Tuesday, December 24, 2019

Economic System in Our Country or Not - 883 Words

John. F Kennedy once said â€Å"Let us not seek the Republican answer or the Democratic answer, but the right answer. Let us not seek to fix the blame for the past. Let us accept our own responsibility for the future.† Kennedy’s wise words reminds us, let us not try to see which party is better but rather work as a nation to find a solution to the problem and learn from our previous mistakes. Our experiences would lead us not to fail and do the same mistakes once again. This leads me to the importance of an economic system in a country. You may ask yourself why a country needs an economic system. What role does an economic system play in a country? Way back in 1776 the English economist Adam Smith asserted that a free market economy would best promote economic growth and raise living standards (Schiller, p.3). As he saw it, the pursuit of profits would induce capitalists to improve products, reduce prices, and advance technology also known as market capitalism (Schiller, p.3-4). He promoted the idea of laissez-faire meaning no government involvement (Schiller, p.4). On the other hand, Karl Marx, a German philosopher, had a different view of a market capitalism. Marx predicated that the capitalist system of private ownership would eventually self-destruct (Schiller, p.4). The capitalists who owned the land, the factories, and the machinery would continue exploiting working class until it rose up and overthrew the social order (Schiller, p.4). He believed that long-term prosperityShow MoreRelatedThe World Bank And International Monitory Fund1287 Words   |  6 Pagesindividuals so that the long term interest of the country would be exposed to external danger. On the other hand, critics argued that prohibition against private ownership of land is a serious limitation on the freedom of citizens. It was supposed to be left for personal decision of individuals and families who have the right of possession and ownership of land. 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The climate change crisis directly affects planetary boundaries, ecological cycles, and lim itations on a domestic and international level. It isRead MoreThe United States Immigration Policy1596 Words   |  7 PagesThe United States immigration policy has never pleased all Americans and probably never will. Throughout the 20th and 21st centuries, politicians have toiled continuously with the broken system. For example, Congress attempted to strengthen the western border by passing the Illegal Immigrant Reform and Immigrant Responsibility Act in 1996 (Historical Overview). Although the proposed increase in Border Patrol agents seemed promising, insufficient funding kept the act from adequate enforcement (HistoricalRead MoreEconomics Of The Gold Standard Debate963 Words   |  4 PagesEconomics of Globalization September 18, 2015 Sydnee Lyman The Gold Standard Debate Beginning in 1870, each nation converted their national currencies to their relative worth in gold. 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Monday, December 16, 2019

Article Review on Mental Illness Free Essays

Jennifer Tozier Compentency Assignment 1, Review #2 Dr. Besthorn 09/15/2012 I chose to write my article review on the article entitled, â€Å"How clinical Diagnosis Might Exacerbate the Stigma of Mental Illness. † It is a not new concept that people are consistently drawn to a labeling others with a stigma, and this article delves into how we as social workers can (unintentionally) either encourage that stigma or hinder it based on the presentation to the client and to the public. We will write a custom essay sample on Article Review on Mental Illness or any similar topic only for you Order Now A key point to the article talks about three kinds of potential ways stigma hurts a client. The first was being label avoidance. Many people do not want to admit to a mental illness, let alone get it treated because of how they might be perceived. Those that can admit having a mental illness and seek services may feel a certain stigma that then draws them back, and they avoid treating the problem, after they have confirmed that they, in fact, do suffer from the illness. They are afraid of being labeled in society or among their peers. The second stigma is blocked life goals. When suffering from a mental illness, everyday life can be and often is hard for the client. Without treatment, the stress of daily life can inhibit the client from seeking opportunities such as work, school, family and friends. Without these life goals being fulfilled, the mental illness takes control of the clients’ life and they are fixed from advancing in the everyday life. The third way a stigma hurts a client is the self-stigma. This is where the client begins to believe what is being said about them and their problem. It further exacerbates the problem because they not only deal with the issue of mental illness but feel judged in every encounter; this changes their behavior and creates a greater issue. This article also discusses the diagnosis of a mental illness in regards to â€Å"groupness† and the â€Å"differentness† aspects of how the public distinguishes people with mental issues. This looks into the stereotypes and over generalizations and how it relates with mental illness and the general public. Mental illness while it may be more prevalent in some groups, it is an equal opportunity illness and can affect anyone regardless of age, race, financial status, or occupation. The article does an excellent job of describing how once a person is diagnosed with a mental llness it draws diversity in how they might be labeled and construed in society, similar to how they might be treated if they were a minority group. Research shows that this stigma â€Å"groups† individuals once they have been diagnosed with a mental illness, regardless if the client demonstrations any abnormal characteristics. The author did a terrific job of discussing the different stigmas th at mental illness produces. It talked about how society or the majority labels a person with mental illness and the way a person can label themselves, both which produce disastrous results. I can see that this is a relevant article in the field of social work, because social workers can shape the way the client is perceived, both by the majority and the client all in the way they identify the illness. I understand that the article is talking about how the diagnosis can exacerbate the stigma, but I did not get a strong hold on ways to diagnosis it in an improved approach. The paragraph talking about diagnosis as a continuum seems like the closest point of reference for me, as an approach, but as it suggested this dimensional approach is not familiar to most clinicians. It seems once again there is only so far workers can go, with the limited knowledge we have obtained through research to date. The theory that I associated with the article is social learning theory. I came to that conclusion for several reasons mainly, because social learning theory suggests that human behavior is learned as individuals. The article talks about how people who have been diagnosed at times will not seek treatment solely because of how they will be stigmatized. The problem behavior will not be treated and will remain a problem because a stigma will be placed on that individual if they admit the problem and get treatment. I think that using the social learning theory as a mode of treatment can be possible if the social worker can convince the client that if they get treatment and function in a â€Å"normal† way they will have a better quality of life. The article talked about how the social worker defines the mental illness and relays the information not only to the client, but also to other mental health providers is a determining factor on how it will be perceived. It is our ethical responsibility treat the client with dignity and respect, therefor when discussing the mental illness we need to be sure to use professional terms and be 100% correct before we unintentionally put a stigma on our client, they may put undue hardship in their life. When engaging with a client with mental illness it is necessary to discuss with them what they can expect, from meeting with the mental health provider all the way through treatment. Also to find out what they expect from the process. It is vital to let them know that they will have issues to deal with such as social stigma, but a road to treatment will give them a better quality of life. Mental illness affects people every day. Simply because of the stigma attached to it, people do not want to admit they have a problem. This is an implication because if more people could be honest and upfront social workers and policy makers could be given more time, resources, and attention to create policies that would benefit those struggling. The more resources and policies available the better chance that people suffering from mental illness will not have to deal with a stigma. How to cite Article Review on Mental Illness, Essay examples

Sunday, December 8, 2019

King Henry Iv Shakespeare Essay Example For Students

King Henry Iv Shakespeare Essay A monologue from the play by William ShakespeareFALSTAFF: If I be not ashamed of my soldiers, I am a soused gurnet. I have misused the kings press damnably. I have got, in exchange of a hundred and fifty soldiers, three hundred and odd pounds. I press me none but good householders, yeomens sons; inquire me out contracted bachelors, such as had been asked twice on the banes such a commodity of warm slaves as had as lieve hear the devil as a drum, such as fear the report of a caliver worse than a struck fowl or a hurt wild duck. I pressed me none but such toasts-and-butter, with hearts in their bellies no bigger than pins heads, and they have bought out their services; and now my whole charge consists of ancients, corporals, lieutenants, gentlemen of companies slaves as ragged as Lazarus in the painted cloth, where the gluttons dogs licked his sores; and such as indeed were never soldiers, but discarded unjust servingmen, younger sons to younger brothers, revolted tapsters, and ostlers trade-falln; the cankers of a calm world and a long peace; ten times more dishonorable ragged than an old fazed ancient; and such have I to fill up the rooms of them as have bought out their services that you would think that I had a hundre d and fifty tattered prodigals lately come from swine-keeping, from eating draff and husks. A mad fellow met me on the way, and told me I had unloaded all the gibbets and pressed the dead bodies. No eye hath seen such scarecrows. Ill not march through Coventry with them, thats flat. Nay, and the villains march wide betwixt the legs, as if they had gyves on, for indeed I had the most of them out of prison. Theres not a shirt and a half in all my company, and the half-shirt is two napkins tacked together and thrown over the shoulders like a heralds coat without sleeves; and the shirt, to say the truth, stoln from my host at Saint Albans, or the red-nose innkeeper of Daventry. But thats all one; theyll find linen enough on every hedge.

Saturday, November 30, 2019

The Middle Passage by Olaudah Equiano free essay sample

The Interesting Narrative of the Life of Aloud Equation, or Gustavo Vass, the African, Written by Myself is a traumatic narrative of the horrors suffered by the Africans slaves of the 18th century, which has touched my heart. No human being should ever have to endure what the African slaves and their families endured during slavery and voyage through the The Middle Passage. The Middle Passage was called the route of the triangular trade through the Atlantic Ocean in which millions of people room Africa were shipped to the New World as part of the Atlantic slave trade.The author starts by giving details of the terrible conditions that he encounters on board of a slave ship. An example of the terrible condition in which the slaves lived is narrated by Equation (2013) as: The stench of the hold while we were on the coast was so intolerably loathsome, that it was dangerous to remain there for any time. We will write a custom essay sample on The Middle Passage by Olaudah Equiano or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page . . (1388) The closeness of the place, and the heat of the climate, added to the number in the ship, which was so eroded that each had scarcely room to turn himself, almost suffocated us (p. 1388).The conditions the Africans slaves endured during the Middle Passage were horrific; no human being should be force to live in such deplorable conditions. The lack of freedom on the slave ships caused great distress to the enslaved Africans. They were treated as cargo, chained one with the other and had to perform their bodily functions while chained. They were also forced to sleep cramped together few of them barely escaped without their limbs atrophying. They rarely had enough to eat or drink, and would grow sick in drove, than many of them wanted to die instead of living a life full of cruelties.The slaves were so tired of the detrimental conditions in which they have been forced to live in slave ships, under the most abominable and hellish hygienic conditions I that they preferred to die, as Aloud Equation (2013) writes, two of my wearied countrymen who were chained together (l was near them at the time), preferring death to such a life of misery, somehow made through the nettings and jumped into the sea; immediately another quite dejected fellow, who, on account of his illness, was suffered to be out of iron, also followed their example (p. 388) Some slaves did everything in the power to end their life; some tried to throw themselves into the Atlantic Ocean, but many were prevented from doing so by the crew and then they were nearly beaten to death to serve as an example, to prevent other slaves from doing the same. Others tried to commit suicide by not eating or drinking any food. In the narrative Aloud Equation (2013) describes the crew members that irked on the slave ship by writing, Their complexions too differing so much from ours, their long hair, and the language they spoke, (which was very different from any had ever heard) united me in this belief (p. 386-1390). Based on the description and in the period which the events took placed those crew members were from the Continental Europe, most likely British, therefore; between the captured Africans slaves and the crew of the slave ship was a the lack of communication because the slave in the ships, were Africans from different regions, cultures and with different languages and elects. Most of the slave encounter white men for the first time when they were brought to the ship, to them those white men with red faces and long loose hair where a strange creature speaking a language they could not understand. They were suddenly separated from their families and forced to live with strangers whose languages they could not understand. Cannot even imagine the turmoil these families when through. For most of the Africans slaves the Middle Passage marked the beginning of their demise, a life of detrimental treatment, torture and horrible living notations.For others the journey thru the Atlantic Ocean marked the end of their lives. Those of them that survived, however, were faced with the agony of a long horrendous journey to an unknown land where an unknown future awaited them.

Tuesday, November 26, 2019

Asthma Pathology Essay Example

Asthma Pathology Essay Example Asthma Pathology Essay Asthma Pathology Essay Asthma is a chronic lung disease that is very common today among many people both children and adults. It can be very severe or it can be mild, but it will always need to be monitored. Asthma is mainly about the muscles in the airways constricting making it difficult to breathe. A person with asthma may say it is hard for them to catch their breath. In this essay I am going to summarize what asthma is, the symptoms of asthma, the diagnosis, and the treatment for this disease. I want to inform people who have asthma or know anybody that has asthma to be aware what to do and how to treat it. There are many respiratory diseases that one can have, and most of them are quite frightening and can be life threatening. Asthma is a chronic inflammatory disease of the airways inside the lungs. With asthma, a blockage of airflow in and out of the lungs occurs from muscle squeezing, swelling and excess mucous. Approximately 12-15 million people in the United States have asthma, including up to five million children (Medical News Today, 2004). There are many causes and symptoms to this disease, however there is no cure to it but it is treatable. Asthma causes a lot of stress to the body, making it more difficult to treat it. It is important as a health care professional to know a brief understanding of these kinds of diseases so we know how to take care of the patient when you are assisting them. Also it is important to know what to do in an emergency while a patient is going through an asthma attack which can be severely dangerous. It is important to know what are the causes, symptoms, treatments, and the medications for Asthma if you are working in a health care facility or even have a family member or friend living with this disease. Asthma is a disease affecting the airways that carry air to and from your lungs. People who suffer from this chronic condition are said to be asthmatic. Asthma is characterized by three airway problems: obstruction, inflammation and hyper responsiveness. Asthma causes your airways to be swollen or inflamed. This swelling or inflammation makes the airways extremely sensitive to irritations and increases the ability to an allergic reaction. The more inflamed the bronchus becomes, the narrower the airways become making it extremely difficult to breath, almost impossible. Since the airways are getting more narrow, less air is able to come to and from the lungs. Once this occurs the person becomes anxious and scared because they are trying to grasp for air. As the airways are becoming narrow, the inhalation and exhalation causes a wheezing sound inside the chest cavity. This â€Å"wheezing† sound is a main symptom to Asthma. This sound inside the chest also feels like a vibration inside your chest, it is best heard through a stethoscope taking deep breaths. Other symptoms are chest tightness, difficulties in breathing, and severe chronic coughing. Usually these symptoms occur more frequently during the late nights and early mornings (American Lung Association, 2013). The increase factor of having symptoms of asthma during the late nights is due to the less adrenaline and corticosteroids which your body automatically makes during the day that protects against asthma. There are many causes to obtaining Asthma; it is not hard to obtain this disease. You can be doing your normal day activities and still have symptoms to asthma. Asthma is the most common chronic disease among children. Children who have a low birth weight, who are exposed to tobacco smoke, are black, and are raised in a high polluted environment. Other risks for children include having allergies, and parents who have asthma. Allergies are another significant cause to asthma. Usually the people who suffer from asthma also have allergies. Allergic reactions triggered by antibodies in the blood often lead to the airway inflammation that is associated with asthma (â€Å"Asthma, A breif†, 1997). Common sources of indoor allergens include animal allergens, usually from cats and dogs. Dust mites, cockroaches, and fungi. It is possible that the push towards energy-efficient homes has increased exposure to these causes of asthma. Another cause is tobacco smoking. Parents who smoke around their children or inside their home have a high risk of getting asthma due to the second hand smoke intake. Stress is another high risk to the cause of this disease. It is hard to avoid this cause because it is a part of life. People who undergo stress have higher asthma rates. Part of this may be explained by increases in asthma-related behaviors such as smoking that are encouraged by stress. Obese adults are another factor that contributes to the cause of asthma. Those with a body mass index between 25 and 30 are about 38% more likely to have asthma compared to adults who are not overweight. Obese adults with a body mass index of 30 or greater have twice the risk of asthma. The way you enter the world seems to impact your susceptibility to asthma. Babies who are born by a C-section have a twenty percent increase in asthma inheritance compared to babies born regular vaginal birth. It is possible that immune system-modifying infections from bacterial exposure during Cesarean sections are responsible for this difference (Medical News Today, 2004). When mothers smoke during pregnancy, their children have lower pulmonary function. This may pose additional asthma risks. Research has also shown that premature birth is a risk factor for developing asthma. The medications that help treat asthma are important in how much you take because there can be negative side effects to the medications, especially long term effects. The purpose of asthma medications is to reduce the inflammation in the airways of the lungs that cause the wheezing, coughing, tightness in chest and other symptoms. The following are types of medications that are commonly used in asthma treatment; anti-inflammatory drugs, corticosteroids, bronchodilators, and anti-leukotrienes which fight potent chemicals that are responsible for airway inflammation. Bronchodilators are commonly used during an asthma attack which is an emergency to open up the bronchial tubes to allow for more airflow. Corticosteroids are inhaled or in a oral form, depending on the severity. Anti- inflammatory drugs such as cromolyn or nedoromil are used to stop and prevent the inflammation in the lungs (Gelfand, 2012). There are several different types of asthma that all lead to similar symptoms. The types are allergic asthma, exercise-induced asthma, cough-variant asthma, occupational asthma, and nocturnal asthma. Allergic asthma is the most common type of asthma. Everyone with asthma, either allergic or non-allergic gets worse after exercising in cold air or after nhaling any type of smoke or dust. Having allergic asthma, your airways are hypersensitive to the allergens to which youve become sensitized. Once these allergens get into your airways, your immune system overreacts. The muscles around your airways tighten and contract. The airways themselves become inflamed and flooded with thick mucus. During normal breathing, the air we take in is first warmed and moistened by the nasal passages. Because people tend to breathe through their mouths when they exercise, they are inhaling drier air (Gelfand, 2012). In exercise-induced asthma, the muscles around the airways are sensitive to these changes in temperature and humidity and react by contracting, which make the airway narrow. Case Study: I am interviewing my patient Bryan Smith as he had many hospital visits for his asthma attacks. He is a sixteen year old male who complains of having shortness of breath and chest pain. He states that he coughs a lot during the day and at night, and he hears himself wheezing. He explains how it is hard for him to take a deep breath because it feels like his lungs close when he inhales. For these symptoms the doctor usually checks the heart and with the stethoscope. He will tell Bryan to take slow deep breaths and the doctor will listen from the patient’s back to hear the lungs. During the test the doctor hears a wheezing sound. After, the doctor will perform a pulmonary test which is called Spirometry. This test measures how fast you can blow air out of your lungs and how quickly. It is often used to determine the amount of airway obstruction you have. The patient will have to use a bronchodilator which is called albuterol. This medication will help open up the patient’s airways allowing air to flow freely and making it easy for them to breathe. As you can see asthma is a very serious disease that needs to be taken carefully. People with asthma should monitor what they do during the day and make sure they are always prepared for having an emergency which in this case is an asthma attack. Being that there is no cure for asthma, there are ways that it can be prevented and treated. Asthma attacks can be reduced by taking medication daily and avoiding polluted environments such as dust, smoke and allergens.

Friday, November 22, 2019

Cheyanne Jessie - Cold-Blooded Murderer

Cheyanne Jessie - Cold-Blooded Murderer On August 1, 2015, 25-year-old Cheyanne Jessie of Lakeland, Florida called police to report that her father, Mark Weekly, 50, was missing and her daughter Meredith, 6. She was arrested and charged with their murders less than 24 hours later after their bodies were found decomposing in a neighbors storage shed. Here are the latest developments in the Cheyanne Jessie case. State to Seek Death Penalty in Cheyanne Jessie Case Sept. 9, 2015 - Polk County prosecutors have decided to seek the death penalty in the case of a 25-year-old Florida woman who is charged with killing her father and her daughter. Cheyanne Jessie could face death if convicted of the deaths of her father Mark Weekly and her daughter Meredith. Jessie has been charged with two counts of first-degree murder and one count of tampering with evidence. She is being held without bail. According to Polk County Sheriffs investigators, Jessie took a gun and a knife to her fathers house on July 18 and shot her father and stabbed her daughter. She left the bodies on the floor of the house for four days. Police said she returned to the house July 22, scraped their remains off the floor with a shovel and put them into plastic storage bins, which she later hid in a storage shed that belonged to the landlord, who was on vacation at the time. Prosecutors did not say specifically why they plan to seek the death penalty. Woman Charged With Murder of Her Father and Daughter Aug. 2, 2015 - A 25-year-old Florida woman has been charged with two counts of first-degree murder after she called the police and reported her father and daughter missing. Cheyanne Jessie is accused of killing her 6-year-old daughter Meredith and her 50-year-old father, Mark Weekly. Authorities said the motive for the murders was almost as horrific as the crime itself: the single mother, who works as a cashier at a big-box store, didnt want her daughter interfering with her relationship with a new boyfriend. Nothings more horrific than the murder of a child, except when its done by a parent, and thats what we saw, said Polk County Sheriff Grady Judd at a press conference. Sheriff Judd became emotional as he displayed Jessies mug shot for the media. This is the face and this is the eyes of a cold-blooded murderer, Judd said. She not only murdered them, but left them in the residence for many days until it became painfully evident she had to move them. Judd said Jessie showed no emotion during interviews with investigators and she continued to go to work at a nearby retail store while the bodies of her family members were decomposing. We cant understand in our minds how someone could murder their 6-year-old baby girl and murder their dad, Judd said. But thats exactly what she did and she showed no emotion. Killed on July 18 From evidence found at the crime scene and the storage shed, and from information gained in interviews with the accused, investigators pieced together the following timeline: On July 18, Jessie dropped her daughter off at her fathers house. Either later that day or the following day, she got into an argument with her father over the child and she killed both of them. Does she think shes going to lose this boyfriend, which she desperately wanted, because of her daughter? Judd said. For whatever reason, not only does she take her daughter to her father but ultimately murders both of them. Puts Bodies in Storage Shed Judd said Jessie returned on July 22, four days later, and used a shovel to remove the decomposing bodies from the house into a Chevy SUV. She put the bodies into bags to hide them, something she learned from watching the television show Criminal Minds, she told investigators. She took the bodies to a storage shed about 200 yards from Weeklys house that belonged to his landlord. The landlord was vacationing and out of town. When relatives began to ask questions about the whereabouts of Weekly and Meredith, Jessie began to launch an elaborate missing persons story. She said her father had received a recent diagnosis of cancer and that he ran off to Georgia to spend his remaining months with his granddaughter. Things Dont Smell Right Jessie used her fathers cellphone to text her boyfriend, pretending to be Weekly, saying that he had only a year to live and wanted to spend it with Meredith. In the texts, Weekly granted Jessie and her boyfriend permission to take his house and possessions, but when Jessie reported all of this to the police, they became suspicious immediately. Things dont smell right. Literally. They dont smell right, Judd said. Judd said at Weeklys house there was a foul smell that Jessie tried to blame on rotting meat left in the kitchen sink and on a dead raccoon under the porch. Police were not able to locate the dead animal. What they did find, after getting a search warrant, was slash marks on a blood-soaked couch and a rug covering a bloodstained floor. They also found the bodies in the nearby shed. Claim Self-Defense As the interview continued, Jessies story began to change throughout the day, Judd said. She claimed she acted in self-defense. Jessie told investigators that her father tried to stab her, but she was able to defend herself using martial-arts training that she learned from her new boyfriends father. The man later told police that he had no knowledge of martial arts. She supposedly gets the knife away from her father after hes fighting and slashing at her, and accidentally stabs the 6-year-old, Judd told reporters. None of the evidence supports any of this. Judd said throughout the interview, Jessie did not shed a tear over the deaths of her father and daughter. He said a gun and a knife were used in the murders. Jessie has a previous arrest in another state for assaulting and boyfriend with a knife.

Thursday, November 21, 2019

Strategic Accounting Essay Example | Topics and Well Written Essays - 1500 words

Strategic Accounting - Essay Example One of the major developments in the area of managerial accounting is the product life cycle costing which has gained serious recognition during recent periods to meet the challenges of changes in the production systems and procedures. Product life-cycle costing being the new development in the management accounting system has been defined as "a new area of reporting in cost management systems which is the accumulation of costs for activities that occur over the entire life cycle of product"(Hilton, 1994, p.230). Product life cycle examines the life of the product from its development stage to the stage till the removal of the product from the usage. According to Horngren & Foster (1991), product life-cycle covers the life of the product from the time of initial research and development to the time when sales and support of the product to the customers is withdrawn. Burstein (1988) observes that the life cycle costing becomes more and more crucial and important in the light of rapid changes in technology and the shortening of the product life cycle. There is a sharp distinction between the product's life cycle costs and the whole life cycle costs. Life cycle costs cover all the costs that the manufacturer will have to incur and whole life cycle cost includes the costs at the hands of the consumer like installation, operation, maintenance, revitalization and disposal (Shields & Young 1991.) Adamany & Gonsalves (1994) have identified the following seven stages in the life cycle of a product: 1. Analysis Stage - involving a critical assessment of the concept and the effects of investing on the concept 2. Start Up Stage - comprising of prototyping, dedication of the manufacturing facilities and practical assessment of the effects of the investment 3. Entry Stage - where the entry into the market with a new product or service is planned 4. Growth Stage - during which the firm receives back the returns on investment as potential sales revenues 5. Maturity Stage - at which the firm harvests the profit from the product or service 6. Decline Stage - signifying the tampering down of the sales which necessitates moving to the withdrawal stage or revitalizing the product 7. Withdrawal Stage - the product is withdrawn from the market It is also vitally important that the managers gather all the required information at the different stages of the life cycle and the life cycle concept introduces an integrated approach to planning and budgeting. Mapping of Key Information Requirements Life Cycle Phase Time Customer Requirement Satisfaction Target Pricing Resource Requirement Continuous Improvements Cash Flow Analysis Critical Critical Critical Critical Critical Start up Critical Critical Critical Critical Critical Entry Critical Critical Critical Critical Critical Growth Critical Critical Critical Critical Critical Critical Maturity Critical Critical Critical Critical Decline Critical Critical Withdrawal Critical Source: (Adamany & Gonsalves 1994) Actions under Life Cycle Costing for Generating Revenue and Reducing Costs Revenue Generation Cost Reduction Product Improvement: New Processes Features Cumulative Volume Performance Experience

Tuesday, November 19, 2019

Leadership------read the requirement i send you carefully Essay

Leadership------read the requirement i send you carefully - Essay Example Various research scholars such as Johnson (2000) and Howell and Costley (2001) have stated that organizations need to develop leadership skill among employees in order to provide direction, commitment and engagement to their work effort. This shows the increasing acceptability and desirability of leadership is various facets and situations in a business. According to John Maxwell (1997), â€Å"Leadership is influence – nothing more, nothing less.†In business terms, it can be defined as the ability to forecast or evaluate policies, long term planning and motivate the followers towards successful completion of the ongoing strategy. The objective of the current research is to identify and evaluate effectiveness and desirability of leadership. For this, attributes and traits of leadership in global as well as domestic environment will be discussed. Relevant examples will be demonstrated in order to strengthen the arguments. Importance of leadership Cultures can be explicitl y different, especially in terms of attitudes, values and behaviours or groups and individuals. This kind of divergence has various implications on leadership in companies (Dorfman, 1996). Majority of previous leadership studies have concentrated only on the leaders in terms of their styles, actions and philosophies as well as appropriateness and acceptance of various styles of leadership among them. However, increasing number of studies has revealed that different leader actions and behaviours are evaluated and interpreted differently. This difference arises because of the variation in cultural environment and in the ideas of individuals in terms of an ideal leader. Some approaches are favoured in some places while others are seen as less effective. The existence of these variations is due to the fact that the importance and meaning given to leadership concept varies across regions (Alas, Tafel and Tuulik, 2007). With the expansion of firms across borders and globalisation, numerou s opportunities and challenges have come into existence for leadership. With differing values and cultural beliefs, there is a bigger necessity for acknowledging and understanding leadership styles that are culturally linked (Avolio, Walumbwa and Weber, 2009). For making a leadership strategy effective, it is important to understand cultural sensitivities and be receptive towards it. In the present research, discussion will be covering the various domestic as well as international leadership skills and traits which aid understanding of the desirability and importance of leadership in the current scenario. Leadership theories and its influence in global and local firms Business around the globe displays various leadership styles. Typically, company culture plays an important role while choosing any leadership style in order to lead businesses and organizations. The leadership style and personality of the person hiring and conducting the recruitment also influences the choice of the t ype of leaders. The leadership style that is ultimately placed in charge determines the success of the company (Schein, 1992). It is also important to note that these styles vary in terms of culture and the functionality of the business. For example, local

Saturday, November 16, 2019

Nine Major Regulatory Bodies Essay Example for Free

Nine Major Regulatory Bodies Essay 1. The Internal Revenue Service (IRS). The IRS was established in 1913. Its purpose is to administer and enforce the internal revenue laws. Its stated mission is to provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all. (Internal Revenue Service, 2008) 2. Securities and Exchange Commission (SEC). The Securities and Exchange Act of 1934 created the Securities and Exchange Commission (SEC) to regulate the securities market. â€Å"The mission of the U. S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation†(U.S. Securities and Exchange Commission, 2008) 3. Financial Accounting Foundation (FAF). The Financial Accounting Foundation (FAF) is a private sector organization that formed in 1972 to create standards for financial accounting. Its mission is to â€Å"establish financial accounting and reporting standards through an independent and open process, resulting in financial reports that provide decision useful information† (Financial Accounting Foundation, 2008) 4. Financial Accounting Standards Board (FASB). The (FAF) formed the (FASB) in 1973 to set up standards for nongovernmental accounting and reporting. The mission of (FASB) is â€Å"to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information (Financial Accounting Standards Board, 2008) 5. Governmental Accounting Standards Board (GASB). The Governmental Accounting Standards Board was organized in 1984 by FAF to generate GAAP for state and local governments. The mission of the GASB is to establish and improve standards of state and local government accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the, including issuers, auditors, and users of those financial reports. (Governmental Accounting Standards Board, 2008) 6. Federal Accounting Standards Advisory Board. The (FASAB) was established in 1990 by the U.S. Secretary of the Treasury, the Director of the Office of Management and Budget, and the Comptroller General to produce GAAP for the federal government. The mission of the FASAB is to promulgate federal accounting standards after considering the financial and budgetary information, needs of citizens, congressional oversight groups, executive agencies, and the needs of other users of federal financial information. (Federal Accounting Standards Accounting Standards Advisory Board, 2008) 7. International Accounting Standards Board (IASB) Since its inception in 2001 the (IASB) has created global GAAP and standards. The mission of the (IASB) â€Å"is to develop, in the public interest a single set of high quality, understandable and international financial reporting standards (IFRS’s) for general purpose financial statements† (International Accounting Standards Board, 2008) 8. Public Company Accounting Oversight Board (PCAOB) The Sarbanes-Oxley Act of 2002 (SOX) established the Public Company Accounting Oversight Board to issue auditing standards for public auditing firms. The mission of the PCAOB is to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports (Public Company Accounting Oversight Board, 2008) 9. American Institute of Certified Public Accountants (AICPA) The American Institute of Certified Public Accountants was born in 1887. The mission of the (AICP) â€Å"is to provide members with the resources, information, and leadership that enable them to provide valuable services in the highest professional manner to benefit the public as well as employers and clients† (American Institute of Certified Public Accountants, 2008) References American Institute of Certified Public Accountants. (2008). AICPA Mission. Retrieved November 20, 2008, from http://www.aicpa.org/About+the+AICPA/AICPA+Mission/ Federal Accounting Standards Advisory Board. (n.d.). Welcome to the Federal Accounting Standards Advisory Board. Retrieved November 20, 2008, from http://www.fasb.org/facts/ Financial Accounting Foundation. (n.d.). FAF Strategic Plan. Retrieved November 20, 2008, from http://www.fasb.org/faf/Strategic_Plan.shtml Financial Accounting Standards Board. (n.d.). Facts About FASB. Retrieved November 20, 2008, from http://www.fasb.org/facts/ Governmental Accounting Standards Board. (n.d.). Retrieved November 20, 2008, from http://www.gasb.org/. Internal Revenue Service. (n.d.). The Agency, its Mission and Statutory Authority. Retrieved November 20, 2008, from http://www.irs.gov/irs/article/0,,id=98141,00.html International Accounting Standards Board. (n.d.). About Us. Retrieved November 20, 2008, from http://www.iasb.org/About+Us/International+Accounting+Standards+Board+-+About+Us.htm Public Company Accounting Oversight Board. (2008). Our Mission. Retrieved November 20, 2008, from http://pcaobus.org/ U.S. Securities and Exchange Commission. (2008, November 7). The Investors Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation. Retrieved November 20, 2008, from http://www.sec.gov/about/whatwedo.shtml

Thursday, November 14, 2019

Pros and Cons of Facebook Essay -- Social Networking, Social Media

Facebook Dangers Because students often post detailed and specific information on Facebook (including phone numbers, addresses, class schedules, social plans, etc.) you can be more easily stalked by strangers (or even acquaintances). Identity theft can also be a significant risk of social networking. Personal details like your full name, names of your family members, your phone number, birthday, address, and place of employment can all be used by identity thieves. "Passport-style" profile photos also make it easier for identity thieves to replicate your online presence. Catfishing: Coined from the independent film "Catfish," which follows a filmmaker who discovers the truth about the online relationship he has been conducting with a woman whom he has never met, "catfishing" occurs when a user creates a false or highly-exaggerated social media profile for the purposes of conducting a relationship online. Some profiles are created out of boredom or loneliness, while others are created to exact revenge or cause embarrassment to the targeted party. Common signs[1] that you are being catfished can include: Inability to contact the other party "in person" - their cell phone is broken or has been stolen, they will not use Skype or SnapChat, they will not or cannot meet you in public despite the seriousness of your relationship. Their photographs appear to be highly edited, stylized, or otherwise unrealistic. You can search Google by image file in order to determine whether the photos you've received are legitimate. Details of their personal life consistently changing, or they have a life story that seems unbelievable or outlandish. If the relationship becomes too intense, they may develop a life-threatening illness, or... ...ion about you[3]. Using a group photo for your profile picture can also make it more difficult for thieves to replicate your identity online. Be prepared to answer questions about your social networking page or other social account in job interviews. It has become common for interviewers to ask applicants, "Are you on a social networking site?" and "What is on your profile?" Be prepared to either decline the question or answer honestly because employers will most likely look at your social networking account themselves... if they haven't already. [1] "Everything You Need to Know About the Catfishing Epidemic," DigitalTrends.com, Molly McHugh, August 23, 2013 [2] "Tracking Twitter, Raising Red Flags" The New York Times, Pete Thamel, March 30, 2012 [3] "Identity Theft on Social Media: Are You at Risk?" Better Business Bureau, Katie Burgoyne, June 20, 2013

Monday, November 11, 2019

Is India Still Developing Country Essay

Even after 66 years of independence, India is still labeled as a developing country. I think as a nation, we have miles to go. The question of whether or not India is a developed or developing country is not so simple. To understand the real India, we need to look at many other indicators, such as health and education too. I think the level of development in a country is directly proportionate to the way we choose to treat our children, elderly and the disabled. As far as India is concerned, we might score very highly in terms of growth of physical infrastructure, but most of the public places are inaccessible to people with disabilities. As per the 2011 census, India has about 2.7 million people with disabilities, and only a handful of those enjoy education and/or employment. We are spending less than 4% of our GDP on important areas of education and health. Almost 12% of our children (between 5 and 15 years) are identified as child labor, and we have about 2.4 million people living with HIV/Aids. Almost 25% of my Indians are poor – in the same India where millions use smartphones. Within India, there are many different countries. There is no doubt that in some areas we are a developed country and, as far as people with disability are concerned, we have created facilities and a support system. But in many areas we still have long way to go. Now I leave it to you to decide whether you perceive India as developing or not! We have to focus on the â€Å"safety of women† and â€Å"corruption†. Corruption has mired growth to a great extent, and past and present governments have so far been unsuccessful in finding a permanent solution. The young Indian faces challenges stretching from a poorly administered education system to the lowest average wage rates in the world. The youth of India today lives in a society defined by multiple languages, religions, ethnicities and political thought, among other things. Yet they define their own generation, which is starkly d ifferent from their fathers and grandfathers. This puts them in a unique position to take their country towards positive growth and development.

Saturday, November 9, 2019

A response to The Bell Jar Essay

You would expect anybody to want the story of depression and suicidal thoughts to leave your memory as soon as the last page was over. However, The Bell Jar is more about the spirit of survival when you are trapped inside yourself and frightened because the rest of the world expects something completely different from you – something you cannot give them. Something you don’t want to give them, if it were your choice. This is a highly auto-biographical account by Plath of a young girl finding that when she should be most excited about her life, she instead finds that things aren’t what she expected, and that the culture of the 1950’s doesn’t seem to allow for all that she wants, which begins her descent into depression. The Bell Jar is in the form of a Roman à   clef, with the main protagonist (Esther Greenwood) succumbing to mental illness. Esther begins the book thinking about the executions of Julius and Ethel Rosenburg, and thinking about cadavers, which is a motif that recurs later on in the book. Esther thinks being executed â€Å"must be the worst thing in the world† so we can tell already that she isn’t exactly a light-hearted character. Instead, throughout the novel, we discover that she is brutally honest and self deprecating. She wins a fashion writing contest, but she isn’t overly happy about it, viewing the gifts and girls there superficial: â€Å"Girls like that make me sick.† She appreciates that she is meant to be â€Å"the envy of thousands of other college girls† but her future prospects trouble her: she can either marry, or, become a secretary and then marry. Neither satisfies her. â€Å"So I began to think maybe it was true that when you were married and had children it was like being brainwashed†, so women in the fifties are meant to want to marry and start a family, and Esther knows this too well. It isn’t considered right to think otherwise, so these opinions stay inside her head. Perhaps, this is why mental illness festers within her; she bottles up her emotions and they mix with more menacing thoughts. Buddy laughs at her when she refuses his marriage proposal, saying that she’s â€Å"crazy† and she’ll â€Å"change her mind.† She thinks he is a hypocrite, and no longer sees him in admiration because of his double standards. Esther observes the gap between what society says she should experience at her age and what she does experience, and this gap intensifies her madness and makes her more aware of any problems she may have, because she is now able to see everything wrong with her in somebody else’s eyes. Esther feels she must repress her natural gloom, cynicism, and dark humour and falsify opinions. Esther’s aversion to convention and conforming is perhaps why she feels so alone and her darker thoughts take over: â€Å"†¦it’s really you getting smaller and smaller and lonelier and lonelier†. Esther’s descent into depression and suicidal thoughts begins on the ski slopes, when she begins scared but â€Å"aims straight down.† This is only the first of numerous suicide attempts: she wants to experiment hanging, drowning, pill overdoses and cutting her wrists, but there are flaws in all of them. When Esther tries to kill herself, she finds that her body seems determined to live. Esther believes that she could kill herself if she wanted, but she must remove the barrier of her body. The beating heart symbolizes her life, as her heart beats, â€Å"I am I am I am.† This is again enforced because she never assigns a blame to her depression, but rather lets us see what it feels like to be in it and living through an experience like it, as she wrote – â€Å"I am I am I am.† But I think the whole book can be summarized by something that Buddy said to her on the ski slopes: â€Å"’You were doing fine,’ a familiar voice informed my ear, ‘until that man stepped into your path.’†

Thursday, November 7, 2019

4 Ways to Take Control of your LinkedIn Endorsements

4 Ways to Take Control of your LinkedIn Endorsements I’m a self-identified control freak when it comes to certain aspects of my life, and as such, I am perpetually perturbed by the Skills Expertise section on LinkedIn. The way this section works, anyone can endorse me for anything – even things I know nothing about! And if enough people endorse me for things I do not consider important, these skills will be prominently displayed at the top of my Skills list. Aargh! You might, like me, get an email almost daily telling you that someone wants to endorse you for â€Å"new† Skills not currently listed on your profile. And if you’re like me, there was a reason you didn’t list that skill in the first place. Either you don’t have that skill or you don’t want to market it. What I do in this situation is press â€Å"Skip† and wait until the next well-meaning person endorses me for skills I don’t have. At the National Resume Writers’ Association Conference in Chicago this past week, LinkedIn endorsements were a hot topic. We are all concerned that the wrong people are endorsing us for the wrong things. In one session about LinkedIn, trainer Dean DeLisle suggested that we take control of our Skills Expertise and stop complaining about it! How can you wield control over this pesky section? Well, let me tell you: Fill in ALL 50 Skills. This way there will be less likelihood of additional, inappropriate skills being added to your profile. You would have to delete one skill to add another. Press â€Å"Skip† to decline adding Skills to your profile. Know that the skills listed at the top of your Skills list are the ones with the most endorsements. If you want different skills to show up there, ask your connections to endorse you for the ones you want to appear at the top! (I am going to do this momentarily. Be forewarned.) As a last resort, you can delete a skill, add it back, and start over from zero endorsements. That will push other skills higher up on your list. Please Take Action! A Request I’ve found that a lot of people seem to endorse me for Blogging, Social Networking, Social Media Marketing, Nonprofits, Career Management, Time Management, and a lot of other things I don’t market as my specialties. My request to you is to endorse me for the list of Skills Expertise that appears below. Please only do so if you are confident that I have the skill! Also note that to endorse a skill, you must be a 1st-degree connection. I invite you to connect with me on LinkedIn if we are not already connected. Hint when endorsing anyone for skills: Don’t default or be limited to the ones suggested at the top of their profile! Scroll down in the profile to the Skills Expertise section and choose from there. You will be able to click on a + sign to choose the skill. For example: Heres my list of requests. Thanks in advance for your support! Resume Writing Executive Resumes Executive Resume Writing Sales Resumes Marketing Resumes C-Level Resumes Senior Management Resumes Supply Chain Resumes Operations Resumes LinkedIn LinkedIn Profiles Cover Letters Professional Bios College Application Essays MBA Admissions Consulting Law School Admissions Consulting Law School Resumes I’m making this request partly as an experiment in service of my e-book, How to Write a KILLER LinkedIn Profile. If I can change the appearance of my Skills Expertise section, then I will be able to stand tall and recommend similar action to my e-book readers in the 8th edition. Also, if you think I am familiar with your skills and want me to endorse you for specific ones, I will do so IF I know your abilities first-hand. Thank you and I look forward to the changing face of all our LinkedIn profiles!

Tuesday, November 5, 2019

9 customer service jobs to apply for this holiday season

9 customer service jobs to apply for this holiday season The holiday season: hot chocolate, seasonal parties, family togetherness†¦ and lots and lots of expenses that make the season as much of a drain as it is a joy. The good news is there are a host of job opportunities to help you actually pay for all those gifts you need to buy- most are seasonal and require you to accommodate the holiday rush, but all will put extra spending cash in your pocket. Here are 9 customer service jobs to consider taking on as the holidays approach. Personal ShopperThere’s a lot of shopping at the holiday season, and some people need you to do it for them. While personal shopping is often for upscale clientele, where you buy piles of presents for the wealthy and standing on long lines at Saks, it more often entails performing simpler tasks like buying groceries (or even takeout) and delivering them to people’s homes. When people are busier at the holidays and need to prepare extra food for visiting relatives, this type of service is in even more demand.E-commerce Support/Social Media Customer CareWith a lot of customer orders at holiday time come a lot of questions and details that need handling. Demand for online customer support is high. The good news- support is a job that can even be done from home.For those who are social media savvy, some companies hire customer care representatives specifically to monitor social media platforms and handle any complaints or issues a customer may voice through social media. While this can be about dealing with a lot of complaints, it can be a great seasonal job for the problem-solver with tech proficiency.Hotel ConciergeIf you live in a larger city, seeking out a temporary position as a hotel concierge can be a way to employ your customer service skills a bit removed from holiday stress, helping people when they are ready to relax. This position helps hotel guests find fun things to do in a city, and assists with finding transportation or even making reservations. With a greater number of travelers during holiday vacations comes a greater need for hotel support staff.Retail Sales AssociateStores are open longer and need lots of help to meet the extra demand of ordering stock, processing orders, and helping customers find what they’re looking for. With the hustle and the bustle of the shopping season, the workflow at a retail store is likely to keep you on your toes.Gift WrapperThere’s an art to gift wrapping that many people do not possess. That’s why this job exists. Making a few extra dollars by beautifully wrapping someone else’s presents can help you pay for your own. For those who actually enjoy making their gifts look gorgeous, this job can be both an enjoyable and integral part of the holiday season.Food Service Hospitality WorkerThe holidays always mean holiday parties. Whether it’s catering, waiting tables, bartending, or hosting, hospitality needs are highest during the holidays. Because event staff usually wor k a small number of hours (but often work late-night hours), catering companies often pay competitive wages. And if bartending is your specialty, you can expect to be well-tipped at the more upscale galas and corporate events.Uber DriverWith all the events, holiday shopping, and travel to attend, one of the services people need desperately during the holiday season is a driver to get them where they are going. Once you pass the various driver requirements, if you have a license and a car and are over 21 you have a way to make money and help people get where they are going safely.Holiday Tours EventsWhether it’s a meet greet with reindeer or a carol-singing bus tour, there are jobs out there that can get you into the holiday spirit, making the fun happen for families to enjoy. These types of jobs really do require a certain kind of energy and interest in working with kids and adults alike. While it’s not for everyone, it can be one of the more fun seasonal jobs out th ere.Package HandlerThere’s Black Friday, and now there’s Cyber Monday (the Monday after Thanksgiving). This Thanksgiving weekend, retail stores will be brimming with customers, and then of course many shoppers are increasingly buying their gifts online. Shipping companies like UPS and FedEx need extra workers to get these packages to customers, and also to get holiday gifts to friends and relatives. Increasingly, Amazon itself is hiring, both to handle increased traffic at its fulfillment centers and for last-mile delivery to customers’ homes.

Saturday, November 2, 2019

Code of Ethics Research Paper Example | Topics and Well Written Essays - 250 words

Code of Ethics - Research Paper Example The issues have always been whether to disclose such information and to whom. For instance, is it proper to place critical loggers on devices on the network to capture all that the user types? Or say so as to see all that is shown screen capture programs those are some of privacy ethical issues that have been of concern. The other ethical issue has been promising more than they can deliver or even taking advantage of client’s ignorance to charge more fees through data manipulation. Today, IT organization can install technology to make client’s network more secure but not very secure in reality. Yet there has been the dilemma of whether to replace the present firewall just to have more billable hours. Some firms promising more than they can actually achieve to gain reputation. The final loyalty has been connected to loyalty. IT organizations with contacts for multiple clients have ethical issues to deal with. For example, should they obtain information about one of their clients that can directly affect the other client, where should their loyalty

Thursday, October 31, 2019

Strategic Marketing Management Essay Example | Topics and Well Written Essays - 3750 words

Strategic Marketing Management - Essay Example Brief History Samsung electronics is one of the Asian technology firms which have been able to capture a good market in the global market. The firm is a part of the Samsung conglomerate that provides a number of services and products. The firm has been able to establish a large enough market niche, overcoming global giants such as Apple, BlackBerry and Nokia. In terms of its Smartphone sales, Samsung has been able to provide a strong competition in the global market, and this has enabled the firm to be able to increase its sales and revenues. However, although Samsung has been able to capture a big market share on the global market, the firm has not been able to capture the Canadian market where its main competitor, Blackberry, has a stronghold on the market. This is critical because the Canadian market is a particularly good one given the fact that the market is a high end market, with numerous potential customers. Goals To be the market leader Samsung intends to be the market leade r in consumer electronics. ... It also aspires to be able to deliver the best most innovative products especially in the smart phone industry. Increase a cream of the market customer base (price skimming) In the technology industry, price skimming is the best way for firms to get their research and development costs returned as soon as possible. Price skimming refers to the firm being able to sell of a new innovative product and a considerably high price to those people who are can to pay more to be the first to use the product (Baker and Hart 2008). Once this happens, the firm recovers its research and development costs which were incurred in developing that product. The firm can now sell the product to the lower market at a lower price. Since Samsung has a global market, the Canadian market could be the best market to act as its high profile market. Although the market for Samsung is a global one, it fails to have a market stronghold in market areas where the firm can use the market for price skimming. This is b ecause of a number o reasons. First one is the fact that the main markets where Samsung has a stronghold on the market cannot be used for effective price skimming. Black Berry has a stronghold in all the high profile markets, and this makes it possible for Black Berry to use price skimming. This ability also makes it possible for Black Berry to be able to invest properly without worrying about its research and development costs (Martin 2013). If Samsung is able to increase its market share in the Canadian market, it will also be able to do effective price scheming and thus positively affect its research and development process. Fig. 1.0 showing the market share of the main Smartphone brands. Note that Samsung is the only experiencing growth. Increase customer base Apart from having a

Tuesday, October 29, 2019

Glaser Health Products Coursework Example | Topics and Well Written Essays - 500 words

Glaser Health Products - Coursework Example In most situations, these costs are part of recurrent expenditure treated as a liability in the company’s profitability index.In as much as production costs are characterized with a multiplier effect on the overall performance of the company, their increase in efficiency is always added to the value of production and increases the profitability of the firm.In order to trace various costs to activity groupings, arbitrary allocations of overheads to products, services, and consumers will be vital. At the first stage, there will be the derivation of the activity cost pool. These will consist of costs such as; material handling, procurement, and set-up. While the second stage will be made up of; costs per material movement, costs per purchase order, and costs per set-up.In primary stage cost drivers in relation to products, one needs to employ the use of activity drivers by assigning the activity costs to outputs on the basis of the consumption and demand for the outputs. All the outputs will be identified on the performance of an activity segment which consumes resources(Barrett, 2005). It is necessary to use preliminary and primary stage cost drivers because they aid in assigning resource costs to activities.This is done in three main ways which include; direct, indirect, and general/administrative costs. Direct costs consist of such costs that are traceable directly to one output such factory painting and repairs in the factory and other coats of production.

Sunday, October 27, 2019

The Disposable Camera

The Disposable Camera The Disposable Camera Brief This report aims to explain and understand the fundamental workings behind the popular and revolutionary disposable camera. The connection between the Lens and the Film will have most emphasis and explanation where appropriate. This will be achieved by a physical dismantling and any online information available. Introduction Photography is undoubtedly one of the most important inventions in history. It has enabled people to capture and cherish moments in time and preserve them for years to come. During its developing life the disposable camera has become inexpensive to manufacture, and thus cheap to the consumer compared with other more ‘user adjustable opposites. The basic technology, first conceived in 1814, is fairly simple. It requires 3 standard elements; an optical element (the lens), a chemical element (the film) and a mechanical element (the camera body). It is the manufacture and assembly of these parts that create a precise image of what we see before us. The basic overview of the device Disposable cameras are all manufactured in the same manor; not to allow removal and reloading of the film. Instead, these single-use cameras are built around the film, with the main process of rolling it from one side of the camera to the other without a protective casing. When the user is ready to take a picture, they â€Å"point and shoot† at the desired subject and press the shutter release button. This button activates a spring-loaded piece of plastic that flicks open for a pre-defined length of time. The length of time is usually defined by the International Organisation for Standardisation (ISO); this is commonly regarded too as the â€Å"shutter† or â€Å"ISO† speed. The, now open shutter makes an impression on the film. All cameras work with the process of light thus the inside of a disposable camera must be very dark. The light that entered the camera is focused and captured on a portion of the photosensitive film, creating a photo image. This printed film is then advanced into the container on the right to stop any more light from continuing to expose the film. As this happens a new section of the film is moved into position. Once the film has been exposed, the physical camera body is no longer needed. To get the photos of the film it needs to be taken to a professional developer; here, the film is removed and developed (usually in a professional darkroom or in a commercial photo developing machine). The developed photos are then collected by the photographer while the casing is discarded or recycled. The FujiFilm 35mm Disposable Camera Under exposed photos have always been a criticism of disposable cameras, where not enough light is gathered through the pre-defined shutter mechanism. To combat this, the FujiFilm 35mm has a built in flash. To activate the flash, a little flap on the front of the camera has to be pulled up, See Fig.01. This flap connects a metal strip inside the camera to the circuit board causing a charge to flow. This moves electrical energy from the pre-installed battery to the transistor ready for the shutter release to be activated. As the user presses the shutter release button, the charged transistor releases its energy to the flash causing light. However, this only happens if the red LED is lit on the top of the camera (indicating the flash is fully charged and ready to use). The flash is usually in sync with the shutter to â€Å"Freeze† the image. The process in which the chemical film is pulled the correct distance for use with a new image is controlled by a series of gears on the top right of the camera. As the user turns the top right gear, the white gear (Fig.06) is pulled by the holes in the film; this pulls another gear until it reaches a â€Å"stop† position. This is how the camera knows when a new section of film is ready for exposure, also releasing the shutter button for the user to take another photo. Simply, the film that the light image is produced upon is useless on its own. It is actually the chemicals that are on the film that react to the input light to cause the end photo result. The chemicals on the film are Silver Halide salts which are bonded by gelatine. The variable crystal size determines the sensitivity, contrast and resolution on the film. The shutter mechanism is possibly one of the most important processes the camera must undertake through the capture process. Within the FujiFilm 35mm is relies highly on the springs to operate the removal of the shutter from the lens. As the user presses the shutter the white arm is released pushing a flap connected to the shutter. This pushes the shutter away from the lens, while the spring relocates it into the correct position. See Fig.07. At the same time the two circuit strips are connected, Fig.08. The Lens The optical element is an essential part to any camera as it angles the light entering the device into a standard that the camera can read. At its simplest, a lens is just a curved piece of glass or plastic, which can slow down and angle the light to redirect it into a â€Å"real image† what is in front of the lens. This make/model of camera incorporates a fixed lens; this basically means that the lens is not customisable by the user. In terms of taking a photo; an object cannot be focused upon if its too close to the camera. The process of taking a picture can be explained very easily. As light travels into a denser medium, at an angle, it changes speed; as glass and plastic are denser materials than air, the light slows down as it enters the camera. Due to the light hitting the medium at an angle, some of the light will slow down before the rest, causing a resultant change in angle. This is commonly referred to as â€Å"Refraction†. Put simply, imagine you are swimming through water; eventually you reach a patch of oil at an angle. The side of your body that hits the oil first will slow down while the opposite side will keep the same potential energy and momentum as before, thus causing a change in direction. In a standard converging or â€Å"Convex† lens, the glass curves out (away from the camera body). This makes the light bend towards the centre of the lens on entry. Effectively, this reverses the image horizontally. (Fig.09) A standard disposable camera gives a minimum distance from the â€Å"real image†. This is its focal range. Anything below the given distance will be processed blurry as the lens cannot refract the light enough to focus on the film. The amount the light is angled on entry is proportional to the structure and curvature of the attached lens. (Fig.10). Standard compact disposable cameras have an aperture (size of the shutter hole) in the range of f/11 to allow the image to be in focus from 4 feet to infinity. The standard lens used in cameras today is most commonly manufactured from a single moulded plastic sheet and mechanically pressed into the camera. Camera Recycling With the government clamping down on waste due to over consumption and the lack of re-using acceptable products, many companies now recycle disposable cameras. There are two options currently available; the first is to re-load the film and replace the original battery to brand new ones. The second is to send of the plastic parts, which are all fully recyclable, off to be remade into something else. Conclusions The disposable camera has become cheap, user friendly, inexpensive to manufacture and a brilliant way to capture images in time. Through many years of development, they have become smaller and more manageable becoming the device we all could not live without today. Although, by making it increasingly smaller and compact, its now fairly complex and contains a large number of parts, increasing the overall sale price. As a result, manufacture and assembly of the components would be very time consuming. The time has come for a completely robotic production and possibly a compact disposable camera that has the ability to place your SD card into and remove once the camera has been used. Bibliography 1. Overview of how the camera works http://electronics.howstuffworks.com/camera.htm 2. Camera electronics http://www.howstuffworks.com/framed.htm?parent=camera-flash.htmurl=http://www.exo.net/~pauld/activities/camera_electronics.html 3. History of the Camera http://en.wikipedia.org/wiki/History_of_the_camera 4. What is photographic film? http://en.wikipedia.org/wiki/Photographic_film 5. Manufacture of a disposable camera http://www.ehow.com/how-does_4925657_how-disposable-camera-manufactured.html

Friday, October 25, 2019

Benjamin Franklin Essay examples -- American History, The American Dre

If ever a story embodied what has come to be known as the American Dream, it is the life story of Benjamin Franklin. Franklin could be considered a passionate and energetic man who motivated himself by self-determination and a strong work ethic to achieve self-improvement. Beyond his sometimes-lofty personal aspirations to attain self-improvement, Franklin’s deep conviction inspired him to help others live well. He demonstrated this conviction in his reasons for writing, his willingness to portray his mistakes as well as his successes as a means of instruction, his recounting of the assistance he gave to others, and his desire to create useful solutions. Franklin successfully used his story to depict this self-improvement. Consequently, Franklin’s trek from a meager beginning and lack of education to a wealthy man of immense stature and influence punctuates his emphasis on hard work and determination. Franklin’s insatiable thirst for knowledge and his relentless pursuit of bettering himself were central to his character. Every success and achievement only emboldens him to accomplish more. He states in regards to his writing ability, â€Å"I had been lucky enough to improve the method or the language, and this encouraged me to think I might possibly in time come to be a tolerable English writer, of which I was extremely ambitious.† (Franklin, p.15) Indeed, later in his life, Franklin acknowledged many of the opportunities he had were afforded him because of his ability to write. (Franklin, p. 61) Franklin's expressed intent at the onset of his book is to write his personal anecdotes for his son. He mentions that he began in poverty and obscurity and rose to a place of reputation. He hoped ... ...on the assistance of God in his search for perfection. However, it should be noted that the nature of man prohibits perfection and any true happiness. Only through the shed blood of Jesus Christ and a changed nature can one embark on a life of true contentment and happiness. Upon later reflection, Franklin realized that he never arrived at the perfection he was striving for, but he was better and happier than if he had not attempted it. (Franklin, p.84) Hence, the reason for publishing his scheme, so that others may derive the same benefit he had. It can be concluded that Benjamin Franklin's life had a great affect not only on his generation, but on many generations that would follow. His intellectual curiosity, ingenuity, and desire to do good propelled him into a life long pursuit of improving himself and serving as a model for others to benefit from.

Thursday, October 24, 2019

Value Investing: Predicting Long-Term Pro?tability Based on Fundamental Data

Value Investing: Predicting Long-term Pro? tability Based on Fundamental Data An Empirical Study in the Manufacturing Industry by Vital Schwander (05-609-136) Master’s Thesis supervised by Prof. Dr. Andreas Gruner University of St. Gallen May 23, 2011 Master in Law & Economics Abstract Warren Bu? ett (1992) classi? es the discussion about value and growth stocks as fuzzy thinking. With that statement, he argues that value investors must consider growth in their value calculations. This thesis shows in a ? rst step that growth is only valuable if the company enjoys a durable competitive advantage.By examining the fundamental characteristics of companies with a durable competitive advantage, this thesis intends in a second step to assess the predictability of long-term pro? tability. The DuPont Identity serves as framework for that purpose. The objects of this investigation are companies within the manufacturing industry (Primary SIC Code between 2000-3999) that were listed in t he United States between 1979 and 2009. The results show that companies with a durable competitive advantage exhibit speci? c characteristics in operating e? ciency, asset use e? ciency, and in the ability to meet short-term obligations.Furthermore, the thesis shows that long-term pro? tability, based on the investigated characteristics, is predictable to some extent. This thesis concludes by assembling the insights to a value strategy that is applied to manufacturing companies listed in Switzerland. The strategy exhibits an outstanding SMI-adj. compound annual growth rate of 13. 19% over a period of 17. 5 years. ii Acknowledgement I would like to express my gratitude to Prof. Dr. Andreas Gruner for supervising this thesis and his assistant Lucia Ehn for her conceptual advices. I have furthermore to thank Mr.Hans Ulrich Jost for giving me insight into the daily business of a value fund at UBS AG. My sister Daria introduced me to R and Latex. I want to thank her for her help and supp ort. I want to thank my great family who has been always supportive and motivating. Finally, I also would like to thank friends and colleagues for making life such an enjoyable experience. iii Contents 1 Introduction 1. 1 1. 2 Issues, Goals and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . Structure and Empirical Approach . . . . . . . . . . . . . . . . . . . . . . 1 1 2 4 4 5 7 7 8 2 Value Investing—An Investment Paradigm 2. 2. 2 2. 3 The Origin of Value Investing . . . . . . . . . . . . . . . . . . . . . . . . . Value and Other Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . Four Value Strategies by Illustration . . . . . . . . . . . . . . . . . . . . . 2. 3. 1 2. 3. 2 2. 3. 3 2. 3. 4 2. 4 2. 5 Piotroski’s F_Score . . . . . . . . . . . . . . . . . . . . . . . . . . Walter and Edwin Schloss . . . . . . . . . . . . . . . . . . . . . . . Warren Bu? ett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 UBS EMU Value Focus Fund . . . . . . . . . . . . . . . . . . . . . 12 Value vs Growth—Fuzzy Thinking! . . . . . . . . . . . . . . . . . . . . . 13 Value Anomaly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2. 5. 1 2. 5. 2 2. 5. 3 Behavioral Approach . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Risk-based Approach . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Competitive Advantage Based Approach . . . . . . . . . . . . . . . 16 17 3 Literature Review 3. 1 3. 2 3. 3 Competitive Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Pro? tability Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Research Gap and General Approach . . . . . . . . . . . . . . . . . . . . 21 22 4 Analysis of Long-term Pro? tability 4. 1 4. 2 Data Sample . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Analysis of Return on Equity Measure . . . . . . . . . . . . . . . . . . . . 26 4. 2. 1 Superior Performers . . . . . . . . . . . . . . . . . . . . . . . . . . 26 iv 4. 2. 2 4. 2. 3 4. 3 4. 4 4. 5 4. 6 Analysis of Performance Persistence . . . . . . . . . . . . . . . . . 28 Analysis of SPP Deciles in respect of ROE . . . . . . . . . . . . . . 30 Analysis of SPP Deciles in respect of other Financial Measures . . . . . 33 Predictability of Long-term Pro? tability . . . . . . . . . . . . . . . . . . . 41 Discussion of the Interim Results . . . . . . . . . . . . . . . . . . . . . . . 43 Market Analysis 4. 6. 1 4. 6. 2 4. 6. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Subdivision-speci? c Market Analysis . . . . . . . . . . . . . . . . . 45 Analysis of SPP Deciles in respect of Market Multiples . . . . . . . 45 Market Performance Analysis . . . . . . . . . . . . . . . . . . . . . 46 48 5 Value Strategy 5. 1 5. 1. 1 5. 1. 2 5. 1. 3 5. 2 Strategy Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Sample Descriptives and Strategy Composition . . . . . . . . . . . 48 Portfol io Formation . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Performance Measurement . . . . . . . . . . . . . . . . . . . . . . . 49 Portfolio Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 53 6 Conclusion and Further Research 6. 1 6. 2 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Further Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 56 i v x xv Bibliography A Data Input B Financial Measures C Subdivisions D Market Analysis List of Tables 4. 1 4. 2 4. 3 4. 4 4. 5 4. 6 4. 7 4. 8 4. 9 5. 1 COMPUSTAT Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Distribution of Firm Years Distribution of Superior Performance Years . . . . . . . . . . . . . . . . . 27 Probability Distribution of Superior Performance Persistence . . . . . . . 29 ROE Distribution for each SPP Decile . . . . . . . . . . . . . . . . . . . . 31 RO E Distribution for each SPP Decile (Subdivision-adjusted) . . . . . . . 32 Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 . . . . . . . . . . . . . . . . . . 47 Predictability of Future Pro? tability . . . . . . . . . . . . . . . . . . . . . 42 Market Performance for each SPP Decile Portfolio Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 . . . . . . . . . . . . . . . . . . . . . . . . i ii v A. 1 Data Input for US Companies A. 2 Data Input for Swiss Companies . . . . . . . . . . . . . . . . . . . . . . . B. 1 Calculation of the Financial Measures . . . . . . . . . . . . . . . . . . . . B. 2 SPP Deciles (Subdivision-adjusted) regarding Financial Measures . . . . vii x xi C. Overview of Subdivision . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. 2 Subdivision Comparison regarding ROE . . . . . . . . . . . . . . . . . . . C. 4 Composition of SPP Deciles regarding Subdivisions C. 3 Subdivision Distribution in respec t of SPP Deciles . . . . . . . . . . . . . xii . . . . . . . . . . . . xiii D. 1 Average Price-Earnings Ratio per Subdivision . . . . . . . . . . . . . . . . xvi D. 2 Average Book-to-Market Ratio per Subdivision . . . . . . . . . . . . . . . xvii D. 3 Average Price-Earning Ratio per SPP Decile D. 4 Average Book-to-Market Ratio per SPP Decile . . . . . . . . . . . . . . . xviii . . . . . . . . . . . . . . . xix vi List of Figures 3. 1 4. 1 4. 2 4. 3 5. 1 Three Slices of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 . . . . . . . . . . . . . . . . . . . . . . . 33 . . . . . . . . . . . . . . . . . . 47 Mean ROE for each SPP Decile SPP Deciles in terms of Financial Measures . . . . . . . . . . . . . . . . . 40 Market Performance for each SPP Decile Performance of the Value Strategy . . . . . . . . . . . . . . . . . . . . . . 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv C. 1 Subdivision Distribution vii List of Abbreviations vg. B/M CAP CAGR CAPM COG S DA EBITDA etc. e. g. EV FCF IE i. e. IPO LT p. a. P/E ROA ROE SGA SMI ST US average Book-to-Market Competitive Advantage Period Compound Annual Growth Rate Capital Asset Pricing Model Cost of Goods Sold Depreciation and Amortization Earnings before Interest, Taxes, Depreciation and Amortization et cetera exempli gratio – for example Enterprise Value Free Cash Flow Interest Expense id est – that is Initial Public O? ering Long-term per annum Price-Earnings Return on Assets Return on Equity Selling, General, and Administration Swiss Market Index Short-term United States iii Chapter 1 Introduction 1. 1 Issues, Goals and Limitations Every investor is looking to buy low and sell high. This does not yet characterize a value investor. Although value investing has become a widely used term, it has been stamped in particular by a small group of academics. They associate stock-speci? c fundamentals such as a low P/E ratio, low cash-? ow-to-price ratio, and high B/M ratio to va lue stocks. These stock-speci? c fundamentals have become characterizing for value investing and embody the basis for many research studies about value investing (see Damodaran, 2011).For example, Piotroski (2000) developed the F_Score to separate losers from winners among value stocks (i. e. high B/M-stocks). On the other hand, research has been conducted on growth stocks (i. e. high P/E ratio, high cash-? ow-to-price ratio, and low B/M ratio). Mohanram (2005) developed the GSCORE to separate losers from winners among growth stocks, for instance. As a consequence, many investors feel compelled to decide between value and growth stocks. However, in the heated discussion it is often ignored that growth has an impact on the value of a company.This impact of growth varies according to the particular company from negligible to very important, and its impact can be negative as well as positive. Growth is valuable in particular if a company enjoys a durable competitive advantage and remai ns very pro? table over a long period of time. There are many books about the competitive advantage (e. g. Porter, 1998; Shapiro, 1999). However, it has never been discussed related to value investing. Only Mauboussin and Johnson (1997) have raised a discussion about the competitive advantage period within the valuation process of stocks.They point out in their paper „Competitive Advantage Period: The Neglected Value Driver† that the persistence of competitive 1 advantage has a huge impact on the value of a ? rm. Yet there is little literature on this topic (see Fritz, 2008) and the bulk of academics as well as practitioners still rely mainly on the di? erentiation between value and growth stocks. This thesis gives priority to the competitive advantage, though, and intends to lay the groundwork for valuing competitive advantage. It is important to understand how a competitive advantage can be captured and if it is possible to predict long-term pro? ability, before starti ng to value the growth potential of a company. Hence, the aim of the thesis is con? ned to the predictability of long-term pro? tability and does not intend to value the competitive advantage as such. The ? rst question that arises in this context is whether it is possible that a company can exhibit long-term pro? tability. The answer to this question is of interest, as most economists maintain the contrary. According to economic theory, pro? tability is mean reverting in a competitive environment (Chan, Karceski and Lakonishiok, 2003). However, reality teaches us the contrary every day.Mircrosoft’s products, for instance, are everything else but innovative. Nevertheless, the company earns excessive returns for decades, and so do others like The Coca-Cola Company. Thus, this thesis investigates the possibility that a company is able to sustain its competitive advantage over several years. Thereupon, the second issue addresses whether companies with a durable competitive advan tage exhibit stock-speci? c fundamental characteristics. Therefore, the DuPont Identity serves as framework. The companies are classi? ed into deciles in terms of pro? tability (i. e.ROE) and persistence. Upon this, the companies are tested for the characteristics regarding various measures, which are derived mainly from the DuPont Identity. All companies that are objects of the investigation are listed in the United States and constrained to manufacturing companies only. The third question addresses whether it is possible to identify companies with a durable competitive advantage based on the observed characteristics. Finally, a simple strategy is composed that implements the investigated characteristics of companies with a durable competitive advantage.The strategy is conducted on manufacturing companies that are listed on a Swiss stock exchange. 1. 2 Structure and Empirical Approach The present thesis is structured in mainly four parts: Chapter 2 reviews literature on value inves ting and points out the broad range of value strategies by the mean of four examples. The reader shall gain an overview of value investing (i. e. the origin of value investing, dissociation from other investors, and current value discussion). Additionally, 2 this chapter shall point out the link between value investing and the competitive advantage period.Chapter 3 contains a literature review about competitive advantage, pro? tability measures and the persistence of pro? tability. Moreover, chapter 3 shows the research gap as well as the general approach to ? ll this gap. The empirical part in chapter 4 deals mainly with three issues: (1) persistence of superior performance, (2) characteristics of companies with a competitive advantage, and (3) predictability of future long-term pro? tability. Finally, in chapter 5 a value strategy will be composed that builds on the insights of chapter 4. 3 Chapter 2 Value Investing—An Investment Paradigm 2. 1 The Origin of Value InvestingV alue investing is an investment paradigm that derives its origin from the ideas on investment and speculation subsequently developed and re? ned by Benjamin Graham and David Dodd through various editions of their famous book Security Analysis. Starting in 1928, Graham began to teach a course on security analysis at Columbia University. The book emerged from that course, and appeared in 1934. Graham and Dodd mainly summed up lessons learned from the previous economic crisis in 1929 and provided readers with inevitable principles and techniques by focusing on the analysis of fundamental ? gures to estimate the value lying behind securities.By publishing the ? rst professional book about investing, they laid the foundation of value investing. In 1949, Graham published his second book, The Intelligent Investor, which was described by Warren Bu? ett (Graham, 2003) as „by far the best book on investing ever written. † It contains mainly the same ideas as in its predecessor Sec urity Analysis, but focuses more on the emotional aspects of stock markets, rather than on analyzing techniques. The techniques to determine investment opportunities that Graham and Dodd have developed are based on two fundamental assumptions about the market: 1.Market prices of securities are sometimes subject to signi? cant and unforeseeable movements. 2. As opposed to the e? cient market hypothesis, which assumes that all stocks are correctly priced by the market at any one point in time, market prices of some 4 securities deviate from their intrinsic values from time to time despite the fact that their underlying economic values do not justify such signi? cant deviation. Hence, an intelligent investment is characterized as paying less for a security then its intrinsic value. Paying more for a stock than its intrinsic value in the hope that it can be sold for a higher price is speculative.In other words, an intelligent investor should not attempt to forecast future stock market m ovements; instead, such movements provide opportunities to purchase undervalued stocks. Moreover, investors are encouraged to purchase securities only when the market price is su? ciently below its intrinsic value. Graham (2003) referred to this signi? cant gap between price and intrinsic value as the margin of safety, and quali? ed it as central concept of investment. In practice, investors lay down di? erent margins of safety that are appropriate to their fundamental analysis. A super? ial analysis requires a higher margin of safety than a deep and broad analysis. Additionally, market conditions as well as the sizes of funds gives reason for di? erent margins of safety. Bu? ett states in his letters to the shareholders of Berkshire Hathaway, Inc. in 1992: „We have seen cause to make only one change in this creed: Because of both market conditions and our size, we now substitute ,an attractive price’ for ,a very attractive price’ (p. 12). † Yee (2008) sugg ests a margin of safety between 10% and 25% of the share price. Larger margins are justi? ed for especially risky stocks.Accordingly, the margin of safety is not a rigid safety net but rather a ? exible net with meshes, which must be properly adjusted to the speci? c needs and conditions from time to time. 2. 2 Value and Other Investors Classic value investors—in the sense of Graham and Dodd—are rare. Every investor is looking to buy low and sell high, but what exactly di? erentiates a real value investor from all the other investors? According to Greenwald, Kahn, Sonkin, van Biema (2001), investors can be di? erentiated into two main categories. The ? rst category pays no attention to fundamental analysis.Instead, these investors analyze charts; in particular they construct charts to represent trading data (e. g. price movements and volume ? gures). In other words, they intend to predict future price movements referring to previous events regardless of its fundamental value (pp. 5-6). Graham and Dodd qualify these investments as highly speculative. 5 Although the second category focuses admittedly on fundamental analysis, Graham and Dood value investors are still a minuscule minority. Greenwald, Kahn, Sonkin, van Biema (2001) divide these fundamentalists into those who ocus on macroeconomics and those who deal with the microeconomics of securities. Macro-fundamentalists often pursue a top-down approach by considering ? rst broad economic factors such as interest rate, in? ation rate, exchange rate, unemployment rate, and the like. They forecast economic trends on a broad national or even worldwide basis. Upon this, they decide whether a group or even a speci? c security is a? ected by this trend. They do not calculate the value of individual securities, though. In particular, they monitor policy makers, such as the central bank, and try then to determine the impact on a speci? industry or group of securities. As any other investor, they attempt to forecast price movements before other investors recognize them and subsequently buy low and sell high, but they do not calculate the intrinsic value of an individual security directly (pp. 6-7). Graham and Dodd originally established value investing as a comprehensive analysis of securities in order to estimate the intrinsic value as accurately as possible, but in the group of micro-fundamentalists, traditional value investors are still a minority.According to Greenwald, Kahn, Sonkin, van Biema (2001), a more common approach takes the current price of a stock as the point of departure. These investors analyze the history of a security, considering how the stock price was in? uenced by changes in the underlying economic factors. In a second step they then attempt to predict the probability and impact of such changes in order to forecast future development of the speci? c security. These kind of investors often forecast future earnings or free cash ? ows. If they ? d that their pre dictions are more optimistic than the market’s expectation, they buy the security; if they ? nd that the market’s overall expectation is to high compared to their forecast they sell the security (p. 7). Indeed, most value investors—in the sense of Graham and Dodd—start their analysis from the bottom up by calculating ? rst the intrinsic value of a ? rm and subsequently they estimate the macroeconomic exposure of the ? rm—similar to the micro-fundamentalists. Although there are some similarities, Graham and Dodd value investors distinguish themselves from micro-fundamentalists in many ways.Greenwald, Kahn, Sonkin, van Biema (2001) mention two reasons why most micro-fundamentalists are not value investors: First, they focus on prior and anticipated changes in prices, and not on the level of prices relative to underlying values. The second and even more decisive di? erence is the absence of a margin of safety to safeguard investors from unpredictable market movements (pp. 7-8). Accordingly, a true value investor in the classical sense is one whose point of de6 parture is the fundamental data of a company. Although macro-economic factors play a signi? cant role in the analysis, they are of secondary importance.Furthermore, this investor does not predict future developments of key factors that cause price changes. Instead, a classic value investor values a company based on current fundamentals and buys a security at a bargain price. In the following section, four value strategies are outlined in order to give an idea by the way of illustration. 2. 3 Four Value Strategies by Illustration The range of value strategies is broad enough that it makes it impossible to sum up all of them. Thus, the following selection intends to show the large variety of aspects that these strategies characterize. These aspects range from fundamental analysis only (e. . Piotroski) to more sophisticated investigation of companies (e. g. Bu? ett), from con centrated portfolios (e. g. UBS EMU Value Focus Fund) to diversi? ed portfolios (e. g. Schloss). 2. 3. 1 Piotroski’s F_Score Piotroski started his career as a professor at the University of Chicago Graduate School, and since 2007 he has taught accounting at the Stanford University Graduate School of Business. In April 2000, Piotroski published a paper in the Journal of Accounting research titled „Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers. In this paper, Piotroski classi? es distressed companies in winners and losers by means of nine fundamental criteria. Four criteria (ROA, ? ROA, CFO, and ACCRUAL) re? ect the pro? tability, three criteria (? LEVER, ? LIQUID, future debt obligations, and two criteria (? MARGIN, and ? TURN) measure changes F_Score is composed as follows: F _Score =F _ROA + F _ ? ROA + F _CF O + F _ACCRU AL + F _ ? LIQU ID + EQ_OF F ER and EQ_OFFER) measure changes in capital structure and the ? rm’s ability to meet in the e? ciency of the ? rm’s operations (Piotroski, 2000, pp. 10-14).The equation of the + F _ ? M ARGIN + F _ ? T U RN + F _ ? LEV ER (2. 1) where a low F_Score signals a ? rm with less recovering potential and a high score indicates the ? rm as having mostly good prospects to recover. If a company ful? lls a criteria, 7 the F_criteria equals 1, otherwise 0. With that, Piotroski translates the criteria into binary signals. The sum of all F_criteria subsequently leads to the F_Score, which can range from a low of 0 to a high of 9. Due to the fact that it is very di? cult to obtain the maximal score, companies with a minimum score of 8 will be classi? d as high F_Score whereas as companies with a score of 0 or 1 are classi? ed as low F_Score (Piotroski, 2000, pp. 14-18). Piotroski (2000) reevaluates the stocks every year and decides whether a stock belongs to the losers or to the winners. Finally, the investment strategy buys high F_Score and sel ls short the low F_Score. This simple strategy generates over two decades an astonishing 23% average annual return. It appears that the strategy is also robust in crisis. In 2008, the American Association of Individual Investors tested the strategy among 50 other investment strategies.With a performance through to the end of 2008 of 32. 6%, it was not only the only stock strategy that would have generated positive returns but has also outperformed the median performance (-41. 7%) of all tested strategies by far (Thorp, 2009). Due to the fact that the portfolio is construed each year on actual data, it is often the case that the portfolio is turning over correspondingly. Once a ? rm is recovering and the market has recognized the improvements the B/M ratio increases and the stock does not appear any more on the screen, although the company has even more growth potential. That is why many ? ms remain no longer than one or two years in the portfolio. Admittedly, buying winners and shor t-selling losers is one big advantage of the strategy. Companies that are classi? ed as losers may transform in a subsequent period from a low F_Score to a high F_Score ? rm. Therefore, the strategy makes double use of a company’s development or business cycle. But the strategy also implies a disadvantage; why should an investor sell an excellent business that bought at a bargain price? Based on a competitive advantage, the business could thrive to a superstar and yield high returns on the initial investment.A top manager also keeps the good business also when others o? er more than its current value because the manager knows that the business will contribute also in the future to the ? rm and its shareholders. 2. 3. 2 Walter and Edwin Schloss Walter Schloss and his son Edwin are very conservative value investors whose motto is to keep things simple and cheap. Walter Schloss attended a course of Graham’s and worked for the Graham-Newman Partnership until 1955. Afterwar d, he ran his own investment ? rm and in 1973 his son Edwin joined the partnership. From the formation of the limited 8 artnership until 2000, the Schloss have provided their investors an annual compound return of 15. 3%. They outperformed the S&P Industrial Index by 4. 2% annually. In other words, they have created a return of 66,200% while the S&P Industrial Index performed 11,800% (Greenwald, Kahn, Sonkin, van Biema, 2001, p. 263). Walter Schloss has been titled by Warren Bu? ett as „superinvestor† (Forbes, 2008). What distinguishes the Schlosses from other value investors is their simple, and almost rudimentary method choosing stocks. They are among the few investors that stick to the principles of the father of value investing.Like Graham, they seek for stocks that are priced lower than their working capital (net assets minus current liabilities). They start their investigation by putting their feelers out to stocks that are unloved, distressed, and unheeded from ot her investors. Most of these stocks are in a downward trend either by a rapid plunge or a continually decreasing price. The longer the company has gone through such hard times, the more they call the Schloss’s attention. Once they have invested in such a unloved stock they hold it on average for four to ? ve years until the stock has recovered. Sometimes they also sell a stock earlier when they ? d a better opportunity (Greenwald, Kahn, Sonkin, van Biema, 2001, pp. 266-269). Edwin Schloss focuses on asset values, but is also willing to buy a company that has a strong earnings power. Greenwald, Kahn, Sonkin, van Biema (2001) describe the investment philosophy of Edwin Schloss as follows: „Edwin Schloss pays attention to asset values, but he is more willing to look at a company’s earnings power. He does want some asset protection. If he ? nds a cheap stock based on normalized earnings power, he generally will not consider it if he has to pay more than three times b ook value. [†¦ Depending on his estimate of what the companies can earn, Edwin may still ? nd the stock cheap enough to buy (p. 268). † Although Edwin pursues a more liberal value approach by taking the earnings power value into account, he is still very conservative. Both father and son do not include in their valuation process other than fundamental data. In their analysis, they rely entirely on annual and quarterly reports—they keep things simple but with a relatively high margin of safety. The diversi? cation of their portfolio also varies. They do not determine a threshold in advance to which they stick.Similar to Warren Bu? ett, their approach leads them to industries, which are not exposed too much to rapid changes that can undermine the value of these stocks (Greenwald, Kahn, Sonkin, van Biema, 2001, p. 269). 9 2. 3. 3 Warren Bu? ett Warren Bu? ett, who is doubtless the most famous student of Graham and one of the most successful investors, too, pursues a s imple strategy, which is complex and di? cult in its execution. Bu? ett started his career in Graham’s investment ? rm. In 1964, he then bought shares of Berkshire, when its book value per share was $19. 46 and its intrinsic value even lower (Bu? tt and Cunningham, 1997, p. 6). In the period from 1964 to 2009, book value per share increased at an annual compound rate of 20. 3% that is an overall gain of 434,057 %. Adjusted by the S&P with dividends included, Berkshire has a compound annual growth rate of 11%. During the period, Berkshire reported only twice a negative change in book value—in 2001 and 2008—compared to the S&P that incurred during the same period eight negative results (Bu? ett, 2009, p. 2). Unlike other investors, Bu? ett feels obliged to share his knowledge that he gained mainly from Graham.Moreover, and opposed to the bulk of successful investors, he teaches his wisdom to the world of investors—and those who are interested in his activit y— by an annual letter to the shareholders of Berkshire Hathaway, Inc. To attain this knowledge it is not necessary to buy a share of Berkshire Hathaway, Inc. —which costs currently over $125,000, nor is it necessary to pay any money for it. Bu? ett gives access to his letter on the Berkshire’s website for free. Additionally, in the book called The Essays Of Warren Bu? ett—Lessons For Corporate America, Cunningham organizes the information in Bu? tt’s letters in a thematic way. This book is also accessible online and can be downloaded for free. Bu? ett is aware that he creates potential investment competitors by passing his wisdom to everyone but imitating Bu? ett’s strategy is everything but simple. His explanations are logical and easy to understand, but the execution requires much experience and a distinctive comprehension of the industry and costumer behavior. In contrast to what Piotroski and other academics and money managers postulate , Bu? ett buys not only high B/M stocks. This amazes readers in many ways. In particular, because Bu? tt refers in several passages of his letters to Graham’s conception. It also contradicts the conceptions of most academics, which assign a high B/M ratio to value stocks. Nonetheless, Bu? ett puts emphasis not only on the book value of a company but more on the competitive advantage that a company enjoys. Like Graham, he is looking primarily for very cheap businesses, which are traded far under their intrinsic values. As opposed to Graham, Bu? ett buys not every stock that Mr. Market o? ers him for a bargain price. Additionally, he seeks for businesses with a high competitive advantage.While most ? rms in Graham’s portfolio are distressed, Graham diversi? es the risk. Bu? ett, on the other hand, holds that an investor should not buy second-class stocks 10 in the hope that they will recover. The awareness of less investment opportunities does not bother Bu? ett; au cont raire, he avoids purchases that he will regret later. According to him, every transaction that is based on a wrong decision is unnecessary, and thus, to be avoided. One could say that transaction costs (e. g. trading costs) are tiny, that they carry no weight. But what most people disregard are taxes.With every transaction, book value is going to be reevaluated and governments levy taxes on the new value. Holding a share does not cause any taxes, as long as the investment will be sold. Therewith, Bu? ett did not pay taxes as much as his colleagues that trade frequently. Either way, Bu? ett’s preferred holding period is forever. This strategy particularly bene? ts private investors that have bought stocks of Berkshire Hathaway. At least in Switzerland, the government does not impose taxes on capital gains. In the shareholder letter from 1992, Bu? tt breaks his strategy down to a few cornerstones of the valuation process: „We select our marketable equity securities in muc h the way we would evaluate a business for acquisition in its entirety. We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price (p. 12). † First, Bu? ett never buys a business that he does not understand entirely. This requires a full comprehension about the industry such as competitors, value chain, costumers, and so on. For this reason, Bu? tt avoids industries with a high rate of change (e. g. technology industry). The second criterion that a business must live up to is a competitive advantage. Preferably, he is looking for businesses that have potential to improve their competitive positions within the industry. Third, but less important, Buffett is looking for competent management. It is less important, because according to him a company with a durable competitive advantage can even operate with ordinary managers and generate extraordinary r eturns (Bu? ett and Cunningham, 1997, p. 21). Finally, a margin of safety prevents Warren Bu? tt from mistakes or unforeseeable developments. It seems that soft factors play an important role for him in the valuation process. Correspondingly, fundamental analysis is only half the battle. The following quote from Warren Bu? ett in the context of the hostile takeover of RJR Nabisco outlines the kind of business Bu? ett likes: „I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty (Burrough and Helyar, 1991, p. 218). † 11 For this reason, Bu? ett also accepts businesses that do not always have a high B/M ratio.Moreover, he seeks for businesses that have potential for improvements and buys them at a relative bargain price in the hope the business remains its advantage and yields high returns in the future. 2. 3. 4 UBS EMU Value Focus Fund The UBS EMU Value Focu s Fund is a highly concentrated and actively managed European equity fund, which holds maximally ten stocks, where each has an initial weight of 10%. The investment process is divided into seven steps (Screening process; Short list; Pre due diligence; Full due diligence; Watch list; Entry, increase/reduce position; and Exit).First, the stock universe is screened by a quantitative approach (EV/EBITDA, P/E, B/M, FCF yield) and by a qualitative approach. Second, in the due diligence process the team meets the management of the target company, they compare the company within the peer group, and determine the fair value and entry level. The team gives particular importance to the within-industry comparisons and a margin of safety of 30%. After the stock is over the due diligence, the stock is deposited on the watch list until the entry level is reached. The stock remains in the portfolio until the stock has recovered and the calculated air value is reached and the weight of the stock is less than 15% of the portfolio. If there is a more promising investment opportunity, a position will be changed. Based on the high portfolio concentration, a sector limitation makes sure that stocks which are stemming from the same sector do not surpass the threshold of 33%. If a stock’s price plunges after its purchase more than 15%, the management also pulls the trigger for safety reasons and sells the stock (UBS, 2010). The strategy of the UBS EMU Value Focus Fund equals in some aspects Warren Bu? ett’s strategy.Both distinguish themselves from Piotroski’s and Schlosser’s strategy insofar as they include a due diligence process that goes beyond a fundamental analysis (e. g. valuation of the management). Furthermore, both strategies do not strive for diversi? cation, although the UBS EMU Value Focus Fund includes some risk management factors that compel the management to exit in certain circumstances. Warren Bu? ett, on the other hand, restricts himself by avoiding complex businesses. The two strategies also di? er insofar as the UBS EMU Value Focus Fund has a relatively short investment horizon of 18 months, whereas Bu? tt holds a stock over decades. 12 2. 4 Value vs Growth—Fuzzy Thinking! Although there is a broad variety of value strategies, it seems that the discussion about value investing leaves little room for interpretation. Nowadays, the bulk of academics di? erentiate between value and growth (glamour) stocks. They ? nd that stock-speci? c fundamental attributes such as a low P/E ratio (Basu, 1977; Ja? e, Keim, and Wester? eld, 1989), low cash-? ow-to-price ratio (Chan, Hamao, and Lakonishok, 1991), and high B/M ratio (Rosenberg, Reid, and Lanstein, 1985; Fama and French, 1992) earn substantially higher returns than glamour stocks.Hence, often one feels compelled to decide between value investing and growth investing. In particular, academic work has upheld the distinction, and thus, has had a strong impact on inv estment professionals. Furthermore, academic research developed style-speci? c benchmarks (Chan and Lakonishok, 2004, p. 71). In that sense, value stocks are referred to a high B/M ratio, a low P/E ratio and a high dividend yield, whereas opposite characteristics—a low B/M ratio, a high P/E ratio and a low dividend yield—are assigned to growth stocks. Some professional investment managers even see a mix of the two approaches as a smart cross-dressing.Among others, Warren Bu? ett labels this classi? cation as fuzzy thinking. Bu? ett argues that growth is always a component in the calculation of value. Nonetheless, he does not neglect that the importance of the growth component varies from negligible to very important and its impact can be positive as well as negative. Thus, a low B/M ratio, a high P/E ratio, and a low dividend yield is not per se inconsistent with „value† purchases. Business growth has often a positive impact on value but tells us little abo ut the intrinsic value of growth (Bu? ett, 1992, p. 12). All growth is not created equal, and thus must be di? erentiated.There is also value-destroying growth, which is not worth a penny. Bu? ett goes even further and scrutinizes the term value investing as such. According to him, the term is redundant because investing implies to pay less then the value of something (Bu? ett and Cunningham, 1998, p. 85). The origin of this fuzzy thinking constitutes the value anomaly that will be discussed in the following section. 2. 5 Value Anomaly Already Graham and Dodd (2008) hint at the discrepancy between market price and intrinsic value and the fact that the market often underestimates value stocks. This mispricing is called in the literature Value Anomaly.In the following section three explanations are outlined: i) a behavioral approach, ii) a risk-based approach, and iii) a competitive advantage based approach. 13 2. 5. 1 Behavioral Approach According to Graham and Dodd (2008), the irrat ional behavior of market participants can drive the price of a security in the wrong direction. As Graham outlined in his book the Intelligent Investor, emotions take part in the participant’s decisions, thus he rejects the E? cient-Market Hypothesis as well as the assumption of Homo Oeconomicus. Market participants are swayed either by positive emotions pushing up prices, or uncertainty and ? rce emotions cause a decline in prices. In general, both results in ine? cient and undesirable market upshots. De Bondt and Thaler (1985) already ? nd evidence that markets overact to unexpected and dramatic news events. Moreover, contagion ampli? es this process of counter-productive behavior, taking a central part of the game, especially in crisis when panics gain the upper hand and investors disinvest despite of existing reasons to act to the contrary. 1 Not only irrational behavior induces a discrepancy between market prices and intrinsic value. Discrepancies can also result from ? ms of little interest, and thus, small liquidity. In particular, small companies fall through the screening raster of professional investors. Once a professional investor manages a fund of a certain size, small investments are out of range. First, small companies are like gold dust, as a consequence thereof di? cult to ? nd, and second, the monitoring costs come along with the number of investments, which makes such companies unappealing. 2. 5. 2 Risk-based Approach Whereas Graham showed that behavioral aspects distort markets and cause a gap between intrinsic value and market value, many academics hold that the di? rence does not necessarily contradict the e? cient-market hypothesis. Some argue that higher returns simply compensate higher risk (Fama and French, 1994). As basis of this argumentation line served the Capital Asset Pricing Model (CAPM), which was developed independently by Sharpe (1964) and Linter (1965) in the 60’s based on Markovitz’s portfolio theory. The model shows the coherence between the expected return of individual securities and systematic risk (market risk). Whereby ? of a security is a parameter describing the relation of its return with that of the overall market.The equation of the CAPM can be summarized as follows: 1 Cella, Ellul, and Giannetti (2010) write in their paper about „Investors’ Horizon and the Ampli? cation of Market Shocks† that stocks which are held in a large part by short-term investors are more likely to plunge under their intrinsic value. They also instance that fund managers often follow restrictions, which do not lead to optimal purchases or sales. 14 E(Ri ) = Rf + ? i (E(Rm ) ? Rf ) (2. 2) where E(Ri ) is the expected return of a speci? c asset, Rf is the risk-free return rate, and E(Rm ) is the expected return of the market.Already Rosenberg, Reid, and Lanstein (1985) give rise to the assumption that the CAPM can not fully explain the correlation between expected returns and t he risk of an individual security. As a one factor model implies, the CAPM oversimpli? es the complex market. Therefore, Fama and French (1992) introduced a three-factor model that is an extension of the CAPM. Basically, they improved the CAPM by adding two more factors: (i) they distinguished between high and low B/M ratio, and (ii) classi? ed stocks according to market capitalization (price per stock times number of shares outstanding).The equation of the extended CAPM can be summarized as following: r = Rf + (Km ? Rf ) + bs ? SM B + bv ? HM L + ? (2. 3) where Rf is the risk-free return rate, Km is the return of the entire stock market, SM B (small minus big) is the di? erence between small and big ? rms according to their market capitalization, HM L (high minus low) is the di? erence between high and low B/M ? rms, bs is the corresponding coe? cient to SM B, and bv is the corresponding coe? cient to HM L. Based on this, Fama and French (1992) argue that high B/M ? rms’ pr ospects are judged relative poorly to ? ms with low B/M ratios. As already postulated by Chan and Chen (1991), Fama and French also interpret high B/M ? rms as ? nancially distressed (see also Piotroski, 2000). They adduce the explanation that a high B/M ratio inheres in a relatively high ? rm’s market leverage compared to its book leverage. Furthermore, they ? nd that during some periods (at least ? ve years) low B/M ? rms remain more pro? table than high B/M ? rms. Fama and French (1992) argue that more risk is inherent with a higher B/M ratio. In other words, value stocks are riskier than „glamour† stocks. Opposed to this, Gri? and Lemmon (2002) show that large returns of high B/M ? rms are inconsistent with a risk-based explanation. Arshanapalli et al. (1998) show 15 that value stocks generally have a risk-adjusted performance superior to that of growth stocks (p. 23). Thus, the value anomaly can be traced back to a mispricing of stocks due to overly optimisti c valuations of „glamour† ? rms. Once this mispricing is revealed, these ? rms earn negative excess returns. According to Chan and Lakonishok (2004), investors, in particular professional investment managers, focus their attention on apparent „glamour† stocks while stock prices of high B/M ? ms plunge under their fundamental value. Hence, investing in high B/M ? rms is likely to be a rewarded long-term investment strategy (p. 85). Moreover, Anderson and Smith (2006) ? nd that a portfolio of the most admirable companies substantially outperforms the market, and thus contradicts the e? cient market hypothesis. As a consequence, the risk-based explanation has lost many of its supporters over the last years and the value anomaly remained unexplained. 2. 5. 3 Competitive Advantage Based ApproachAlthough it is probably the closest explanation, academics rarely make the competitive advantage of a company accountable for the superior performance and excess returns of a company. According to them, competitive advantages must theoretically fade away. But in reality this is not always the case. New academic research indicates that the risk driver refers more to the riskiness of losing the competitive advantage (Mauboussin and Johnson, 1997; Greenwald, Kahn, Sonkin, and van Biema, 2001). This could be the case if new competitors enter the market and/or in industries where the rate of technology changes is high.On the one hand, new technologies open up new opportunities for existing players, but on the other hand, they also carry the risk that entrants come up with new products and technologies that force existing players to keep up with the changes. This kind of competition is often quite expensive and indicates that excess returns can be wrest away easily. Therefore the risk of businesses, which are exposed to such changes, is higher than of businesses that sell products with marginal changes. Of course, some companies even maintain their competit ive advantages in fast-changing industries over decades (e. g. Microsoft, Inc. r maybe Facebook) due to customer retention and network e? ects, which create switching costs on the demand side and enormous costs to enter the market on the supply side. The mispricing of such companies that exhibit a durable competitive advantage originates from the complexity in identifying such companies in advance. The following chapter elaborates a bit more on this and points out the state of the art as well as the existing research gap. 16 Chapter 3 Literature Review 3. 1 Competitive Advantage Competitive advantage is a central theme in value investing that has often gone forgotten in the heated debate about the value anomaly.Although an immense number of books and papers have been written about competitive advantage, it has not found proper entrance into the value discussion. Nonetheless, it is an essential part in the valuation process of a company. Greenwald, Kahn, Sonkin, and van Biema (2001) break the Graham and Dodd framework down to three main sources of value (see Figure 3. 1): (1) the asset value, (2) the earning power value, and (3) the value of growth. All three elements must be involved in the calculation of value—also growth (pp. 35-47). The asset value equals the reproduction costs of the assets and is therefore the most reliable source of value.The second most reliable measure of a ? rm’s intrinsic value is the value of its current earnings (earning power value). The earning power value equals current earnings divided by the cost of capital, assuming that the growth rate is zero. The deviation between the asset value and the earning power value equals the franchise of a company. What they call Franchise is referring to the competitive advantage and describes the same phenomenon—the ability to earn more on a ? rm’s assets than it is possible under perfect competition (p. 41). The least reliable source of value is growth, because it i s the most di? ult element of value to estimate and therefore obtains last priority in the valuation process. According to Greenwald, Kahn, Sonkin, and van Biema (2001), growth is only valuable if it is within the franchise. Correspondingly, growth that only increases revenues, earnings or the assets of a ? rm does not create additional value. Growth is valuable only if a company can extend its pro? tability by the means of its competitive advantage. 17 Figure 3. 1: Three Slices of Value Nevertheless, excess returns, which exceed the cost of reproducing a ? rm’s assets, are under the assumption of perfect competition not possible (see Mankiw, 2004, pp. 4-65). As soon as a company earns more on its assets than its reproduction cost, it will attract new competitors, and thus, erode the excess returns until the earning power value equals the value of assets. However that may be, economic theory about perfect competition is seldom the case in reality. Some companies have enjoyed a competitive advantage even over decades (e. g. The Coca-Cola Company or Microsoft, Inc). There have been many research studies conducted on competitive advantage and a huge number of drivers have been found. 1 Without going too deeply into the di? rent drivers, it might be worth to mention the most common: searching costs, switching costs, and economies of scale. By the means of switching costs, a company can create a lock-in: once somebody has chosen a technology, switching can be very expensive (Shapiro 1999, pp. 11-13). Microsoft, Inc. is probably the best example to illustrate a lock-in e? ect. Changing from MS O? ce Word to another writing program is costly. It raises the annoying problem that the formats are not compatible, and thus requires much e? ort that is more costly than remaining with MS O? ce Word. Switching costs can hange over time as buyers alter their products Thomas Fritz (2008) has conducted an extensive literature review of over 140 empirical investigations p ublished between 1951 and 2007. He comes to the conclusion that the di? erent drivers for a competitive advantage are as manifold as the number of studies and that there is no such as a universally valid driver as one could assume. 1 18 and processes (Porter, 1998, p. 296). Another kind of lock-in occurs by search costs. Search costs occur as buyers and sellers attempt to ? nd each other and establish a business relationship (Shapiro, 1999, p. 26). Finally, a competitive advantage arises by economies of scale. Porter (1998) describes economies of scale as the ability to produce more e? ciently at a larger volume (p. 70). But one should note that economies of scale by themselves do not constitute a competitive advantage. In addition to economies of scale, it needs a demand advantage, which does not have to be big. Once a demand advantage exists, economies of scale in the cost structure will transform superior market share into lower costs, higher margins, and higher pro? tability (Gr eenwald, Kahn, Sonkin, and van Biema, 2001, p. 0). Correspondingly, products or services that pro? t from high purchase frequency often enjoy a demand advantage that derives from a habit (e. g. the cigarette industry). Still, it is not written in stone that a competitive advantage lasts for an in? nite period if once achieved. Although a vast number of studies examined the attributes of a ? rm with a competitive advantage, considerably less studies have elaborated on the sustainability of a competitive advantage and the reason why some ? rms enjoy a competitive advantage for decades and other only over a short period. The in? ence of the Competitive Advantage Period (CAP) on the valuation of a ? rm’s shares has also been largely ignored by the literature, although the notion derives its origin from Miller and Modigliani (1961). The term itself appeared in the 90’s in numerous writings. The concept that was developed in Miller and Modigliani (1961)’s seminal pape r on valuation can be summarized as follows: V alue = N OP AT I(ROIC ? W ACC)CAP + W ACC (W ACC) (1 + W ACC) (3. 1) where NOPAT represents net operating pro? t after tax, WACC represents weighted average cost of capital, I represents annualized new investment in working and ? ed capital, ROIC represents rate of return on invested capital, and CAP represents the competitive advantage period. The CAP can be identi? ed, as shown in Equation 3. 1, as a fundamental value driver among risk and cash ? ow. In order to get the CAP we can rearrange Equation 3. 1 as follows: CAP = V alue (W ACC ? N OP AT ) (1 + W ACC) I (ROIC ? W ACC) (3. 2) As Mauboussin and Johnson (1997) assert correctly, this equation has some shortcomings that constrain its practical scope, but it illustrates how the CAP can be con19 ceptualized in the valuation process.According to Mauboussin and Johnson, the key determinants of CAP can be captured by a handful of drivers. The ? rst key determinant is ROIC that re? ects the competitive position within an industry, whereas a high ROIC indicates a strong competitive position. Generally, it is costly for competitors to snatch competitive advantage from high-return companies. The second key determinant is equally important, and measures the rate of industry change. High returns in a fastgrowing industry do not have the same signi? cance as returns created in a stagnated or even shrinking industry. The third driver re? cts the barriers to entry, which is essential for sustainable high returns on invested capital (pp. 68-69). 3. 2 Pro? tability Measurements High-return companies, which have returns in excess of the cost of capital, also capture Warren Bu? ett’s attention. As Mauboussin and Johnson (1997) note, a constant CAP is contrary to economic theory, but it might be achieved through outstanding management. However, companies with a stable CAP are everything but simple to ? nd (p. 71). As mentioned above, Equation 3. 2 has limited practical s cope; thus, in order to evade this problem other performance measures have to be found.In practice, there are many di? erent performance measures, but this thesis will focus in particular on ROE. Fritz (2008) shows in his investigation that ROA and ROE are two of the most frequently applied accounting-based performance measures (p. 31) regarding competitive advantage investigations. Both are pro? tability measurements and capture the relation of return on applied capital. ROE measures how much pro? t a company generates for shareholders while ROA states how e? cient the asset management is. The higher the pro? tability, the better is a ? rm’s economy and the stronger its competitive advantage.Nowadays, less attention is paid to the ROE. Sharpe, Alexander and Bailey (1999) mention the ROE only marginally and Spremann (2007) devote less than one page to it. Nonetheless, ROE has not lost its usability entirely, but Spremann sees the reason for the decreasing importance in the fa ct that shareholders orient themselves more toward market values instead of book values. Provided that, market ratios (e. g. P/E ratio) gained increasingly attention. But since superior earnings are generated based on a competitive advantage, it must remain a core theme in the valuation process, in particular for the long-term investor.Pro? tability measurements tend to change over time; thus, forecasting future profitability is a task that many practitioners and academics would label speculative. On 20 the other side, pro? tability is mean reverting in a competitive environment. Thus, nothing is simpler than predicting long-term pro? tability, which must be zero in the long run. Freeman, Ohlson and Penman (1982) already found evidence that ROE follows a mean-reverting process. Almost twenty years later, Fama and French (2000) found strong evidence of mean-reverting process in terms of pro? ability and estimated a rate of mean reversion of 38% per year. Assuming a ? rm’s ROE of 20% above mean will shrink below one percent after ten years and therefore lose its competitive advantage—,this corresponds to 38% reversion rate. This is also in line with Chan, Karceski and Lakonishok (2003)’s expectation that superior operating performance cannot be sustained for more than ten consecutive years. Furthermore, Fama and French (2000) show that mean reversion is faster below its mean and when it is further from its mean in either direction. However, Penman (1991) scrutinizes ROE regarding its su? iency to predict future pro? tability. According to him, ROE indeed exhibits a mean-reverting tendency, but it proves a too-strong persistence over time. Hence, he suggests that B/M multiples are better indicators of future ROE than current ROE, and a combination of both increases persistence in ROE even further. 3. 3 Research Gap and General Approach Some research has been conducted about predicting future pro? tability. Though these studies deal in particu lar with the issue of predicting the near future. Thus, this study claims high expectations by predicting long-term pro? ability, with the notion that „longterm† means in this study a period of ten years. There are several papers that postulate a mean reversion of pro? tability measures (Freeman, Ohlson and Penman, 1982; Penman, 1991; Lipe and Kormendi, 1994; Fama and French, 2000; Nissim and Penman, 2001). Soliman (2008) forecasts out-of-sample future changes in RNOA ? ve years into the future by applying the DuPont analysis. All these studies have in common that they investigate one ? nancial measure (or two) in time. Thus, this study intends to close these two gaps. In the following chapter, ? rst, several ? ancial measures will be considered regarding companies with a durable competitive advantage, and second, it will be hypothesized that predicting long-term pro? tability (up to ten years) is possible. 21 Chapter 4 Analysis of Long-term Pro? tability The following c hapter aims to determine indicators in order to forecast long-term profitability. Thus, the chapter is structured in four sections: Section 4. 1 describes the data sample and the adjustments. Section 4. 2 deals with the classi? cation of superior performers in terms of ROE and analysis of the persistence of superior performance.Subsequently, the analysis of ROE performance deciles according to persistence is centre stage. Section 4. 3 involves the analysis of further ? nancial measures regarding the ROE persistence deciles. The starting point of this section is the DuPont Identity, which breaks the ROE measure down into further ? nancial measures. The aim of this section is to ? nd speci? c characteristics that will serve in Section 4. 4 to separate ? rms in advance according to future superior performance years. Finally, Section 4. 6 investigates the ROE persistence deciles according to market ratios (i. e. B/M ratio and P/E ratio). . 1 Data Sample A reliable analysis depends to a great extent on the size of the data sample. The size, in turn, is determined by company years (i. e. number of companies times number of years) that are considered. All data in this study originates from COMPUSTAT if there is no explicit mention of it. COMPUSTAT provides historical data of US companies with available historical annual data from 1950. For this study, the dataset on COMPUSTAT was screened for all companies that were listed on any stock exchange in the United States (including inactive companies) with a primary SIC classi? ation between 2000 and 3999. The data was selected at the end of each calendar year between 1979 and 2009. Hence, historical data for the following investigation is available for thirty-one years. Similar to McGahan and Porter (2002), all records from the dataset that do not 22 contain a primary SIC designation after extraction or any that were not within the stated range were dropped out of the sample. The restriction to companies containing a prim ary SIC classi? cation between 2000-3999 corresponds to the manufacturing division, which contains twenty subdivisions (see Table C. ). Focusing on one division has the advantage that the ? rms have a similar value chain. All manufacturing ? rms have in common that they purchase raw materials or components and manufacture these materials to more mature products, which will be sold to a seller or for further processing. Seldom, do these companies sell the product directly to the ? nal consumer. Drawing comparisons among ? rms with similarities regarding their value chain is simpler and also more reliable. Given this restriction to manufacturing companies, 3844 companies are available. It is art of a dynamic industry process that listed companies disappear and new companies appear on trading lists of stock exchanges. This fact leads to certain problems, which were not always considered properly in prior studies. For the sake of convenience, some researchers have considered only compan ies with available data for the entire sample period. Thus, they have excluded companies that were passing through either a delisting or an initial public o? ering (IPO). Others have ignored in their investigation only inactive companies. In this category fall two cases, in particular: Either a company did not survive the entire period due to ? ancial distress and subsequent bankruptcy or it was the target of an acquisition by another company. Ignoring inactive companies would distort the relative ? nancial performance of other companies in the same group in the same period. Not least, since pro? tability depends on competition, it is important to include inactive companies to reduce the e? ect of survivorship bias as it is important to take new competitors into consideration. COMPUSTAT provides the option to also include inactive companies into the sample. Many researchers assume that newly-listed companies show high growth rates that are not economically signi? ant for the compari son to other companies, and thus, lead to distortions (see McGahan and Porter, 2002; Rumelt, 1991; Schmalensee, 1985). Hence, they exclude all companies from the data sample that exhibit less than $10 million in sales. Following these researchers, the sample in this study contains only companies with sales of at least $10 million during the entire sample period. All companies that come below this threshold for any year in the sample period were excluded. After these adjustments, the sample comprises 1905 companies.In order to avoid the possibility that companies distort the calculation of growth rates through short-term measurements, companies with less than ? ve years of ? nancial history were excluded. There is evidence that suggests that window-dressing before an IPO a? ects the performance of subsequent years after the IPO. For instance, Jain and 23 Kini (1994) ? nd that IPO ? rms exhibit a decline in post-issue operating performance (see also Degeorge and Zeckhauser, 1993). The refore, only ? rms with at least ? ve years of ? nancial data on COMPUSTAT items listed in Table 4. 1 were included. Table 4. 1: COMPUSTAT Items This table shows all items hat are downloaded from COMPUSTAT. A more detailed description is given in Appendix A. Companies that have missing data on one of these items are excluded fr