Mercedes Benz Brand Evolution and History

Mercedes-Benz is a multinational division of the German manufacturer Daimler AG, and the brand is used for luxury automobiles, buses, coaches, and trucks. Mercedes-Benz is headquartered in Stuttgart, Baden-Wurttemberg, Germany Mercedes-Benz has been making buses since 1895 in Mannheim in Germany. Since 1995, the brand of Mercedes-Benz buses and coaches is under the umbrella of EvoBus GmbH, belonging 100% to the Daimler AG. The German luxury car-manufacturer has been around for more than a century, having elegantly drifted the both smooth and rough curves of automobile history. Responsible for the modern internal combustion engine's genesis, the ‘fathers' of the Mercedes-Benz brand practically invented the automobile. Many years ago when mahogany canes and high-top hats were the ultimate fashion and social prominence statements, two men by the names of Karl Benz and Gottlieb Daimler were busy freeing the world from horse-powered transportation. The 1886 archetype of the modern engine, their device was not a result of team-work but of independent and synchronous research and development. Although both lived in Southern Germany, they never actually met if historical accounts are to be believed. Despite the equal share of the two engineer's contribution to the development of the four-stroke petrol engine, it was Gottlieb Daimler who garnered more attention that would eventually lead to world-spread fame. Following Daimler's successful results in racing, a wealthy Austrian business man by the name of Emil Jellinek became interested in the Unterturkheim-built cars. Daimler and his chief-engineer, Wilhelm Maybach's work had pleased Jellinek to the extent of him approaching the two with a business proposal: a large number of cars would be ordered in exchange to a name change from Daimler to Mercedes – Jellinek daughter's name – and the right to alter the car's designs as well as the right to resell the vehicles in some European countries, including Austria, France and Belgium. Despite having been widely criticized for alleged forced employment and violation of human rights during the Second World War, Mercedes – Benz have been successful at building an automotive empire, strongly supported by some of the company's far-from-average clients, such as state leaders, media moguls and ridiculously rich families. Mercedes – Benz have become known particularly for their limousines, most of which can be seen in most movies ever since the Lumiere brothers became famous for their ‘little' invention called cinematography. As if outstanding product quality and world fame weren't enough, the Mercedes – Benz team has also fathered tons of innovations, many of them targeting the simple four-cylinder engine. After marking a new era in mechanical supercharging technology, Mercedes went on to cross new borders through the release of new engineering concepts and ground breaking designs. The BlueTec system unveiled in 2005 was developed with only one though in mind: cutting CO2 emissions, achievement made possible through the use of SCR (Selective Catalytic Reduction). Two other notable events occurred the same year with the release of the A 200 Turbo engine for the A-Klasse and the organic-looking Bionic concept. Market Shares of Mercedes on 07-2013 Betting big on the Indian automobile market, German luxury car maker Mercedes Benz is aiming for a double digit growth this year The company sold 7,138 units last year, Mercedes Benz India Director (Sales and Network development) Boris Fitz said. During the first quarter of this calendar year, the company sold 2,009 units, he said. However, he declined to reveal the number of units that Mercedes Benz has planned to sell in India. Stating that Mercedes Benz was â€Å"bullish† about the Indian market, he said the company was investing Rs 250 crore towards capacity expansion plans at its Pune plant. The company is doubling capacity from 10,000 units per year at present to 20,000 units per year. Mercedes Benz on Thursday introduced the diesel version on its compact hatchback B Class at Rs 22. 60 lakh ex-showroom Mumbai. Having already sold 500 units of B Class petrol since its launch nine months back, Mercedes Benz expects the diesel variant to outsell petrol variants in the coming months and lead the double digit growth in 2013, for the luxury carmaker. Eberhard Kern, MD & CEO, Mercedes Benz India told ET that despite the changing fuel price equation, the customers are still demanding diesel cars. â€Å"In our portfolio where diesel variant is available, it constitutes 80% of our total sales with petrol making up for 20% with the B Class too we are expecting the same. Daimler India Commercial Vehicles Pvt Ltd (DICV) announces that Mercedes Benz' bus division will be integrated with it. Previously the bus business was handled by Mercedes Benz India Private Ltd (MBIL) located out of Pune. Daimler sees the Indian market as one with increasing potential. However, the Luxury Coach segment is still very small in comparison to the total market. While MB India has sold more than 300 buses since 2008, Volvo Buses sold 700 units in 2012 alone (Volvo entered the Indian bus market in 2001). DICV will now handle the marketing, sales & after-sales of Mercedes-Benz Buses. Servicing will be taken up by select dealers of BharatBenz. Initially only 7 dealers, along with 2 existing dealers who have been servicing MB buses, will handle the servicing requirements for these buses. Bus manufacture will continue at MB India's Pune factory for some more time. Eventually, manufacturing will shift to DICV’s manufacturing plant at Oragadam, near Chennai. Growth Rate The ingenious luxury car manufacturer Mercedes-Benz reported witnessing a substantial rise in sales volume over the past quarter of 2012. The company was pleased to announce that there had been a massive 5. 3% growth in the sales. Mercedes with its growing reputation over the past few decades has made it one of the most powerful in the automobile industry. Taking into consideration the overall major drop in the Indian LCV automobile industry, this can be reported as huge success. Over the course of a few years, Mercedes has dazzled the imaginations of car lovers and enthusiasts by unveiling ingenious and exciting cars, ideas and concepts and rolled out some of most powerful four-wheeled machinery there is. Mercedes is a brand looked up to for its superiorly performing and luxurious cars. This may the cause of such a massive boost in the company’s sales. Mercedes Benz production plants all over the country have begun ramping up car production numbers for the expected profit from this substantial rise. Mercedes is planning to optimistically envisage double-digit growth numbers over the next six months. The German car manufacturer has enthusiastically developed several exciting designs to be rolled out this year and car enthusiasts are extremely interested in what they’re going to be. This enthusiasm may have been what sparked a healthy growth of over 5% in the past three months. The manufacturer believes it is capable of inducing much more growth in the company’s sales in some time and they would try to enhance the overall quality of products. They should be able to easily capture their expected double-digits growth rates. Mercedes seems to be very optimistic at this topic and expects to beat the industry by its uniqueness and ability to touch the very visions of enthusiasts around the world. The crowd expects even more from the company, and Mercedes has the type of people who won’t give up until they achieve the most of it. They’re building on towards a better future for the company as well as consumers of LCVs in the Indian market. CHAPTER 2 Founder profile Karl Friedrich Benz (help ·info) (November 25, 1844 – April 4, 1929) was a German engine designer and car engineer, generally regarded as the inventor of the petrol-powered automobile, and together with Bertha Benz pioneering founder of the automobile manufacturer Mercedes-Benz. Other German contemporaries, Gottlieb Daimler and Wilhelm Maybach working as partners, also worked on similar types of inventions, without knowledge of the work of the other, but Benz patented his work first, and, subsequently patented all the processes that made the internal combustion enginefeasible for use in an automobile. In 1879, his first engine patent was granted to him, and in 1886, Benz was granted a patent for his first automobile. In 1871, at the age of twenty-seven, Karl Benz joined August Ritter in launching the Iron Foundry and Mechanical Workshop in Mannheim, later renamed Factory for Machines for Sheet-metal Working. The enterprise's first year went very badly. Ritter turned out to be unreliable, and the business's tools were impounded. The difficulty was overcome when Benz's fiancee, Bertha Ringer, bought out Ritter's share in the company using her dowry. On July 20, 1872, Karl Benz and Bertha Ringer married. They had five children: Eugen (1873), Richard (1874), Clara (1877), Thilde (1882), and Ellen (1890). Despite the business misfortunes, Karl Benz led in the development of new engines in the early factory he and his wife owned. To get more revenues, in 1878 he began to work on new patents. First, he concentrated all his efforts on creating a reliable petrol two-stroke engine. Benz finished his two-stroke engine on December 31, 1878, New Year's Eve, and was granted a patent for it in 1879. Karl Benz showed his real genius, however, through his successive inventions registered while designing what would become the production standard for his two-stroke engine. Benz soon patented the speed regulation system, the ignition using sparks with battery, the spark plug, the carburetor, the clutch, the gear shift, and the water radiator. Product Profile The world's first motorised bus was built in Germany by Karl Benz in 1895, some years before Gottlieb Daimler also started to build and sell buses in Germany as well. By 1898 both Karl Benz and Gottlieb Daimler, then rivals, were exporting their buses to Wales and England. Soon Daimler products were sold in the British Empire in a partnership with the British company Milnes. Milnes-Daimler developed a double-decker in 1902 and provided a bus for the first motorised bus service in the United Kingdom the following year. Though the company met success in selling buses throughout the British Empire, the partnership between Daimler and Milnes had to be undone due to the First World War Due to economic hardships in the early 1900s, Daimler Motoren Gesellschaft and Benz & Cie. merged into one company in 1926, two years after both companies signed an agreement of mutual interest. Thus, Daimler-Benz AG (also known as Mercedes-Benz) was formed. In the next year, the company presented its first combined bus range. By that time emphasis was given to diesel engines (as opposed to petrol engines) for commercial vehicles. In 1951 Mercedes-Benz unveiled its first bus specifically designed for bus operation (and not derived from a lorry, as was the case of the other buses produced by the company until then) – the O6600 H. This 11-metre-long vehicle was equipped with a six-cylinder, transverse-mounted rear engine delivering 145 hp, a lower frame than its predecessors, and an electric gearshift system. In 1954 Mercedes-Benz unveiled its first semi-integral bus – the O321 H. The semi-integral design meant a reduction in weight, improvements in stability and body resistance. The O321 H also was the first to feature coil springs in the front-axle suspension. This 9. 2-metre-long vehicle (a 10. 9-metre version was later unveiled) also featured a rear-mounted engine. The first version was available with an output of 110 hp, and a later optional 126-hp version was made available. More than 30,000 units of the O321 H complete bus and its platform were sold around the world, a mark which places it as the best-selling bus of its time and, until today, one of the most successful models by Mercedes-Benz.

Enron: Smartest Guy in the Room Essay

Enron: The Smartest Guys in the Room is a documentary that was produced in 2005 as a reflection of the 2003, bestselling book with the same name. The documentary was written by Bethany Mclean and Peter Elkind. The film, produced by Alex Gibney is an explicit demonstration of how reputable corporations can tumble down because of illicit financial management. The film is about the Enron Company, which experienced enormous financial drains because of the scandals elicited by its top managerial team. Two years after the inception of the company, two traders engage in betting activities on the lucrative oil markets. This eventually leads to suspicious profits for the company, a phenomenon that raises eyebrows on the financial stand of the company. It is also discovered that Enron’s Chief Executive Officer is redirecting the company’s finances to different accounts. In demonstrating the poor financial management of Kenneth Lay, he encourages the traders to keep on making money for the company, yet he understood clearly that betting is a risky activity that could cause the company a lot of its assets. Lay finally realizes his mistakes when he sacks the traders because of wasting the company’s reserves through gambling. Their actions virtually damaged the image of Enron. When the facts about what happened to the company are exposed, Lay argues that he had no knowledge of the illicit financial endeavors. Jeffrey Skilling is brought in as the new CEO and immediately imposes his own principles about handling profits and projects. Skilling adopts a management practice that engages the company in projects without examining whether the projects have the capacity to be successful or not. This is indeed, a trait that has the capacity to taunt the image of the company in respect to the management of its assets and resources. In essence, this portrays Enron as a profit making company, even if it is not making any profit. The film also highlights on Skilling’s theory of grading employees and firing those who do not perform well, on an annual basis. In order to fulfill his endeavors for the company, Skilling appoints Clifford Baxter and Lou Pai, who heads the Enron Energy Services. Pai is an irresponsible executive who squanders money belonging to shareholders by visiting entertainment joints. Eventually, Pai resigns having cost Enron a loss of $1 billion. After selling his stock, he purchases a ranch in Colorado and becomes one of the largest landowners in the state. Despite the declining performance of Enron in the global scale, the company initiates a public relations campaign that displays itself as profitable and solid. With the short term successes that the company gets, it tries to captivate stock market analysts. Executives raise their stock prices and introduce the broadband technologies in order to distribute movies on demand, but the projects do not meet their expectations. After a series of financial irregularities, Jim Chanos and Bethany McLean expose the financial misappropriation and irregularities in stoke value. In response to the allegations, Skilling argues that McLean is unethical in his assertions. It is also found out that Andrew Fastow, one of Enron’s executives has been defrauding Enron of millions of dollars. Indeed, this is a documentary about the fall of a big corporation because of financial misappropriation (Gibney, A. and McLean, 2005). II. Analysis In reference to the documentary, it is worth pointing out that the management of the company did not articulate its financial obligations in the most feasible way. Financial management is an integral aspect in the success of a company. A company’s management should ensure that proper procedures are followed in capitalizing on its assets in order to avoid loses in the future (Bhat, 2008 p. 65). The management team’s lapse in controlling its finances led to the downfall of the company. The image of the company was put at risk because of the selfish actions of the leadership. The company’s corporate image was not able to maintain its stability, bearing in mind that the media exposed the inappropriate handling of the company’s assets. Embezzlement of the finances led to the loss of confidence in the public eye. This is a clear indication that financial obligations are pertinent in influencing the performance of a company; since, financial endowment is a primary component of expanding the image of a business enterprise (Shoffner, Shelly & Cooke, 2011 p. 36). It is also worth noting that the management’s actions affected the performance of the employees. In a company, it is extremely pertinent to invest in feasible measures that will enhance human capital. A well established human capital is instrumental in providing a viable platform for proper financial management (Jones & Spender, 2011 p. 94). When the management started a program of rating and firing employees, this created a non-cohesive environment that did not give employees a chance to thrive. In this respect, employees could not fulfill their obligations in enhancing the capacity of the company. In addition, the stakeholders to the company lost confidence in the management team of the company because it did not deliver as it was expected of them. This affected the input of the stakeholders as well as the internal and external cohesion of the company. It is also critical to assert that the company faced financial implications resulting from management’s failure to conduct itself in a competent and professional way. The company’s markets share did not achieve its expectations; since, it could not maintain stability in the stock market. The values of its shares could not compete vehemently with other companies because the company had lost its market value. Moreover, the company incurred losses in regard to its assets record through engaging in illicit financial planning. This led to the company failing to meet its financial objectives; since, it was not in a position to control its costs. The failure of a company to control its costs leads to unaccountability and the risk of loses due to poor accounting systems (Lee, 2006 p. 201). Additionally, the company experienced a lapse in its financial accounting systems in an effort to hide the misappropriation of finances. Compromising the financial accounting systems resulted to slow growth in the development of feasible accounting procedures (Hampton, 2009 p. 6). Another financial consequence to the company was the inability to control debts. The company could not keep track of its debts because its financial records had been compromised by the incompetence of the management team. The lack of proper financial returns led to inconsistency in the company’s performance; hence, leading to an internal financial crisis. In this respect, it is viable to underscore that the financial inconsistency in a company is a contributing factor in its financial meltdown (Brigham, Gapenski & Ehrhardt, 2011p. 12). III. Commentary The actions of the management team were indeed detrimental in the financial breakthrough of the company. The company’s resources were put in jeopardy because of mishandling the assets in an unethical manner in respect to business standards. The employees of the company did not have a cohesive environment to capitalize on their potential. They could not handle the products and services of the company in a professional way because the management team did not provide the platform for enhancing the cost of goods. I believe the biblical worldview as Christ would view it for the church is that whatever you do in the dark will be exposed. The Bible states that God hates the very presence of evil and it will have no place in his kingdom. So the catastrophic effect that this company had on society was abomination to what God would want for his people. God wants us to suffer with him and the end result is that we will reign with him, however lying, cheating and stealing will not have a place in heaven. As part of the management team, I would have handled things differently. Firstly, it is significant to point out that I would not allow incompetent people to control the company’s finances. Only competent people would be allowed to handle the company’s financial obligations and management of the company’s assets. Secondly, it is essential to assert that I would invest immensely in the employees of the company. I would ensure that human capital is enhanced in order to improve the image of the company. It is widely acknowledged that an empowered human resource is vital in the success of a company; hence, I would seek to empower the activities of the employees. Moreover, as part of the management team, I would ensure that transparency is enhanced in corporate governance. The duties and responsibilities of every stakeholder would be defined in an amicable way, in order to avoid the confusion that emerges. This would play a dominant role in enhancing the profitability of the company, as well as improving the image of the company in a large scale. Indeed, it is critical for any business enterprise to adopt a viable mechanism of enhancing its corporate governance (Baker, 2008 p. 78). In my opinion, I believe what happened was as a result of managerial incompetency by the management team. Lack of inconsistencies in financial breakthrough by the company led to the meltdown in the company’s assets and costs control. In this respect, I believe that accounting laws and regulators can help in avoiding this scenario again. The accounting laws will play a dominant role in keeping track of a company’s financial assets and prevent it from incurring unnecessary loses. In addition, it is critical to highlight that such law and regulators will help immensely, in holding the management accountable. The management team of a company will be able to maintain high profile accountability in maintaining the value of the company. The market share of a company is able to attain reputable standards because of using the accounting laws. Additionally, accounting laws and regulators act as instrumental platforms in identifying challenges in a company, and making the necessary decisions in overcoming the challenges. The management team of a company is able to use business intelligence in developing a way forward in solving the challenges that a company faces in respect to financial management. In order to avoid the detrimental effects of financial mismanagement, companies can adopt viable ways of managing their operations. Transparency is a critical way of enhancing the gains of a company because its operations are open to scrutiny. In addition, it is important for companies to employ competent personnel to handle its operations, ranging from cost control to managing its experiences. It is pertinent for companies to develop policy frameworks that implement feasible financial obligations.

Main Challenge in International Staffing

ADRIEN KARCHER EIM4 UB1 International Human Resources Management 2nd Assignment  : Describe the main challenges in International Staffing. Ever since the globalization began, companies became more aware of the competitive environments they operate in. It is obvious that a competitive advantage such as technology, resources and quality can be imitated. It’s the peoples that a company employs that makes the difference. Making the right selection and most efficient use of it will surely provide the advantage needed.In this assignment, we will define in a first part the four main approaches to staffing within International Human Resource Management and what are the advantages and disadvantages of each approach to international management. In a second part we will speak about recruitment and selection of the staff in foreign subsidiaries. Heenan and Perlmutter identified approaches to manage foreign subsidiaries which are, ethnocentric, polycentric, geocentric and regiocentric.In this part we will examine the connection between this approaches and staffing practices as well as the advantages and disadvantages of this differents approaches. The first approach is called ethnocentric. Employees from headquarters base it on the occupation of a key position. It is assumed that expatriates can manage subsidiaries more efficiently. This is because expatriates are more informed about the company's goals and objectives, strategies compared to the local managers. This method is used when expanding globally and there is need of good communication, cooperation and control of activities.Consequently, PCNs are assigned to top management positions who implement strategic decisions coming from headquarters. Hence, the selection of expatriates will depend on the technical knowledge required or the type of international expansion a company is planning. The ethnocentric approach provides the parent company with more control, which is vital when expanding to a new country. The refore, expatriates are seen as more able than host country nationals. The polycentric approach will opt for HCNs manager in their subsidiary even if PCNs occupy key positions at orporate headquarters. It’s a multinational approach, there is continuity in management of foreign subsidiaries, language barriers can be eliminated and for MNEs still less expensive to hire locals than expatriates. All this elements represent advantages of this approach. But, there are disadvantages for firms and local employees, which have restricted career opportunity outside the subsidiary. With the geocentric approach, MNEs try to find the best people for key positions regardless of nationality. The mix of PCNs, TCNs and HCNs maintains the international team.That’s why HR department play an important role in the international staffing however taking into account staff availability, time and cost constraints, host government requirements and ineffective HRM policies. It’s a Global a pproach in which one each part makes a unique contribution with its unique competence. So now, let see the regiocentric approach which is similar than the geocentric approach but much more nationally focused, the staff may move outside their countries but within the particular geographic region.It’s on the way between ethnocentric or polycentric approach to a geocentric approach. Challenges for MNEs are to work with all of these different characteristics and find the most appropriate approach according to their policy. They have to take in consideration, the context specificities, the company specificities and the local unit specificities as well as IHRM practices. All these factors affect staffing choices, which represent a real challenge in international staffing.Recruitment and selection of staff for international assignments is a considerable challenge because it’s an important and crucial factor of the international expansion for MNEs. They need to find the right people to make position and particularly key managers. In fact, a selection error can lead to an expatriate contract failure and correspond to a return to home before the period of assignment is completed, then it could have long-term negative consequences in term of subsidiary performance.Several factors have to be taken into account in the failure of international assignment: the inability for expatriates to adjust to the foreign culture, the family concerns, career concerns, security concerns, the length of assignment etc. They represent a critical IHRM issues in international staffing, so the challenge is to find the right people which are consistent with all the factors of expatriate selection.Selection criteria are family requirements, technical ability, the cultural requirements, the language and the MNEs requirements. Mendenhall and Ouddou have proposed a four-dimensional approach that attempts to link specific behavioural tendencies to overseas performance. We see these day s appear another constraint for companies : the dual-career couples who are now considered as a barrier to staff mobility and it’s why the MNEs techniques are now utilized to surmount this constraint.To conclude, and according all the facts defined in this assignment, Recruitment and selection of staff still criticals because the future employees have to gather the maximum of criteria which correspond to the MNEs standards and expectations particularly in international assignments. The International staffing is a complex process in which many criteria have to be taken into consideration in order to achieve the best international assignments in the way to insure a sustaining international business operations for MNEs.

Nursing Theory Analysis Assignment Example | Topics and Well Written Essays - 2000 words - 1

Nursing Theory Analysis - Assignment Example Before coming up with the Jane Watson theory of human caring, Dr. Jane Watson, who is also the founder of the Watson Caring Institute, received her bachelors, masters and Doctor of Philosophy qualifications. Apart from her professional and academic expertise, Dr. Jane Watson’s personal experience played a huge role in the development of the theory, which mainly focuses on human caring. Going through Dr. Jane Watson’s teachings, publications and writings, one will not fail to recognize the fact that human caring is diverse than had been perceived by other scholars as it incorporates the emotions of the healthcare provider as well as the inner subjective feelings. That explains why in most of her works, Dr. Watson strives to provide both voice and spiritual credibility to the practice of human caring. Dr. Watson asserts that her personal experience made her realize the extent to which the practice of human caring had been neglected in the models and practices of medicinal science. This follows a traumatic injury that she had, an uncanny golfing accident she went through with her grandson as well as the sudden demise of her devoted husband who committed suicide. The streak of unfortunate events made Dr. Jane Watson aware of the fact that both human caring and healing are the main principles of human nursing as a practice. Moreover, human caring should not only be left to nurses, but all healthcare professionals, health educators, health service workers as well as all the other entities involved in the caring journey should join hands in ascertaining that life is sustained. Apart from Dr. Jane Watson, who established the theory, different scholars have written various works on the hypothesis. Moreover, the scholars have reaffirmed that the practice of human caring should be founded on a professional, academic and personal

Affirmative action at the work place Research Paper

Affirmative action at the work place - Research Paper Example It is pertinent to note that there is several affirmative actions’s named reverse discrimination by the critics. Here, the critics argue that it enforces barriers between individuals instead of its down breakage. A general scenario of affirmative action in the United State is outlined as follows. With affirmative action, several issues are designed for address. First, it is pertinent to address the history of discrimination (Roach, 1997, p.52). Importantly, according to the law it is evident that many people have been excluded historically from schools, social endeavors, and jobs just to mention but a few and so in many cases there is creation of advantages from such historic pattern of exclusion. Policies are set to address the issue of current discrimination in a fight to create a more diverse and fully integrated society. In America, it is clear that there is a continued dialogue on gender, race, and inequity therefore the affirmative action needs a distinctive place in the talks. Of late, the experts affirm that the debate on affirmative action has its focus on the government-sponsored actions of affirmatives as well as university admission. It follows that due to submergence in the government-sponsored actions of affirmatives, the cooperate affirmatives actions are left unattended. The above is significant in the manners that it leaves uncertainty on the future of the affirmative action. According to research, it is argued that republican revolution of the year 1994 did weaken the affirmative action advocacy in political power. Sadly, the above decreased Capital Hill political support. Further, it is discussed that several court cases that are pending can initiate the of the voters to eliminate many forms of action of affirmative potentially. Unfortunately government sponsored affirmative actions are literally distinct from the corporate programs in a manner that it is hard to substantially multiply survival chances. It is unfortunate to realize tha t in United State the key corporate on affirmative action and attempts made voluntarily in the fight to improve diversity at the work place. Experts puts it that, affirmative actions are generally unaffected by the issue of constitutional that are preferred to us thorny. Some of the thorny constitutional issues are those raised by Michigan University and lawsuits, which plague programs like university admission. It is evident that race is one of the affirmative actions in the United States; here it is true by one of the confessions, G. Jennifer who was allegedly denied admission in one of the universities based on race despite of her qualifications. Considering the issue by Christopher M, with the continual dialogue on the pertinence of affirmative actions in terms of gender race and inequality, it is wise for the affirmative action to have a distinct place (In Defence of Affirmative Action, 1996, p. 25). Here, he also state that it is unpleasant to realize that government-sponsored affirmative actions are concentrated than the corporate affirmative. Nevertheless, it is important to realize that a number of benefits that a company can report from programs on affirmative actions are as follows; a greater innovation and opening the possibilities of perspectives in different manner as well as creativity comes in from more diverse team. Another notable benefit is the forging of customer relations that are comfortable. Therefore, it is pertinent to have a more diverse workforce so that the above goal can be achieved. Serious implementation of affirmative

Human resources organization Assignment Example | Topics and Well Written Essays - 250 words

Human resources organization - Assignment Example I will set the goal of group deadlines for returning feedback and specific responsibilities and deadlines for each training lesson amongst the group members. They will be assessed on their current standing especially Susan and Hari for their laid-back attitude and late submission of work and how the other members cover up for them. This obstacle will be provided with options like formulating a time table or increasing work hours to avoid further delays or delegating and splitting the work into smaller easily attainable tasks. The best option will be implemented. Then the outcome/progress must be reviewed against objectives and analysis of the trainees; if unsuccessful then the strategy must be revised and trainers will be threatened of job security. If it works then it is an ongoing process. Setting and monitoring management strategies is never a static operation.

Koreas High Context Culture Assignment Example | Topics and Well Written Essays - 1250 words

Koreas High Context Culture - Assignment Example The paper tells about countries that present with high context cultures particularly about Korea, wherein individuals connote extensive networks among groups, peers and family members. Studies concerning intercultural communication indicated that mostly Eastern countries, particularly Asian cultures, pose heavy direction in accordance with high-context data, an example would be the languages used in Asian countries that profuse subtlety. Apart from the language, another notable factor is the non-verbal communication prevalent among Asian cultures that are deemed indirect as opposed to those in Western cultures. Another factor that contributes to the high context nature of Korea is their predilection towards Confucianism, which promotes egalitarianism. In this regard, Koreans are more inclined to preserve harmony than defend a stance, in order to preserve the credibility of the other party. A study made by Korea UNESCO presented that in spite of the global exposure of Koreans, they ar e still dominated with a high context culture. Korean traditions are continuously upheld and the Confucian principles of harmony, preserving other's credibility and not sticking out are still widely employed within Korean Society. With that in mind, there are several critical considerations to take before an individual from a low-context culture goes to Korea and communicates with local Koreans. This is very important because culture differences are at large and communication misinterpreted due to the variance in practice. (Kramsch 2001; Korea UNESCO 2002). Korea’s High Context Culture High context cultures can be challenging to penetrate, especially external parties due to the fact that no cultural context information is internally available and it is not possible to immediately build close connections among individuals as their bonds are formed over a long period Korea UNESCO (2002) High Context implies that the bulk of information can either be present in physical context or the message, while some are present in the explicit part of the message that has been conveyed (Mead 1998). In essence, it is of utmost importance to identify the cultural origin of the person you are speaking with to avoid misunderstanding (Kent 2002). One important factor in communicating and understanding Koreans is to place value on "how" the message was delivered. The manner in which the message has been stated does not solely attribute to the voice tone and the non-verbal messages, but also on the spatial and

TQM (total quality management) Essay Example | Topics and Well Written Essays - 2250 words

TQM (total quality management) - Essay Example These concerns, alongside various others, gave rise to the breed of management called Total Quality Management.      Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Total Quality Management (TQM) is a management system that aims to achieve the ultimate customer experience, whether meeting the expectation of the customers or going beyond what they anticipated (Dale, 1999). Dale (1999) expresses that in order achieve the goal of TQM, strong cooperation and involvement from the entirety of the company is needed. Thus, TQM requires active participation and synergy of all employees and focusing that synergy towards meeting the customers expectations and improving overall business processes. To attain improvement in the company, various researchers said that the key to improvement is constant upgrading and development (Goetsch & Davis, 1994). Management should not stop upgrading because all processes can still be improve and be better. Once they stop improving, they could be left behind by their competitors. Based on this discussion, TQM seems to be a management concept only. However, TQM also has a quantitative and more defin ed facet (Priporas and Psychogios, 2007). Priporas and Psychogios (2007) identified some of the quantitative aspect or measure of TQM, which includes Statistical Process Control, ISO 9000 standards, Pareto Analysis, Histograms, among others. On the other hand, the qualitative ideas that constitute TQM are overall workers’ participation; uninterrupted upgrading; incessant coaching; cooperative relation among employees; self-motivated employees; full dedication and support from high-tiered officers; independent and autonomous administration approach; consumer happiness; and business surrounding alterations (Priporas and Psychogios, 2007).   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  The main purpose of TQM is already well-known to everyone—customer satisfaction. However, to achieve this employee satisfaction should be fulfilled. Once the employee is satisfied and happy, it will be his innate response and goal to

The leadership skill I most want to develop Essay

The leadership skill I most want to develop - Essay Example This was followed by exploration of available list of leadership skills that singled out most suitable ones for my leadership style. I conducted an online evaluation of my leadership style through responding to traits based questions and the process matched my traits with transformational leadership. My further exploration of the fundamental characteristics of the leadership style such as empowering and motivating people together with promoting collectiveness developed my insight into my leadership skills and other necessary skills to the leadership style. Based on this process, I identified translation of business strategies into clear objectives and tactics, and training other people in developing their skills as my strongest leadership skills. My weakest leadership skills are however, the ability to prepare people to understand changes and transitions, and managing multiple demands and competing priorities. I know that these are my strongest and weakest leadership skills because o f my self-evaluation together with background information on leadership. The leadership skill that I most wish to develop is the ability to prepare people to understanding changes and transitions. My specific objective in developing this skill is to be able to empower people to the capacity in which they can understand a change its consequences, and strategies to dealing with the change. I will measure progress of the development through qualitative evaluation of my subjects understanding of change at a particular time. This will involve presenting a change situation to the subjects, sampling them, and using interviews to evaluate their understanding of the change. I will then compare their responses with the actual scope of the subject change. I will need secondary resources such as published books and journals with information on strategies to developing human potentials. I will also require human resource in management

Supernaturalist View Found in Civilizations Essay

Supernaturalist View Found in Civilizations - Essay Example Believers of supernaturalism argue that any event that goes beyond scientific understanding does actually exist just as the same way as natural occurrences do. This view can be supported by the fact that natural phenomena such as rainbows, lightning and floods were interpreted in ancient times as having some kind of unearthly causes behind them. Another school of thought believes that each so-called supernatural phenomenon is explicable through the knowledge of science. Now the root of controversy surrounding these two conflicting beliefs lies in the fact that there is no universally accepted definition of 'natural'. We may say that any event that takes place in accordance with natural and scientific laws is natural. In other words, any natural event can be seen or perceived, and can be affirmed by a set of proved principles. Having said that, we cannot really set a parameter by which we can verify, for instance, the existence of God. Hence, the controversy remains when it comes to d raw a borderline between the supernatural and the natural. The Code of Hamurabi, laid down in the eighteenth century B. C., is a source of much historical as well as divine interpretation especially the way it is addressed to the Babylonian Gods. Elements of supernaturalism can also be traced in the Judeo-Christian tradition where the Ten Commandments enlist moral and religious duties to be followed to show obedience to the Almighty. This revered set of imperatives has been in use in many civilizations including the Roman and in the Middle-East. Egypt, the country of myths and mysteries, has innumerable supernatural elements to be explored. The Pyramid of Khufu, also known as the Great Pyramid, is a source of wonder for historians, scientists and archeologists alike. Many folklores and legends are associated with this gigantic and awe-inspiring construction. The preternaturalism is vividly depicted in the treatise of Herodotus: "[he] brought the country into all sorts of misery. He closed all the temple, then, not content with excluding his subjects from the practice of their religion, compelled them without exception to labor as slaves for his own advantage". (Tour Egypt, 1996) Evidences of supernaturalism are widespread in prehistoric cave paintings that have been found in many parts of Europe. Based on the timeline, these paintings are classified to three main epochs - Palaeolithic, Neolithic and Mesolithic. The literary significance of such art forms is of immense worth, considering how they have been preserving the essence of proto-European culture. The marvels of prehistoric sculpture are to be explored in the North European megaliths. Carved with symbolisms that substantiate physical and ideological beliefs surrounding the areas dwelt by the first Northern farmers, researches on the construction of megaliths have thrown light on the contemporary cultural and ritualistic landscape of the northern parts of Europe. The 'Emergence Myth' and the 'Creation Myth' carried by the Anasazi Symbolism are two of the most prominent religious structures from the New Mexico region. The 'Emergence Myth' tells about the sacred Spirits or the Kachinas, whereas the 'Creation Myth' is about the origin of the earth. (Granite School District Teacher Quality Center, 2004) The power of magic, divination and demonology was literally

Unit 7 paper biochem Essay Example | Topics and Well Written Essays - 750 words

Unit 7 paper biochem - Essay Example As the extent and the strength of the exercises increases, the aerobic system (mitochondrial or oxidative system) takes over and provides the energy needed. Therefore, the first few minutes of running involve anaerobic activity, but as the intensity of the exercise increases during running and weight lifting, aerobic activity takes over to oxidise the previously produced pyruvate into more ATP to sustain the body during the exercise. These energy systems are interdependent of each other and work concurrently in the body. Based on the meal plan above, rice is the key carbohydrate food that is rich in starch. Skim milk, in addition, contains carbohydrates in the form of lactose (milk sugar). Beans also contain the polysaccharide starch. Protein foods include chicken, beans, and skim milk (whey proteins). Olive oil, skim milk, and ranch dressing contain fats. Olive oil, ranch salad, and chicken contain unsaturated fats, whereas skim milk contains exceptionally small quantities of saturated fats since skim milk usually has a low quantity of fat compared to whole milk. The salad contains vitamins, minerals, and roughage (fiber), which do not undergo digestion in the alimentary canal. When food is ingested in the mouth, the grinding action of the teeth (mechanical digestion) breaks it down into small pieces as saliva lubricates it. Chemical digestion of carbohydrates begins in the mouth where salivary amylase (ptyalin) digests starch into maltose. In the stomach, waves of muscular contractions called peristalsis (mechanical digestion) further squeeze the food, aiding in mechanical digestion. The gastric cells in the stomach walls secrete acidic juices including hydrochloric acid that create a favourable environment for the enzyme pepsin, which digests proteins into peptides. The partially digested food passes to the duodenum where most of the enzymatic digestion takes place. The pancreas

Energy Conservation Essay Example for Free

Energy Conservation Essay Abstract: The gap between supply and demand of energy is continuously increasing despite huge outlay for energy sector since independence. Further the brining of fossil fuel is resulting in greenhouse gases which are detrimental to the environment. The gap between supply and demand of energy can be bridged with the help of energy conservation which may be considered as a new source of energy which is environment friendly. The energy conservation is cost effective with a short payback period and modest investment. There is a good scope of energy conservation in various sectors, viz industry agriculture, transport and domestic, This paper will give overview of energy conservation in Indian scenario. Introduction India today has a vast population of more than 1.20 billions out of which nearly 75% are living in rural areas. Energy and development are inter-related. In order to have sustainable growth rate. It is imperative to have sufficient energy for systematic development in various sectors. Energy sector has received top priority in all Five year pains so far. During seventh Five Year plans 30% of the plan outlay was allotted to this sector. The installed capacity of electric power has increased from 1362 MW. At the time of independence to a staggering 70,000 MW. Despite such achievements, the gap between demand and supply of electrical energy is increasing every year as power sector is highly capital-intensive. The deficit in installed capacity was nearly 10,000 MW, by the and of eleventh five year plan. It is estimated that in 2011 alone India has lost above 10.0 billion US$ in manufacturing productivity because for power is projected to grow by 7 to 10% per year for the next 10 years. The working group on power had recommended capacity addition program of 46,645 MWduring the twelveth plan period along with the associated transmission and distribution works at a cost of Rs. 12, 26,000 corer. With this capacity addition there would have been a peak power shortage of 15.3 percent by the end of the 12th plans. The proven reserves of fossil fuel in India are not very large. A major share of scarce foreign currency is earmarked for importing petroleum products. The bill of which is continuously increasing coal reserve likely to be exhausted by the middle or centaury. Thus a bleak scenario awaits India in future unless absolutely new strategies are adopted. In spite of huge plan outlay of energy sector in last 60 years, most of the rural population has not yet been able to reach the threshold of enough energy to meet their basic human needs. There appears to be something basically wrong in planning. The planners have adopted the western model of centralized energy system without necessary modification to suit Indian condition. In future the energy conservation would assume more significance globally on the basis of the effect of burning fossil fuel on environment, particularly the global warming rather than the depletion of fossil fuel reserves and other consideration. Sector wise energy consumption:Sector Industry Transport Residential Agriculture Others %power consumption 49% 22% 10% 5% 14% THE SCOPE AND POTENTIAL The developing countries like India are obliged to maintain a certain growth rate for which energy is a basic ingredient. Failure to meet the energy demand for the basic needs of the economy will cause inflation unemployment and socio economic disorder. The major energy projects are capital-intensive and result in the degradation of the environment and ecology. Energy efficiency and conservation in the past have been neglected on the assumption of continuous availability of fossil fuel. Energy conservation is the strategy of adjusting and optimizing energy using systems and procedures to reduce energy requirements per unit of output without affecting socio-economic development. Energy conservation means going with what is available, while in developed countries 1% increase in G.N.P. needs barely 0.6% increase in energy consumption in whereas in India the corresponding increase in energy consumption is nearly 1.5% 1. Transmission and Distribution Losses India has a complex transmissio n and distribution network. The Transmission and distribution (T D) losses in Indian Power Systems are rather high. According to Central Electricity Authority (CEA) statistics, on all India basis the losses are around 20 percent. According to the estimates of a few other independent agencies, the real TD losses may be even higher than this figure power systems with those of more developed In order to estimate the cost effectiveness of the various modern techniques available for reduction of TD losses in the context of Indian environment, it is essential to have an idea regarding the energy losses taking place at the various stages of transmission and distribution of power as well as a further break—up of the line losses and transformation losses. The TD losses can be divided in to two parts, namely. Extra-high voltage (EHV) /High Voltage (HV) transmission and low voltage distribution. Out of total 15% TD losses targeted to be achieved. 2. Long Term Conservation Objectives of Energy 4. To take steps to prevent inefficient use of energy in future projects, buildings, products, processes etc. in every sector of energy use. 3. Areas of Energy Conservation The main areas where conservation was possible are as follows:1. Improvement in power factor would result in reduction in actual maximum demand on the system. 2. Improvement in plant load factor results in optimum utilization of plant capacity and increasing production. 3.80% of the industrial electricity consumption is accounted for by induction motors which are mostly used for pumping and compressor application, etc. 4. Various furnaces, electrolysis baths and vessels operating at higher temperature are found to have inadequate insulation. Higher surface temperature means loss of electrical form of energy by radiation. This can easily be prevented by applying proper insulation to limit the surface temperature rise above ambient up to 200C. New Concerpts in Energy Conservation Energy Conservation offers a practical means of achieving development goals. It enhances the international competitiveness of industry in world markets by reducing the cost of production. It optimizes the use of capital resources by diverting lesser amounts in conservation investments as against huge capital investment in power sector. It helps environment in the short run by reducing pollution and in the long run by reducing the scope of global climatic changes. Energy conservation is a decentralized issue and largely depends on the individual unlike decisions of energy supply which are highly centralized. The housewife, the car driver, the boiler operator in industry and every other individual who consumes energy in some form or other is requiring participating in energy saving measures. In order to have energy efficiency strategies really effective some conceptual changes are imperative. †¢ Conservation must be recognized as a new source of Energy- â€Å"a benign and clean source† 1. To bring attitudinal changes in all energy users so that they strive for maximum energy efficiency in all products, projects, buildings, processes, domestic and commercial use, agricultural and transport use in consistent with economic considerations. 2. Take necessary steps to discipline those who fail to fall in line with the above changes. 3. To adopt policies which make energy conservation easy and attractive for being adopted by all energy users. End use management of energy demand should not be met by increased supply only. Energy efficiency is the most cost effective way to bridge the gap between supply and demand. In the past the energy planning was based on continuous supply of fossil fuel. What matters to a consumer of energy is not energy per so but the services it provides cooking. Lighting, motive power etc. thus the true indicator of development is not the magnitude of per capita energy consumption, but the level of energy services provided. A stage has reached when developing countries need not to look at energy consumption per capita as a sign of development and growth. The economics of major power projects ignore the time value of money. The gestation period of the project is ignored. Thus the projects which yield physical benefits after many years are treated at par with projects that yield immediate benefits. Thus no attention is paid to when the returns are obtained. subsidies, liberalization of licenses and loans at concessional terms. It is in this context that Industrial Development Bank of India (IDBI) has introduced to schemes, with a sharp focus on energy conservation objectives in industries. These schemes are (a) Energy Audit Subsidy Scheme, and (b) Equipment Finance for Energy Conservation Scheme. These Schemes which were initially in operation for a period of 2 years have been extended up to the end of the twelvth Five Year Plan. . a) Energy Audit Subsidy Schemes ENERGY AUDIT AND FINANCIAL INCENTIVES 1) Energy Audit The Energy Audit is an accounting tool, an analytical device to detect energy waste.. One series of entries consists of amounts of energy which were consumed during the month in the form of electricity, gas, fuel, oil, steam: and the second series lists how the energy was used: how much for lighting, air conditioning, heating, production processes and other activities. Energy Audit, therefore, is a crucial tool for energy management because it indicates the scope for conservation by identifying the waste areas. Nearly 20-30 percent savings on energy can, at a conservative estimate, be easily achieved by any industry, if energy conservation measured identified by energy surveys are adopted. Moreover, at least 10 percent savings are possible simply by following good housekeeping practices which require no investment whatsoever. Even when a conservation measure demands investment, it is generally always paid back in less than two years. 2) Financial Incentives Assistance would be available under this scheme for preliminary as well as for detailed energy audit. The charges of the approved consultancy agency for carrying out the energy audit would be partly subsidized by IDBI which will bear 50% of the cost, the balance to be borne by the applicant company. For preliminary audit, the amount of subsidy available under this scheme per undertaking/company would be limited to Rs. 10,000 or 0.01 percent of gross fixed assets of the undertaking/company whichever is less. The limit of assistance for detailed energy audit would be Rs. 1.00 lakh or 0.05% of the gross fixed assets of the undertaking/company whichever is lower. Assets value shall be exclusive of revaluation reserves. b) Equipment Finance For Energy Scheme conservation For the purposes of EFEC scheme, equipment shall include plant machinery, miscellaneous fixed assets erection and installation charges, technical know-how fees for designs and drawings. Assistance under the scheme would be available only for installation of equipment for effecting energy conservation in the existing plants/processes and not for expansion or diversification of production capacities, even though, the same may also result in energy conservation. Assistance under the scheme would be in the form of term loan. APPROACHESAND CHALLENGES Approaches The various approaches of energy conservation may be divided into (i) short-term measures (ii) mediumterm measures and (iii) long-term measures. All the short-term as well as medium term measures for the energy intensive sectors may be taken up immediately so that their benefits can be realized during 12th plan itself. Further, the programmes for long- Recognizing the importance of energy conservation projects by the Government and the financial institutions in terms of concessions/reliefs income-tax, excise duties, customs duties, sales tax, term measures should also be initiated simultaneously during the 12th plan hey include: 1) Software components These include: (a) Promotion, motivation education, dissemination of information, data bank and creation of national Energy Conservation centre (b) Promotion of RD in technologies, equipment etc. (c) Promotion of studies on policies, economics of energy use, demand management, various types of survey etc. (d) Developments of standards. (e) Rectification programmes. They include:2) Hardware Components The following are included under this category. A. Energy efficient projects in all the sectors including co-generation. B. Demonstration projects-Models of efficient appliances, demonstration centres etc. Energy may not be very cooperative as there is an information gap in these areas. The creation of a database and its scientific analysis is the backbone of any future planning and decision making. There are certain challenges in effective implementation of energy efficiency programmes. Some of them are given below: †¢ †¢ †¢ †¢ Technological Economics Motivation and Awareness Institutional and Legislation . STRATEGIES AND ACHIEVEMENTS In sixth Five Year Plan (1980-84) for the first time the significance of energy efficiency and conservation was realized. In the Seventh Five Year Plant document too the Planning Commission identified energy conservation and efficiency as thrust areas based on the recommendations of the inter Ministerial working Group (IMWG) (1983) on energy conservation. The Eleventh Year Plan document has also emphasized the implementation of rectification programmes for agricultural pump sets for achieving energy efficiency in the agricultural sector. Even though the Eleventh Five Year Plan realized the opportunity, potential and need for energy conservation it did not incorporate any concrete programmes, policies and budgetary provision in this regard. The working Group on Energy conservation has recommended a comprehensive scheme for twelvth Five Year Plan period. This includes awareness programmes, training, development, research, energy audit, energy efficiency measures in various sectors, providing subsidies to implementing agencies and covering other aspects as well. The status of energy conservation in various sectors is as follows: 1. Agricultural Sector C. Technology import/up-gradation-Acquisition of state-of-art technology through foreign collaborations. D. Strengthening of Transmission and Distribution systems of various State Electricity Boards to reduce the system losses to 15% range. E. Development of infrastructure such as improvement of transport systems, communication systems, electrification of railways etc. 2. Stages of Energy Efficiency The different types of activities of energy efficiency could be put into four distinct categories. The first two types given below concern existing plants and equipment and latter two to new ones:†¢ †¢ †¢ †¢ Soft or managerial Solutions Modest Investment New Technology of Production Technological Break through Challenges One important factor in achieving energy efficiency and conservation target is the response of the and-user. As often, the behavior of many end-users of The farmers in the country have installed about 18 million pumps operated by diesel/electricity. These roughly consume 30 billion kWh of electricity and 6 billion litres of diesel. It is necessary to provide the much needed irrigation to the crops but, unfortunately, the pumping systems adopted have remained inefficient and the consumption of electricity and diesel has been 50 to 100 percent more than what it should be. Regarding petroleum products, India produces hardly 60% of the required crude oil indigenously, importing more than Rs. 15,000 crores worth of crude oil and petroleum products to meet the current demand. The excessively wasteful consumption of energy in the agricultural sector has to stop both for conserving energy per se and reducing the irrigation cost for the farmers. There has been an increase in the absolute consumption of energy in agricultural sector. The electricity consumption has grown at the rate of 14.4% per annum whereas the oil consumption has increased at the rate of 10.1% per annum. 2. Transport Sector of light bulb known as E-lamp (electronic light) has been introduced recently in USA. This lamp is supposed to consume 75 percent less electricity than conventional incandescent lamp. Its lifetime is between 15,000 to 20,000 hours. The E-lamp has made its bid to become the â€Å"Compact Disc† of residential lighting, but events during the next few years may determine whether it will become a household word. 4) Industrial Sector The sector uses, nearly thirty two percent of the commercial energy. This sector is second only to industrial sector. Further, this sector is heavily dependent on petroleum products. Import of petroleum is nearly 35 percent of total expenditure on imports in India. Its consumption is increasing at an annual rate of 6 to 8 percent. Automobiles thus offer one of the most promising areas for major savings. There are tow modes of transport which are most common, viz. rail and road. Unlike the railway, the road sector is not wholly in the organized sector and hence its database is rather weak. The road transport has increased very fast during last decade or so. One approach to achieve energy conservation is to shift a part of the traffic from road to rail. It is imperative to develop research and development activities in the direction of improving the fuel efficiency of vehicles and developing alternate energy sources. According to the report of Advisory Board on Energy the conservation potential in transport sector is nearly 20% which can be achieved by an investment of Rs. 890 crores. Conservation measures would yield an annual savings of Rs. 765 crores and avoid an investment of Rs. 432 crores for creating additional energy capacity. A series of measures including operation control, upgrading driver’s skills training programmes to create fuel conservation consciousness and proper use of clutches, reduction of body weight, speed restrictions and improved over hauling practices has been recommended.

Examining the history and background of intangible assets

Examining the history and background of intangible assets In the majority of 20th century, tangible assets is considered to be the main source of the commercial value, which include fixed asset such as buildings, land, manufacturing as well as financial assets such as bonds and their valuation. They were shown in the financial statement after valuation which is based on their cost and/or outstanding value. However, it is not mean that people do not recognize or pay any attention on intangible assets, though the specific value of intangible assets is not clear and recorded in the balance sheet. Even now, the priority companys evaluation on profitability and performance is still focus on those assets excluding intangible assets, for example, predicting return on investment, evaluating the value of fixed assets or equity. Because there are no recording value of intangible assets in the accounting book, they are not included in price relative measurements as well, such as price and book value ratio. But in the last 25 years of this century the awareness of creating value for the shareholders changed dramatically, people start to keep eyes on intangible assets and their valuation. Though people do not pay so much attention on the benefit from intangible assets, it is not mean that management of the company are not aware of the importance of such assets. It seems that most of successful businesses are due to successful corporate management of intangible assets such as brands, patents, technology and employees, but still lack of explicit valuation on such assets. Their values are summarized in the whole value of the assets, no any recording Independently. The owners of some major brands, such as Coca-Cola, Procter Gamble and Nestle did do some actives to protect their intangible assets and recognized the importance of their brand, but there were still not intentions on intangibles on the stock market to substitute for investors concerned about their assessment of the value develop from tangible assets. We will discuss some important cases below with evidences to support what I have said above. So this report will trace the history and background of intangible assets(Brands mainly) to look for the answer why intangible assets(Brands mainly) should be recorded Independently in financial report and analysis the benefits by using cases in practice. We will also discuss the manners of brands valuation and the benefits. Those two main contents will be discussed Independently and both are focus on theory and practice. The date and information are researched form internet and some related books. A table will be quoted with proper referencing(see reference). Introduction Structure of the report The main body of the report is consist of six chapters. In chapter one, introduction In chapter two, the theory on reporting brands In chapter three, Benefit from brands in practice In chapter four, The social value of the brand In chapter five, The theory on brand valuation manners In chapter six, the function of brand valuation in practice In chapter seven, conclusion In chapter one, it is about the theory of intangible assets under IAS 38 and FASB. Including, the definition of intangible assets by IAS 38, manner of recognition and measurement of intangibles, useful life of intangibles. It will illustrate gradually which types of intangibles should be recognized on the financial statement and how to valuate from the basic knowledge point. A brief introduction to the theory of three main valuation approaches (income approach, market approach and cost approach) will be involved. In chapter two, I will using three UK companies (Coca-Cola, Amazon and Sony Ericsson ) in different sectors as case studies to show the application of theory to practice and also get feedback by compare those company approach of intangible assets. Aiming to find out the what is the effect recording intangibles in the financial statements has on the interpretation of corporate financial performance. Get the manner how to maintain the asset value of companies brands. In chapter three, I will try to indicate several recommendations base on above expound. Assuming suggest the historical cost of intangible assets are disclosed on the corporate balance sheets while the fair value of intangible assets to be disclosed in financial statements to enable enterprises to reflect a more complete and realistic accounting information. Background to the topic Acquired the brand in the late 20th century, waves of 80 caused a great deal of goodwill accounting standards, the majority can not be a reasonable approach to handling the economy. Transactions led to the goodwill accounting in the debate on the balance sheet, including Nestle Rowntree, United Biscuits acquisition and divestitures Kebler purchase, the Metropolitan made Pillsbury and Danones acquisition of Nabisco European business. The so-called goodwill accounting practice does not involve the growing importance of intangible assets, with the company to make acquisitions they think the punishment is valueenhancing results. They either face the profit and loss account (income statement), or they had to write off the amount of reserves and the end of the acquisition of the asset base than ever before in many cases a large number of lower amortization expense. In countries such as Britain, France, Australia and New Zealand is still possible to recognize the acquisition of identifiable intangible brand value, and proposed the acquisition of these companies balance sheet. This helps solve the problem in good faith. Then, as the brand recognition of intangible assets used by a gray area of accounting, at least in the United Kingdom and France, so companies do not encourage including a balance sheet on the brand, but not unable to do so. In the mid-80s, Reckitt Colman, the British firm, to its Airwick brand, which recently acquired the balance sheet value; major metropolitan area and Smirnov did not brand it as part of the acquisition, with Heublein. At the same time, some newspaper groups to its acquisition of the rise of their balance sheet value. To the late 80s, on the balance sheet was the understanding of brand value within the company led to valuable financial assets, internally generated brands, similar recognition. 1988, Rank Hovis McDougall (RHM), the UKs leading food group, to play their brand of power heavily in the successful defense of Goodman Field Wattie (GFW) hostile takeover bid. RHMs defense strategy includes an exercise to demonstrate the value of RHMs brand portfolio. This is the first to establish an independent brand value, the value of this is possible, not only when they acquired the brand, and when they were created by the company itself. Successfully resisted the bid GFW, RHM in its 1988 financial accounts of the value of all internally generated intangible assets, and get the brand on the balance sheet. In 1989, the London Stock Exchange approved the concept of brand valuation allowed by the RHM shareholders approved the acquisition of intangible assets included in class test. This proved to be a major wave of consumer products companies to promote brand awareness to their balance sheets as intangible brand value. In the UK, including Cadbury, city (when it is 50 billion purchase of Pillsbury), Guinness, Li Bo (when it acquired the Hilton), and United Biscuits (including Smiths brand). Theory on reporting brands The FASB and other accounting bodies have stated that the financial reporting should provide information: that is useful to potential investors and creditors and other users in making rational investment, credit, and similar decisions; that helps current and potential investors, creditors, and other users in assessing the amounts, timing, and uncertainty of prospective cash receipts and net cash inflows to the enterprise; and that describes the economic resources of an enterprise, the claims to those resources, and the effect of transactions, events, and circumstances that change its resources, and claims to those resources (Nearon, 2003). Today, including Louis Vuitton, LOreal, Gucci, Prada and PPR many companies have recognized the acquisition of their balance sheet brand. Some companies already use the brand value and provide historical performance indicators as a financial brand value, as an investor relations tool, the balance sheet of their brand identity. In accounting standards, the United Kingdom, Australia and New Zealand have been allowed to acquired range of leading brands in the balance sheet, and provide information on how to deal with detailed guidelines of goodwill acquired the road. In 1999, the UK Accounting Standards Boards FRS 10 and 11 of the acquired goodwill in the balance sheet treatment. International Accounting Standards Board and International Accounting Standard 38, after the suit. In the spring of 2002, the Financial Accounting Standards Board Accounting Standards Board released 141 and 142, giving up centralized accounting and laying about recognition of acquired goodwill in the balance sheet of the detailed rules. There are indications that most of the accounting standards, including international and British Standards, will ultimately converted to the U.S. model. This is because most of the U.S. capital markets to raise capital or business in the United States must abide by international companies with account ing principles generally accepted in the United States (GAAP). All the main provisions of these accounting standards, the acquisition of goodwill needs to be used on the balance sheet and amortized in accordance with its service life. However, if the brand can claim unlimited life intangible assets not subject to amortization. Instead, companies need to be tested for impairment annually. If the value is higher than the initial valuation of the same or higher in the balance sheet value of assets remains unchanged. If the impairment of the value of low, need to write the assets down to a lower value. The recommended method of valuation is the discounted cash flow (DCF) and the market value approach. Valuation of the need for business unit (or subsidiary), generated revenue and profit performance. Once the acquisition accounting treatment of goodwill is to improve financial reporting for intangible assets such as brand an important step. It is still not enough, because only with goodwill recognized and reported in detail down to a minor footnote account. This has led to distortions, McDonalds brand and does not appear in the companys balance sheet, even though it is estimated to be about 70 percent of total stock market value (see Table 2.1), but the Burger King brand recognition of the balance sheet . There is still a quality brand is recognized in the balance sheet valuation. While some companies use a brand specific valuation methods, other less sophisticated valuation techniques, often doubt values. Financial report on the introduction of line is a long-term enterprise value of the real debate is likely to continue, but if there greater consistency, greater brand assessment approaches and the report of the brand values, corporate asset value will become more transparent mu ch. Benefit from Brands in practice The growing awareness of the value of intangible assets, with companies in the gap between book value and stock market valuations are increasing and the market value of these shares in the merger and acquisitions in the late 80s surge of premium paid. Now, it may be argued that, in general, mostly from the derived value of corporate intangible assets. Asset Management attention will undoubtedly greatly increased. The brand is a special kind of intangible assets, in many enterprises is the most important asset. This is because the economic impact of the brand. They affect the choice of customers, employees, investors and government agencies. In the world of abundant choices, this effect is a commercial success and the key to shareholder value creation. Even as a non-profit organizations have begun to embrace receive donations, sponsors and volunteers the key assets of the brand. Some brands also show a remarkable durability. The worlds most valuable brand, a Coca-Cola is more than 118 years, and the worlds most valuable brand, the majority of more than 60 years. Compared with surviving a string of different business owners, estimated to be 25 years or so.2 average life expectancy of many brands. A number of studies attempt to estimate the contribution of brands to shareholder value. In Interbrand and JP Morgan, a correlation (see Table 2.1) concluded that the average brands account for more than a third of shareholder value. Research shows that brand and create significant value both as a consumer or business brand or both. More than 70 percent of McDonalds shareholder value, brand accounts. Coca-Cola brand accounted for 51 percent of Coca-Cola stock market value. While this is true, the company has other drinks, such as Sprite and Fanta brands of large-scale combinations. Harvard University researchers and South Carolina3 and the Best Global Brands list in the select company Interbrand4 show that companies with strong brand is better than respect for the market in a number of indicators. It also shows that a portfolio from the worlds best brand, brand value was significantly higher than the weighted implementation of the MSCI World Index and the Morgan Stanley Capital International to focus on the S P 500 index better. Today, the key and leading enterprises in the management of intangible assets. For example, the Ford Motor Company to reduce investment in intangible assets, tangible benefit of its asset base. In the past few years, it has spent more than 12 billion U.S. dollars acquisition of Jaguar and other famous brands The social value of the brand The economic value of the brand, its owner is now widely accepted, but their social value is not very clear. Brand building to do any other value than all of them is the value that they create large social costs? 7, the popularity of global brands, so many brands around the world the focus of discontent. They believe that as a brand and exploiting workers in developing countries between the homogenization of culture and other issues directly linked. In addition, the brand has been accused of stifling competition, sully, to encourage monopoly and limit consumer choice of the capitalist system of the United States and Germany. On the contrary argument is that brands create substantial social as well as increasing competition as a result of the economic value of improving product performance and brand owners on the stress behavior of socially responsible way. The basis of race performance, and price, this is the nature of brand competition, and promote product development and improvement. And there is evidence that the promotion of companies than others in their class to do their own brands more often be more innovative in their respective categories. A European brand Association8 European PIMS study showed that fewer brands of products launched less significant investment in the development of small and less than rival brands of product advantages. Almost all of the non-branded half of the sample, compared to product development, nothing more than a brand less than a quarter samples. Though 26 percent of non-branded producers of new products have never made an important, a figure far below a collection of seven percent for the brand. Need to keep the brand relevant R D promotion, increased investment, leading to product improvement and development of the ongoing process. Brand owners are responsible for their quality and brand products and services, and their moral behavior. As the business from the brand value and sales and stock price, the potential costs of the act is far greater than any benefit directly immoral, than the monitoring costs and business ethics. A number of high profile brands have been accused of unethical behavior. Interestingly, these are already developing voluntary codes of conduct and internal control systems use some of the brand. This is not to say that these brands have been successful elimination of the unethical business practices, but at least show their will to address this issue. The gap between the companys more honest to admit that they have the moral behavior of the bridge, they will appear more credible. Nike, a number of suppliers in developing countries, the employment system of the criticism of a company, now post the results and factory workers www.nikebiz.com external audit and interview. The concerns of multinational companies is understandable, taking into account a 5% drop in sales of brand value may result in the loss of more than one billion U.S. dollars. It is in their economic interests of the clear moral. Theory on Brand Valuation Manners Some have always attached importance to the economic value of the degree of brand and other intangible assets, but it is only established in the late 80s the valuation methods may be fairly claim to understand and assess the specific value of the brand. Of: on a single brand values is now widely accepted. For those concerned with accounting, transfer pricing and licensing agreements, mergers and acquisitions valuebased management, brand valuation plays a key role in business today. Brand Valuation approach Unlike such as stocks, bonds, commodities and real estate assets, there is no brand value, will provide similar active market. Therefore, to reach an authoritative and effective way, to the growing number of brand evaluation model. Most fall into two categories: à ¢Ã¢â€š ¬Ã‚ ¢ research-based brand equity evaluation, and à ¢Ã¢â€š ¬Ã‚ ¢ purely financial-driven approach (1) Research-based approach There are numerous brand equity model, using consumer research to assess the relative performance of the brand. Not to the brands financial value, but they measure consumer behavior and attitudes, there is a brand of economic performance. Although these models are complex and complexity vary, they all tried to explain, explain and measure the impact of consumer behavior point of view. They include: 1, such as different levels of knowledge (foreign aid, finance, spiritual), knowledge, familiarity, relevance, specific image attributes, purchase consideration, preference, satisfaction, perceptions and recommendations of the wide range of measures. Some models add, such as market share and relative price behavior measures. Through different stages and the depth of the statistical model, which measures whether a rank order, to provide from the barrier, leading to a conscious choice and purchase, or relative of their overall consumer concepts, provide an overall score or measure brand equity. A combination of indicators of a change or expected to affect consumer behavior, which in turn would affect the financial value of the brand. However, these methods do not distinguish between, such as other influential factors, design and brand development. Therefore, they did not provide specific sales targets and between the financial performance of the brand a clear link. A strong brand can be the basis of these indicators, but still can not create a financial and shareholder value. Understanding, interpretation and measure of brand equity is essential to assess the brands financial value. After all, they are the key to consumer purchase behavior measures, given the success of the brand. However, unless they are an economic model, they are not sufficient to assess the economic value of the brand. (2) Financial-driven approach Cost-based approach is defined as all historical or replacement costs incurred, so that the current state of the brand needs a brand value of aggregation: in development costs, marketing costs, advertising and other communications costs combined, and so on. These methods fail because there is no direct correlation between financial investment and increase the brand value. Financial investment is the establishment of an important component of brand value, as long as it is targeted effectively. If not, it may not make a difference in beans. Investment demand significantly exceeded the advertising and promotion, including research and development, employee training, packaging and product design, retail design. Factors in brand valuation (1)Comparable. Another method is to reach a whole new thing on the basis of comparison value. However, comparability is difficult in the case of the brand, because, by definition, they should be differentiated, so are not comparable. In addition, in the same category of brand value creation can be very different, even though most other areas, such as the target groups basic business, advertising expenditures, price promotion and distribution channels are similar or identical. Comparable offers an interesting cross-examination, but, even if they can not rely solely on brand valuation. (2)Premium price. In the premium price method, the value of the net premiums of the present value of future price of a brand without the brand through a common command or equivalent. However, the main purpose of many brands is not necessarily to obtain higher prices, but to ensure the highest level of future demand. The value of these brands is to ensure the future generation, rather than the protection of a premium. This applies to a number of durable and non-durable consumer goods. This approach is flawed, because one of the few common brands can compare the premium price equivalents. Today, almost everything is brand, and in some cases can serve as a store brand as a brand producers charge the same or similar prices strong. Competition between brands and product price differentials can be indicators of its strength, but it will not be the only and most important value contribution to the basic operations of a brand. (3)Economic use. This is a driver of brand equity measures or means of financial measures to a complete lack of any financial or marketing component to provide a brand of integrity and strong economic valuation. Economic use method, which in 1988 developed a combination of brand equity and financial measures, and has become the most widely recognized and accepted brand valuation method. It has been used for over 3500 worldwide brand valuation. Economic use is based on the basic marketing and financial principles: à ¢Ã¢â€š ¬Ã‚ ¢ Marketing principles related to business functions, the implementation of the enterprise brand. First, the brand will help create customer demand. Customers can be individual consumers and businesses under the Consumer The nature of the business and purchase conditions. Customer demand into income through the purchase quantity, price and frequency. Second, brand loyalty and long-term security by buying customers. à ¢Ã¢â€š ¬Ã‚ ¢ related to the financial principles for the future expected net profit, widely used in the commercial concept of present value. The brands future earnings to determine, and then discounted to net present value of the discount rate, reflecting the risk of achieving these gains. Brands valuation steps In order to capture a complex brand value creation, take the following five steps: 1. Market segmentation. Customer brand choice, but the influence of different brands in the market determined the operation. Split brand and market access of non-overlapping homogeneous consumer groups, such as by product or service, sales channels, consumption patterns, purchasing maturity, geography, existing and new customers for the standard, and so on. The value of the brand in each segment and the segment of the valuation of the sum constitutes the total value of the brand. 2. Financial analysis. To identify and forecast revenue and generated by the brand established in step 1 for each different part of the intangible benefits. Intangible income is income minus operating costs, the brand, the use of the applicable tax rates and the cost of capital. This concept is similar to the concept of economic profit. 3. Needs analysis. Assess the role of the brand to play in the promotion of products and markets, the demand for business services, and determine what proportion of intangible earnings is measured as an indicator of the brand is called by the brands target role. This is done by first identifying the business needs of a variety of brand drivers, and then determine to what extent each driver is directly affected brands. The role of branding index represents the brand produced by the percentage of intangible earnings. Proceeds from the sale multiplied by the brand index of the role of intangible benefits. 4. Competitive benchmarking. Decided competitive advantage and disadvantage in brand specific brand derived discount rate, reflecting the expected future earnings of their risk profile (which is measured by an indicator known as the brand strength score). This includes a wide range of competitive benchmarking and market the brand, stable leadership, trends, support, geographic footprint and legal protective structure evaluation. 5. Brand value. Brand value is the net present value of brand earnings, discounted by the brand discount rate forecast (NPV). Net present value calculation includes both the forecast period and a later period, reflect the brands future ability to continue to generate income. A brand valuation of the market in a hypothetical example is shown in Table 2.2. This calculation is a useful model of brand value in various situations, such as: à ¢Ã¢â€š ¬Ã‚ ¢ Forecast market and investment strategies; à ¢Ã¢â€š ¬Ã‚ ¢ Identify and evaluate the communication budget; à ¢Ã¢â€š ¬Ã‚ ¢ calculate the return on investment on the brand; à ¢Ã¢â€š ¬Ã‚ ¢ assess the opportunities, lack of new or developing markets; and à ¢Ã¢â€š ¬Ã‚ ¢ tracking brand value management. The function of brand valuation in practice The application of brand valuation has been greatly expanded since its founding in 1988, it is the most strategic use of marketing and financial decisions. There are two main types of applications: à ¢Ã¢â€š ¬Ã‚ ¢ Strategic brand management, brand valuation focused on the domestic audience the tools and process management to improve the economic value of the brand. à ¢Ã¢â€š ¬Ã‚ ¢ financial transactions, the brand valuation of brand-related transactions with outside parties, all kinds of help. Strategic Brand Management Economic value of brand awareness, increase brand equity for the effective management of demand. In the pursuit of increasing shareholder value, companies are keen to establish the brand in line with other corporate assets, as well as management procedures throughout the company. Simply because the traditional research-based measurements proved to understand and manage the economic value of less than the brand, the company adopted a new management tool brand value. Brand valuation can help them build brand management valuebased system. As creating economic value of brand management and brand of all the key investment decisions. Diverse, including American Express, IBM, Samsung Electronics, Accenture, United States of America, British Petroleum, Duke Energy Corporation and Fujitsu road brand value, to help them re-focus on its branded business, and create a brand decision-making and investment on economic grounds. Many companies are making the brand value of the remuneration of senior marketing managers to create the part of the standard. Brand valuation of these companies find the following help: à ¢Ã¢â€š ¬Ã‚ ¢ the decision on business investment decisions. By making the brand assets and other tangible and intangible assets, different asset allocation of resources between the types, you can follow the same economic conditions and reasons, for example, capital allocation and return requirements. à ¢Ã¢â€š ¬Ã‚ ¢ Measuring the return on investment on the brand based on brand value in the investment rate of return, you can directly reach relative to other investments. Brand management and marketing service providers, measurable performance goals specifically related to the value of brand equity. à ¢Ã¢â€š ¬Ã‚ ¢ make decisions on brand investment. By priority according to brand, customer base, geographic markets, products or services, their distribution channels, etc., the brand can spread the cost of investment, influence and determine the cause maximum benefit. à ¢Ã¢â€š ¬Ã‚ ¢ decision making licensing subsidiary of the brand. A subsidiary of the license will be responsible for the management and use of the brand, and asset management to pay more stringent than the one to be free. à ¢Ã¢â€š ¬Ã‚ ¢ turn into a profit center, from a cost center, connecting brands and brand marketing ROI (from the subsidiarys brand use fee). The relation between investment, the returns from the brand to become transparent and easy to manage. Remuneration and career development of marketing staff can link to the development and brand value measurement. à ¢Ã¢â€š ¬Ã‚ ¢ allocation of marketing costs in the interests of the various business units from the brand equity. à ¢Ã¢â€š ¬Ã‚ ¢ Organization and optimization, for example, using different brands in the business (corporate, product and subsidiary brands) according to their contribution to the economic value. à ¢Ã¢â€š ¬Ã‚ ¢ assess the co-branded initiatives according to their economic benefits and risks to the companys brand value. à ¢Ã¢â€š ¬Ã‚ ¢ determine the appropriate brand after the merger by a clear economic reasons. à ¢Ã¢â€š ¬Ã‚ ¢ Manage the brand more successfully migrate to a different value of the brand as a better understanding of the results, therefore, nothing to lose or get, if the brand migration occurred. à ¢Ã¢â€š ¬Ã‚ ¢ The brand value of building brand value, providing focused, brand performance on the basis of the best understanding of the measures taken action, the driver scorecards. à ¢Ã¢â€š ¬Ã‚ ¢ managing a brand portfolio across multiple markets. Brand performance and brand investments to assess the basis of comparison with the same combination from brand to improve the overall return. à ¢Ã¢â€š ¬Ã‚ ¢ the economic value of brand communication as appropriate to create a capital market to support share prices and financial assistance. Financial transactions Brand valuation of financial applications include the following: à ¢Ã¢â€š ¬Ã‚ ¢ assessment of the subsidiary companys brand in the fair trade price. Brand royalty income tax return the way you can to the company headquarters. Brand may authorize the international subsidiaries in the United States, subsidiaries in different countries. à ¢Ã¢â€š ¬Ã‚ ¢ identify the brand of brand equity through brand licensing to third parties the best use of royalty rates. à ¢Ã¢â€š ¬Ã‚ ¢ Capital of the brand balance sheet under U.S. GAAP, international accounting standards and accounting standards in many countryspecific. Brand value is used for both initial and periodic valuation of a derivative of the value of impairment testing. à ¢Ã¢â€š ¬Ã‚ ¢ establish a brand in the mergers and acquisitions, asset prices and the value of clearly defined brand increasing trade. à ¢Ã¢â€š ¬Ã‚ ¢ determine the contribution of the brand, a joint venture to establish a joint venture distribution of profits, investment demand and stock. à ¢Ã¢â€š ¬Ã‚ ¢ Use the brand in debt, the economic exploitation of the brand rights for the mortgage securitization facilities. Conclusion As global competition is becoming increasingly severe, and many competitive advantages, such as technology and become more transient, the brands contribution to shareholder value will increase. The brand is a small number of assets that can provide long-term competitive advantages. <

What Is The Cost Of Capital Structure Finance Essay

What Is The Cost Of Capital Structure Finance Essay The cost of capital is the cost of a companys funds (both debt and equity), or, from an investors point of view the expected return on a portfolio of all the companys existing securities. It is used to evaluate new projects of a company as it is the minimum return that investors expect for providing capital to the company, thus setting a benchmark that a new project has to meet. In order to be a worthwhile investment, the expected return on equity is greater than the cost of capital. The capital cost of the return to capital is expected to earn in an alternative investment with similar risk. If a project similar to the average risk to the companys business, it is reasonable to use the companys average cost of capital underlying the ratings. The companys securities are typically in the debt and equity, the expected, both because of the cost of debt and equity costs of determining the companys capital. The cost of debt is relatively simple to calculate, since the interest rate is paid. In practice, the interest rates paid by the company modeled as a risk-free rate plus a risk component (risk premium), which also includes the expected probability (and the amount of recovery given default). For companies with similar credit risk or the interest rate is largely exogenous (to be explained by the use of external in this context). The cost of equity is more challenging to calculate as capital is not a fixed return to investors. Than the cost of the loan, the cost of equity, broadly defined as the estimated risk-adjusted returns that investors require, which yields a barely known. The cost of equity, therefore, conclude by comparing the investment and other investment (like) with similar risk profiles to determine the market cost of equity. If the cost of debt and equity costs have been established, a combination of the weighted average cost of capital (WACC), calculated. The WACC is then used to estimate the discount rate for project cash flows. In this paper I will explain, first, 1 chapter, the capital as well. From the second chapter, Sources of Capital, and finally, 3 chapter, capital will be explained. CAPITAL Capital, the most basic conditions for the money. All companies need capital to purchase assets and maintain operations. Corporate capital is available in two main forms: debt and equity. Debt refers to loans and other loans to be repaid in the future, usually with interest. The capital, however, generally do not impose a direct obligation to repay the amount. Instead, investors have a rule in the form of ownership shares in the company. The capital, wage describes the various means by which the capital of the people who save money for businesses that need money. Such transfers can be direct, which means that a company sells shares or bonds directly to investors, who own a business in return. Transfer of capital can also be made indirectly by investment bank or a financial intermediary such as a bank, broker or an insurance company. The indirect transfer through an investment bank, is selling the business assets of the bank, which in turn sells them to investors. In other words, the easy flow of capital investment bank. The indirect through a financial intermediary, however, a new form of capital, which is actually created. The intermediary bank or fund raise capital to invest and issue its own securities exchange. Then the broker uses the funds to buy stocks and bonds of companies. 1.1 Capital Structure Because of the small business capital is expensive, it is particularly important for small business owners to define the structure of the target companys capital. The share capital structure of debt and equity is achieved. Trade-offs are involved: increases the risk of liability to the companys revenue, which tends to reduce the companys stock. However, the debt lead to a higher expected return, which tends to increase a companys share price. As Brigham stated, The optimal capital structure is the one that strikes a balance between risk and return and thereby maximizes the price of shares and simultaneously reduce the cost of capital. Capital structure decision depends on several factors. One of the companys business risks and risks related to operations, which the company participates. Companies in the hazardous industries, such as high technology, lower than the optimal level of debt than other firms. Another factor in the companys capital structure involves tax situation. Since interest on debt is tax deductible, debt is usually better to use the company tax rate is high, and not many are able to protect income from taxation. The third important factor is the companys financial flexibility, or ability to raise capital in less than ideal conditions. The companies that are able to maintain a strong balance sheet resources generally can be more reasonable terms as other companies in the economic downturn. Brigham suggested that each company has a power reserve borrowing to defend themselves in the future. In general, tends to a stable level of sales, assets, collateral for loans to be good, and the high growth rate using a higher debt than other firms. On the other hand, the companies that have conservative management, high profitability, or poor credit ratings that they want to rely on equity instead. 1.2 The Modigliani and Miller Theorem 1.2.1 Definition The Modigliani-Miller theorem states that if there are no taxes, bankruptcy costs and asymmetric information, the efficient market, the companys value affects how it is financed with the equity shares or bonds, or a combination thereof, or what is the dividend policy. The kit is also known as capital structure is essentially irrelevant. A number of principles underlying rate, which agrees with the adoption of the tax and no taxation. The two main principle is that, firstly, if there is no tax, thus increasing the benefits of power does not create value, and second, that if there are taxes, the benefits in the form of interest tax shield occurs when you leverage and / or elevated. The price compares to the two companies one unlevered (ie, funded entirely of their own capital) and the second levered (ie, partially financed by equity and partly debt) and says that if the same value in all other ways the two companies are identical. For example, why it must be true, it is assumed that an investor buys a company or a levered or unlevered company. The investor buys shares in the companys levered or unlevered firm buys shares in a loan of an equivalent amount of money borrowed from the levered company. In both cases, the return on investment should be the same. Thus, the cost of the levered firm is the same as the unlevered firm minus the price of borrowed money, with the value of the levered companys debt. There is an implicit assumption that the investors cost of borrowing money is the same as the levered company, which is not necessarily true in the presence of asymmetric information, or in the absence of efficient markets. A company that is risky debt, as debt-equity ratio increases, the weighted average cost of capital is constant, but there is a higher return on equity, due to a higher risk for shareholders in the companys debt. 1.2.2 Advantages and Disadvantages of Modigliani and Millers Theorem Advantages: In practice, this can be said that none of the assumptions are met in the real world, but we teach the lot, that capital structure is important because one or more assumptions will be violated. Using mail-equations, economists find the determinant of an optimal capital structure and see how these factors affect the optimal capital structure. Disadvantages: Modigliani-Miller theorem, which justifies virtually unlimited economic power has been used to increase the economic and financial activities. However, its use also led to increased complexity, lack of transparency and greater risk and uncertainty in these activities. The global financial crisis of 2008, which saw a number of highly leveraged investment banks, has been partly attributed to the excessive leverage concepts. SOURCES OF CAPITAL 2.1 Debt Capital Small businesses can obtain debt capital from various sources. These sources can be divided into two broad categories, public and private sources. Private sources of debt financing according to W. Keith Schilit in The Entrepreneurs Guide for Preparing a winning business plan and venture capital, such as friends and relatives, banks, credit unions, consumer finance, commercial finance companies, trade financing, insurance, factor companies and leasing companies. Public sources of debt financing from a number of loans granted by the state and federal governments to support small businesses. Many types of debt financing to small businesses, including a private placement of bonds, convertible debentures, industrial development bonds and leveraged buyouts, but by far the most common type of debt financing in the conventional loan. Credits include the long-term (longer than a year) and short-term (maturity of less than two years), or the loan (for more immediate borrowing needs). These may be approved by the signatory, as the government, or secured to the property, debts, stocks, savings, life insurance, stocks and bonds, and purchased the product on the loan. In the evaluation of a small company, a loan, Jennifer Lindsey said in his book Guide to the contractor in the capital, the lenders prefer to have a two-year operating history, stable management team, a desirable niche in the industry, market share growth, strong cash flow and the ability to get short-term loan to supplement the funding from other sources. Most lenders require a small business owner to prepare a full proposal for a loan or credit application. The lender will then determine the application taking into account several factors. For example, the lender will consider the small business credit card, and look for evidence of their ability to repay the loan in the form of previous earnings or revenue forecasts. The lender will also consider how much equity in the business, and that management has sufficient experience and skills to function effectively. Finally, the lender seeks to determine whether the small firms in a reasonable amount of guarantee for the loan. 2.1.1 Cost of Debt The cost of debt is estimated by the risk-free interest rate bonds, whose length is equal to the yield curve for corporate debt and then add a default premium. This is the standard premium will increase in debt increases (since all else being equal, all other factors, increased the risk of increasing debt). Since in most cases, the debt burden of the deductible expense is the cost of after-tax cost of debt is expected to be comparable to the cost of equity (after tax). Thus, profitable companies, is debt at a discount. The formula can be written as: (Rf + credit risk rate)(1-T) where T is the corporate tax rate and Rf is the risk free rate. 2.2 Equity Capital Equity capital for small businesses is also available from many sources. Some possible sources of equity include the Farmer family and friends, private investors (the general practitioner, to groups of local business owners to wealthy entrepreneurs known as angels), employees, customers and suppliers, former employers, venture capital companies , to investment banking firms, insurance companies, corporations, and government-backed Small Business Investment Corporation (SBIC). There are two main methods that small businesses use to obtain equity finance: the private equity investors or venture capital firms, public stock issues. The private placement is easier and more common for young companies or start-ups. Even if the stock still closed with a number of federal and state securities laws, does not require formal registration with the Securities and Exchange Commission. The main requirements for private equity that the company did not advertise the offer, and you have to do the transaction directly to the customer. However, the public stock offering includes a lengthy and costly registration process. Indeed, it charges, the public stock offering in more than 20 percent of the capital. As a result, public stock offerings are generally a better choice for mature companies, as a starter. Bids may benefit from intervention maintaining control of a small company, but also expand the participation of different groups of investors, but by concentrating it in the hands of a venture capital company. 2.2.1 Cost of Equity Cost of equity = Risk free rate of return + Premium expected for risk Expected Return The expected return (or required rate of return for investors) can be calculated with the dividend capitalization model, which is: That equation is also seen as: Expected Return = dividend yield + growth rate of dividends. THE COST OF CAPITAL The capital required for a productive, as with any other factor is that there is a cost by Eugene F. Brighams book Fundamentals of Financial Management. In this case, the cost of debt capital the interest which the company must pay to borrow. In the capital cost shall be repaid to investors in dividends and capital gains. Since the amount of available capital is often limited, it is distributed in various companies on the basis of price. Business is the most profitable investment opportunities are willing and able to pay most of the capital and thus attract out inefficient firms, or those for which such goods are not in demand, Brigham explained. The good thing is that in most industrialized countries (eg USA, Germany, Japan, Britain, etc.), there are agencies that help individuals or groups of loans on favorable terms. Among those eligible for such assistance to small businesses, certain minorities, and the company is willing to build plants in areas with high unemployment. As usual, the cost of capital for small businesses tend to be higher than the big, established companies. Because of the higher risk for both service providers and charge a higher price for equity funds. Several researchers found that small stock portfolios have consistently achieved the higher average returns than large company stocks, it is called the small business impact. In fact, its bad news for small firms, where small companies effect means that the market requires a higher return on capital stocks of small companies than otherwise similar stocks of large companies. Therefore, the cost of equity is higher for small businesses. The weighted average cost of capital of the companys return that investors expect the various debt and equity issued by the company, according to Richard A. Brealey and Stewart C. Myers, in his book, Principles of Corporate Finance. Table 1 Cost of Capital 3.1 Capital Asset Pricing Model Capital Asset Pricing Model (CAPM) is used to determine the economics of the theoretically appropriate price of the asset as security. 3.1.1 The Expected Return on Equity According to the Capital Asset Pricing Model Market risk is generally characterized by ÃŽÂ ²-parameter. Thus, investors would expect (or demand) that: Where: Es: The expected return of security RF: The expected risk-free rate in this market (bonds) Î’s: Sensitivity to market risk to the safety RM: The historical performance of the stock market / stock market (Rm-rf): The risk premium in the market risk-free assets in the assets. Writing: The expected yield (%) = risk-free interest rate (%) * + sensitivity to market risk (the historical performance (%) risk-free interest rate (%)) Other expected yield (%) = yield of the bonds closest to the concept of the project or the projects safety + beta * (market risk premium) historically the market risk premium of 3-5% Comments The models show that investors expect a return on risk-free rate plus a market risk sensitivity of the security times the market risk premium. A truly risk-free rate is the lowest offer price for the bonds market, such as government bonds. The risk premium varies over time and space, but some developed countries in the twentieth century, an average of around 5%. The real stock market returns are roughly the same as the annual real GDP growth. The gains in the Dow Jones Industrial Average is 1.6% per year over the period 1910-2005. The dividend increased by all the real return on average equity in the double, about 3.2%. Sensitivity to market risk (ÃŽÂ ²) is unique to each company and depends on the management to every business and capital structure. This value is not known ex ante (beforehand), but may not be retrospective (past) experience with similar guarantees and undertakings. 3.2 Cost of Retained Earnings/Cost of Internal Equity We must remember that the profits from the component of equity, and thus the cost of retained earnings (internal equity) equal to the cost of equity capital as described above. The dividends (income paid to investors, and should not be) part of the return on capital to shareholders, and to influence the capital cost of the mechanism. 3.3 Weighted Average Cost of Capital What makes the weighted average cost of capital WACC does this mean? This estimate is the companys cost of capital, which is weighted in proportion to their capital. Each source of capital ordinary shares, preference shares, debentures and other long-term debt include the WACC calculation. Each equal to the WACC of a company increases the return on equity beta and the woman, and notes a reduction in the WACC increases and a higher level of risk. The total value of equity (for a company that no outstanding warrants and is the same as the companys market capitalization) plus the cost of debt (the cost of debt should be continually updated as a result of changes in the cost of debt interest rate changes). It should also be noted that justice in the debt-equity ratio of the total market value of equity, no equity on the balance sheet. To calculate the weighted cost of capital, we must first calculate the cost of some funding sources, namely: cost of debt Cost of Preference Capital cost of capital. WACC is calculated by an iterative procedure that requires an estimate of market value of equity. WACC formula is: [Rd x D / V x (1-5)] [Re x E / V] Rd = Bond yield to maturity (Y / Y Calculator) D = Market value (NPV) of debt (1 T) = 1 tax shield on interest deduction for interest expense = Re = shareholder return requirements V = value of total capital (debt equity) Generally, a company or assets financed by debt or equity securities. WACC is the average cost of financing sources, each weighted by its use in a given situation. By taking a weighted average, we see that much interest the company must pay for every dollar it finances. Since a companys WACC is the overall expected return on the company as a whole, and as such are often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers. This is the appropriate discount rate to use the cash flow risk similar to the entire company. 3.3.1 Example of Weighted Average Cost of Capital (WACC) A Corporation issued 10,000 units of the bonds, which currently sells for 98.5. The coupon rate of 6% this year bonds, the interest semi-annually. The remaining period of these bonds is 3 years. The companys current share price of two million common shares for $ 10 a share. The stock beta 1.5, a 4.5% risk-free rate on government bonds and the expected return on equity of 14.5%. The tax rate is 30% Table 2 Bond and Stock Calculations Bond Calculations Stock Calculations N = 3 x 2 = 6 I/Y = ? (Rd) PV = 0.985 x 10,000 x $1000 = $9,850,000 (D) PMT = (-10,000,000 x 0.06) / 2 = $-300,000 FV = $-10,000,000 P/Y = 2 C/Y = 2 Solution: I/Y = 6.56% Re = Rf + B[Rm Rf] Re = 0.045 + 1.5 [0.145 0.045] Re = 0.045 + 0.15 = 0.195 (19.5%) Market Value of Equity = E Stock price x common shares O/S $10 x 2,000,000 = $20,000,000 V = Total Capital Structure V = 9,850,000 (bonds debt) + 20,000,000 (equity of common shares) V = 29,850,000 3.4 Cost of Capital in Islamic Banking Proper use of investment criteria is important for industry and agriculture as well. Although the assessment can be used for both public and private sectors of the economy, should the public sector in its own special problems considered complementary, because the social costs and benefits. Therefore, we will participate in the private sector and the problems of evaluating investments in various industrial projects. Contradictions abound in the relative merits of different methods of investment valuation. But the most important points with different match. It is worth noting that almost every economist in the treatment discounting as a method of evaluation, as the only possible way to choose between different investments. Essentially two methods frequently used economists, namely the net present value (NPV) and the enlarged internal rate of return (IRR). The concept of internal rate of return (IRR) was JM Keynes (perhaps better known as the marginal efficiency of capital MEC) schedule, called the marginal efficiency of investment (MEI). It is defined as the rate at which the present value of future income exactly equal to the market price for the project. In other words, this is Return on capital employed. It is, committed while the return of the project. NPV of the project is formally defined as the value today of the surplus that the company can do in addition to the investors own marginal. IRR on the basis of the extended to the negative cash flows are discounted back to the companys cost of capital as long as it does not outweigh the positive cash flow. Both methods (the extended NVP and IRR) on its own common deficiencies, such as non-IRR NVP can be used either in the usual way that the correct ranking of projects in situations where the entrance is a rationing system. But there are ways to eliminate gaps and allow them to appropriate methods of investment evaluation. We will have a higher degree of internal rate of return, which is simply called the internal rate of return. A simple rule of decision in cases where the decision is all or nothing about which projects should be chosen from the various investment options, to implement all the projects whose IRR exceeds the cost of capital. Cost of capital, the capitalist system, the rate that a loan company and the investment is likely to be, which is simply the interest. In other words, that cut off rate, in relation to the internal rate of return regulation, which are also found in the literature as a barrier percentage. Note that the NPV approach to investment decisions, it is essential that decision-making, that there is no explicit prior discount rate, which, as already mentioned, is nothing more than to get money market rates. But they did not have a pre-determined percentage of the IRR method, except when its time, where debt capital is rationed in the various projects. This makes it completely independent of the IRR method is very appropriate rate and can be used for investments in the Islamic interest-free option and follow the debate. In the case of capitalism, is the internal greater than or equal to the market, the project will be implemented. The project also encourages companies to maximize profits, which last carried out the projects internal rate of return equal to interest. Apparently, the internal time of a declining function of investment, more projects, which would reduce the internal rate of return (in the same trade, of course). Already adopted (the Western economists) that the interest rate plays a decisive role in determining which projects will be implemented and also how much capital to be invested in various projects. Roll the relationship between these two terms seem to be exaggerated. Since only one project, the established criteria are quite valid and applicable as the optimal size of equity should be considered. As the number of projects increases, the IRR should be calculated for each project will increase so much. Moreover, it happens to all nodes in the two IRRs. This complicates the problem, and this will reduce the importance of interest, especially if interest rates happen to be far from the IRR to the last possible projects. Given that an investors risk-taking entrepreneurs, he is usually in front of the chains of investment options from which to choose allegedly, the first of the highest IRR. Assuming that you know, a lot of project finance, there may be dozens of projects whose IRR is higher than the going rate. There is no doubt that these projects are attractive, but to varying degrees, the contractor and will be selected in descending order rate. This is the case in the real economy, the role of interest rates is rather passive, even useless. This is because in such circumstances, the project IRR rate range. This is beyond that point to the role that a reasonable interest rate, and the role of the cut-off ratio. In other words, it is a long process before the existence of the interest rate becomes irrelevant, because the IRR for a couple of projects related to each other because of the interdependence refers to the ratio of investment is not at all. Exogenous real interest rate in the sector (especially investment), it is ironically suggested the capitalist system and then used to determine the optimal level of investment. In addition, the speculators, who needs money market interest in the products, allowing decisions to lead the business, whose activities are so important to the economy. It seems reasonable to link the contrary, ie, because of the interest, but we assume it to be the real sector, led by the monetary sector, if any. The abolition of an Islamic state, it would not be an external variable such as interest, what type and level of investment. Investment projects, in this framework are competing with each other, and the investment will be needed to achieve full employment, that is, until there are idle production factors in the economy. This is particularly true of human resources make it necessary and inherent meaning, as we see in Islam, the authorities should not keep the unemployed, for the sake of the interests of capitalists. Can easily be shown that in an Islamic context, for each part of the money (ie, the potential capital) that comes out of the interest-free banks to finance various projects under various types of contracts, it becomes possible to go directly to the products and / or services. Is a term, and it is: a prerequisite for an Islamic state is strictly prohibited, and appear to prevent speculation in any market (be it either money or goods). It has long been a misunderstanding among some Islamic scholars in the financial support that speculation can take place, and the abolition of interest is permitted. Easy to show that one-to-one correspondence between the interest (rate), and speculation. Interest rate (rate) is necessary and sufficient condition for the speculation that takes place. Although the lack of clearly illegal-frame-rate, if speculation is allowed in any market, you will definitely be of interest in its own nature. Therefore, the prohibition of interest leads logically to a ban on speculation. This interdependence between interest and speculation is not only very rarely in the economic literature, but also its negligence was the source of serious misunderstandings. Economic relations are rarely a single direction. A collection of the IRR can be measured both by an Islamic bank, Islamic banking sector, an independent agency authorized to appropriate guidance on the nature and viability of the project. This measure is to be used so that the expected profits can be divided into an Islamic bank and finance company demanding. The matrix is very useful for determining how much funding should be allocated to projects that are in the priority list for economic development. To determine the companys share of the profits, various factors, such as the following may be considered: the risk premium, the rate of poverty in different parts of the countrys priorities for economic development plans, the degree of capital intensity, taxes, employment considerations of the burden of rates and the like. All of these factors, or a combination thereof may affect the companys demanding (my fiancee) share of the profits that can be safely manipulated without interfering with the market mechanism. It gives interest-fr ee banking system, the IRR method, the absolute advantage of the artificial manipulation of interest rates, which is quite often the case in capitalist countries, and an obvious interference with market mechanisms. This contrasts with the situation are often held in the Western economists who argue that market mechanisms should be avoided. Add to this the expected negative correlation between interest and investment as both a classical and Keynesian economists have empirically demonstrated that infertile. This is so, while the bill may be taken into account the positive correlation between the rate of profit and investment. This bill provides not only the interest cost of the capitalist system, but also that profit maximization is consistent with the aims of each company. Surprisingly, however, this goal is at the micro level, the capitalist will change textbooks without a logical explanation for the negative correlation between interest investment at the macro level. Using the IRR method of an Islamic state is not only compatible with the goal of maximizing profits (if proof was not suitable for such a system) and to avoid interfering with market mechanisms but it is an absolute advantage in another, so the opportunity cost of capital to zero. The logic is simple. This lack of interest, all projects compete with each other (with due regard to their own priorities), internal rate of return. Also, the fact that the investment projects against each other at each other and there is no reason to ensure that any external factors to determine the same extent as the cost of capital for each project. The capitalist system, the current interest rate to be logically the next best alternative, or the cost of capital for each project. The logic of the independence of the IRR for the project. The second best option not to report to the IRR for a project according to an account must be seen as the opportunity cost of capital. This is because of the interdependence of all projects do not meet any of the BMR in another appropriate opportunity cost of the project, otherwise it would cost hundreds of alternatives to the capitalist framework, while the interest rate will be to measure the opportunity cost of all capital investment. In other words, to allow costs to be met independent state. Failure to consider the interdependencies between projects and independent degree of internal rate of investment has led to that many writers to form the misconception about the opportunity cost of capital. This lack of interest, there is nothing to compare the IRR of the various projects (with the exception of the IRR of the project by themselves). Interdependent and common to the Islamic banks, these proje