Company Analysis of Nestle Corporation Essay Example | Topics and Well Written Essays - 2750 words

Company Analysis of Nestle Corporation - Essay Example A situational audit is a comprehensive analysis of an organization’s current state in comparison to its micro and macro economic environment. According to Cherniss and Adler (2000, p. 97), a situational audit helps to establish the organization’s current situation in relation to its marketing objectives. In addition, a situation analysis identifies the future economic performance of the organization if it continues to use its current strategies. Nestle foods has operations in more than eighty countries globally. The organizations expansion strategy is implemented through joint venture and acquisitions. This report presents a situational audit for Nestle Foods, one of the world’s largest organizations. It explores the external, competitive, and internal market factors influencing the organization performance. Finally, it provides an analysis of the suitability of the marketing strategy used by the corporation and provides appropriate recommendations. The Internal environment According to Remenyi, Money and Bannister (2007, p.128), the internal analysis of an organization helps to identify the organization’s strengths, weaknesses, opportunities, and threats. The strengths represent the competencies and resources within the organization, which help it to achieve a competitive position in the industry. Nestle foods has numerous strengths which have helped the organization to become one of the worlds largest corporations.... Management of the organization has excelled in creating an environment, which foster innovation in the company. Innovation has helped the organization to achieve internal growth through the ability to meet and surpass consumer expectations. Nestle Foods has uses a low cost strategy which helps the organization to maintain low cost for all operations. Through the low cost strategy, Nestle Foods is able to offer its consumers competitive prices for its products. In addition, Nestle foods have a highly competitive team of research and development in charge of new product development. Nestle Foods has affiliations with major learning institutions and has developed a university where most of its research and development is conducted. The research and development team has enabled Nestle Foods to differentiate its products from those of its competitors in the industry. Another strength that Nestle Foods has its health based weight-management product line. With the growing popularity of heal th foods in the European market and other countries, this presents a lucrative opportunity for Nestle Foods. According to Remenyi, Money and Bannister (2007, p.128), threats are factors in the business environment which may hinder the successful implementation of an organization strategies. Nestle Foods has undertaken an intensive expansion strategy by venturing in many markets in Europe and other continents. However, most markets in Europe are already saturated which may hinder the successful implementation of the Nestle Food’s expansion strategy in European markets. For example, when Nestle Foods launched its yoghurt, Yoplait, in France, it failed to acquire a large market share because Danone is the established brand of yoghurt in the country. Nestle

Restaurant design issues Essay Example | Topics and Well Written Essays - 1750 words

Restaurant design issues - Essay Example The problem is in choosing the right kind of lighting. 4. Acoustics can make or break a restaurant. If the restaurant is too loud, then people will not want to eat there, unless the theme is that the restaurant is fun and vibrant. The right acoustics is essential to the success of the restaurant. Concept One of the most important aspects of design of the dining room is what concept is the restaurant going for? The concept is important because all the other aspects of the dining room would play off of this (Walker, 2005). Walker (2005) describes what a restaurant concept is, and how designs might change according to the concept that is conceived by the restaurant designer. He describes concept as â€Å"the matrix of ideas that constitutes what will be perceived as the restaurant’s image† (Walker, 2005, p. 51). A restaurant should aim for a concept that is different than other competing restaurants, while also being better than these other restaurants. The elements of con cept are atmosphere, menu, location, marketing, image and management. Examples of concepts include family restaurants, romantic restaurants, fun restaurants, formal restaurants, and, within each of these broad categories are sub-categories that help further define the restaurant. The concept should be clear-cut, in that the symbols, furnishings, service and everything else about the restaurant should be integrated into the proper image that is conveyed to the patrons about the restaurant. In other words, the restaurant should have some kind of theme, character or purpose (Walker, 2005). Walker (2005) lists some of the concept restaurants that have been successful, such as Planet Hollywood restaurants, Lettuce Entertain You restaurants, and different restaurants that are owned by celebrities. He also states that one of the most successful restaurant chain concepts is that of the Hard Rock Cafe. This was a chain that was founded in London in 1971, and each of the restaurants boasts ro ck ‘n’ roll memorabilia and a generally loud and boisterous atmosphere. Therefore, when beginning with the different dining room elements, one must first begin with what kind of concept the restaurant has. This will dictate the three elements that will be explored further in this essay – color schemes, lighting and acoustics. Obviously, a restaurant that has a concept as a family restaurant would have different lighting, color schemes and acoustics than would a restaurant that is being marketed as formal, or a restaurant that is marketed as fun - such as a Hard Rock Cafe or Planet Hollywood. Color Color schemes is the first element that must be considered. According to Piotrowski and Rogers (1999), color schemes need to reflect the overall concept and type of restaurant, as well as take into consideration the current color trends. The color scheme may be unexpected or traditional – for instance, in a Chinese restaurant, the traditional color scheme is red and gold. Unexpected colors might be mauve and walnut. This can work two ways – on the one hand, unexpected color schemes set the restaurant apart from other Chinese restaurants who stick with the more traditional schemes. On the other hand, this kind of color scheme might turn off the patrons who have come to expect the more traditional color scheme. Piotrowski and Rogers (1999) recommend studying color psychology before deciding upon the restaurant color scheme – certain colors stimulate appetite, other colors are soothing, and

Succession Planning Essay Example for Free

Succession Planning Essay 1. Introduction All around the globe there are two main opinions about talent management. One that states that talent can be developed by itself through the everyday work. On the other hand another school states that a talent must be discovered, nurtured, grow and retained. In the fast growing business world especially in last 2 decades many issues appeared that emphasise on taking a stand whether to follow the evolutionary theory or to follow the succession planning and management. Sometimes a company face a challenge if a key position worker disappears for any reason. For example taken by a head hunter, retirement or death. A place is vacant and to fill this place it would take maybe months. Not mention the amount of knowledge that was lost as this key employee was gone. As the competition increases in the business world there is no more loyalty, both from the company and the employee. To face those challenges big organisations must develop a plan not just to solve these situations but also to avoid them in the first place. This plan is a complicated process that requires the dedication of everyone involved.  Its success can be measured by the people that affects. (Palma, M 2009, ‘Succession Planning’, PA Times (American Society for Public Administration, March, vol.32, iss. 3, pp.10-11). This report aims to explain and both theories from different vintage points. This paper has three sections. The first is the definition of succession planning. The next is examples of the evolutionary theory. The third section is about talent development as a result of sustained efforts to prepare the leaders of tomorrow. At the end I’ll briefly discuss my conclusion and give my recommendation. 2. Why Succession planning Succession planning has been defined as: A means of identifying critical management positions, starting at the levels of project manager and supervisor and extending to the highest positions in the organisation. Succession planning also describes management positions to provide maximum flexibility in lateral management moves and to ensure that as individuals achieve greater seniority, their management skills will broaden and become more generalized in relation to total organisational objectives rather than to purely departmental objectives.( Rothwell, W. J., 2010. Effective Succession Planning. Fourth edition ed. New York: AMACOM American Management Association.) Also it is the identification and development of potential successors for key positions in an organisation, through a systematic evaluation process and training. Unlike replacement planning (which grades an individual solely on the basis of his or her past performance) succession planning is largely predictive in judging an individual for a position he or she might never have been in.( www.businessdictionary.com) It is a component of good HR planning and management. It understands that staff will not be with an organization forever and it provides a plan and process for ameliorating the situation that will occur when they leave. It must not focus on the senior positions only, but also on all the crucial key positions in all levels. Succession planning is a process of developing talent to meet the needs of the organisation now and in the future. Every time a manager makes a work assignment, he or she is preparing someone for the future because he or she  is building that workers ability. Work experience builds competence, and different kinds of work experience build different kinds of competence. (Effective succession planning, William J. Rothwell, 4th edition, p371) Organizational leaders need to think about aligning their staffing and leadership needs with the organization’s future strategic objectives. If they do not take action to establish an effective SPM program, they are likely to fall victim to the so-called like-me problem, in which people are biased to pick other people like themselves, viewing them more favourably. Given the tendency to want to â€Å"clone† job incumbents for successors, organizations must take steps to counteract that built-in bias, for the simple reason that the job incumbent of today, while perhaps perfectly suited for the business environment now, may not be suitable for the business environment of the future.( Rothwell, W. J., 2010. Effective Succession Planning. Fourth edition ed. New York: AMACOM American Management Association.) 3. The Evolutionary Process of Talent Development: Here are some examples of real life companies using the evolutionary process: 3.1 Mohamed Ibrahim Optics This company was established in 1972 and the owner Mr. Mohamed Ibrahim at this time about 35 years old. By 1999 there were more than 25 branches around Egypt. After more than 40 years it’s the time for him to retire because health issues. He has 3 sons and because he was always managing the process he is assuming that one of his sons would be his successor in the business, but neither had he identified which of them would be the best successor, nor he tried to develop them. The emotional factor and the notion that he was going to stay at home and would not be the C-executive terrifying Mr. Ibrahim. Now one of his sons who is not interested in the business is running the operation and the employees are not happy with the new manager which affected their performance. 3.2 Rizkallah appliances This is an example about a CEO’s maneuvering to delay the succession process. After 2 decades of running Rizkallah for electronics, the time has come for Mr. Essam to start planning for retirement. The board was confident that Mr. Essam was the best one for the position. He has the experience and the knowledge. Putting his retirement plans in one hand and the strategy he want  to follow in the other hand made him procrastinate the succession process. He became hypercritical of all potential candidates. Also compare his performance with the performance of the new candidate. For Mr. Essam he was losing his job. The key to successful succession planning is to stop viewing it as a zero-sum game with one winner and one loser. It should be regarded as a natural progression in the health of an organization. (Baldoni, J 2008, ‘Making a Success of Succession Planning’, CIO Insight) 3.3 Masr for insurance This is about a CEO who would not leave his position due to economic factors. The recession in Egypt make Mustafa think twice about leaving his position. Also the recession made it very difficult to start a systematic succession planning in the organisation. Pulling off a CEO transition is never easy, especially during a recession. (The art of succession, By: Boyle, Matt, BusinessWeek, 5/11/2009, Issue 4130) In his mind he thought that he must be the only decision making person. Holding all the keys for making a decision in his hands. Regardless he was about 59 years old he never thought of choosing a successor or investing in a succession plan. During the revolution Egypt in 2011 he was exposed to the gases and because of his age and medical condition he could not tolerate the gas and he suffocated to death. More than 6 months passed by and his position was still vacant and no one dare to fill his place. Those 6 months were very tough and the firm missed lots of opportunities as in this period many companies changed their policies to coop with the different situation. 4. Succession planning and management Argument: From the previous examples we understand that succession planning is needed in any big company. SPM program is needed so the organisational leaders align their staffing and leadership needs with the organisation’s future strategic objectives. Another reason why SPM program is needed: More and more organisations are experiencing the effects of aging workforces that are putting them at risk of losing their most experienced workers to retirement. Also terrorism increases the need for SPM program to ensure that key workers have back up in case they are needed. (Effective succession planning, William J. Rothwell, 4th edition) I Use everything that happens as  a learning experience to prepare my staff to stretch in the future. Everyone takes experiences at a different level; they dont all derive the same kinds of lessons from those experiences. What I try to do on a daily basis is turn everything into a leadership learning session. (Chief learning officer magazine, The CLO Succession Plan, March 2008 issue) According to Peter F. Drucker: â€Å"The question of tomorrow’s management is, above all, a concern of our society. Let me put it bluntly-we have reached a point where we simply will not tolerate as a country, as a society, as a government, the danger that any one of our major companies will decline or collapse because it has not made adequate provisions for management succession.† (Harper W.Moulton and Arthur A. Fickel, Executive Development: Preparing For the 21st Century (New York: Oxford University Press, 1993), p. 29. â€Å"Every enterprise is a learning and teaching institution. Training and development must be built into it on all levels—training and development never stop.à ¢â‚¬  – Peter F. Drucker 5. Talent development is a result of a sustained effort to prepare leaders of tomorrow Another good example from a friend of mine who was working as human resource manager in Prizma Securities Company. 5.1 Prizma Securities In the company they were using a 6 key steps model which used in many large organisations worldwide. They were using market-driven approach to integrate strategic plans with succession plans where necessary talents are required to deal with competitive pressure. 1. Formulating a mission statement: It describes the purpose of a program or the reason for its existence. 2. Identify key areas and positions: Gap analysis may identify key areas. Also Review key positions periodically because they may change over time, depending on changes in Government direction and the introduction of new technology. 3.Identify competency for key areas and positions: Employees who believe they are growing and developing professionally, learning new skills and gaining experience are more productive, have higher morale, and are more loyal than employees at organizations that dont emphasize talent development and knowledge management (Moskal, Planning for Succession, Baseline, October2008, iss. 89,  pp. 12 -14.) This was achieved by assessing knowledge, skills and abilities or competency profile. 4. Find interested employees and —assess them against capabilities: Using Talent review meetings 5.Develop and implement succession and knowledge transfer plans: Using stretch assignments, acting assignments, formal training, mentoring and coaching and Job rotations those procedures would help in transferring of knowledge and not remain with certain people. Effective succession planning and talent retention nurtures those employees responsible for the organizations future vision, strategy and success. It assures a sequence of qualified, promotable people as the boomers move on. (Moskal, Planning for Succession, Baseline, October2008, iss. 89, pp. 12-14.) 6. Evaluate effectiveness Evaluation was based on the Donald Kirkpatrick pattern which examines four levels: customer satisfaction, program progress, effective placement and organisational results. Also the programmatic evaluation which examine the process against its stated mission, objectives, and activities. 5.2 Adel Elkholy for shipping: Adel Elkholy Company is one of the largest companies in Egypt. The total number of workers is about 800 employees. In a meeting with HR manager personally he explained briefly the program for succession he is implementing. The purpose of the program: This step to clarify why the company undergoing this program. So the whole departments could be involved and participate. The measurable objectives of the program: result must be measurable so they can measure the success of the program. Design a Competency model: A competency model was established to link the organisation core competencies to job competencies. A present competencies identification for success: in this step 2 categories are identified the exemplars and the fully successful performers. The way those competencies are measured: using high technological software. The competencies needed for success in the future: A scenario planning is conducted to discover the  competencies needed in the future. The way the organization assesses potential: using empowered individual potential assessment. Classify individuals by performance and potential: Using the performance/potential 9 grids Narrowing gaps: Preparing and evaluating individual development plans and activities. Evaluating results: It’s carried out by external consultant. Then the results are presented to the owner of the company. 6. Conclusion Although about one half of the companies do not have a succession plan as stated in Business Week: Last year, the National Association of Corporate Directors found that 42.4% of companies had no succession plan at all. The economic crisis has exacerbated this problem as resources have diminished. (The Art of Succession. by: Boyle, Matt, BusinessWeek, 5/11/2009, Issue 4130). But this does not mean that succession planning is not important for the survival of the organisation; moreover its importance is increasing year after year. Most of the organisations knew its importance even if they do not apply the plan. In my opinion, the previous examples show the importance of having a systematic succession planning and management program. That helps placing the right person in the right place at the right time. Having successors is not an easy job, if the SP Management Program is not aligned with the business strategies HR strategies; all stockholders are involved, top management giving full support and the use of proper approaches and tools. It became also mandatory than ever for organisations to plan for future leadership and development of all workers at all levels. At the same time, all the activities in the market became more and more complex. Many functions now require extensive skills and knowledge. 7. Recommendations For all the previous reasons mentioned in my report supported with real life cases, I strongly recommend leaders to understand that its critical to strengthen their talent pool through succession planning, professional development, job rotation and workforce planning. They need to identify potential talent and groom it. So, they must take proactive steps to plan for talent needs at all levels and implement programs designed to ensure that the right people are available for the right jobs in the right places and at the right time. References 1. (A 2009 tune up your firm’s succession planning. Dominic Cingoranelli. Journal of accounting march 2009). 2. (Palma, M 2009, ‘Succession Planning’, PA Times (American Society for Public Administration, March, vol.32, iss. 3, pp.10-11) 3. Rothwell, W. J., 2010. Effective Succession Planning. Fourth edition ed. New York: AMACOM American Management Association. 4. ( www.businessdictionary.com) 5. (Baldoni, J 2008, ‘Making a Success of Succession Planning’, CIO Insight) 6. (The art of succession, By: Boyle, Matt, BusinessWeek, 5/11/2009, Issue 4130) 7. (Chief learning officer magazine, The CLO Succession Plan, March 2008 issue) 8. (Moskal, Planning for Succession, Baseline, October2008, iss. 89, pp. 12-14.) 9. Harper W.Moulton and Arthur A. Fickel, Executive Development: Preparing For the 21st Century (New York: Oxford University Press, 1993), p. 29.

And Now For Someone Completely Different :: Essays Papers

And Now For Someone Completely Different When the six foot five inch man that is John Cleese is mentioned, most people see him in their minds eye complaining about his dead parrot or as the brave Sir Lancelot. What many people don't think of, though, is his involvement with multiple other productions, not all of them comedy. His involvement, too, stretches from just simple acting. John Cleese is truly a Renaissance man of the media. John Cleese went through school wanting to be in the legal profession and he received his M.A. degree from Downing College in Cambridge. He soon abandoned his plans in law, however, when he had a great success with Footlights, the performing arts society for Cambridge. He met his future writing partner and Python member Graham Chapman in Footlights. Cleese had an appearance in the Footlights Revue which was a campus production that later was shown in London's West End, and then again, as Cambridge Circus, on Broadway in 1964 (Current Biography). He stayed in New York to perform in the British musical Half a Sixpence. When he returned to England he was approached by David Frost to help write and to perform in Frost's new weekly BBC comedy show, The Frost Report, in 1965. Chapman was also working on The Frost Report, with other to be Python members Eric Idle, Michael Palin and Terry Jones (The Life of Monty Python). Cleese went on with his writing partnership with Chapman after The Frost Report, working on such titles as The Magic Christian, based on the novel by Terry Southern (The Fairly Uncreative Monty Python Site). Cleese's largest comedy hit came when he joined up again with Chapman, Idle, Palin, and Jones. Together, with American cartoonist Terry Gilliam, they created the notorious Monty Python's Flying Circus. The whole group co-wrote and starred in this "breakneck barrage of satiric skits, [and] surreal cartoons" (Current Biography) for several years; drawing over ten million viewers each week. The Monty Python sextet would later collaborate to write books, do live performances, and make movies, such as Monty Python and the Holy Gail (1975), a spoof on the legend of King Arthur and his quest for the Holy Grail, and The Meaning of Life (1983), which was Monty Python's view on the stages of life (TFUMPS). At the emerging point of his career that was his BBC works, he met American actress Connie Booth, who he would wed in 1968 (TLOMP). The couple would write and star in a small motion picture in 1974 but would have great success in the television And Now For Someone Completely Different :: Essays Papers And Now For Someone Completely Different When the six foot five inch man that is John Cleese is mentioned, most people see him in their minds eye complaining about his dead parrot or as the brave Sir Lancelot. What many people don't think of, though, is his involvement with multiple other productions, not all of them comedy. His involvement, too, stretches from just simple acting. John Cleese is truly a Renaissance man of the media. John Cleese went through school wanting to be in the legal profession and he received his M.A. degree from Downing College in Cambridge. He soon abandoned his plans in law, however, when he had a great success with Footlights, the performing arts society for Cambridge. He met his future writing partner and Python member Graham Chapman in Footlights. Cleese had an appearance in the Footlights Revue which was a campus production that later was shown in London's West End, and then again, as Cambridge Circus, on Broadway in 1964 (Current Biography). He stayed in New York to perform in the British musical Half a Sixpence. When he returned to England he was approached by David Frost to help write and to perform in Frost's new weekly BBC comedy show, The Frost Report, in 1965. Chapman was also working on The Frost Report, with other to be Python members Eric Idle, Michael Palin and Terry Jones (The Life of Monty Python). Cleese went on with his writing partnership with Chapman after The Frost Report, working on such titles as The Magic Christian, based on the novel by Terry Southern (The Fairly Uncreative Monty Python Site). Cleese's largest comedy hit came when he joined up again with Chapman, Idle, Palin, and Jones. Together, with American cartoonist Terry Gilliam, they created the notorious Monty Python's Flying Circus. The whole group co-wrote and starred in this "breakneck barrage of satiric skits, [and] surreal cartoons" (Current Biography) for several years; drawing over ten million viewers each week. The Monty Python sextet would later collaborate to write books, do live performances, and make movies, such as Monty Python and the Holy Gail (1975), a spoof on the legend of King Arthur and his quest for the Holy Grail, and The Meaning of Life (1983), which was Monty Python's view on the stages of life (TFUMPS). At the emerging point of his career that was his BBC works, he met American actress Connie Booth, who he would wed in 1968 (TLOMP). The couple would write and star in a small motion picture in 1974 but would have great success in the television

Reason for falling in Indian rupees Essay

Throughout the country please stop using cars except for emergency for only seven days (Just 7 days) Definitely Dollar rate will come down. This is true. The value to dollar is given by petrol only.This is called Derivative Trading. America has stopped valuing its Dollar with Gold 70 years ago. Americans understood that Petrol is equally valuable as Gold so they made Agreement with all the Middle East countries to sell petrol in Dollars only. That is why Americans print their Dollar as legal tender for debts. This mean if you don’t like their American Dollar and go to their Governor and ask for repayment in form of Gold,as in India they won’t give you Gold. You observe Indian Rupee, † I promise to pay the bearer†¦Ã¢â‚¬  is clearly printed along with the signature of Reserve Bank Governor. This mean, if you don’t like Indian Rupee and ask for repayment,Reserve Bank of India will pay you back an equal value of gold.(Actually there may be minor differences in the Transaction dealing rules, but for easy comprehension I am explaining this) Let us see an example. Indian petroleum minister goes to Middle East country to purchase petrol, the Middle East petrol bunk people will say that liter petrol is one Dollar. But Indians won’t have dollars. They have Indian Rupees. So what to do now? So That Indian Minister will ask America to give Dollars. American Federal Reserve will take a white paper , print Dollars on it and give it to the Indian Minister. Like this we get dollars , pay it to petrol bunks and buy petrol. But there is a fraud here. If you change your mind and want to give back the Dollars to America we can’t demand them to pay Gold in return for the Dollars. They will say † Have we promised to return something back to you? Haven’t you checked the Dollar ? We clearly printed on the Dollar that it is Debt† So, Americans don’t need any Gold with them to print Dollars. They will print Dollars on white papers as they like. But what will Americans give to the Middle East countries for selling petrol in Dollars only? Middle East kings pay rent to America for protecting their kings and heirs. Similarly they are still paying back the Debt to America for constructing Roads and Buildings in their countries. This is the value of American Dollar. That is why Many say some day the Dollar will be destroyed. At present the problem of India is the result of buying those American Dollars. American white papers are equal to Indian Gold. So if we reduce the consumption of petrol and cars, Dollar will come down The Above Details are translated originally from Telugu Language to English by Radhika Gr. Kindly share this and make everyone aware of the facts of American Dollar V/s Indian Rupee. And here is a small thing other than petrol , what we can do to our Indian Rupee YOU CAN MAKE A HUGE DIFFERENCE TO THE INDIAN ECONOMY BY FOLLOWING FEW SIMPLE STEPS:- Please spare a couple of minutes here for the sake of India. Here’s a small example:- At 2008 August month 1 US $ = INR Rs 39.40 At 2013 August now 1 $ = INR Rs 62 Do you think US Economy is booming? No, but Indian Economy is Going Down. Our economy is in your hands.INDIAN economy is in a crisis. Our country like many other ASIAN countries, is undergoing a severe economic crunch. Many INDIAN industries are closing down. The INDIAN economy is in a crisis and if we do not take proper steps to control those, we will be in a critical situation. More than 30,000 crore rupees of foreign exchange are being siphoned out of our country on products such as cosmetics, snacks, tea, beverages, etc. which are grown, produced and consumed here. A cold drink that costs only 70 / 80 paise to produce, is sold for Rs.9 and a major chunk of profits from these are sent abroad. This is a serious drain on INDIAN economy. We have nothing against Multinational companies, but to protect our own interest we request everybody to use INDIAN products only at least for the next two years. With the rise in petrol prices, if we do not do this, the Rupee will devalue further and we will end up paying much more for the same products in the near future. What you can do about it? Buy only products manufactured by WHOLLY INDIAN COMPANIES.Each individual should become a leader for this awareness. This is the only way to save our country from severe economic crisis. You don’t need to give-up your lifestyle. You just need to choose an alternate product. Daily products which are COLD DRINKS,BATHING SOAP ,TOOTH PASTE,TOOTH BRUSH ,SHAVING CREAM,BLADE, TALCUM POWDER ,MILK POWDER ,SHAMPOO , Food Items etc. all you need to do is buy Indian Goods and Make sure Indian rupee is not crossing outside India. Every INDIAN product you buy makes a big difference. It saves INDIA. Let us take a firm decision today. we are not anti-multinational. we are trying to save our nation. every day is a struggle for a real freedom. we achieved our independence after losing many lives. they died painfully to ensure that we live peacefully. the current trend is very threatening. multinationals call it globalization of indian economy. for indians like you and me, it is re-colonization of india. the colonist’s left india then. but this time, they will make sure they don’t make any mistakes. russia, s.korea, mexico – the list is very long!! let us learn from their experience and from our history. let us do the duty of every true indian. finally, it’s obvious that you can’t give up all of the items mentioned above. so give up at least one item for the sake of our country! We would be sending useless forwards to our friends daily. Instead, please forward this to all your friends to create awareness.

Essay on The Watergate Scandal - 1199 Words

June 17, 1972 forever changed both journalism and politics. A simple botched break-in marked the downfall of President Richard Nixon, and the rise to glory of two obscure young Washington Post journalists: Carl Bernstein and Bob Woodward. While their investigative journalism revealed the truth, their questionable methods and ethics have led to these questions; Do the ends justify the means? Was their behavior ethical and legal? The Watergate Scandal was a major political scandal during the Presidency of Nixon. Nixon, paranoid and afraid of losing his reelection, employed men to do an assortment of illegal activities intended to place the republicans ahead of the democrats in the election. The activities were not detected until a†¦show more content†¦During different incidents spaced throughout the investigation of Watergate , all four were violated by Woodward and Bernstein. The first infringement occurred early during Watergate. Bernstein was investigating Miami ties to the Watergate burglars and agreed to trade information (arrests, mental illnesses, history of homosexuality) on a name, for the Dade County, Fl district attorneys knowledge about the connections (Bernstein Woodward, 1974). It turns out the man investigated was the DAs opponent in the next election. Bernstein never actually gave the DA the research; the DA told him he did not need the information anymore. His crime? Plotting with a prosecutor to investigate a political target (Cook, 2012). Another ethically objectionable choice was Bernstein illicitly pulling phone and credit card records on Watergate targets (Cook, 2012). He persuaded a source at a telephone company to give him Bernard Bakers (the burglar) records. While not illegal at the time, it is presently a federal offense punishable by up to ten years in prison. Currently, Rupert Murdochs British newspaper holdings are being destroyed over similar behavior, and the News of the Earth is gone for illegally accessing voicemails; Bernsteins infringements were vastly more obtrusive (Cook, 2012). Violating privacy of personal financial records is completely unethical and a complete infraction of minimizing harm (Society of ProfessionalShow MoreRelatedThe Watergate Scandal1543 Words   |  7 Pagestrustworthy – or so they thought. Unfortunately, shortly after Nixon was elected to his second term of presidency in 1972, the Watergate Scandal changed America forever by creating a sense of mistrust toward the government for the American people because of The Nixon Administration’s actions. It all began on Sunday, June 18, 1972 when Frank Wills, security guard at the Watergate office complex in Washington, D.C., found a piece of tape that was preventing a door from locking. After removing the pieceRead MoreWatergate Of The Watergate Scandal1135 Words   |  5 PagesWatergate Scandal The Watergate Scandal happened almost 43 years ago; the event will never be forgotten. The Watergate scandal defined, perhaps for the first time, that a president of the United States could be portrayed as untrustworthy. Richard Nixon ran for a second term in 1972, in which he won by a huge margin. The Democratic Party had their headquarters at the high-end Watergate hotel. The break-in happened on June 17th, 1972, in which a security guard noticed the tape on the door lockRead MoreWatergate Scandal2036 Words   |  9 PagesThe Watergate Scandal Essay written by Unknown The Watergate Scandal was a series of crimes committed by the President and his staff, who were found to spied on and harassed political opponents, accepted illegal campaign contributions, and covered up their own misdeeds. On June 17, 1972, The Washington Post published a small story. 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Global financial crisis debt securitization - Free Essay Example

Sample details Pages: 9 Words: 2627 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? The present global financial crisis is the worst financial crisis world has witnessed since the great depression of the 1930s. In this essay, I attempt to critically review the role played by capitalism in causing this crisis. I shall concentrate the causal events that happened in United States of America, though there were similar events to lesser extents that happened elsewhere in the world, especially in developed countries. Don’t waste time! Our writers will create an original "Global financial crisis debt securitization" essay for you Create order Such related causal events in other countries are not unexpected, given the significance America has in the global economy, as well as the fact that comparable ideas were used by politicians and financial institutes across the globe. In the first part of the essay, a brief history of debt securitization is given, followed by various details on how the system of CDOs (collateralized debt obligations) used to function. In the latter part, the effects it had on the whole financial system is analyzed as well as what went wrong and the reasons behind it. The essay concludes by critically reviewing the whole system and linking it to the principles of Capitalism, that was found to be the root cause of this systemic failure. A brief history of debt securitization The current system of securitisation of house mortgages started in the eighties. Though many have tried to present this system as an innovative technology initiated by private companies to spread their risk, the reality is different. It was a result of the US Federal reserve in 1979 controlling growth of money to reduce inflation. Hence financial companies were forced to chase risky high return mortgages. However, the aftermath of this was that these financial companies had to transfer these risky assets from their books. Thus the system of securitization was born. Many economists realized the high potential of this system. Mortgages and other assets were grouped into various risk classes, and the prices of each of these were varied depending on the risk covered. Buyers of these packaged assets could pick the ones that matched with their risk appetite. These financial companies charged fees for the originating these loans, as well as for evaluating the risk and further charges a serv ice fees. The capital market would then sell these sliced and diced packages as CDOs (collateralized debt obligations) to fit the demands of the potential investors. This whole system was hailed as a major democratic movement because this helped many middle class people to get into home ownership. Initially, the banks and other financial institutions thought that they will not be affected by any interest rate risks. This also brought two additional possibilities. Firstly, CDOs and packaged debt assets could be easily traded anywhere in the world, and were free from any national borders. Post world wars, and the subsequent growth that happened across the developed countries (and most of developing countries), there was huge amount of investors with money, who were in search of high returns. Hence the risk appetite of these investors were high. Hence, these packaged assets were very sought after by these investors. It did not take much time before the value of these securitized debts overtook the value of US Federal debts market Minsky. Also was the advantage that these assets were denominated in dollars (1987). Secondly, the significance of banks declined in comparison to capital markets. So much that the share of banks trading financial assets declined from fifty percent to twenty five percent in the years from 1950 to 1990. There were experiments conducted by the policy makers favouring unregulated capital markets. For instance, for the banks to function profitably, they had to have a 450 points spread between the assets interest rate and liabilities interest rate. This was essential to profitably cover the profits including the return on capital, customer service costs as well as the costs to meet strict government regulations. In contrast, the capital markets operate under much relaxed rules such as exemptions from capital and reserve ratios, and hence could afford a lower spread. To overcome these tough regulations, banks started charging for the origination of these loans, but moved these loans outside their books so as to get away with the reserve requirements as well as capital requ irements. Then it was the job of the investment banks to purchase these mortgages, package them based on the risk profile into various CDOs and sell them to the investors. Various stakeholders responsible for the crisis According to Minsky (1987), these large multinational investment banks will then pay credit ratings agencies and get good credit ratings. Economists were also hired by them, to show that the earnings will be much more than the risks associates. Hence these credit rating agencies and economists, effectively acted as if they were credit enhancers, helping these investment banks by certifying that the potential risk of default on these subprime mortgages were not too different from that of other traditional mortgages, thus helping these CDOs to get investment grade rating that are looked upon by pension and insurance fund managers. Also, other enhancements such as early repayment penalty and guaranteed buybacks in case of exceedingly large number of foreclosures and defaults, were added to these packages. The buybacks later became significant because when the financial crisis happened, these buyback guarantees came to haunt these backs, because the risk was transferred back to these ban ks. Also, these securities were insured by companies such as CFIG, AMBAC, MBIA, FGIC Corp etc. These investment banks would have found it extremely difficult to sell these securities had there been no good credit ratings and no affordable insurance (Gutscher and Richard 2007). When the financial crisis started, ratings for these very insurers got degraded, thereby affecting the securities they had insured. One of the root cause of the problem can be pinned down to the incentive structure that was in place. After the 2000 stock market crash, alternate profit avenues were in demand from the investors. Because the Fed followed a low interest rate regime, the conventional markets did not present them the required returns. They wanted to chase high return high risk investments. Also, the brokers got excellent incentives for persuading the mortgage borrowers to agree to extremely adverse terms and conditions, in the process increasing the securities value. Also, hybrid variety of ARMs were also promoted. These risky mortgages were even approved by Greenspan, the Fed Chairman. Some studies reveal that out of the total subprime loans of $2.5 trillion performed, most borrowers got a bad deal than they were eligible for. Wrong incentives and credit enhancers For instance, many borrowers with good credit scores who would have been eligible for traditional loans, were persuaded to take these high risk sub-prime mortgages. Most of them were at least eligible for better terms and conditions. The root cause of this problem was the incentive plans which rewarded these brokers immensely (in comparison to traditional loans) for promoting these high interest high risky loans (Simon and Brooks, 2007). Brokers and originators also were not persuaded to ensure proper documentation and the borrowers capability to repay these mortgages, because they did not have to worry since the originators will not be holding on to these mortgages. This was like an assembly line in which the brokers and banks were profiting by the income they got from fees and service charges, and not from interest rate spread. Hence they were rewarded more by the quantity of mortgages they promoted. Thus in reality, most of these affordable mortgages werent what they promised, because when the borrower had to reset these loans, they had to pay service charges for various agents and early repayment penalties. The bankruptcy laws made it almost impossible for the borrowers to escape from the mortgage debt. These laws were passed by the US Congress, and it acted as another form of credit enhancer to these invest banks, who later sold these assets. Comparison with conventional banking Hence, the whole package of these CDOs with all these incentives and enhancements made it extremely easy for the investors to buy these very risky assets without much reluctance. While traditional banks stressed a lot on the features of the mortgage borrower (age, assets, income, profession, credit history etc), this new system meant that there was infinite amount of money available to invest in these extremely risky CDOs, with no incentive to assess the repayment ability of these borrowers. Thus extremely risky debts were grouped and divided into different groups again, and were sold to various investors, who bought them based on their risk appetite. As with any debt, the senior tranche will be the first priority for repayment, and the junior tranche only after the seniors are paid. However, it is almost astonishing to notice that some of these junior tranches were grouped again and again, thereby converting some of those extremely risky debts as highly rated investment-grade senior debt. All this made the whole system extremely fragile. High leverage ratios This new system of securitization into CDOs also increased the leverage ratios, and it was not uncommon to see leverage ratios as high as fifteen-to-one or even more. The hedge funds and other investors put only a small amount of their own capital into these securities. Thus the economic stability promoted creativity and innovations, however by stretching and increasing the leverage ratios and easy availability of credit, making the whole system inherently unstable and fragile. What encouraged the financial companies to increase leverage ratios is that for whatever expected losses, ROE (return on equity) is raised by higher and higher leverage ratios. This was fuelled by the fact that the house prices or real estate prices (the underlying assets in this case) kept on increasing because of demand fuelled by this easy availability of credit, thus the new loan amounts kept increasing and further encouraging financial companies to keep on increasing the leverage ratios (both loan amount- to-borrower income and loan amount-to-loan value. The logic (or assumption) used was that these houses can be either sold or refinanced later at a much higher value if at all any unexpected trouble occurred. Minsky stated that the capital markets and the whole system will undergo three stages: 1.) hedge stage 2.) speculative stage and finally 3.) Ponzi Stage. All these stages required the price of these underlying assets to appreciate in order to confirm it. Hence, owing to this virtuous cycle, it was very hard to prevent the Ponzi stage from happening. Wrong assumptions According to Chancellor (2007), the risk management methodologies used in modern times makes use of data on historical volatility, as a substitute or alternative to risk. If volatility declines, subsequently the risk is also supposed to decline, thus encouraging financial companies to enhance the leverage ratios. Bernanke in 2004 described the period as great moderation, which basically suggested that since volatility is permanently less, it was encouraged to have higher leverage ratios. Thus, Chancellor states that a fund (eg: hedge fund) with just pound;1 million of its own funds was allowed to have a leverage of as high as pound;85 million of CDOs, an astonishing 85 to 1 leverage ratio! Problems with the system The newly formulated system of debt securitization was very little regulated by policy, and was not flexible enough to change as things went bad. Rather than being a highly controlled industry, housing finance was very much a highly unsupervised, speculative and highly leveraged industry. The whole Ponzi scheme will stop only when asset prices declined or stopped rising, or if interest rates rose. Both of these scenarios were almost impossible to avoid, because they were both correlated dynamically since Federal rate increases will result in a decline in speculation, and will ease the increasing housing prices and will result in a rising risk spreads. The aftermath What happened after the start of this crisis were completely unexpected. The losses on these highly risky highly leveraged sub-prime surpassed expectations which were all based on historical data. This resulted in the prices of asset prices to decline drastically, creating a panic across the markets. Problems in one market spread rapidly and increasingly to other markets, which includes the commercial paper, mutual funds and money markets. The commercial banks were now extremely risk averse, and did not even lend for small time periods. Because of the very high leverage ratios, extremely huge losses were suffered by money managers, many times much more than their capital. They had to quickly respond to this crisis, and they did it by deleveraging by selling the assets on their books, which inevitably put a lot of negative pressure on those assets prices. The rippling effect Following the subprime mortgage market collapse, the panic and qualms broadened to similar and dissimilar asset-collateral security markets, which included municipal bond and real estate bond markets. Markets realized the extent and significance of the systemic faults with the system, particularly that of the credit rating companies credit ratings. The markets also understood, though very late, that insurers would have tremendous losses, if all these asset-backed securities were riskier than understood earlier. This resulted in the severe downgrading of these insurers credit ratings. Since the financial position of these insurers became extremely bad, the assets those insurers had insured became valueless thus the security and bond ratings were severely downgraded. In a lot of instances, to make things even worse and regrettably, the worst securities were also held by these investment banks, and had either held positions in some of these insurers, or had guaranteed taking back these mortgages. To improve the terrible condition the capital markets and the global financial markets were in, the United States government had to come out with massive bail outs of its various bank and insurance companies. Some of them went bankrupt, but some of them were too big for them to be allowed to fall. Till Jan 2009, almost one trillion dollars of bad debt was completely written off by those financial institutions combined, assisted mostly by those government bailouts. Conclusion Till 2009 January, the US Treasury had provided almost four hundred billion dollars of assistance, mostly by purchasing the assets, and in certain cases taking equity positions. The actual cost of supporting the financial system is expected to be much more, at least some trillions of dollars. It is worth noting that the whole securitized debt market was only around ten trillion, and the share of the sub-prime mortgages were more than 2.5 trillion dollars. From all these facts explained above, one thing is evident and clear. The series of events that caused this financial crisis would not have happened had the markets been more regulated, and most importantly, had the policy makers not believed and followed the tenets of capitalism so blindly. The extremely heavy losses and bankruptcies that have happened, and those that are yet to happen are not just the case of bad housing loans offered to poor home loan borrowers for them to purchase luxury manors which they did not have the capaci ty to repay. But instead, this is clearly a case of failure of the so called neo-liberal capitalism, which believed in unregulated markets, markets will decide for itself what is good for it, regulation means bad for businesses and economy, Its all about creating shareholder value etc. There has been a systemic failure, and sadly those people who were responsible for the whole sequence of events have gone scot-free, and the millions who are terribly affected are the very same low-income or middle class people (including pension funds and other social security funds), who were deceived by those responsible for it all. It is high time that governments who come to power repossess finance from the completely unregulated capital markets, and bring in necessary regulations to make the system more equitable and stable. This will also help bring some order back to the system, and regain some control from the Wall Street 6.