Enron and the Derivative Market - Free Essay Example

Sample details Pages: 9 Words: 2814 Downloads: 10 Date added: 2019/08/08 Category Business Essay Level High school Tags: Enron Essay Did you like this example? According to Frank Partnoys article: Enron and the Derivatives World, Enron structured itself into a derivative trading firm. A Derivative is defined as a financial security instrument whose payoff is linked to another, previously issued security. Derivatives involve the buying, selling, or transferring of risk. Don’t waste time! Our writers will create an original "Enron and the Derivative Market" essay for you Create order Derivatives can be traded in two ways: through unregulated markets and regulated exchanges. Many of Enrons success with derivatives focused on the unregulated markets (also known as Over the Counter Markets). Enron collapsed due to two reasons; both involve the use of derivatives. The use of derivatives outside of the company such as transactions with the Special Purpose Entities (SPE). The other cause to the collapse of Enron was due to the use of derivatives inside the company. Enron may have been perceived to be an energy business when it was first created in 1985 due to the merger of InterNorth and Houston Natural Gas. As the company progressed throughout the years, they have transformed themselves into a full-blown OTC derivatives trading firm (Partnoy, pg. 170). Enrons trading operations are not regulated or audited by the United States security regulators; therefore, the OTC derivatives market are not deemed securities. Following Enrons collapse, the Commodity Futures Trading Commission (CFTC) began to fight for the regulation of Over the Counter derivatives but failed to do so. Congress rejected the proposal and made it clear that the markets will stay unregulated. Therefore, OTC markets have become a ticking time bomb which Congress has fully chosen not to defuse (Partnoy 171). Derivatives Outside Enron Previously stated above, Enron collapsed due to two reasons, one of them being the use of derivatives outside of the company. Enron had deals derivative deals with several of its 3000 subsidiaries and partnerships, ones that stand out the most are JEDI, LJM, and Raptor. Enron also used derivatives with the help of the SPE to shield assets from the quarterly financial reports. Therefore, Enron used derivatives to inflate the value of their assets by using put and call options. Enron used special purpose vehicle and derivatives to improve their financial statements by hiding losses on the stock market, hiding debt due to the financing of unprofitable business developments, and inflated the value of its business despite losing money. Enron was known as an energy and gas company, but all of their derivative transaction did not follow their business model or involve energy at all. Hiding Losses on the Stock Market through the use of Derivatives: Enron hid hundreds of millions of dollars in losses on its investments in specific technology-based companies such as Rhythms Net Connection Incorporated. Rhythms Net Connection was a subsidiary under Enron, which was a startup telecommunications company. Enron invested around $10 million into this technology company. As the Dot.Com boom struck, Enrons stake in Rhythms company was now worth hundreds of millions of dollars. Enron did this with several other startup companies as well and experienced the same results, skyrocketing stocks which brought the company a ton of money in return. Following this, Enron entered itself into a series of transactions with the Special Purpose Entity (SPE). Two companies that stood out with the SPE was Raptor and LJM1. When the Dot.com boom came to an end, the technology companies that Enron invested into started to decline. Enron found itself losing more money through these stock then they were making. Therefore, Enron exchanged its shares of stock in these technology companies for a loan. Raptor later issued its own securities to investors and kept the cash from the investors as a profit. What made this work was the price swap derivative which was used between Enron and Raptor. Enron gave stock to Raptor if its assets declined in value. The more assets that declined for Raptor, the more stock Enron posted. Enron was committed to maintaining Raptors $1.2 billion value, so if either Enron or Raptors stock declined, Enron issued more and more to Raptor. These derivative transactions carried the risk of diluting the shareholders of En ron if either stock were to drop in value. Due to the securities that Raptor issued to Enron, investors of Raptor were buying Enrons debt, not the new startup companies stock (such as Rhythm). Although the investors thought they were buying into the rising stocks of these startup technology companies, the money was going straight to Enron and used to help get the company out of debt following the crash of the Dot.Com boom. Hiding Debt Incurred by Unprofitable Business through the use of Derivatives: Enron used two Special Purpose Entities to hide debt incurred to finance new and unprofitable businesses. Joint Energy Development Investments Limited Partnership (JEDI) and Chewco Investments Limited Partnership (Chewco) where the two SPEs. Since Enron owned 50% of JEDI, they could report the company as an unconsolidated equity affiliate. If Enron owned over 50% of JEDI, then Enron would have to release all of their financial statements due to the accounting laws. JEDI was subjected to the same rules, JEDI could issue equity and debt securities since they owned 50% of the company. Derivatives permitted Enron to avoid consolidating these Special Purpose Entities. Similar to Raptor, Enron used derivative transactions with Chewco. In its financial statements, Enron took the position that, although it provided guarantees to unconsolidated subsidiaries, those guarantees did not have a readily determinable fair value, and management did not consider it likely that Enron would be required to perform or otherwise incur losses associated with guarantees. That position enabled Enron to avoid recording its guarantees (Partnoy, pg. 174). Enron disclosed around $2.1 billion of derivatives transactions with related entities and recognized profits of about $500 million similar to those transactions. Enron is not the only business or company for the use of accounting deception through derivatives to make themselves look better than they really were. Inflating the Value of its Troubled Business using Derivatives: Enron inflated the value of certain assets it held by selling a porting of those assets to the Special Purpose Entity at an inflated price. With the assets Enron still held onto, they then inflated those prices as well to match the amount of the assets they just sold. Partnoy breaks down a line from Enrons 2000 annual report: In 2000, Enron sold a portion of its dark fiber inventory to the Related Party in exchange for $30 million cash and a $70 million note receivable that was subsequently repaid. Enron recognized gross margin of $67 million on the sale. Partnoy states that the related party is LJM, which was a company that had a partnership with Enron. LJM was ran by Andrew Fastow who was Enrons Chief Financial Officer (COO). Dark fibers refer to a type of Bandwidth that Enron traded as part of its broadband business. Enron traded the right to transmit data through fiber optic cables through its broadband business. Enrons fiber optic cables ranged for over 40 million miles througho ut the United States. Only a small portion of these cables were lit meaning they worked, while the majority of these cables were dark and needed to be upgraded or fixed. Partnoy states: Enron sold dark fiber, which at the time was valued at only $33 million, for triple that value: $100 million in all†$30 million in cash plus $70 million in a note receivable. It appears that this sale was at an inflated price, thereby enabling Enron to record a $67 million profit on that trade (Partnoy, pg. 176). As Dark Fiber was a falling business, Enron was able to drive of the value and make a substantial profit. Overview of Enrons Outside use of Derivatives: These are three prime examples on Enrons use of derivatives dealing with outside companies. Enron paid hundreds of millions of dollars in fees to both investment banks and commercial banks for their work on assorted and various aspects of business. Enron also included fees to these banks for derivative transactions, but the banks failed to reveal to the investors the derivative problems that faced Enron. Along with paying the banks, Enron also paid outside law firms that failed to correct the issues related to the use of derivatives and the SPE. Therefore, these actions made Enron an excellent stock to invest in through the 2000-2001 years. Enron paid off three credit rating agencies as well: Fitch, Moodys, and Standard Poors to make the company look like a good investment. Despite Enron filing for bankruptcy in December of 2001, these three credit rating agencies still gave Enron a good investment rating grade. These agencies played a vital role for Enron special purpose entities t o work. A good investment grade was the batteries that kept Enron alive. Derivatives Inside Enron Derivatives problems associated with Enron went much deeper than outsider investors and the Special Purpose Entities. Enrons core business model was strictly not making enough money, which is why Enron shifted from an energy company to the buying, selling, and trading of derivatives. As this shift occurred, it appears that some of its employees began lying systematically about the profits and losses of Enrons derivatives trading operations. Simply put, Enrons reported earnings from derivatives seem to be more imagined than real. Enrons derivatives trading was profitable, but not in the way an investor might expect based on the firms financial statements. Instead, some Enron employees seem to have misstated their profits and losses systematically in order to make their trading businesses appear less volatile than they were (Henriques, 2001). Employees used fake numbers and accounts to create false profits and losses for the derivatives that Enron traded. The derivative traders that En ron faced were highly pressured to meet specific earnings and requirements. To meet these requirements, many of the traders hid losses and over exaggerated profits. Enrons derivative traders were required to keep records of every transaction and state whether it was a profit or a loss. These profits and losses were supposed to be recorded to keep the companys economy in reality. These traders split the profit into two columns instead of one. The first column would contain the actual earnings to Enrons financial statements while the second column, called prudency reserve, would include the remaining amount. Prudency Reserves explained: Say a derivative trader earned a profit of $5 million, of that $5 million the trader will record in the first column that Enron profited $4 million and in the second column put $1 million into the prudency reserves (Natarajan, 2017). Enrons prudency reserves were set aside into a specific account. The account can only be accessed when the company experienced losses and can use this money to offset the losses. This account would protect traders from financial losses for several years. Traders did not anticipate this as a wrongful act, but the use of prudency reserve accounts are not accepted business practices. Prudency accounts also misinterpreted the companys current evaluation of the trading business, which consequently, mislead investors as well. These fraudulent claims on Enrons financial statements do not give investors an accurate understanding of where the company stands. Not only did Enron misreport their derivative positions but also misstated their profits and losses by mismarking future curves. A forward curve is defined as a list of forward rates for a given range of maturities, and a forward rate is the price or rate a person can buy something in the future. Forward curves are very important in the trading of derivatives because it values the derivative contract today. In Enrons case, the traders mismarked their forward curves to hide losses. Enron traders did this because they make their money on profits, therefore, by hiding losses they are more likely to make more money. Traders used mismarked and misleading forward curves for approximately three years. In the more obscure markets, traders were more aggressive on the mismarking of forward curves. For instance, if a trader in the smaller markets reached max profit for the year, they would reduce their profits for that year and push the forward into the following year so they can assure themsel ves a future profit. Enron used VAR, value at risk, which captured a 95% confidence interval for a one-day holding period. Enron never reports their VAR during the year so the investors would not know how risky Enron was. Enron used misleading VAR numbers, for instance, Enron reported VAR for what it called its commodity price risk†including natural gas derivatives trading $66 million, more than triple the 1999 value. Enron reported VAR for its equity trading of $59 million, more than double the 1999 value. A VAR of $66 million meant that Enron could expect, based on historical averages, that on five percent of all trading days (on average, twelve business days during the year) its commodity derivatives trading operations alone would gain or lose $66 million, a not trivial sum (Partnoy, pg. 182). Enrons derivative trading operations are still unclear today. In February of 2000, Enron reported $7.2 billion in profit in regards to derivative but stated in December of 2000 they made $21.6 billion. Either Enrons derivative contracts and operations made a 33% increase within the 11 months, or the company was misleading their investors through false financial statements. The Conclusion of Enron and the Derivative Market Enron was originally an energy company which transformed itself into a derivative trading firm that made billions of dollars trading, buying, and selling derivatives. This was accomplished through mismarking forward curves, prudency reserves, use of technology stocks, fiber optic bandwidth, and retail gas and power. Enron used experts to hide losses through the use of derivatives. Enron is not the only institution to blame for these occurrences; law firms, auditors, banks, Special Purpose Entities, securities analysts, and credit rating agencies. All played a major role in Enrons use of derivatives which ultimately caused the company to collapse. Could Enron Happen Again? In 2007 Theodore di Stefano wrote an article called Enron: Could it Happen Again? Stefano states that a corporate board of directors is the major protection to the recurrence of an Enron-like scandal. In 2002 the Sarbanes-Oxley Act (SOX) was passed following the Enron scandal. It protects investors, employees, and the public from fraudulent activities made by a corporation. This act enforces strict reforms to improve financial disclosures and prevent accounting fraud. SOX gives the audit committee specific responsibilities and assignments to complete a companys financial statements along with legal and regulatory compliance. Sox states that it wants a minimum of three people as audit committee members, all who need to be independent. These audit committee members cannot be members of the companys management team and all must be financially literate. To prevent another scandal like Enron from occurring; management, stockholders, employees, rating agencies, and board members all need t o work together in a legal and professional business manner. SOX has done a great deal to reduce the possibility of another Enron. However, the fact remains that, human nature being what it is, there will be future financial scandals, but probably with far less impact than the Enron scandal. I dont think well ever see the day that corporate governance is scandal-free. There will always be people in high positions who have too much ambition, power or ego. Although I believe there will always be corporate scandals, I doubt that well witness another scandal of Enrons magnitude in the future. (Stefano, 2007). Capital and Money Markets I choose Enron and their use of derivatives as my term paper topic. I watched a movie in high school called Enron: The Smartest Guys in the Room. I never heard of Enron at that time and was eager to see what this movie was about. I found the entire story of Enron to be fascinating, yet it made me curious. I have completed projects on Enron in the past, but I always discussed the accounting aspect of the scandal. I never knew that derivatives played such a major role in the collapse of the company. As the semester comes to an end, I learned several dozen new financial terms, instruments, and formulas. The last chapter, chapter 10, we discussed Derivatives, Securities Markets, Future Contracts, and Options. Everything I learned throughout this course helped me to write this paper because Enron used all of these to make money, hide losses, and strive as a business; as I stated throughout the entire essay. If it werent for this class I would have been entirely unaware what all these term s and structures meant; as a result, this assignment would have been very challenging to complete. Work Cited Derivatives at root of Enron collapse, expert says Rediff.com India News, 25 Jan. 2002, www.rediff.com/money/2002/jan/25enron1.htm. di Stefano, Theodore. Enron: Could It Happen Again? ECommerceTimes.com, 2 Feb. 2007, www.ecommercetimes.com/story/55489.html. Henriques, Diana B. ENRONS COLLAPSE: THE DERIVATIVES; Market That Deals in Risks Faces a Novel One. The New York Times, The New York Times, 29 Nov. 2001, www.nytimes.com/2001/11/29/business/enron-s-collapse-the-derivatives-market-that-deals-in-risks-faces-a-novel-one.html. Natarajan, Manju. Enron Scam- Role of Derivatives. LinkedIn SlideShare, 8 Mar. 2017, www.slideshare.net/manjunatarajan/enron-scam-role-of-derivatives. Partnoy, Frank. PDF. Enron and the Derivatives World Researchgate.net. www.researchgate.net/publication/265008940_Enron_and_the_Derivatives_World.

Concept Of Creation And Evolution From The Perspective Of...

Task 1 (Achieved) Analyse the concept of creation and evolution from the perspective of the Catholic Church, explaining the components and key features of their belief. Your answer should include:- The Biblical foundation of the belief; How the belief has developed over time including Christian philosophy; Recent teaching concerning the concepts of science, creation and evolution. The Biblical foundation of the belief The Bible says that God created the earth and everything on it in 6 days and rested on the 7th. â€Å"1 In the beginning God created the heavens and the earth... 3 And God said, â€Å"Let there be light,† and there was light... 6 And God said, â€Å"Let there be a vault between the waters to separate water from water.† And God said, â€Å"Let the water under the sky be gathered to one place, and let dry ground appear.†... 11 Then God said, â€Å"Let the land produce vegetation: seed-bearing plants and trees on the land that bear fruit with seed in it, according to their various kinds.†... 14 And God said, â€Å"Let there be lights in the vault of the sky to separate the day from the night, and let them serve as signs to mark sacred times, and days and years... 20 And God said, â€Å"Let the water teem with living creatures, and let birds fly above the earth across the vault of the sky.†... 24 And God said, â€Å"Let the land produce living creatures according to their kinds:the livestock, the creatures that move along the ground, and the w ild animals, each according to its kind.†...26 Then GodShow MoreRelatedEssay about The Influence of Religion on Scientific Advancement1737 Words   |  7 Pageshinders scientific advancement. 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Atm Card Service for Student free essay sample

The author would like to gratefully acknowledge the numerous individuals, banks, universities and colleges that have contributed in one way or another, to help the author conduct this research. First of all, the author would like to express sincere thanks to all faculty members of the MBA program at CFVG where the author, over the past two years, has studied and gained valuable knowledge and expertise. Especially, the author would like to express the deep gratitude to Doctor Nguyen Thi Tuyet Mai for her enthusiastic guidance and encouragement that inspired the author a lot during the process of writing the thesis. The author’s special acknowledgment is due to the managers and staff of the following organizations, banks, universities and colleges whose contribution has helped conduct this research: Techcombank, Vietinbank, Vietcombank, Marintime bank, National Economic University, University of Technology, Banking Institution and to many marketers of different banks. Having integrating into WTO for nearly two years has brought Vietnam many chances and challenges. There are big changes in policies and environment of Vietnam economy. Therefore companies doing business in Vietnam have more efforts in such more dynamic economy. 2007 was the year witnessing a rapid and strong development of banking in Vietnam. However, in 2008, along with the world’s financial crisis, Vietnam inflation was tracking at 20. 3 percent for the first half of the year, much higher than the 3. 4 percent rate measured in 2000. This makes the business of Vietnam’s banks cope with so many difficulties such as high interest rate, lacking of capital for loans†¦ In addition, there have been the world’s top banks occupying in Vietnam for more than a decade such as Citigroup, HSBC, Deutschebank, ANZ, Standard Charter Bank†¦ For these significant reasons, Vietnam’s banking business is more and more cruelly competitive. Currently, the banking sector in Vietnam is held by state-owned commercial banks (SOCBs), joint-stock banks (whose shareholders include state-owned enterprises and private entities), foreign bank branches; and joint-venture banks. Founded on the 27th of September, 1993, Techcombank (TCB) is one of the first Commercial Joint Stock Banks of Vietnam born in the circumstance that the country was shifting to marketing economy. Techcombank (also known as Vietnam Technological and Commercial Joint Stock Bank) serves primarily the countrys small to medium enterprises, offering them deposit products, loans, leasing, cash management, and other services. At the beginning, TCB had the legal capital of 20 billion VND and its Head office was in Ha Noi. To 1994 – 1995, TCB raised its capital to 51. 915 billion VND and established TCB Ho Chi Minh branch, opened a fast – growing TCB in great urban in Vietnam. Afterward, TCB has been continuously expanding and raising its legal capital nearly every year. To the late of 2007, TCB, with about 130 branches and transaction office, became the bank having a transaction net ranked the second in commercial joint stock bank sector. Recently, Vietnam has moved to further op en its financial sector, giving approval for the first foreign banks HSBC Holdings Plc and Standard Chartered Plc to open wholly owned units in the country. These policies did a favor to the development and expand of TCB. On September, HSBC Holdings PLC raised its stake in Techcombank, to 20% from 14. 4%, at a cost of $77. 1 million. However, TCB, the same as other Vietnam banks, has the thread of being inferior to the international financial organizations in capital, technology, management, product, etc†¦ and also the way to satisfy customer’s needs. Marketing in banking business is considered an in-depth direction of applying marketing’s rules and principles to a specific service sector, aiming to find out how to meet customer’s needs about financial service, the way they choose and use product supplied by various banks. Techcombank’s marketing department is the unit which in charge of advertisement, communication with clients, event organization, market research, marketing plan, public relation. The most important function is doing market research, which is collecting information on market, identifying potential customers, making survey. Marketing department plays an important role in Techcombank’s development. 1. 2. Research problem Vietnam economy is growing fast; and Vietnam is a good market for other banks to go in. a lot of banks are going to operate in Vietnam. Techcombank is facing with competition from not only banks in Vietnam, but also banks in all over the world. To survive, all banks have to take some action, find new opportunities in this market. Now, Techcombank has service on many kinds of cards, almost for businessman, people with high income in Vietnam†¦ Recognizing there will be more and more students coming to Hanoi from other provinces, and they will need to use banking services. ATM card is one of their needs. This part is the growth of student number in Hanoi and Hochiminh city. And the percentage of them is from other provinces. Leaving far away from their parents, these students will need to use ATM card service for their financing demand. The necessary thing for Techcombank to do now is having knowledge about these independent students use ATM card service. This problem can be solved by doing research on students to learn the characteristics. And Techcombank can make sure that this is the new opportunity to consolidate its card market. 1. 3. Research objectives This project is about to achieve the following objectives: ?Providing overall picture of students going to use ATM card service ? Understanding students in term of demographics, behavior characteristics and information reaching hobbies ? Identifying students’ perceptions of payment method and money transfer ? Checking students’ awareness on Techcombank service ?Providing marketing recommendations to attract more students using ATM card service of Techcombank Achieving these objectives will help Techcombank to expand its market, serving new customers – students, consolidate the card market and improve Techcombank’s position with sustainable quality products and services in customer’s mind. 1. 4. Research scope and limitation For the limited time and resources, this research is only performed in some universities in Hanoi. They are Hanoi University, University of Technology, National Economic University and Banking Institution. Almost data will be collected from students, who leave in hostel, boarding house, far away from their parents. 1. 5. Structure of the thesis This research includes five chapters, they are: Chapter 1. Introduction This chapter presents an overview of Vietnam economy and Vietname banking sector. A brief Techcombank and its marketing department are also ntroduced. Besides, research problems, objectives and scope of the research is also mentioned in this chapter. Chapter 2. Theoretical background This chapter presents some theories on marketing, banking products and services and customer’s behavior on banking sector. Chapter 3. Research methodology This chapter is aimed to show how data in this research is collected. Both quantitative and qualitativ e method is applied. Not only primary data is gathered from questionnaire, interview survey but also secondary data is selected on other studies in banking customers. Chapter 4. Research findings This chapter presents the results of this research, including overview of students’ demographics, buying behavior, awareness on banking services. The assessment of Techcombank’s services are also mentioned in this chapter. Chapter 5. Recommendations for Techcombank This chapter presents some recommendations for Techcombank to create a right ATM card services for students, choose suitable pricing policy, select channel of distributions and commit promotion activities. The concept of banking market 2. 1. 1. Marketing Nowadays, marketing is an important part making the success of not only business but also other activities in modern society. There are many definitions of marketing. The better definitions are focused upon customer orientation and satisfaction of customer needs. As Phillip Kotler stated: â€Å"Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others†. Another definition, the Chartered Institute of Marketing (CIM) efinition (in common with Barwells definition of the marketing concept) looks not only at identifying customer needs, but also satisfying them (short-term) and anticipating them in the future (long-term retention): â€Å"Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably†. In Palmer’s point of view, Marketing is essentially about marshalling the resources of an organization so that they meet the changing needs of the customer on whom the organization depends. And there is a more recent and very realistic definition of Bartles that looks at matching capabilities with needs: Marketing is the process whereby society, to supply its consumption needs, evolves distributive systems composed of participants, who, interacting under constraints technical (economic) and ethical (social) create the transactions or flows which resolve market separations and result in exchange and consumption. There are some of main factors that companies care of when they study and apply marketing in their business: -Profit and customer’s pleasure All enterprises have to equalize their profit target and customer’s requirement. If a company chooses to have high profit that doesn’t base on customer’s pleasure, this will make the negative effect in company’s future business because customers are treated only once. If a company chose to have low profit it can create customer’s pleasure in short-term, but it also means the company using ineffectively their resources in long–term that decreases capital for new product. -Customer needs and future demand To meet customer needs is the centre of all marketing activities and the decisive factor of marketing is imitating or introducing new product, service when customer needs change. The unchangeable factor of marketing is the trend of unceasingly changing. -Customer’s payable demand -Set target in business management The three most important targets of business in marketing are: -Making profit as planted -Direct customer at every issue and every level -Coordinate every activity toward the general target. 2. 1. 2. Banking business -Banking The definition of a bank varies from country to country. Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as: †¢Conducting current accounts for his customers †¢Paying cheques drawn on him, and †¢Collecting cheques for his customers. In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking. Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques do not depend on how the bank is organized or regulated. The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in minds that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions: †¢Banking business means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation). Banking business means the business of either or both of the following: 1. Receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] or with a period of call or notice of less than that period; 2. Paying or collecting cheques drawn by or paid in by customers -Banking pr oduct In the tangible goods domain the notion of what constitutes a product is pretty- straight forward, as it comprises palpable physical characteristics. However, the situation is less straightforward when it comes to financial services because product comprises both utility features and service features. The former concerns the primary need for which the product was bought – for example, a personal pension to provide an income in retirement. Amongst the utility features associated with a pension may be a choice of investment funds, the ability to switch between funds, and an option for income drawdown. Services features are somewhat analogous to the process element of the extended marketing mix of the 7-Ps. In the case of a personal pension, it could include ability to access a fund’s value and make additional contributions on-line, or perhaps access to information and assistance via a 24/7 call-centre. Sometimes the boundary between the two types of feature can appear to be somewhat blurred. An additional dimension to appreciate is the role played by service features where third-party intermediaries form part of the distribution processes of a product provider. In these cases, real competitive advantage can be achieved by providing intermediaries with a range of helpful and responsive service features such as the ability to input new cases on-line and the provision of connectivity between the IT systems of the provider and the intermediary. Thus, when we refer to terms such as product, product management and product development in the context of financial services, we must ensure that both utility and service features are given due consideration. Products are only purchased because they provide these benefits to the consumer. Therefore, in order to understand products and how they should be managed, it is important to understand what those benefits are and how they are provided. Understanding the nature of the service product requires an understanding of both the needs of customers and the organization’s ability to meet those needs. In different countries and different historical periods, there are various detail regulars about banking business. According to Vietnam current law, banks are financial organizations set up to do currency business and others banking services such as deposit, credit, payment services Followed are some main functions of banks: Capital mobilization: Receive deposits from individuals, organizations and other banks under the forms of unfixed-time limit saving, fixed-time limit saving and others savings. Issue bond, value note to mobilize capital domestically or abroad. Mobilize capital from other credit agencies or State bank. -Grant credit terms -Fund and payment service Payment service: Supply payment means, doing domestic or international payment, doing payment order, receipt order and other payment services. Fund service: Receive and pay pretty cash to customers 2. 1. 3. Marketing in banking business and application of marketing in Vietnam banks’ business Doing business in the competitive economy, banks are not outside organizations that have to apply marketing in their business. Experts affirmed marketing is considered a management science and is equipment of managers. Marketing have its role at all in business as well as structure of banks. In recent years, baking business is rapidly develop in Vietnam. Since Vietnam integration into WTO, there are many opportunities but also many threatens to Vietnam economy in general and baking business in particular. The legal frame is somehow more relevant to domestic banks, but this also allows foreign banks expending their business in Vietnam. In addition, there is the setting of series of new domestic banks. These factors encourage banks to compete and marketing is more and more appreciated in such cruel competition. 2. 2. Customer behavior in the banking industry 2. 2. 1. Factors influence to the needs of banking service The majority of organizations offer a range of products to a variety of customer groups in order to meet a variety of customer needs. In financial services, the prime customer groups are personal, institutional and corporate. In personal markets, financial institutions will often separate high net-worth individuals (HNWI) from other customer groups. In the corporate markets, banks will typically separate large corporations from small and medium-sized enterprises. These customer groups have a wide variety of financial needs. The need to move money and make payments (e. g. current accounts, ATMs debit cards) oThe need to earn a return on money (e. g. savings accounts, unit trusts, bonds) oThe need to defer payment or advance consumption (e. g. loans, credit cards, mortgages) oThe need to manage risk (e. g. life insurance, general insurance) oThe need for information (e. g. share price information services, product information) oThe need for advice or expertise (e. g. tax planning, inve stment planning, advice on IPOs, advice on mergers and acquisitions). Because of the limitation of this thesis which study marketing on card service, so we will concentrate on individual customer. During decades, there have been many important eco-social trends influence to banking services for individual customer. Financial organizations in general and banks in particular need to know they are doing business with whom and what are the trends of market: -The range customer’s age are widen In 1980, the tradition target customers of financial organizations in developing countries are under forty-year old men. However, the change in developing countries’ age structure make banks has to adjust their customer policies when customers become older and more long-lived. In a developing country like Vietnam, according to the figure of Statistic Bureau in 2007, Vietnam population has a trend of being older, the proportion of old people increased (percentage of people under fifteen-year old decreased from 33% to 26%, the rate of people over sixty-year old increased 6% to 7% compared with the year of 1999). Moreover, thanks to the development of the eco-social, there are more and more young people using banking services. These changes not only create opportunities for bank to supply new product and widen business net but also require banks to have better awareness about their customer. -The more importance of female customer Another social trend influence to banks’ customer determination is the increase of female labor resource. The needs of economy, the desire of increasing living standard, the personal success make women have their own jobs and earn their own incomes. In 2006, UNDP reported the proportion of women contributing in social activities such as being member of National Assembly, chief executive officer, expert†¦ reaches 50% in some countries. In Vietnam, the number of working women remarkably increasing. -The various incomes Incomes and asset of customer most influence in demand of using banking services. During some decades, people have the trend of being richer and more using banking services. The shift in job type impact differently to banking services demand. In Vietnam, companies are more professional in paying salary to employees’ accounts. The eventful stock marketing in recent years also creates banking transaction needs†¦ -Customers are more unstable In the past, banks’ customers were supposed to be loyal, loyal in behavior and loyal in opinion. About behavior, they used banking services of a certain bank as a habit; they didn’t want to waste their time in looking for another bank. About opinion, customers are in favor of a certain bank – they are satisfied, they are chosen as basic customers by that bank, so they supposed that their bank are better than others. However, at this stage, the tendency of changing appears clearer. Firstly, customers are more complicated, their awareness of banking service makes them confidently change their chosen bank. Secondly, there are much more information and the multiform of banking product make customer’s unstable minds. -Customers pay more attention to society Since 1980, customers have cared much about society, environment, and liberty†¦ that impact on consumptions decision. Customers not only want to invest but also want to know surely that their money is being invested in right way, for suitable purpose and adaptation with their moral value.

When the mountains fall (Eternal Bride) Review Essay Example

When the mountains fall (Eternal Bride) Review Paper Essay on When the mountains fall (Eternal Bride) The last novel of Chingiz Aitmatov, the great humanist and utopian. And let it utopian, but Im still on his side. Nothing worse than when neither of you do not believe. And the reality presentedin in his works, as this cruel and corrupt world is still ruining the character, but not his spirit slomlyaet. And before us necessarily appears strong, heroic figure, which had to contend with fears, misery, and despair neponimaniemi. In the novel When the mountains fall (Eternal bride) the author shows rasprostroninie market, business, around, everywhere. buy-sell can be everything. People who voluntarily sold his soul for the sake of wealth and fame. People who are bored are ready to fly to distant lands, what would entertain themselves and to hunt for rare and strange for them beasts. Enterprising people who at any time will be able to live successfully, tenacious, smart, capable. And the people, driven to despair, poverty and envy, ready to terror, murder. And he Arsen Samanchin, a journalist, a witness of it. I can not say that this is the strongest novel by the author, but I captivates mans attempt to vosmidisyatom year of life to keep up with the times, try to write in modern language, use slang. It turns out its true a bit awkward, but really cute. But when he returns from the city back to himself, to his mountain village, things get closer, dearer. Yet the world has changed. As important as the world in its place. And the protagonist again be able to feel it, he bestowed this happiness, this blissful moment, love and understanding, before the difficult moments of hopelessness, despair and self-sacrifice. We will write a custom essay sample on When the mountains fall (Eternal Bride) Review specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on When the mountains fall (Eternal Bride) Review specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on When the mountains fall (Eternal Bride) Review specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Still, 21, already a century alien Chingiz Aitmatov

Dancing in September

The film depicts the struggle the black community faces to change the status quo through film. Tommy is an incredible playwrite with ‘Just us’ being pitched by his childhood friend George. After its test pilot is approved they celebrate their creativity by depicting the characters as positive, warm and humane something which doesn’t play out well with the directors.Advertising We will write a custom essay sample on Dancing in September specifically for you for only $16.05 $11/page Learn More With the falling ratings the pressure is piling on Tommy to change the script to the ordinarily predictable African American stereotype. Even after their demeaning efforts, the show is cut off leaving George and Tommy where they were hinged on a retrogressive system. They face the forces of negativity in their work and fuel it by believing they had failed in their quest for equality. Discrimination is rife in their society since even the audience loses belief in the show by not tuning in causing the ratings to drop. The film gives us a flashback of when Tommy and George were young and they used to watch ‘roots’ a show which focuses on how a young African warrior is stolen from Africa and sold as a slave is able to create a family which generations later is able to be free from slavery. It tries to outline the importance of freedom and people charting their own paths in life by breaking the monotonous cycle . The story pans out in today’s society where a clique doesn’t allow for dynamic shifts in the mindsets of people to be expressed through the media. The portraying of black people as criminals doesn’t serve the purpose the show was meant to undertake since it short-changes the viewers and the writers as well. George and Tommy also take up an important role in the film as the main actors through their interactions to see the show through. Though they are faced with a myriad of challenges th ey managed to end up as people who added value to society through their show. They also had challenges of balancing their professional and private lives. Personal values also play a part in the film through Tommy being prone to manipulation by the network executive to appease their thirst to retain the status quo.Advertising Looking for essay on art and design? Let's see if we can help you! Get your first paper with 15% OFF Learn More It hasn’t been easy for black entertainers to leave their mark in television with some of them getting either demeaning or ‘lesser roles’. The most common catch phrases that have been used by black characters were either given to us by the white man during the slavery days and are now used by black people while referring to each other. This in turn begs the question does it really matter to us that we insult each other and how does it help us? Some may argue that it helps in lessening the stigma against us with others not paying attention to the words which faded after the independence of all Americans. To white characters it gives them an edge over black Americans since they feel superior due to their power over the mindset of black Americans. To blacks, it neccesitates for a change of attitudes and mindset. It is a shame that some blacks still think that the only way out of poverty is through crime or drug dealing. Black-cast dramas have been a revelation when it comes to cable channels because of the way the stories are able to resonate with the audience. Although they haven’t been rampant as expected the growth of the shows has created a buzz in the industry. The industry is very bureaucratic and rigid with any show that doesn’t bring instant success through ratings being shot down. Compounded with the fact that AfricanAmericans are a minority their needs are not seen to weigh much when it comes to demanding shows because of the low returns compounded with other factors such as being unfairly associated with gangs and drug dealing. With competition from other cheaper to produce shows such as Mexican soaps the average African American will have to wait a little bit longer before they can get their own shown on cable networks. The promotion of black-cast shows has not been forthcoming with all parameters in cable networks turning a blind eye on the importance of a balanced viewership by audiences. With the storylines of other kinds being recycled over and over again the networks have deliberately looked the other way instead of tapping the unharnessed potential of all the stories that could be changed into stars. This in turn has led to the formation of a network for black-cast viewing, BET (Black Entertainment Television). It exclusively airs black content while creating awareness of the deliberate attempt by rigid forces to lock out the stories of minorities.Advertising We will write a custom essay sample on Dancing in September specifically for you for only $16.05 $11/page Learn More My ideal African American show would have to be The Fresh Prince of Bel-Air. The show is about a young Will who moves to West Philadelphia to live with his aunt and uncle in Bel-air (Diaz, 2011). This contrasts with his previous lifestyle. The show’s premise is all about how Will was able to surplus all the pressure of maintaining his ‘hood’ past and concentrate on the lessons to learn from his experience. The central conflict plays out such that Will is against society. He is placed in an unfamiliar setting where he is found wanting in most of his actions such as his etiquette. This leads to him learning the ropes anew while also using his past experiences to move past hurdles he encounters daily. The person who I feel would be able to capture and own the position of Will would have to be Eddie Griffin while Will’s uncle would have to be Denzel Washington. Eddie would be able to capture the humor while also charm his way out of trouble if need be. I felt the underprivileged boy would be better played by a person who would look the part which Eddie would comfortably do. On my decision to cast Denzel I thought he would suit the wealthy uncle while also looking the part as well. The film maker should ensure the script is well represented on the screen through cinematography to encompass the theme of the show. He /she is charged with creating the scenes scripted in a manner that captures the audience best while its main purpose would be to evoke emotions. The film maker is also charged with the moral responsibility of not creating biased works where a certain storyline must be observed to create a balance in the story to bring out the story in its entirety without fear or favor. But it goes without saying that all this is within reach and the only limitation to anything is where minds reach their creative end. Works Cited Diaz, Evelyn. â€Å"Fresh Prince of Bel-Air Star Slams Will Smith | News | BET.†Ã‚  Celebrities, Music, News, Fashion, Entertainment, TV Shows and Video | BET.  28 Dec 2011. Web. This essay on Dancing in September was written and submitted by user Edward Sullivan to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Kudler Fine Foods Commitment Orientation

Kudler Fine Foods Commitment Orientation Free Online Research Papers â€Å"Strategic competitiveness can be attained only when the firm’s selected structure is congruent with its formulated strategy† (Gomez-Mejia et al., Chapter 7, pg 28). Kudler Fine Foods continues to manifest growth based on Mrs. Kudler’s original vision of a one stop gourmet food store. Having direct control over hiring, ordering and customer service, she has built the company into an expanding entity. The following is a discussion of strategy implementation, technology and opportunities, strategic recommendations and external forces to be aware of. Most growing companies have used information technologies (IT) to enhance operations and improve customer service. Mrs. Kudler has plans to add to the inventory and ordering automation by introducing new e-commerce capabilities and an online catering link (Kudler Fine Foods Portal, Strategic Plan, pgs 15-16). Strategic Information Systems have the ability to amplify strengths into potential sustainable competitive advantage. For example, British Airways implemented customer service online and self checking at the airports. Though the restructuring effected employee morale due to job loss, the company increased in efficiency and cost leadership. Mrs. Kudler is known for her kindness and generosity to employees, so the company will only prosper with new IT applications. Two main approaches of Strategic Information Systems are mostly used: inwardly focused and outwardly focused. An inwardly focused system is â€Å"focused on enhancing the competitive position of the firm by increasing employees’ productivity, improving teamwork and enhancing communication† (Turban et al., Chapter 13, pg 3). Companies that develop a unifying strategic theme aligned with business unit activities have more of a chance of survival than the mirroring or boom and bust type companies. Thanks to new technology, the internal workings of Kudler Fine Foods can be optimized far beyond the owner’s initial vision. For example, the new website and inventory/ordering automation will allow cash flows to be directed towards geographic expansion instead of traditional operations functions. Outwardly focused technology applications will help Kudler Fine Foods assess the external environment in the gourmet industry. â€Å"Such activities to gather information on competitors are part of competitive intelligence† (Turban et al., Chapter 13, pg 4). Knowledge of other products in demand will help Mrs. Kudler forecast changes and additions needed to remain current with the consumers she maintains. Additionally, developing an awareness of trends occurring will prepare for unpredicted threats to the organizational expansion plans. A strong example is how Frito Lay collects field data from all over the U.S. to assess inventory and product popularity. Common competitive intelligence information used is found on internet newsgroups, store websites, financial statements at the SEC (Securities Exchange Commission), customer input and professional research companies (Turban, Chapter 13, pg 5). Kudler Strategy Developing sustainable competitive advantage requires strategic awareness of how and what a company should focus on. The response strategies that Michael E Porter (and other scholars) has termed are very useful in describing Kudler Fine Foods. Due to the careful attention Mrs. Kudler has given to the company, she exhibits a combination of differentiation, focus and cost leadership. In addition, response strategies such as growth, internal efficiency and customer orientation are also identifiable. â€Å"Kudler Fine Foods is committed to providing our customers with the finest selection of the very best foods and wines so that our culinary visions can come true† (Kudler Fine Foods Portal, Strategic Plan, pg 1). The salient qualities of Mrs. Kudler’s products show differentiation, the commitment to gourmet foods displays focus and new plans to buy direct from local growers will achieve cost leadership. New store locations (growth), information technology applications (int ernal efficiency) and special ordering (customer oriented) are examples of the added response strategies (Turban et al., Chapter 13, pgs 7-8). When Mrs. Kudler found that her community grocery store did not carry the products she needed for her own cooking, the company was born. Vision created Kudler Fine Foods, and this is the main reason that business activities continue to be improved every quarter. The central theme becomes part of the company structure as it expands. Now bakery goods are guaranteed fresh or they are free, special orders are taken, the store promises the freshest of organic meats and seafood, gourmet cheeses are stocked, and also an extensive wine inventory. Reliance on strong customer relationships supported by efficient information technology will hopefully, guarantee the company’s future. â€Å"Success is getting the right customers and keeping them† (Gomez-Mejia et al., Chapter 7, pg 28). Not only is growth important to Mrs. Kudler, she believes in satisfying the customer value chain. â€Å"Strategic management involves the major decisions, business choices, and actions that chart the course of the entire enterprise† (Gomez-Mejia et al., Chapter 7, pg 3). The success of Kudler Fine Foods has much to do with Mrs. Kudler’s effective leadership that inspires employee motivation. Her monthly operations meetings are very democratic which re-enforces transactional/relational bonds with employees. This is very important to the company, because staff members respond best to empowerment and support. By including management in product sampling at all the meetings, Kathy Kudler addresses staff needs that translate into proactive behavior and better results. Tactics to Realize Strategy Developing as a company that will sustain requires an understanding of strategic formulation and implementation. Primary to any strategy is a strong mission statement to define functions of the organization. Ideally, the overarching theme will connect through processes and lead to the completion of enterprise objectives. Kathy Kudler has grown the business because she has transformed her thoughts into a structure that produces returns. â€Å"Strategic intent is internally focused, indicating how the firm tends to use its resources, capabilities and core competencies to win competitive battles†¦strategic mission flows from strategic intent, defining its external focus in terms of what the firm plans to produce and market, utilizing the firm’s internally based core competence† (Gomez-Mejia, Chapter 7, pg 22).Establishing tactics for Mrs. Kudler to formulate successfully and implement her plans must include efficient resource allocation, cost leadership, differentia tion and focus. How the company decides to manifest these strategies, and the combination there of, will decide the future of the company. Suppose that another organization similar to Kudler Fine Foods arrives near to one of her locations. Depending on how sharp management is regarding optimal strategy combinations, the new rival store could decrease Mrs. Kudler’s market share. In this competitive world, one never knows when a developer will hire the best strategists, analyze the gourmet food market and construct an impeccable gourmet store business plan for Orange County. This could devastate the Kudler customer base. Therefore, Mrs. Kudler can mitigate this possible scenario by actively assessing the strength of her advantages and weaknesses in strategy. â€Å"Each generic strategy is vulnerable to different types of attacks† (Porter, Competitive Advantage, pg 21). So often businesses favor cost leadership, which easily loses market share due to lack of differentiation. Management must always remember that efficiency is not gong to achieve competitive advantage alone, but must be married to strategy. Therefore, Mrs. Kudler should consistently remind employees that the consumers are loyal due to her rare/high quality products, customer service and relatively low cost. For now, this is sufficient for her to sustain. Preparing for the future survival of the company, however, requires careful analysis and internal evaluation of how various differentiation concepts will establish loyalty connecting to the customer’s family orientation. Kudler Fine Foods is focused on the gourmet chef, however, will have to formulate and implement ways to secure customers by becoming a part of their lives. Kudler Competitive Awareness As mentioned in the first section of this paper, Strategic Information Systems are more frequently used to enhance a company’s competitive situation. â€Å"Research indicates that the percentage of companies using IT to support competitive intelligence increased from 31 percent in 1993 to about 50 percent in 1999† (Turban et al., Chapter 13, pg 5). The internet has become a powerful strategic tool for organizations to gather data on rival companies. While information technology exponentially grows in the world today, Kudler Fine Foods should take advantage of applications for more informed strategic decisions. An effective way for Mrs. Kudler to update her processes of analysis is to hire an experienced person trained in competitive intelligence IT applications. The company only has 2 computer support technicians on staff meant to solve tech problems. In order to function in this fast pace, constantly changing world, she will need to add competent analysts. Confronting un-predictable competition through active internal business intelligence should always bring hope to an organization’s stability. Conclusion The central point of this paper was to discuss the necessity for commitment orientation when deciding on formulation and implementation strategies. â€Å"In reality, strategy formulation and implementation are two sides of the same coin† (Gomez-Mejia et al., Chapter 7, pg 28). Mrs. Kudler’s company has a brilliant chance of continuing the positive cash flow it has been earning. All the organization has to do is accept the fact that strategy combinations and information technology is essential in updating and securing substantial returns. Mrs. Kudler will succeed by creating a connection between the store products/cooking ware and the consumer’s lives. This will help develop the sought after sustainable competitive advantage. References Chase, Richard E. Jacobs, Robert. Aquilano, Nicholas J. (2006) Operations Management for a Competitive Advantage 11e. New York: The McGraw Hill Companies. Gomez-Mejia, Luis R. Balkin, David B. (2002) Management 1e. New York : The McGraw Hill Companies. Kudler Fine Foods Virtual Organization. Retrieved July 2, 2008. University of Phoenix rEsource, MBA-502 course material. Porter, Michael E. (1985) Competitive Advantage-Creating and Sustaining Superior Performance. New York: The Free Press. Porter, Michael E. (1980) Competitive Strategy-Techniques for Analyzing Industries and Competitors. New York: The Free Press. Turban, Efraim. Rainer, R. Kelly. Potter, Richard E. (2003) Introduction to Information Technology. New York: John Wiley and Sons Inc. Research Papers on Kudler Fine Foods Commitment OrientationAnalysis of Ebay Expanding into AsiaRiordan Manufacturing Production PlanOpen Architechture a white paperThe Project Managment Office SystemBionic Assembly System: A New Concept of SelfIncorporating Risk and Uncertainty Factor in CapitalMoral and Ethical Issues in Hiring New EmployeesPETSTEL analysis of IndiaMarketing of Lifeboy Soap A Unilever ProductDefinition of Export Quotas

Introduction - Rationale - Conclusion Essay Example | Topics and Well Written Essays - 2500 words

Introduction - Rationale - Conclusion - Essay Example Tentative research show that the use of the internet for marketing purposes can make the operators of tourism and travel services easily bridge this gap between the suppliers and the consumers. As already previously discussed, tourism is reliant on a cycle known as the travel cycle, which entails dreaming, researching, booking, experiencing then sharing of the experience (Leigh et al 2013, p.90). The dreaming stage of the traveller or the tourist occurs at the preliminary stages mostly when the potential tourist or traveller uses the internet to look for the most affordable and reliable means of travel by reviewing web pages or videos that ultimately inspires him to want to travel. The consumer then researches and narrows down on his travel options through the making of requests through queries. This is the most important stage for the future successful tourism or travel supplier as it enables the collection and evaluation of the path that determines the path and the power of the tou rist or traveller towards purchasing. Knowing what is likely to happen in the future fascinates each and every man kind and tourists are no exception (Yeoman 2012, p.1). In tourism circles this is significant in the sense that it helps us understand tourism from a sustainability point of view as the industry players that is the tourism and travel suppliers become more prepared and find out the best answers to challenges that are likely to be met in future. The importance of future tourism is intertwined with that of the travel agencies especially those that are internet-based. Tourism experts agree that the internet is an important factor in the distribution and communication of services and products to the global market and eventually all players in this field may be forced to embrace the internet as a means of marketing for the services. Despite this, others argue that the internet will not automatically make the travel agencies dispensable as there are still consumers who insist on the personal touch that may be offered by physical agents as the information supplied needs to be in a continuous manner. The internet as a tool used for marketing is therefore complementary to the physical tourism and travel agent (Palmer and McCole 1999, pp.33-47). Other researchers look at the relevance of the internet based travel agencies as merely to reduce cost by eliminating the intermediaries who increase the total costs incurred in procuring a travel or tourism service or product (Barnett and Standing 2001, P.143). The travel industry and the tourism industry is therefore a major user of the internet that needs to constantly seek new methods of improving the services and products offered to consumers in order to fit in the current and future trends in marketing. Rationale The revolution of the internet is applicable in all aspects of the public especially those wishing to travel. This calls for traveler and tourism suppliers to investigate what motivates consumers of th e tourism and travel services to go into the internet to shop or buy products and services online. The reason for the increased uptake of internet in the marketing of travel products can be attributed to factors such as the ability of one to have one-to-one marketing and can support an interaction between the