Management practices employed by multinationals in controlling and managing the financial risks The WritePass Journal

Management practices employed by multinationals in controlling and managing the financial risks ABSTRACT Management practices employed by multinationals in controlling and managing the financial risks ABSTRACTINTRODUCTION:IMPACT OF GLOBALIZATIONBMW: CORPORATE OVERVIEW LUFTHANSA: CORPORATE OVERVIEW FINANCIAL AND EXCHANGE RISKS EVALUATIONRISKS PECULIARITY: BMWRISKS PECULIARITY: LUFTHANSAFINANCIAL/MARKETING STRATEGIES TO MANAGE RISKSCONCLUSIONBIBLIOGRAPHYRelated ABSTRACT This study seeks to highlight the management practices employed by multinationals in controlling and managing the financial risks they are exposed to. It also assessed the management practices used by multinationals in the face of financial crisis using Lufthansa and BMW as case study. INTRODUCTION: Early learning of scholars has presented arguments that exchange risks have little impact on foreign activities especially by Multinationals. This view has been shared by Jorion (1991) who went on to question the activeness of financial managers who perform hedging as the risk associated with foreign exchange/currency exposure is minimal. This was also in line with the argument by Bodnar and Gentry (1993) who suggested that not many industries are faced by exchange risks depending on their significance. However, contrary to these views, recent studies have identified exchange rate to be of huge significance amongst the risks that multinationals face and thus questioned the measurement techniques used by earlier studies. This view is supported by Doukas et al (2001) who projected that organizations who engage in foreign activities will be more affected by exchange rate movement. Eitemal et al (2006) further explain that corporate organizations, mostly multinationals face a higher exchange risk exposure than their non-multinationals counterparts because of their higher degree of international business operations. In line of these contrasting views, the author however argues that firms wanting to exercise their international or global presence will be faced with distinctive financial management challenges. And as long as there is movement of capital and finance owed to the rapid movement of globalization, corporate organizations will continually be faced by global factors like reactions to movements in currency markets (such as a undervaluing of a currency) . Dominguez et al (2001) go further to argue that even emerging markets are likely to be faced with a significant level of financial risk exposure as they may be relatively less efficient and for the reason that both developing and developed countries are open to such risks. Therefore, firms must be flexible in their approach by demonstrating an ability to diversify their consumers, contractors and financial sources. IMPACT OF GLOBALIZATION BMW: CORPORATE OVERVIEW BMW, an independent German automobile and engine manufacturing company is a global leader in premium car sales and is known for its performance and luxury vehicles. It has under its ownership the Mini brand, BMW motorcycles and the Rolls-Royce motor cars. A commanding international company with presence in over 120 countries, the BMW Group has business activities broken down into manufacturing, assembly and sales of automobiles and a financial services arm whose primary aim is to provide financial credit to dealers and customers. Its strategic investors make up 46% of its shareholdings, while institutionalized investors breakdown include North America 15.8%, United Kingdom and Ireland: 11.8%, Other Europe: 5.7%, Germany: 4.8%, Rest of the world: 2.5%. Other investors make up the rest with 12.7%. Its financial arm provides financial and investment advice to customers and dealers alike which extends into offering financial credit which is used in the lease or purchase of its automobiles or spare parts. It therefore offers flexible and attractive payment options which also ensure that its finances circulate within the group. BMW has been to known to practice operational flexibility in a bid to handle foreign exchange shocks and has began exploration of emerging countries like China for investments and long-term commitment for service. Establishment and entrenchment of BMW in emerging markets has emerged and identified by its operations in China for instance. China is currently its fourth largest market with huge potential even though representing only 5% has been boosted by the Chinese government offering incentives and subsidies to urge purchases. LUFTHANSA: CORPORATE OVERVIEW Deutsche Lufthansa AG (Aviation Group) is an international aviation company with strategic business segments providing mobility and services for airlines. A German based company serving more than 500 destinations across the world with code sharing agreements. Its business operation is segmented into passenger airline services, MRO (maintenance, repair and overhaul), provision of IT services, logistics and catering for its own airlines and extensively to external customers. However, providing passenger airline services is the hub of its business activity. It is a premium brand with global service offering via a fleet of over 500 aircrafts (which makes the company very liquid) with its major target market being Europe, America and Asia. Lufthansa is one of the leaders in the provision of maintenance and overhaul services for external airlines, servicing government, organizations and leasing companies. It also extends this service to its own airlines. Its catering segment also provide airline cuisine as it is located at international airports of over 40 countries catering to regular customers and international airlines. Its Europe segment contributes the highest of the company’s total revenues, with sizeable contribution in North America, Asia/Pacific and the Middle East.   However, it continues to strive given the significant exposure in competitive markets like Europe visible through the improvement of the flights and other business operations in Asia, North America and the Middle East. Even at this, a successful diversification of its flights to other market regions to reduce the economic, political and geographical risks has not been fully achieved. FINANCIAL AND EXCHANGE RISKS EVALUATION Extending operations into a global landscape is becoming increasingly challenging even as companies wish to exert global presence, they are increasingly faced by the risks that expose the unpredictability of cash flow. They are constantly faced with emerging dimensions of risks varying from long run against short run investment risks, certain against uncertain transaction risks, and risks relating to value of cash flows. Multinational corporations like BMW and Lufthansa are therefore faced with risks such as transaction risks which identifies the impact on exchange rate changes on the value of cash flows that lie in the future that has been committed but whose nominal value is known. It refers to committed transactions for which the company is expecting receivables or payables from export or import contracts. Profits or losses may arise if exchange rates fluctuate between the date of purchase and the date of payment. They may also be faced with economic risks which refer to varying cash flows based on the impact of changes in macroeconomic activities such as inflation, economic growth and or interest rates. Inflation generally increases the cost price of goods due to an increase in costs of input which may lead to a cut back in purchases. Economic growth on the other hand may increase the demand of a product as people may increase their purchase or consumption at these periods. Another major risk faced by MNCs such as the companies under study is translation risk which refers to the degree of influence of foreign exchange rates on the value of foreign assets and liabilities. The seeming liability for multinational companies facing translation risks is the volatility of the currency at hand and the currency with which it is being measured against. Even as the risks mentioned above account for the major risks that multinational organizations may face, they may also be faced with some other types of risks. Country risk refers to risks that are associated with particular countries which make them higher volatility for investments. A proper country risk analysis will ensure that a corporate organization will monitor countries with excessive risk and therefore avoid entrance into such country. Government laws or bans on certain items may also have an impact on the sale of certain products while interest rates, inflation and exchange rates all have an impact on the other therefore making the consideration of entry into a country more complex. It is also pertinent to recognise that there may be political influence in some countries arising so that local companies may thrive in the face of foreign competition. Therefore, considering the nature of globalization, even though it has encouraged borderless trading, multinational corporations have to recognise the risks associated with operating in a host country.            RISKS PECULIARITY: BMW The BMW group enjoys the exclusivity of three premium brands that are not overlapping and doing well independently. With a keen focus on research and development, it has developed innovative display in the manufacturing of groundbreaking engines. It has therefore enjoyed success due to its unique designs and a carving a niche for itself in the luxury brand sector. However, due to its setup and base mainly in Germany, cost competitiveness may continually be a worry given that more competitors are recognising the cost advantage of emerging markets and therefore shifting their production activities to these locations. It must therefore locate a balance between cost efficiency and the status it derives from the German engineering quality. BMW, having a huge base in Germany may pose a risk as there may be considerable currency fluctuation in other countries of operation which may result in uncertainty in cash flows. Selling to its American market may result in converting the Dollar revenue to Euros for instance, and a decline or a weakening of the Dollar makes the expected Euro income equivalence to be lower. It also faces cross-border purchases which consumers may engage in to avoid some costs mainly on currency value differences with people going to Canada for instance to purchase an automobile and driving it back into the US. These fluctuations are beyond the company’s control and may on only react to the changes which may have been caused by changes in the economic position of such country, speculation, demand and supply factors on currencies, consumer index, foreign investment and or Gross National Income (GNI). BMW also faces the risks of specification given the nature of the product it sells. Product specifications especially for countries outside Europe will be a huge concern as it may require new production lines to cater for this change. Also, risks associated with late delivery of goods or damages while shipping as was the reported case of a sunken ship containing BMW automobiles many of which were beyond repairs. Being a premium brand, BMW has to contend with high cost of producing its high quality parts and still staying within the reach of consumers who are now more exposed to cost effective automobiles given the rising of oil prices. RISKS PECULIARITY: LUFTHANSA Risks associating with the airline industry are becoming more complex even as the industry is becoming more competitive. The business model applicable in the industry attracts a lot of capital, labour and technology input. Additional business dynamics like increase in oil prices, frequent risk of terrorism, charges that are specific to countries, unfavourable weather conditions and disruption of air-traffic are all risks associated with security and safety, hazards issues and operational risks that have characterised the airline industry. A peculiar situation was the abnormal weather in December 2010 which had a huge impact on air traffic as over 4,000 flights were cancelled. The industry is also characterised by cyclic demand, domestic and international competition which is growing by the day, increasing gearing levels, regulatory hindrance like landing rights or ownership restrictions. The concern of interest rate is particularly of great significance to airlines as it affects their debt financing. Also, the debt-to-equity ratio of the airline industry is thus equally high as it is capital intensive which makes borrowing more difficult. Bartram (2002) highlighted this further by pointing out the impact of interest rate and the succession of business cycle considering the effects on demand by customers.   Carter et al (2002) also argued that due to expected costs of distress, there is a considerable level of underinvestment. When airlines are strained and therefore resort to sell off their fleet of aircraft, this may be a representation of financial distress as the aircrafts are sold off at heavily discounted amounts. The industry is equally faced with currency risks which may affect international or domestic demand in relation to the home country currency value. For instance, if the Canadian dollar depreciates, there will be an increase in demand for flights into and within Canada by non-residents while the residents may substitute local travels for international locations. The predictability of these currency changes being close to impossible equally makes the airline operators more exposed to these risks. A considerable contribution of airline operating cost is the cost of jet fuel which also poses a risk to Lufthansa. Although, the level of profit responsiveness may be dragging as airline tickets are sold in advance, future commitment to advertised lower fares in the short term. However, in the medium/long term its profitability decreases in relation to direct and indirect cost of fuel. Carter et al (2002) further illustrate that airlines are in a dilemma of underinvestment whenever a revenue generation opportunity presents itself during the periods of high cost of jet fuel. The further weight of the air traffic tax adopted in Germany and Austria for instance means that fuel costs cannot be passed on in full to consumers due to the sensitivity of pricing. FINANCIAL/MARKETING STRATEGIES TO MANAGE RISKS For BMW, recognition of the potentials of emerging markets both for demand and production units has helped diversify its risk. Its focus traditionally had been on European market, but with the steady growth of the Chinese automobile industry, there was a need to break its unilateral brand structure and embrace innovation. However, completion is becoming strife in the Chinese region as competitors have recognised the potentials it offers and focus is shifting gradually away from product competition to a comprehensive demand for brand and services. Adopting localised sustainable development in the Chinese market by adding traditional local elements will also attract demand within this newly acquired market. Also, BMW may choose to relocate its manufacturing and supply units to final markets whose currencies are less prone to currency exchange risks. This can be done through an investment in localised procurement and production units. Shifting its base to final markets and having its suppliers do likewise ensures that BMW is guaranteed input cost safety. Whilst doing this, it can also assure its suppliers of sustainable income which reduces their vulnerability in time of fluctuations.   Even as it tries to satisfy global appeal by developing unified product models, BMW cuts costs and alleviates risks by adopting flexible means of customizing its models to fit regional tastes in markets representing huge demands on short notice. For instance, it developed a longer version of one of its models solely for Chinese customers due to high demand. It can then focus supply of its marketing plans and products to markets with stronger currencies with less likelihood for fluctuations. As the largest market outside Europe, the US plays a vital position in BMW’s business plans as it established production lines for its 3 and 5 series models in the country due to increasing demand. Even at the point of establishing the plant, most of its cars were manufactured in Europe and transported to the US and sales of the cars may become more profitable as the dollar weakens. It then may build its competence to identify and take advantage of a strong currency market. It is also striving to ensure there is a plant in china by 2012, thus making sure most of its costs are denominated in local currencies. However, all these strategies are not as expedient as currency hedging. Hedging refers to an investment that is made in order to alleviate the risk of adverse price movement in an asset. Exchange rate risk can also be neutralised (hedged) through financial instruments, such as exchange rate derivatives or foreign currency debt (financial hedges), as well as through the operational setup of the exporting firm (operational hedges). Financial derivatives have today become standard tools for hedging risks related to exchange rates, interest rates or commodities prices. Accordingly, Bartram et al (2009) further argued that organizations do not only use financial derivatives, but operational hedging and foreign currency debt may be crucial to their management of financial risk.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Even as the hedging strategy may be applicable to Lufthansa AG as well, it can be argued in accordance to the views of Kim et al (1993) that diversification is considered to be a chief instrument which corporations can adopt in order to manage the financial risks facing them. This is in line with the view of the author as hedging is still a rather speculative attribute and can still lead to a loss or a profit. It can be further argued that a business ought not to fully hedge all of its firm value from all risks because when future hedges are applied and the prices go up in the first few years, there will be a large marginal impact on the cumulative futures covering the multiple years. And as a form of international strategy, Lufthansa formed the Star Alliance with other airlines which afforded it an almost faultless network of intercontinental connections which provided it with the needed expansion. Lufthansa also hedges fuel prices to dea l with fuel price risk for a time sphere of two years mostly by means of time combined options. The hedging transactions are based on fixed rules and map the average of crude oil prices over time. Sales of international tickets, fuel purchases, aircraft and spare part maintenance also present some form of currency risk to Lufthansa and it performs hedging on the main currencies it uses which are the US Dollar, the Yen, Euro and the Sterling. Being a very liquid company (Lufthansa owns about 75% of its fleet of aircrafts), considering its financial strength, Lufthansa is considered a worthy partner by investors and banks. Thus, future investment plans can be met through borrowing at an already determined action plan and the duration of such investment is limited to one year. The risks and opportunities facing the group, is defined mainly by macroeconomic factors and a resulting effects on passenger and cargo demand. In this regard, Lufthansa relies on its capability to regulate its resources and capacity in a flexible manner in order to adapt to changing market conditions and therefore cut costs.    CONCLUSION Organizations are faced with financial risks arising from a combination of sources either from an exposure to changes in market prices either through interest rate or exchange rate fluctuations and/or financial risks emerging from an interaction with suppliers or customers. Given that corporate risk management can lower the present value of bankruptcy and financial distress costs, firms with a high probability of default and/or high financial distress costs should be more likely to engage in corporate hedging. Companies with international supply chains and international markets will face not only exchange rate risk from the financial accounting perspective, but risks to their competitive positions and cost-revenue dynamics as a result of steep and large declines in the dollar’s value. Financial hedging strategies are suitable for mitigating small and short-term currency fluctuations. But to avoid the effects of huge, long-term shifts in a currency’s value, the likes of BMW and Lufthansa are however advised to adopt operational hedging strategies. These provide the flexibility to dynamically manage supply chains and markets, thereby allowing some degree of difference and efficient management of the cost-revenue equation as international macro-economic forces influence the global marketplace.    BIBLIOGRAPHY Alan Shapiro,2006. Multinational Financial Management, Wiley 8th edition Jorion, P., 1991. The Pricing of Exchange Rate Risk in the Stock Market, Journal of Financial and Quantitative Analysis, 26, 3, September 363-376. Bodnar G. and Gentry W., 1993. Exchange Rate Exposure and Industry Characteristics: Evidence from Canada, Japan and U.S., Journal of International Money and Finance, February, 29-45. Doukas J., P. Hall and L. Lang, 2001. Exchange Rate Exposure at the Firm and Industry Level, SSRN working paper series Eiteman, David K;Moffett, Michael H;Stonehill, Arthur, (2006) Multinational business finance11th ed Published  Boston, Mass. ; London : Pearson/Addison-Wesley Bartram, S.M. 2002, ‘The interest rate exposure of nonfinancial corporations’, European Finance Review, vol. 6, pp. 101–25. Carter, D.A., Rogers, D.A. Simkins, Betty J. 2002, ‘Does fuel hedging make economic sense? The case of the U.S. airline industry’, Working paper, Oklahoma State University. http://investor-relations.lufthansa.com/en/fakten-zum-unternehmen.html Bartram, S.M., G.W. Brown, and J.E. Hund 2007. â€Å"Estimating Systemic Risk in the International Financial System. â€Å"Financial Economics 86(3), December, 835-869. Kim, W. C., Hwang, P., Burgers, W. P. 1993. Multinationals diversification and the risk-return trade-off. Strategic Management Journal, 14: 275-286. Dominguez, K. and L. Tesar 2001. A Re-Examination of Exchange Rate Exposure, NBER Working Paper Series. (Forthcoming, American Economic Review: Papers and Proceedings, 2003)

Violence and Victimization Essay Example | Topics and Well Written Essays - 500 words - 1

Violence and Victimization - Essay Example The frequency of occurrence of such instances is dependent on various factors. Such factors form the basis for the argument that proposes social causes to violent behavior. It may be argued that people whose parents demonstrated violent behavior are more likely to be violent as compared to those whose parents were more peaceful (Besemer, 2014). That may lead to a linkage of such behavior to biological traits. However, a closer study may reveal other factors that result in such connection between the parents and their offspring. Human beings are social beings, and therefore tend to learn and adapt to different environments. Socialization thus brings out different traits in them. One can, therefore, draw conclusions as to the correlation between violent behavior and social structures (Laland and Brown, 2011). For instance, for those cases where the violent acts of someone have led to a linkage to the violent acts of the parents, it may be possible to establish social causes to such a link. It may be that the person may have experienced violence in their childhood, which affects their actions causing them to be violent. Studies indicate that children from abusive families tend to be more abusive as they grow (Besemer, 2014). Also, those exposed to violence in their childhood end up with violent tendencies in their later years. That is because they develop a form of retaliation to adversity and based on their past, this turns out to be violence. Another important social factor to violent behavior is the relationship a mother has with her child. Where there exists a poor mother-child relationship, chances are that the child may develop violent tendencies in future (Besemer, 2014). That may be because the child may experience frequent punishment from the mother as a result of the anxious attachment between them. Apart from such maternal punitiveness and paternal inattentiveness, other social factors among peers also

Personal statment for ucas Statement Example | Topics and Well Written Essays - 750 words

Statment for ucas - Personal Statement Example Of most importance is that I received awards with two prestigious prizes in Europe entitled ‘The Small Montmarte in Bitola in Macedonia and TheEvora’ which appeared in the local dailies at the time. It is about this time when I joined the Roedean School in the United Kingdom where I sat for my GSE and passed well. Then, I joined the Lancaster University where I accomplished my first year in Fine Arts. I became convinced that I had a passion for Architecture hence put extra efforts to become an architect. I became fascinated in applied art as opposed to previously drawing and/ or creating. Nevertheless, I was certain that there existed a strong connection between doing arts and architecture. Moreover, aesthetic perspective suggests that the hand is the most direct linkage between my mind and the paper. Another reason that inspired me further in Architecture was during my Course at the Lancaster University, there was investigation of modernism history that has a huge impact on the course. Scholars affiliated to this field have continually described architecture to suit the normal life. Forinstance, an English critic of Aestheticism, Walter Pater declared that â€Å"all art continually aspires to the condition of music†. Another English artist, William Morris argued that â€Å"architecture was the primary form to which other arts could be related, and it could be a meeting place for artists and craftsmen†. In a general sense, the Maslow’s hierarchy of needs, physiological needs is the physical requirements for human survival. As such, architecture is a shelter, a protection, a necessity but also exists as a form of art, and the discovery of cave by the Caveman and the building of the Orthodox by the Ancient Greek. Pertaining to achievements,I participated in a Guinness World Records art project known as â€Å"Brushstrokes over

Business Ethics Essay Example for Free

Business Ethics Essay As we have discussed the ethical issued related to production and distribution of wine, we will now focus on the ethical issues relating to the consumption of wine. The consumption of wine in U. S. has been on the rise since last fifteen years. The U. S. ranks 34th in wine consuming nations with wine consumption of 7. 69 liters per capita per annum. The consumption of wine in 1994 was 404 million gallons which increased to 658 million gallons in the year 2008. These figures show the growing popularity of wine in U. S. Consumption grew 2. 5% per annum. As capita income per person has increased, the wine consumption has also seen a increasing trend. According to U. S. Beverage Marketing Corporation, the organic wine consumption have rise in last few years. As people are getting environmental and health conscious, they are turning towards organic products. In 2003/04, organic wine consumption was about 6. 5% of total beverage market in U. S. , which increased to 9. 5% in the year 2007/08. This signifies the important aspect of change in the human nature that is turning to the products which is beneficial to both humans and environment. The type of wine customer consumes depends on the number of factors namely per capita income, household size, preference of quality over price etc. The nutrition facts of wine are minimal. There is no cholesterol or fat present in the wine. Generally, the alcohol content ranges in between 10-15%. Over consumption of wine can be dangerous to health as it can cause unconsciousness and high blood pressure. Nutrition Facts (Serving Size 6 oz) Amount per serving| Red Wine| White Wine| Calories| 123| 115| Protein| . 28 grams| . 14 grams| Cholesterol | 0| 0| Sodium | 8. 5 milligrams| 8. 5 milligrams| Carbohydrates| 2. 9 grams| 1. 35 grams| Vitamin B1(Thiamin)| . 01 %| . 01 %| Vitamin B2 (Riboflavin)| . 05 %| . 01 %| Vitamin B3 (Niacin)| . 13 %| . 12 %| Organic wine is the wine produced from organically grown grapes without adding any sulfites. Organic wine is the best quality wine obtained without relying on chemical fertilizers. The most important aspect of producing organic wine is the matching of unique characteristics of growing region with the most suitable variety of grapes. Different varieties of grapes need different soil and climate to grow. Usually, warm and dry climates are suitable for growing quality grapes and these climates protect the grapes against moulds and other diseases resulting from humid climate. The smaller sized grapes are suitable and desired for the production of organic wine because we get the distinctive taste for a particular wine from grape’s skin and the smaller grapes has high skin to juice ratio as compared to the large sized grapes. But the yield per field of small sized grapes is considerably low, which increase the cost of production per unit volume. The grapes in the organic vineyard are usually handpicked which allows only the ripest and healthiest grapes to be picked up. This process also minimizes the damage to the soil and the fruit. This accounts for the difference in taste of the wine. But this handpicking of grapes increase the labor costs. Low yield and handpicking of grapes, along with other factors, increase the overall production costs. Thus, organic wine is generally expensive than the regular wine. It is far better in quality and taste than the regular cheap wine. The consumption of organic wine has effect on the environment. As the grapes have been grown naturally, no pesticides or insecticide had been used and re-plantation of oak trees to replace the cut oak trees helps in preserving the nature and benefits the world around us by preserving the soil and help reducing the pollution to both air and soil. It helps maintain the balance of nature. The organic wine production is an ethical business process. Nobody feels cheated in this process, as the customer gets the quality products for the dollars he/she spends and know what he is getting as there is no deception on the labels, and the producer get the return for following the sincere ethical processes. Customers get the value for the money spent as they get high quality wine with distinctive taste. On the other hand, the producer earns enough to cover his costs of production and also makes a profit. The environment is also saved through this ethical business practices which is the biggest gain. On the other hand, the regular wine can be produced with the large sized grapes and the insecticides and pesticides are used on a large scale. As the yield of large grapes is more, the cost of production per unit volume is low. This results in lower prices. The regular wine is pretty cheap and available in abundance qualities. Thus, it is affordable to people with low income. It is cost friendly to both the wine producers and the customers. Wine producers can adopt mass production of the regular wine as the production costs are low and there are no special regulations to be followed, this result in increased profits. Customers are also attracted to the low- priced wine as they have to spend less and get their wine desire satisfied with this low priced regular wine as compared to costly organic wine. But there are consequences of drinking cheap wine. The production of regular wine has an adverse effect on the environment. As the consumption of regular wine is increasing, so does the adverse effects. The use of unlimited pesticides, insecticides and other chemicals not only pollute the soil but also the air we breathe. It even spoils the water bed beneath the soil. The deforestation of the oak trees is rapidly increasing. The effects are adverse than we could even think and they are long termed/ lived. The cheap wine could have health consequences too. The sulfites present in the wine can degrade person’s health. The cheap wine has much higher sulfur content than expensive organic wines. The consumption of this cheap wine could results in allergies, breathing problems, skin rashes, itches and nausea. Overindulgence of wine can raise the blood pressure which could be harmful. In the recent years, the genetically engineering wine production is on the rise. It is the method of wine production using the gene altered grapes. The genetically engineered vineyards are more resistant to the fungal diseases than the traditional vineyards. The main motive behind the genetical engineering is to make vineyards more resistant to diseases and increase the output of grapes. The researched concluded that these disease resistant plants would need very less pesticides, thus lowering the use of pesticide in production process. This is really beneficial for the environment. But it is feared that the genetically altered genes may result in uniformity of taste of different wines. But according to the reports; people have not accepted the genetically engineered wine. They have rejected the concept of genetically engineered wine as the fears of taste uniformity have raised concerns. According to the report by Greenpeace, California wine makers may have to face mass consumer rejection if they accepted the genetically engineered grapes for their wine production process. British retailers have also threatened California wine makers to quit importing their wine if they adopted the genetically engineered wine making process. Fact is that, Britain is the largest importer of California wine as it imports 30% of the state’s wine. Researchers have found out that the gene which is inserted into the wine grapes create a protein similar to that present in the bee venom. This could cause anaphylactic shock in some people and can also create other health issues. This deadly substance could not be put out the production process of the genetically engineered wine.

Floods of 1998 in Bangladesh and Shrewsbury :: Papers

Floods of 1998 in Bangladesh and Shrewsbury Causes, Effects and responses to flooding In Shrewsbury The Severn Valley floods, Shrewsbury, UK 1998: Causes ====== The human causes of the floods were summed up by the then Shadow Countryside Minister Tim Yeo MP, he said 'the flooding had increased because of the housing developments on Greenfield sites.' By this he means that by covering the land with tarmac in urban areas humans have increased the rate of surface runoff and decreased the saturation levels of the ground. When surface runoff is high rainwater reaches the river faster. It would appear that the speed in which the water reached the river was too fast for the river to handle. The river filled up reaching bank-full discharge and then overflowing its banks onto the flood plain. The flood plain of the River Severn is built on, therefore, when the river floods it floods onto residential areas. With the building of these urban areas the amount of vegetation in the area surrounding the river was reduced, this affects the river two ways. It reduces the amount of interception, which in turn increases the speed of runoff into the river. The lack of vegetation also leads to the saturation of the ground. During the months of October and November the rainfall in the Severn Valley was high, as the water soaked into the ground it became saturated. More vegetation in the area would have meant the vegetation using the water would have decreased the amount of water in ground storage. Physical factors of the flood in 1998 are many; however, the most important one was the amount of rainfall. In October 1998 many areas received record amounts of rainfall caused by a 'hurricane'. This 'hurricane' brought very heavy rain and strong winds. The fact the rain was heavy means that the river did not have time to dissipate the water quick enough and the runoff was too fast, making the river rise t such an extent that it flooded.

Valuation Project Report

Valuation project report Valuation of the Incentive Stock Options for Procter & Gamble Co. Name: Haining Jiang Company background: In this valuation project, I will analyze a company which is mature and I am interested in. The name of the company is Procter & Gamble Co. the Procter & Gamble Company, together with its subsidiaries, engages in the manufacture and sale of a range of branded consumer packaged goods. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care.In the year of 1837, William Procter and James Gamble settled in the Queen City of the West, Cincinnati, and established themselves in business. As a result, a new company was born: Procter & Gamble. Procter & Gamble became into a listed company at a stock price and dividend which are $ 1. 7 and $ 0. 01 per month respectively in 19 Jan. 1970. For many years, P & G keep following their purpose and social responsibility at every and every corner in the world: â€Å"We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come.As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper. † Until now, P & G has become the largest consumer packaged goods company in the world at $ 67. 17 of the share price and $ 0. 562 of dividend per month. Main contents: 1. Discounted dividend valuation The most basic model is the Gordon Growth Model, which prices the stock by the dividend and future growth of dividends. The formula would be like this: V0=D0 (1+g)(r-g)=D1r-gWhere D0 is today’s dividend, which would be $ 2. 21 in our case. r is the cost of capital, r will be calculated like: Assume : The market premium = 6%* The risk-free rate = 3%* Given number in the case: ? = 0. 27 So, r = 0. 03 + 0. 27 x 0. 06 = 4. 62% The best way to estimate g is: The term g can be viewed as the return on owner’s equity times the earnings retention rate b. b = (1 – dividend payout ratio) = 1 – 58% = 42% return on equity = 14. 05% So, Sustainable growth rate = gs = 42% x 14. 05% = 5. 901% r< g, so we may meet a big problem when using the V0 formula above.But, as far as we all know, it is not possible that the firm can grow faster than r forever. The high return will attract other investors into the market to compete and the firm’s rate will eventually fall. And, I determine the long-run growth rate of dividends, gL = 3%*. g < r. Even if this data is not real in the true P&G case, I think it’s will be fine to continue our model. V0=D0 (1+g)(r-g)= $ 2. 21x(1+0. 03)(0. 0462-0. 03)=$ 140. 51 1) Two-stage dividend growth When the P & G is growing faster than r, one can use a multistage model, where the growth stages are broken into two parts.The first is the supernormal growth phase call gs , which is the rate that is higher than r. So we can assume: at the first period ( r < g ): gS = 5. 901% (as we calculated above) n = 3*; At the second period ( r > g ): r = 4. 62% (as we calculated above) gL = 3% (as we calculated above) D0 = $ 2. 21 (real data from P&G) ; As we all know the formula is: V0 = t=1n[ Dt1+rt+ Vn(1+r)n] Vn= D01+ gsn(1+ gL)(r- gL) So, V3= 2. 21Ãâ€"1+ 0. 0593(1+ 0. 03)(0. 0462- 0. 03) = $ 166. 88 V0 = 2. 21x(1+0. 059)1(1+0. 0462)1+ 2. 21x(1+0. 059)2(1+0. 0462)2+ 2. 21x(1+0. 059)3(1+0. 0462)3+ 166. 88(1+0. 0462)3 = $ 152. 27 2) Three-stage dividend growth We assume the P & G company experienced a life-cycle with a three stages that are: an early, development stage with high growth, a maturing phase with moderate growth, and a declining phase with little, no, or negative growth. The current dividend of $ 2. 21 per share will not change. Dividends are expected to grow at a rate of 10%* for 2 years. Following that, the dividends are expected t o grow at a rate of 8%* for 2 years. After the total 4 years, the dividends are expected to grow at a rate of 4%* per year, forever. The rate of return unchanged: 4. 2% (as calculated in 1. 1). We can break the calculation in to six steps: (1) Calculate the dividends for years 1 through 5: year| Dividend growth rate| Dividend| 1| 10%| 2. 431| 2| 10%| 2. 674| 3| 8%| 2. 888| 4| 8%| 3. 119| 5| 5%| 3. 275| (2) Calculate the present value of each of these dividends for years 1 through 5: Year| Dividend| Present value| 1| 2. 431| 2. 3236| 2| 2. 674| 2. 4430| 3| 2. 888| 2. 5220| 4| 3. 119| 2. 6035| 5| 3. 275| 2. 6130| (3) Calculate the present value of the dividends beyond year 4: P4= $ 3. 275(0. 0462-0. 04) = $ 528. 23 (4) Calculate the present value of the price at year 4:PVP4 = $ 528. 23(1+0. 0462)4 = $ 440. 92 (5) Calculate the sum of the present value of the dividends: PVdividends in year 1-4= t=110Dt(1+0. 0462)t = $ 12. 51 (6) Calculate the price today as the sum of the present value of dividends in years 1-4 and the price at the end of year 4: P0=$ 440. 92+$ 12. 51 = $ 453. 43 3) The uses of the dividend valuation models (1) The price-earnings ratio also known as the price-to-earnings ratio or PE ratio, is the ratio of the price per share to the earnings per share of a stock. Let us observe these data from P&G firstly: ?| 2012| 2011| 2010| stock price| $66. 6| $64. 50| $60. 44| current earings per share| $3. 82| $4. 12| $4. 32| P/E ratio| 17. 37173| 15. 65534| 13. 99074| dividend payout ratio| 58%| 50%| 42%| If we take the DVM and divide both sides by earnings per share, we arrive at an equation for the price earnings ratio in terms of dividend payout, required rate of return, and growth: P0E0= Dividend payout ratio x (1+g)r-g We can conclude the information below according to the above formula: Increase in dividend payout rate will cause increase in P/E ratio, this point is also obviously in the table above, the data comes from the real P&G case.Increase in r will cause decrease in P/E ratio Increase in growth rate will cause increase in P/E ratio. (2) we can also use the DVM to relate the price-book value ratio to factors such as the dividend payout ratio and the ROE. We assume the B0 indicate the current book value per share and ROE0 indicate the current return on book equity. As we all know: ROE0 = E0B0 , and P0=D0 (1+g)(r-g)=D1r-g ; So, we can get the formula easily below: P0=B0x ROE0 x D0E0x (1+g)(r-g) So we could get the conclusion through analyzing the above formula: increase in B0 will increase in P0; ncrease in ROE0 will increase in P0; increase in D0E0 will increase in P0; increase in g will increase in P0; increase in r will increase in P0; I believe there are plenty of other conclusions we can get from those formulas, I just mention some of them in my valuation report here. But in other words, we can fully use the DVM to find all the related fundamental factors to have further understanding through DVM. 4) What if there no d ividends? I think it’s acceptable and expectable if the P&G isn’t paying dividends now, but chooses to reinvest its money.It is a sign that the dividends in the future will be even larger. Of course, I won’t stick around with the company long enough to receive any of those dividends. But because of the growth of the company, I will realize that the eventual dividends will be even larger with the increasingly share price. After that, I can sell me shares to someone else to get my profit from it. Summary: â€Å"Valuation is the process of determining what something is worth at a point in time. When we value investments, we want to estimate the future cash flows from these investments and then discount these to the present.This process is based on the reasoning that no one will pay more today for an investment than what they could expect to get from that investment on a time and risk adjusted basis. †1 I think the paragraph I cited above not only give us the best conclusion of by valuation project report, but also tell us a definitely reason we study finance. Please Note: If the number followed a * behind it, it means this number is assumed and the others without * are all real data from P&G company finance report. 1: cited from the â€Å"Dividend Valuation Models†, by Pamela Peterson Drake, Ph. D. , CFA.

Argumentative Gun Control Essay - 1422 Words

Argumentative Gun Control Paper The issue of Gun Control has been on the minds of humans for hundreds of years. How do we protect ourselves and our loved ones? How do we keep such a dangerous weapon out of the hands of the wrong person? Inside the Second Amendment we are granted the right to Bear Arms. Having that amendment gives each person the ability to carry a weapon if they choose, so how can we control who should or shouldn’t carry? According to an article evaluated from Kovandizic and Marvell, each year in America we can see the most violent crimes have been committed using firearms. â€Å"In 2000 firearms were involved in 66% of homicides, 26% of robberies, 6% of aggravated assaults, and 8% of all violent crime victims faced†¦show more content†¦This group has very strong ties with many members of legislation; it also has many lobbyists and supporters in our government. Among the many members of congress, former presidents George Bush and Ronald Reagan were and are members of the NRA. One of the NRA’s most noticeable acts happened a few years ago, they tried to repeal the ban on assault weapons. The second group mentioned was the Gun Owners of America. The Gun Owners of America is another group that is against gun control. The GOA preserves and defends the rights of gun owners through legislation. They publish books, articles, and videos on gun issues and how those issues affect people. They also conduct seminars for the press and Congress about issues on the Second Amendment, and gun issues. The GOA opposes bans on semiautomatic weapons, armor piercing ammunition, and handguns. You know a little about two major groups for gun control, now let’s take a look at a couple groups that are pro-gun control. The major group for gun control is Handgun Control, Inc. (HCI), which is headed by Sarah Brady. Mrs. Brady is the wife of James Brady, who was shot during an attempt on President Reagans life in 1981. Another major group is the Coalition to Stop Gun Violence (CSGV), which was formerly known as the National Coalition to Ban Handguns. The CSGV believes that handgunsShow MoreRelatedArgumentative Essay Gun Control1410 Words   |  6 Pages English 101 Argumentative/Persuasive Essay 4/12/2013 Word Count 1,255 Readability 12.3 There are new proposed gun control laws in the aftermath of the massacre at Sandy Hook Elementary School in Newton, Connecticut that occurred on December 14th, 2012. This incident claimed the lives of twenty 1st graders and six adults and has set the government in motion to try to prevent future acts of violence by strengthening gun control laws in the United StatesRead MoreGun Control : Argumentative Essay Essay1702 Words   |  7 Pages100 3 November, 2014 Gun Control: Argumentative Essay The gun control debate is a good example that justifies the common known mantra that history will always repeat itself. Gun control is a regulation put forward with an aim of managing the purchase and ownership of firearms with the main aim being to reduce the criminal and unsafe use of firearms. The gun control measures involve strategies such as registration of firearms aimed at restricting the ownership of guns by people proved to beRead MoreArgumentative Essay : Gun Control Essay1000 Words   |  4 Pages Argumentative Essay: Gun Control in America â€Å"The second amendment of The United States Bill of Rights is my concealed weapons permit, period.†- Ted Nugent. Saving lives one by one starts with limiting the purchase, sale, and use of guns in America. According to Alexander Lee, the political and social debate over the question of how much gun control is appropriate and it has been regularly discussed within the last decade. Shootings such as Sandy Hook, and Tucson shootings have raised the government’sRead MoreArgumentative Essay On Gun Control1397 Words   |  6 Pagesto the United States Constitution protects the right of the people to bear arms and was adopted on December 15, 1791, as part of the first ten amendments located in the Bill of Rights. Since then there have been many attempts to create stricter gun control legislation and this leads to the argument whether or not this is an attack on the 2nd  Amendment? The Bill of Rights amendments adds to the Constitution specific guarantees of personal freedoms and  rights. The Second Amendment was originally basedRead MoreArgumentative Essay On Gun Control757 Words   |  4 PagesWhat is gun control? Who is affected by gun control? Why should someone care about gun control? Imagine going to a concert with your friends and family, you guys are laughing and having a good time when all of a sudden someone starts shooting up the place. Are you thinking to yourself if guns were banned this wouldnt have happened? Or are you wishing you had a gun to protect everyone from what is happening? Gun Control has been an issue since the beginning of time, there are some people who thinkRead MoreArgumentative Essay On Gun Control715 Words   |  3 Pagescourse you can expect an ongoing political conversation on how to prevent attacks like this. During the attack, Paddock used what is called a â€Å"bump stock,† on many of his guns, making his gunsâ €™ rapid fire, like an automatic gun, which is what made it so easy for him to open fire and attack so many. After the tragic event, a gun control organization looked into the device that helped aid Paddock in his attack and decided they would sue the makers for making it so accessible, and other reasons. WashingtonRead MoreArgumentative Essay On Gun Control1153 Words   |  5 PagesIn an editorial published in the Vidette Online titled â€Å"We Need Gun Control Now More Than Ever,† the editorial board takes on the topic of the need for stricter gun control. The editorial board reports that if gun control isn’t more strictly enforced it will only create more mass shootings. They make the point that if there was stricter gun control many people would still be living, but their lives have been cut short because of mass shootings. The editorial board is correct when they go on to sayRead MoreArgumentative Essay On Gun Control1610 Words   |  7 PagesGun Control Although gun control laws are made to prevent violent outcomes, the influence which laws carry are the complete opposite to what one would think. Ever since the ratification of the Second Amendment, the debate on gun control has become a very heated topic. There is one side that believes that guns should be banned in order to stop any future tragedies from occurring. On the other hand, there is another side that believes guns are our cherished right to own and we should be allowed toRead MoreArgumentative Essay On Gun Control1006 Words   |  5 PagesGun control in the United States is a very controversial topic in today’s political society, leaving the nation divided into two sides with two strongly opinionated beliefs. This all started with the increase in the amount of mass shootings and an overall increase in gun violence. The two sides consist of the liberal point of view and the conservative point of view. The liberals believe that the availability of firearms to the pe ople in the country is a major issue, and that the U.S. government isRead MoreArgumentative Essay On Gun Control749 Words   |  3 PagesAs deciding to what topic I would choose to write a research paper on, the choice was quite simple. The major topic of many discussions today are about guns, gun control and how deadly they can be. The question at hand in my book is simple, are guns bad or are people bad? I believe that legal citizens, who can pass a background check with no prior felonies, should be entitled to the right to purchase and obtain a firearm. With that being said, there are quite a few loopholes in the current