Sunday, May 17, 2020

Stock market bubble - Free Essay Example

Sample details Pages: 22 Words: 6632 Downloads: 9 Date added: 2017/06/26 Category Statistics Essay Did you like this example? market bubble The genesis of the present problem goes back to the bursting of the stock-market bubble in the early years of this decade. In an effort to avoid its deflationary consequences, the bursting of the stock market bubble was followed by successive Federal Reserve cuts in interest rates, all the way down to little more than 1% by the end of 2003. These cuts in interest rates were accomplished by means of repeated injections of new and additional bank reserves. The essential interest rate in question was the so-called Federal Funds rate. This is the interest rate that the banks that are members of the Federal Reserve System charge or pay in the lending and borrowing of the monetary reserves that they are obliged to hold against their outstanding checking deposits. Don’t waste time! Our writers will create an original "Stock market bubble" essay for you Create order The continuing inflow of new and additional reserves allowed the banking system to create new and additional checking deposits for the benefit of borrowers. The new and additional deposits were created to a multiple of ten or more times the new and additional reserves and made possible the granting of new and additional loans on a correspondingly large scale. The sharp decline in interest rates that took place encouraged the making of mortgage loans in particular. The reason for this was the steep decline in monthly mortgage payments that results from a substantial decline in interest rates. The new and additional checking deposits were money that was created out of thin air and which was lent against mortgages to borrowers of poorer and poorer credit. So long as the new and additional money kept pouring into the housing market at an accelerating rate, home prices rose and most people seemed to prosper. But starting in 2004 and continuing all through 2005 and the first half of 2006, in fear of the inflationary consequences of its policy, the Federal Reserve began gradually to raise interest rates. It did so in order to be able to reduce its creation of new and additional reserves for the banking system. Once this policy succeeded to the point that the expansion of deposit credit entering the housing market finally stopped accelerating, the basis for a continuing rise in home prices was removed. For it meant a leveling off in the demand for housing. To the extent that the credit expansion actually fell, the demand for houses had to drop. This was because a major component of the demand for houses had come to be precisely the funds provided by credit expansion. A decline in that component constituted an equivalent decline in the overall demand for houses. The decline in the demand for houses, of course, was in turn followed by a decline in the price of houses Housing prices also had to fall simply because of the unloading of homes purchased in anticipation of continually rising prices, once it became clear that that anticipation was mistaken. This drop in the demand for and price of houses has now revealed a mass of mortgage debt that is unpayable. It has also revealed a corresponding mass of malinvested, wasted, capital: the capital used to make the unpayable mortgage loans. The loss of this vast amount of capital serves to undermine the rest of the economic system. The banks and other lenders who have made these loans are now unable to continue their lending operations on the previous scale, and in some cases, on any scale whatever. To the extent that they are not repaid by their borrowers, they lack funds with which to make or renew loans themselves. To continue in operation, not only can they no longer lend to the same extent as before, but in many cases they themselves need to borrow, in order to meet financial commitments made previously and now coming due. Thus, what is present is both a reduction in the supply of loanable funds and an increase in the demand for loanable funds, a situation that is aptly described by the expression credit crunch. The phenomenon of the credit crunch is reinforced by the fact that credit expansion, just like any other increase in the quantity of money, serves to raise wage rates and the prices of raw materials. It thereby reduces the buying power of any given amount of capital funds. This too leads to the outcome of a credit crunch as soon as the spigot of new and additional credit expansion is turned off. This is because firms now need more funds than anticipated to complete their projects and thus must borrow more and/or lend less in order to secure those funds. (This, incidentally, is the present situation in the construction of power plants and other infrastructures, where costs have raised dramatically in the last few years, with the result those correspondingly larger sums of capital are now required to carry out the same projects.) In addition, the decline in the stock and bond markets that results after the prop of credit expansion is withdrawn signifies a reduction in the assets availa ble to fund business activities and thus serves to intensify the credit crunch. The situation today is essentially similar to all previous episodes of the boom-bust business cycle launched by credit expansion. The only difference is that in this case, the credit expansion fed an expanded demand for housing and, at the same time, most of the additional capital funds created by the credit expansion were invested in housing. Now that the demand for housing has fallen, as the result of the slowdown of the credit expansion, much of the additional capital funds invested in housing has turned out to be malinvestments. In most previous instances, credit expansion fed an additional demand for capital goods, notably plant and equipment, and most of the additional capital funds created by credit expansion were invested in the production of capital goods. When the credit expansion slowed, the demand for capital goods fell and much of the additional capital funds invested in their production turned out to be malinvestments. In all instances of credit expansion what is present is the introduction into the economic system of a mass of capital funds that so long as it is present has the appearance of real wealth and capital and provides the basis for sharply increased buying and selling and a corresponding rise in asset prices. Unfortunately, once the credit expansion that creates these capital funds slows, the basis of the profitability of the funds previously created by the credit expansion is withdrawn. This is because those funds are invested in lines dependent for their profitability on a demand that only the continuation of the credit expansion can provide. In the aftermath of credit expansion, today no less than in the past, the economic system is primed for a veritable implosion of credit, money, and spending. The mass of capital funds put into the economic system by credit expansion quickly begins evaporating (the hedge funds of Bear Stearns are an excellent recent example), with the potential to wipe out further vast amounts of capital funds. As the consequence of a credit crunch, there are firms with liabilities coming due that are simply unable to meet them. They cannot renew the loans they have taken out nor replace them. These firms become insolvent and go bankrupt. Attempts to avoid the plight of such firms can easily precipitate a process of financial contraction and deflation. This is because the specter of being unable to repay debt brings about a rise in the demand for money for holding. Firms need to raise cash in order to have the funds available to repay debts coming due. They can no longer count on easily and profitably obtaining these funds through borrowing, as they could under credit expansion, or, indeed, obtaining them at all through borrowing. Nor can they readily and profitably obtain funds by liquidating the securities or other assets that they hold. Thus, in addition to whatever funds they may still be able to raise in such ways, they must attempt to accumulate funds by reducing their expenditures out of their receipts. This reduction in expenditures, however, serves to reduce sales revenues and profits in the economic system and thus further reduces the ability to repay debt. To the extent that anywhere along the line, the process of bankruptcies results in bank failures, the quantity of money in the economic system is actually reduced, for the checking deposits of failed banks lose the character of money and assume that of junk bonds, which no one will accept in payment for goods or services. Declines in the quantity of money, and in the spending that depends on the part of the money supply that has been lost, results in more bankruptcies and bank failures, and still more declines in the quantity of money, as well as in further increases in the demand for money for holding. Such was the record of The Great Depression of 1929-1933. Given the unlimited powers of money creation that the Federal Reserve has today, it is doubtful that any significant actual deflation of the money supply will take place. The same is true of financial contraction caused by an increase in the demand for money for holding. In confirmation of this, The New York Times reports, in an online article dated August 11, 2007, that The Federal Reserve, trying to calm turmoil on Wall Street, announced today that it will pump as much money as needed into the financial system to help overcome the ill effects of a spreading credit crunch. The Fed pushed $38 billion in temporary reserves into the system this morning, on top of a similar move [$24 billion] the day before. In addition, the print edition of The Times, dated a day earlier, reported in its lead front-page story that the European Central Bank in Frankfurt lent more than $130 billion overnight at a rate of 4 percent to tamp down a surge in the rates banks charge each other for very short-t erm loans. Thus the likely outcome will be a future surge in spending and in prices of all kinds based on an expansion of the money supply of sufficient magnitude to overcome even the very powerful impetus to contraction and deflation that has come about as the result of the bursting of the housing bubble. Another outcome will almost certainly be the enactment of still more laws and regulations concerning financial activity. Oblivious to the essential role of credit expansion and of the governments role in the existence of credit expansion, the politicians and the media are already attempting to blame the present debacle on whatever aspects of economic and financial activity still remain free of the governments control. It probably is the case that at this point the only thing that can prevent the emergence of a full-blown major depression is the creation of yet still more money. But that new and additional money does not necessarily have to be in the form of paper and checkbook money. An alternative would be to declare gold and silver coin and bullion legal tender for the payment of debts denominated in paper dollars. There is no limit to the amount of debt-paying power in terms of paper dollars that gold and silver can have. It depends only on the number of dollars per ounce. To be sure, this is an extremely radical suggestion, but something along these lines will someday be necessary if the world is ever to get off the paper-money merry-go-round of the unending ups and downs of boom and bust, accompanied since 1933 by the continuing loss of the buying power of money. Copyright 2007, by George Reisman. George Reisman is the author of www.capitalism.net. July 08, 2008 First Half Follies for Global Markets For global investors, the manic market climate in the first half of 2008 was a period worth forgetting. Stock markets around the world were caught up in an epic selloff as the ongoing U.S. subprime credit crunch began to take its toll on the real economy, and inflation became a headline problem around the world. The first half ended with a bang the stock markets worst June performance since 1930 (think depression), and the biggest first-half losses since 1970 (think stagflation). The biggest twin-threats to the global economy seem to be an odd combination of soaring commodity-price inflation, and crippling asset-price deflation both happening at the same time. The economic news in the first half of 2008 highlights these fears. Global consumer price inflation soared to about 7% the highest level in nearly two-decades. Meanwhile, in the U.S., housing prices continue to slide, and employers cut 438,000 jobs so far this year. No wonder consumer confidence has plunged to the lowest level in 15 years. U.S. stocks of course officially entered bear-market territory in the first half of the year, with the Dow Jones Industrial Average falling over 20% from its high last October (the SP 500 Index followed last week). Global markets certainly didnt fare any better either. In fact, for the first time in a long time, most markets outside the U.S. performed even worse in the second quarter. Mainland China (Shanghai Composite) fell another 21% in the second quarter, adding to a stunning 48% first-half loss. Fellow BRIC India dived 14% in the three months ended June, and is down 33.6% year to date. So far this year the U.K. is down 13%, Germany 20%, France 21%, and Hong Kong 20.5%, however there have been a few bright spots (almost too few to mention). Japan, one of the worlds most undervalued major markets, advanced 7.6% in the second quarter, although its still down for the year. And the other two BRIC markets, Brazil Russia, enjoyed second-quarter gains of 17.7% and 10.5% (in U.S. dollar terms). All in all, it was a very mixed bag with a definite bias to the downside. Commodities once again turned in the top asset class performance in the first half. The sky-rocketing price of crude oil up nearly 40% in the past three months alone drove the SP Goldman Sachs Commodity Index to a 29% gain in the second quarter. Commodity investors should be careful not to get too complacent with their good fortune, since a big reversal could be lurking right around the corner. Its worth noting that last year at this time, Chinas Shanghai Composite Index was one of the worlds best performers and look at it now. Posted at 07:32 AM in TrackBack (0) July 07, 2008 Refiners Caught in a Squeeze Play, But Your Can Profit as Oil Prices Fall In my last post(Crude Oil Bubble Trouble), I pointed out that many investors are beginning to speculate the bull-run in energy particularly crude oil has reached bubble-like proportions. Some folks are saying that speculators have driven the price of crude to unsustainable levels, and that a painful correction is just around the corner. Theres one sub-sector of the energy industry that would actually benefit big-time from such a crude-price correction: Refiners. Since 2001, the price of a barrel of oil has risen more than 600% to a recent high of $145. The price of unleaded gasoline however has jumped only 300% or so over the same time frame, to a recent price of $4 per gallon. Share Prices and Profits Plunging for Refiners That math just doesnt add-up if youre in the refining business. The biggest factor in the price of gas is (not surprisingly) the price of crude oil, which accounts for 75% of the total cost for gasoline. The other next two biggest factors (at about 10% apiece) are taxes, and refining expenses. Theres no way to avoid the taxes. One of the Presidential candidates proposed temporarily suspending Federal taxes on gas recently; until someone pointed out that nobody would be fixing the potholes or widening lanes on the interstate highway system if no gas taxes were collected! So with taxes pretty much a fixed cost, and crude prices escalating, the companies that refine oil into unleaded gasoline and diesel have been caught in a squeeze play that has decimated their profit margins. In fact, profits at U.S. refinery operators plunged 98% in the first quarter as they were caught behind-the-curve on skyrocketing oil prices. Refiners have been raising prices to be sure. But they just havent been able to hike prices for gasoline, heating oil, and jet fuel fast enough to keep up. To Know When Refiners are a BUY Again Keep an Eye on the Crack As a result, refinery stocks in the SP index have been clobbered for a 40% decline, even as oil prices set new record highs. But the key to refinery profits is the crack-spread. And no, this doesnt have anything to do with illegal drugs. The crack spread is the theoretical profit margin a refiner should earn from processing three barrels of crude into two barrels of refined gasoline and one of heating oil. That spread has plunged 38% over the past year, taking industry profits down-the-drain along with it. But crack spreads, like so many relative price relationships in financial markets are constantly shifting from peak to valley and back again. Last year the crack spread for refiners was almost $23, today its just under $14 a big shift. Thats mainly due to crude oils unusually strong advance. Falling crude prices however can actually be a boon to refiners. You really want to own refiners when oils going down, and not straight up, according to Cambridge Energy Research. But now energy-sector fortunes may be reversing. At least thats what smart-money investors, including industry insiders and hedge fund mangers, are saying. In the last month alone, refining company executives have purchased $2 million worth of their own shares, according to Bloomberg. Thats more insider buying at refiners that at any time since 2000. In fact before March of this year, insiders had been very consistent net-sellers of refining stocks dumping more shares than they bough every week since 2003. Anyone right now buying the refiners would have to be banking on a pullback in oil prices, according to one fund manager interviewed by Bloomberg. A Lower Risk Way to Make Money Off A Widening Crack Spread Buying the refinery sector now just might be your best-bet among the various energy sector investment plays, especially considering the speculative over-bought state of crude oil futures at the moment. Unfortunately, theres no ETF available that gives you a broad based bet on the refining sector, at least not yet. However, several leading refiners including: Valero Energy (VLO) and Tesoro Corp. (TSO) are among those stocks with big insider-buys recently, according to Bloomberg. This should even make a good pairs trade strategy for you. Typically a pairs-trade involves going long one stock or ETF in this case a refiner. Meanwhile, you would sell-short another in this case a major integrated oil firm like say, Exxon Mobil (XOM) at the same time. But heres a pairs-trade twist that goes long-long perfect for retirement accounts. Buy the ProShares UltraShort Oil Gas (DUG), which is designed to go up in price as the overall energy sector declines. At the same time, buy your favorite refiner, and earn potential gains as the razor thin crack-spread widens again. Posted at 07:00 AM in TrackBack (2) July 04, 2008 Crude Oil Bubble Trouble Last week crude oil traded up to yet another record high price above $145 a barrel. Black gold is living up to its nickname, having jumped more than 72% over the past 12-months alone and up a stunning 631% since the end of 2001! Theres been much speculation of late about whether or not oil prices are in a bubble thats destined to burst just like China last year, housing a few years before, and internet stocks before that. There are good arguments both pro and con to the oil-bubble notion. Lets take a closer look Fundamental Imbalances Leading to High Prices Theres no doubt that supply-demand imbalances are playing a very big role in oils meteoric rise. Decades of under-investment in new oil production and refining capacity when crude oil prices were low, over the last two decades set the stage for todays energy crisis. And many years of above-trend global growth this decade led to a sharp increase in demand from the emerging world. Meanwhile, global production capacity just hasnt kept pace with the worlds growing thirst for oil. More recently supply disruptions in Nigeria and Iraq and falling output from Russia, Venezuela, and Mexico among others has resulted in very tight global supplies. Meanwhile, strong demand growth in emerging markets hasnt let up, partially due to widespread fuel subsidies in many developing nations. Signs of Excess Speculation in Bubbling Crude Still, fundamentals may not account for the entire rise in oil prices. According to data from the Commodity Futures Trading Commission (CFTC), speculators have increased their share of outstanding futures contracts to about 70% of the total, up from just 37% in 2000. Commodity index funds and other pooled investments have poured about $250 billion into commodity trading strategies over the past five years alone. In other words: the hot money is chasing performance in one of the best performing asset classes this decade. To be sure, some of this increase comes from diversified investment strategies adding commodities to enhance returns. And some of the increase in oil market speculation includes investment firms involved in hedging strategies (going both long and short) for their clients, according to the CFTC. However, several analysts caution that a big share of the recent run-up in oil is pure speculation, and that prices could correct sharply, closer to the marginal cost of oil production thats about $65 to $70 a barrel! Congress Debates Tighter Regulation, Higher Margin Limits Now Congress, feeling the heat of higher energy costs, is proposing that the CFTC rein in oil market speculators by, among other things, suggesting a huge increase in margin requirements. Currently, many investors in crude oil futures get away with putting up initial cash collateral (margin) of just a few percent of the underlying position value. A $500,000 purchase of crude contracts on margin might cost just $25,000 to $50,000 in cash up front. In the stock market, a trade of similar size would require initial margin of $250,000 in cash. And thats exactly what Congress is talking about, raising margin requirements to 50% on futures! Theyre also looking into barring pension funds from investing in commodities altogether. As this debate rages on, one thing is certain, high energy prices are already resulting in demand destruction in the U.S. and other developed economies. In fact, the domestic slowdown already underway will reduce crude oil demand by 240,000 barrels a day this year. The battle between the oil bulls and bears is really beginning to heat up. It ought to be a good fight with lots of fireworks. There are some interesting energy-sector bets you can make that should pay-off in big profits even with crude oil prices falling. Ill give you more info in Mondays blog, so stay tuned. Have a happy July 4th holiday weekend! Posted at 09:06 AM in TrackBack (0) July 02, 2008 Will the Cold War Against Inflation Heat Up? Another Federal Reserve Bank official said in a speech yesterday that he is: taking the recent inflationary pressures very seriously, and that Policy needs to react decisively to keep expectations of higher inflation in check. So is this just more lip service from the Fed in an attempt to jawbone inflation (and perhaps support the dollar)? Financial markets arent so sure, as Fed funds futures continue to price-in a Fed rate hike sometime this year. The major economies of the developed world are experiencing a sharp slowdown in growth, and bracing for recession. In fact, the U.S. economy expanded at a feeble rate of just 1% in the first quarter. And we may have already entered recession, when data for the second quarter ended June finally gets reported. But even as the economy slows, consumer price inflation in the U.S. rose to 4.2% in May, while wholesale prices rose 7.2%. Meanwhile, emerging market economies continue to enjoy very robust economic expansion, expected to average 6.7% this year. That compares quite favorably to growth estimates of just 1.3% for developed countries including the U.S. and Europe (the U.S. will grow just 0.5%). While inflation is running above the Feds comfort level in the U.S. (and the ECBs target in Europe), inflation in the emerging world has become an even bigger threat. In fact, inflation exceeds double-digit rates of 10% or more in 50 economies around the world, nearly all of them emerging markets. This is an economic environment that looks shockingly similar to the stagflation era of the 1970s and early 1980s. Famed investor Warren Buffett highlighted the dueling threats of slower growth and faster inflation recently saying: I think the flation part will heat up and I think the stag part will get worse. While the Fed continues waging its war-of-words on inflation, the ECB gets to act on it tomorrow. Stay tuned. Posted at 07:35 AM in TrackBack (0) July 01, 2008 Inflation or Deflation Pick Your Poison The U.S. economy, and most other developed nations continue to be squeezed between two opposing economic threats. Commodity-price inflation and asset-price deflation are creating havoc with financial markets, while global consumers, businesses, and central bankers are caught in the cross-fire. The U.S. Federal Reserve appears to be caught like a deer in the headlights, unable to reach consensus last week about the correct monetary policy prescription for dealing with the twin flations. The FOMC decided to hold-the-line, keeping the fed-funds rate steady at 2%. By contrast the European Central Bank (ECB), confronted with the same economic data as the Fed, has reached the opposite conclusion. The ECB is threatening to raise interest rates at its upcoming policy meeting. Data out today shows Eurozone inflation ticking higher to 4% the highest ever. It seems this pretty much seals the deal for an ECB rate hike. Of course this makes life difficult for the U.S. dollar. There is the slight matter of yield differential, which my friend and colleague Jack Crooks has discussed at length. The dollar yields just 2% (the Fed funds rate) while the euro already yields 4% (the ECB benchmark rate) and is likely to go up at least another quarter-percent this week. Thats why Treasury Secretary Paulson is in the middle of a four-day, whirlwind tour of Europe today, trying desperately to talk ECB finance ministers into a less-hawkish stance on inflation. After all, higher Euroland rates could send the dollar plunging further, which in turn will lead to even higher commodity-price inflation. A vicious cycle if ever there was one. The dilemma for central bankers around the world is trying to figure out which is the greatest threat to economic stability at present: A. The threat to growth from deflation in real estate and equity market values amid the housing recession and credit crunch. OR B. The threat to purchasing power that results from accelerating inflation rates around the world. The Fed has focused more on the de-flation threat, while the ECB is more concerned with in-flation at the moment and financial markets are caught in the cross-fire! Stay tuned Posted at 08:37 AM in TrackBack (0) June 30, 2008 Fun Facts on Inflation: Or, Why $140 Oil Looks Dirt-Cheap Compared to Other Necessities Investors are fretting over $142 a barrel oil this morning, and gasoline is well above $4 per gallon, but a recent story on CNBC.com shows how the high price of crude really stacks up against several other necessities. The conclusion oils actually pretty cheap at these levels so quit complaining. In fact, a trip to your favorite neighborhood sports bar will really give you sticker-shock. A barrel of Budweiser beer will set you back $447.25. Would you like some Tabasco hot sauce for your chicken wings? Thatll cost you $6,155.52 a barrel! HmmIll take mine mild. Switching to water to quench your thirst instead of beer wont save you much either. A barrel of Perrier will set you back $300.61 per barrel. How about a trip to your local neighbor Starbucks instead? Cost: $954.24 a barrel thats only IF you take your coffee black. Adding milk will cost you another $163.38 a barrel. Of course you can always just stay home, and drown your inflation sorrows in a pint of Ben Jerrys New York Super Fudge Chunk instead; cost: $1,609.44 a barrel! Clearly its belt-tightening time for the average American amid these soaring prices for everyday necessities just cut back on the luxury items and youll be ok. After all who can afford Chanel No. 5 at a cost of $1,666,560 a barrel? My wife will just have to do without! Posted at 07:29 AM in TrackBack (0) June 27, 2008 Ben Bernanke and the Honey Pot When my two girls were a few years younger, they were huge fans of Winnie the Pooh, one of the true childrens classics. At bedtime I would read them episodes from Poohs adventures in the hundred-acre wood nearly every night. They just couldnt get enough. One Pooh story in particular comes to mind this week. In this tale, Winnie the Pooh is so intent on licking the last drop of honey out of the pot that he gets his head stuck in the jar. Ben Bernanke apparently never heard this story as a child or certainly didnt take the lesson to heart. Thats because Bernanke and the Fed are now stuck. Its an unenviable position, but its of their own making. The Fed has been all over the map in response to the credit crunch that began last year. First they ignored it in the summer of 2007, keeping rates steady at 5.25%, while saying the fallout from subprime would be limited. Later, after $400 billion in Wall Street write-offs, the Fed decided to slash rates to the bone, and bail out Bear Stearns with $39 billion in taxpayer money. More recently, inflation is the Feds main concern. The Fed hinted strongly that rates must go higher to backstop the value of the slumping U.S. dollar, and to keep inflation in check. Yesterday, however the Fed did nothing, leaving rates unchanged. More empty talk from the Fed. In its official policy statement the Fed said on the one hand: Recent information indicates that overall economic activity continues to expand But on the other hand: uncertainty about the inflation outlook remains high due to increases in the prices of energy and some other commodities. So in conclusion: Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. Bernankes in a box. The Fed is stuck in a honey-pot of indecision while the twin threats of asset-price deflation and commodity-price inflation take a heavy toll on the economy. When you net out all the Feds double-talk, they appeared to adopt a tightening bias yesterday, but of course didnt raise rates. So the worst of all worlds continues: stagflation! In a TV interview yesterday Warren Buffett shared his views on the economy and inflation. He said: I think the `flation part will heat up and I think the `stag part will get worse. When asked what hed do if he were in Bernankes shoes he said: Id probably offer my resignation. Posted at 08:27 AM in TrackBack (0) June 26, 2008 Hog-Wild Grain Prices Putting the Pinch on Livestock Farmers Iowa livestock farmers arent living high on the hog these days. Recent flooding in this key section of Americas farm belt dealt yet another blow to farmers who are already in a bind due to sky-high feed costs and low livestock prices. Livestock farmers and meat producers across the country have been dealing with soaring feed costs for nearly two years, explains a recent Wall Street Journal article. Now, heavy flooding in Iowa is sending corn prices even higher. Thursday, the corn futures contract for July delivery closed at $7.27 a bushel on the Chicago Board of Trade, up about 13% from two weeks ago. Livestock prices just havent kept pace with other soaring commodities, including the grain thats used to fatten them. Both farmers and meatpackers are seeing their profits squeezed as a result. In response, some big processors are liquidating their breeding herds, and family farmers are calling it quits. Shaun Greiner, a 39-year-old hog farmer in southeast Iowa, says he has been losing money selling his pigs since November. It costs him over $170 in feed and overhead expenses to fatten a 15-pound piglet into a 280 pound whole-hog thats ready for market. The trouble is he can only fetch about $150 apiece when its time to sell the animal at current market prices. That math just doesnt compute. Still, Mr. Greiner remains cautiously optimistic: The wheels going to turn and things are going to get better, and when they do its going to be like shooting fish in a barrel, but I dont know when thats going to happen. Were in the midst of a long-term bull market in commodities. In this kind of cycle, all commodity prices eventually soar to record highs, but performance is uneven from commodity to commodity. While everyone is focused on soaring crude oil prices, some of the best values in commodity markets are in the agricultural sub-sector especially livestock prices (lean hogs and live cattle). According to my colleague Eric Roseman: Over the last six years, live cattle and lean hogs have gained just under 30% in nominal terms, or up barely 4% adjusted for inflation. Livestock has essentially been standing-still compared to soaring grain and energy prices. In fact, over roughly the same time frame, crude oil is up over 600% in value! Corn prices (a key feedstock for livestock) are up 120% in the past year alone! You might say Eric is hog-wild for livestock, and I believe hes right on the money. Somethings got to give. Livestock farmers are already thinning the size of their herds, or calling it quits altogether, in response to soaring grain prices. Inevitably this results in reduced supply amid growing demand sound familiar? The next big round of commodity market gains are likely to come on the hoof. Posted at 09:11 AM in TrackBack (0) June 25, 2008 Holding the Line Will they or wont they? That seems to be the hotly-debated question as the Federal Reserve wraps-up a two-day policy meeting today. Theres already some dissension within the rate setting Federal Open Market Committee (FOMC) with some members voting in recent meeting to hold the line on further interest rate cuts, or even talking about the need to raise rates to combat inflation. Inflation worries are leading to lots of lost sleep these days for global central bankers. In fact, the European Central Bank may actually raise rates at its July meeting. The trouble is, higher interest rates dont do much to combat this kind of inflation, which involves mainly soaring food and fuel costs. Headline inflation in food and energy prices has so far not spilled over into rising wages, the biggest input cost for most businesses. The reason is a globalized economy that has made labor markets much more flexible. In fact, employment in the U.S. is already on the decline. Consumer and business confidence in both the U.S. and Europe has already fallen to the lowest levels in years, if not decades. The Fed must continue to talk tough on inflation, if for no other reason than to keep the dollar from free-fall. The U.S. dollar is down about 40% this decade alone against a basket of world currencies. This fact has as much to do with rising oil and other commodity prices than global supply-demand imbalances. Talk is cheap, but I expect the Fed to stick with a war-of-words against inflation rather than a major policy shift. The latest housing data show foreclosures up over 40% last month with bank repos of now abandoned homes nearly doubling. With continued pressure on housing, consumer confidence at record lows, and employment falling, the Fed is not likely to begin raising interest rates. I expect the FOMC to hold the line on interest rates today, but continue to talk tough about inflation. The Feds bark is worse than its bite. Posted at 07:34 AM in TrackBack (0) June 24, 2008 BRICs Crumble Under Threat of Inflation Dont look now but the BRICs are falling! The group of fast-growing emerging market countries which includes: Brazil, Russia, India, and China are facing their biggest economic challenge this decade. Inflation is accelerating in the BRIC economies and central bankers are responding by raising rates and tightening monetary policy. While these moves may be necessary to combat inflation, tight money policies are usually a very unfriendly environment for stock investors. India is the latest BRIC under fire. With wholesale price inflation running at 11% the highest level in 13 years and climbing the Reserve Bank of India responded last week by raising its benchmark lending rate to 8%. Global investors are signaling a vote of no confidence however, as they send Indian stocks plunging. Indias currency, the rupee, is also under attack, having lost 8% of its value against the dollar this year the worst performance for the rupee since 1993. Inflation Looms as Biggest BRIC Threat Spiraling inflation has reached a tipping point, where rising import prices (particularly food and energy) are hammering consumer spending power. The result has been a dramatic reversal of fortune for India, including an erosion of investor confidence in its currency and its capital markets. Overseas fund managers were big buyers of Indian stocks in recent years, but have turned into net sellers. After $19.5 billion flowed into Indian stocks and bonds last year, foreign investors yanked $5.3 billion out of the countrys exchanges so far this year. India is in the riskiest position among the BRICs in this environment of soaring commodity inflation. Thats because India is a net importer of most resources, including 75% of its oil. Brazil meanwhile is a leading exporter of agricultural products and metals, And thanks to a growing energy industry and new offshore oil fields, Brazil should become energy self-sufficient this year. Russia of course is one of the worlds largest oil producers, so it too enjoys a favorable trade balance. And China has a record $262 billion trade surplus, in spite of the fact that it too is a net importer of just about everything. Also, China has the worlds largest currency reserves at $1.7 trillion and growing at nearly $2 billion a day. Is India an Early-Warning Sign for the BRICs?. Still, the BRIC economies are all under serious threat of seeing their economies crumble under the threat of runaway inflation. Indias troubles are perhaps just an early-warning sign. Inflation in China is running close to 8% in spite of several interest rate increases last year. Inflation just topped 15% in Russia. Brazil, which suffered a painful hyper-inflationary past, recently raised interest rates after inflation crept up to 5.4%. Stock investors, seeing this threat on the horizon, have been busy pulling money out of the BRIC markets. Chinas CSI 300 Index is down over 50% from its 2007 high, while Indias Sensex Index has plunged by one-third in value. Share prices in the first two markets of the BRIC alphabet, Brazil and Russia, have so far held up well. This is due in no small part to their favorable trade terms. All of the BRICs are threatened by the risk of inflation. As an Indian government official put it, Until inflation slows, this crisis is only going to widen.

Wednesday, May 6, 2020

The Nineteen Years War An Instrumental Turning Point For...

The Seven Years War in 1763 was an instrumental turning point for the American Colonies. Shortly after the initial excitement of winning the Seven Years War ended, tensions between the American colonies and the British Empire rose. These tensions were largely due to the financial mess that was created by the war, miscommunication, and a struggle for power. The British Empire’s need to regain power over the American colonies and organize the new territories gained by the war served to intensify the tension. These tensions set the stage for the beginning of a new era in the Americas, which led to the Declaration of Independence. Overall, the American Colonies declaring independence from Britain was inevitable and a very logical thing to do.†¦show more content†¦However, the Proclamation Line established by the British halted their westward expansion. Finances continued to play a part in the rising tensions between the American Colonies and the British Empire. The Quarte ring Act of 1775, established by the British Empire, set regulations requiring the colonists to house military troops and endure the cost of maintaining the British army. While the British’s motives were mainly monetary, the colonists felt their presence was an attempt to demonstrate power of them. Despite the raised tension from the Quartering act, the British government did not waiver from their goals. The British, then, decided to exert power over the justice system. The British government decided to begin their exertion of power over the justice system by pushing for certain legal cases, mainly dealing with customs, to be sent to Admiralty courts. The outcome of these cases being moved to Admiralty courts was that the American colonists would no longer have a jury of their peers, but instead a London judge would decide their fate. This created great tensions because the British Empire allowed for individuals back in England to have a fair trial with a jury, but were now t aking that right away from American colonists. This exertion of power made the American colonists feel that the British Empire was taking away their basic rights. Tensions continued to rise as the British government made attempts toShow MoreRelatedOne Significant Change That Has Occurred in the World Between 1900 and 2005. Explain the Impact This Change Has Made on Our Lives and Why It Is an Important Change.163893 Words   |  656 Pagesand Paul Buhle, eds., The New Left Revisited David M. Scobey, Empire City: The Making and Meaning of the New York City Landscape Gerda Lerner, Fireweed: A Political Autobiography Allida M. Black, ed., Modern American Queer History Eric Sandweiss, St. Louis: The Evolution of an American Urban Landscape Sam Wineburg, Historical Thinking and Other Unnatural Acts: Charting the Future of Teaching the Past Sharon Hartman Strom, Political Woman: Florence Luscomb and the Legacy of Radical Reform Read MoreOrganisational Theory230255 Words   |  922 Pageswell researched and readers are encouraged to view chapters as a starting point for getting to grips with the field of organization theory. Dr Martin Brigham, Lancaster University, UK McAuley et al. provide a highly readable account of ideas, perspectives and practices of organization. By thoroughly explaining, analyzing and exploring organization theory the book increases the understanding of a field that in recent years has become ever more fragmented. Organization theory is central to managing

Apple’s Strategic Plan Essay Sample free essay sample

The company that will be the subject of treatment in my concluding undertaking paper is Apple Inc. The company was established on April 1. 1976 by Steve Jobs. Steve Wozniak. and Ronald Wayne. Apple Inc. was once known as Apple Computer. Inc. until January 9. 2007 when the word â€Å"Computer† was removed ( Wikepedia The Free Encyclopedia. 2012 ) . Apple is a Fortune 500 company whose central office is located in Cupertino. California with over â€Å"60. 000† employees and generated over 65 billion in gross ( 15 Amazing Facts About Apple. 2010 ) . Apple â€Å"designs and sells consumer electronics. computing machine package. and personal computers† ( Products: Leading invention. 2012 ) . The company is best-known for its hardware merchandises which include the Macintosh lines of personal computing machines. the iPhone. iPad. and the iPod† ( 15 Amazing Facts About Apple. 2010 ) . Apple Inc. is an American transnational company is traded on the New York Stock Exchange and is one of 100 stocks that make up the NASDAQ and S A ; P 500. Apple is surpassing all of the other tech stocks and is considered the â€Å"sector leader† over companies such as Microsoft. Oracle. Samsung. and Google because of its strategic program of invention. excellence and consumer delectation ( S A ; P 500. Nasdaq Celebrate a Record-breaking One-fourth. but It’s All About Apple. 2012 ) . The market value for Apple has topped $ 600 billion because of their outstanding public presentation in the industry! Section 1 – Scheme Apple’s deployment scheme for 2013 is to prosecute excellence by supplying advanced engineering merchandises that will please consumers now and in the hereafter. This deployment scheme supports Apple’s shared strategic values: Invention. Excellence. and Consumer Delight. The cardinal facet of implementing this technological advanced scheme will include: forming for Innovation. pull offing the new merchandise development procedure. pull offing new merchandise development squads. and crafting a deployment scheme. In order to craft the deployment scheme. Apple will be to concentrate on five cardinal elements: launch timing. licensing and compatibility. pricing. distribution. and selling. Furthermore. a â€Å"key component of Apple’s strategic playbook is its grim chase of consumer-delighting innovation† ( Apple Strategy A ; Corporate Culture — Proven Success Formula. 2011 ) . Deployment Procedure First. the timing of a merchandises launch is a important portion of Apple’s deployment scheme. The end is to come in the market at clip that will supply an advantage over the competition such as cut downing concern rhythm clip or seasonal effects to place the merchandise in the market. Timing is an indispensable constituent of the deployment scheme! Following. Apple will necessitate to look for ways to leverage the â€Å"technological invention of its bing merchandises †¦ frequently a house must make up ones mind how compatible or incompatible to do its technology† with that provided by others or with old coevalss of its ain engineering. However. if there is an bing engineering with a big installed base or handiness of complementary goods. the house can sometimes leverage the value of that installed base and complementary goods by doing its engineering compatible with current merchandises to increase net incomes ( Schilling. 2009. p. 290 ) . A cardinal component in Apple’s deployment scheme is pricing. How a merchandise is priced will act upon its rate of acceptance. the product’s placement in the market place. and the firm’s hard currency flow. The company must put the concern aims for its pricing theoretical account before they can find its pricing scheme. A common pricing aim is to â€Å"maximize current profits† when it is launched. The house foremost estimation costs and demand and so put the monetary value to maximise hard currency flow or rate of return on investing under this pricing scheme ( Schilling. 2009. p. 291 ) . Harmonizing to Shilling. the selling scheme for a technological invention must see both the nature of the mark market and the nature of the invention by inquiring inquiries such as: 1. Can the seller relieve client uncertainness about the invention? 2. Is the mark market composed of big industrial users or single consumers? 3. Is the invention probably to appeal merely to technophiles or to the mass market? 4. Are the benefits of the engineering apparent. or will they necessitate client instruction? 5. Will clients react more to detailed proficient content or attention-getting trade name images? Using the deployment schemes that has been discussed will assist Apple go on to present advanced merchandises to a consumer that guarantees excellence and supply tremendous net incomes for its stockholders. Section 2 – Core CompetencesApple’s nucleus competence is advanced design and engineering which is depicted in the undermentioned diagram:Apple’s Core Competency Model The end is to present exceeding experience through superb user interfaces utilizing advanced design and engineering. The company’s merchandise scheme is based around this. with iTunes. the iPhone with its touch screen â€Å"gestures† that are re-used on the iPad. and the Apple Apps store all playing cardinal functions. That’s the spirit behind its celebrated â€Å"Think Different† advertisement run. Apple has been establishing merchandises that transform and wow the market for over 20 old ages such as the â€Å"iMac. iPod. iTunes. iPhone. Intel Mac Book. and iPad† ( Apple Branding Strategy ) . Think back to the Macintosh. the first low-cost computing machine with a graphical user interface ( GUI ) was launched in 1984. The personal computing machine has changed in a batch of ways over the old ages but Apple’s vision of the power and potency of the personal computing machine has triumphed. Apple signed understandings with the â€Å"five major record labels ( Schilling. 2009. p. 185 ) † and opened its iTunes Music Store on April 28. 2003. This trade proved to be successful the first twelvemonth with 50 million downloads and is now the taking distributer of on-line music. The iTunes trade has redefined the distribution of music to consumers in the US. Then there is the iPad! Harmonizing to Wikipedia. Apple released the first iPad in April 2010 and sold 300. 000 the first twenty-four hours. The iPad 3 is scheduled to be released on March 7. 2012 and if I had to do a anticipation. it will be every bit profitable as the first iPad which generated â€Å" $ 9. 5 bil lion† the first nine months ( Wikipedia The Free Encyclopedia. 2012 ) . Today. the iPhone challenges the definition of a phone. by uniting a portable digital media participant. Internet client. GPS sailing master. camera. and †¦ um †¦ Ohio yeah† . a Smartphone. Not merely does Apple belly laugh consumers. but it changes the manner we think about consumer electronics ( Apple’s Core Competency and Technology. 2009 ) . Finally. what can I say ; Apple has transformed the market and is considered one of the most successful companies in the universe. Apple has been proven over the old ages that it is a leader in the industry with the release of new engineering that is intuitive. advanced. and user friendly. The remainder is history! Section 3 – Industry DynamicsThe first iPhone was developed in 1983 but was drastically different from the iPhone that we use today. The first iPhone was a â€Å"landline† . white French telephone. â€Å"built-in screen controlled with a stylus† ( Apple’s foremost iPhone was made in 1983. 2012 ) . Furthermore. if compared with the current iPhone. the original version would be considered large and bulky. The hereafter is really bright for the iPhone! Apple introduced the tablet computing machine ( iPad ) in the Spring of 2010. Harmonizing to industry experts. the iPad was an effort by Apple â€Å"expand the niche for digital books that was foremost opened up by Amazon. com’s Kindle e-reader. The iPad has the quality of an iPhone with a 10. 1 inch LCD screen. a voguish market name endorsing it up. a simplified and streamlined toolbar. Furthermore. Apple offered its manufacturers â€Å"70 percent† of the gross versus Kindle’s â€Å"50 percent† . The iPad’s advanced characteristics every bit good as the gross option has given Kindle a tally for its money. Since the initial debut. the iPad has changed the industry kineticss with itsadvanced characteristics and gross option ( Apple’s â€Å"iPad† Rumored For Spring 2010. 2009 ) . Apple’s supreme iCloud solution is all set to alter the industry kineticss in a seamless mode. iCloud platform will supply streamlined support to the concern directors who wish to hive away and entree informations online without any restraints at all. Over the old ages. these solutions have been conceptualized but gadget maker has implemented the thought. The landscape of these services are extremely supreme and best in category excessively. One can easy entree usage iCloud based solutions without any restraints at all. The added advantage behind the solution is that iCloud service can supply on the spell benefits to the high terminal clients in shorter span of clip. The industry is traveling competently in the way of virtualization. Therefore. one should look to leverage from cloud based virtualized solutions in order to do most out of these seamster made services. Apple’s iCloud proposition is genuinely cutting border and one can do most out of it in order to drive concern public presentation in shortest span of clip in a streamlined mode. Therefore. the burden of choosing for these solutions lies mostly on to the terminal users. Get traveling and look to optimise public presentation by choosing to travel with these solutions at all times. The ability of iCloud to automatically sync up the informations on bing devices has made it a supreme engineering solution amidst all options. Therefore. acquire traveling and look to derive infinitely from this all right base of services. The pupils and concern professionals are likely to derive infinitely from these solutions instead than the regular conference of clients. The secured cloud login can assist one and all in puting the right context from twenty-four hou rs one and assist them in accessing the services all the manner. The cloud solution is the order of the twenty-four hours and is expected to ramp involvement from all corners of the Earth ( iCloud To Change The Industry Dynamics. 2011 ) . Section 4 – Technology Sourcing and Internal InnovationThe market place is invariably alteringbecause clip is money. Many companies have recognized that external invention brings added value to their merchandises. and can frequently be the cardinal difference in an progressively competitory market. See Apple’s recent debut of iPhone 4s and its game-changing Siri digital helper. Many companies have tried assorted attacks to capturing external invention chances. from engineering reconnoitering. to 3rd party webs. and to herd sourcing. Although one size doesn’t fit all state of affairss. each of these have their virtues. A more holistic attack is needed to leverage the best of these methods at the right clip and topographic point to convey new inventions to market faster ( A best patterns approach to engineering sourcing. 2011 ) . It has been said that â€Å"luck is where chance meets readying. † Many of todays’ top inventions in concern expression like â€Å"lucky breaks† from the exterior. On farther probe. we find that these lucky interruptions go on when companies are prepared to prehend on invention chances and turn them into â€Å"performing assets† that is driven by invention. ( Insight-driven Invention: How companies can acquire â€Å"lucky†Ã¢â‚¬ ¦consistently. 2011 ) . Apple’s success can be linked back to its corporate civilization because of Job’s leading and invention. Job’s did non believe that Apple’s corporate environment was good so he created a separate division for the Macintosh. This group of squad members was specially selected and protected from the normal corporate civilization and encouraged â€Å"to see themselves renegades† ( Schilling. 2009. p. 221 ) . Therefore. it is non surprising that Apple is now the most valua ble engineering company in the universe. Section 5 – Product Development StrategyApple is a alone company and its senior leading has a different direction manner. so it is the company is run otherwise and the development scheme will be like no other company. The development scheme is top secret and is outlined below: 1. New merchandise squads are treated as startups within the company. The squads are separated from the remainder of the company and sworn to secrecy. 2. Interior designers are at the top of the nutrient concatenation and are given limitless resources. They are uninhibited by the accounting section. they are genuinely allowed to woolgather large. 3. The executive squad reviews merchandises every Monday. 4. The Apple New Product Process ( ANPP ) is invoked. 5. The technology plan director ( EPM ) and the planetary supply director ( GSM ) are chosen. Both executives spend a batch of their clip in China to supervise production. 6. Apple ensures plentifulness of clip is available for each merchandise by restricting how many it will work on at a clip. 7. Once a design is complete. the merchandise is built.8. The paradigm is tested. 9. The merchandise may be redesigned. rebuilt. and retested as many times as needed ( The Secret World of Apple Product Development. 2012 ) .Merchandise development scheme is really of import to the continued success of a company and that is why Apple continues to put in research and development. Apple spent merely $ 1. 7 billion on research and development last twelvemonth. Microsoft. with smaller gross revenues and immensely slower growing. pass $ 8. 7 billion. Section 6 – Strategy to Protect InventionsSection 6 – Strategy to protect inventionsApple’s trade secrets must be protected in order for the information to measure up as a trade secret under the Uniform Trade Secret Act. Therefore. the undermentioned steps will be implemented to run into the demand: 1. All information refering to 2013 releases for the iPad. iPod. and Smartphone will be shared on a demand to cognize footing merely footing with developers.2. The jutting gross for these merchandises is expected to transcend $ 50 billion dollars. 3. The Lab will be monitored electronically. key coded entry for developers and other cardinal forces that use thumb print every bit good as guards posted outside the door 24 hours a twenty-four hours. The universe of patent licensing frequently seems like a labyrinth of tortuous small transitions. all likewise. but every so frequently the industry stumbles into a new tunnel — or. at least. one that seems new at first glimpse. Apple asked the European Telecommunications Standards Institute ( ETSI ) to set up a set of basic rules regulating alleged just. sensible. and non-discriminatory ( FRAND ) licensing of patented engineerings included in radio communications criterions. That sentence may do many consumers’ eyes glaze over. but it boils down to this: Apple wants regulations stating that if a company contributes their engineering to a criterion. they don’t acquire to utilize that engineering to crush up rivals who use that criterion. This patent seeks to protect invention and do competition more just and sensible ( Apple’s patent supplication: Stop Samsung and Motorola from keeping us surety. 2012 ) . Apple’s hallmark will be protected and authorized utilizing the bing guidelines that can be found at hypertext transfer protocol: //www. apple. com/legal/trademark/guidelinesfor3rdparties. hypertext markup language. These guidelines are for Apple licensees. authorised resellers. developers. clients. and other parties wishing to utilize Apple’s hallmarks. service Markss or images in promotional. advertisement. instructional. or mention stuffs. or on their web sites. merchandises. labels. or packaging. Use of the â€Å"keyboard† Apple Logo ( Option-Shift-K ) for commercial intents without the anterior written consent of Apple may represent hallmark violation and unjust competition in misdemeanor of federal and province Torahs. Use of Apple hallmarks may be prohibited. unless expressly authorized ( Guidelines for Using Apple Trademarks and Copyrights. 2012 ) . AbstractionIn sum-up. 2013 promises to be an exciting twelvemonth for Apple because of the merchandises that are presently in the grapevine such as Applevision. Apple will go on to prosecute excellence by supplying advanced engineering merchandises that will please consumers in 2013 and beyond because of its strategic values: Invention. Excellence. and Consumer Delight. The cardinal facet of implementing this technological advanced scheme will be: Innovation. new merchandise development procedure and the deployment scheme. Apple will seek to capture extra Smartphone market from its rivals like Android. Additionally. now that other sellers besides AT A ; T can sell the Smartphone. this will increase their client base from 100 million to 260 million. Furthermore. 2013 will be dominated by the undermentioned four subjects. all targeted at cementing users and developers into Apple’s alcoholic. walled garden of matchless user experience: 1. New merchandise: Smartphone 2. Scaling all operations ( fabrication. retail. Internet ) to run into planetary demand 3. Rapid enlargement in China and developing economic systems4. New merchandise signifier factor: Apple Television5. New merchandise: Apple spectacless Bibliography 15 Amazing Facts About Apple. ( 2010. October 28 ) . Retrieved April 5. 2012. from Business Insider: hypertext transfer protocol: //www. businessinsider. com/15-amazing-facts-about-apple-2010-10 # A best patterns approach to engineering sourcing. ( 2011. September ) . Retrieved April 5. 2012. from Inova: hypertext transfer protocol: //www. inova-software. com/webinar Apple Branding Strategy. ( n. d. ) . Retrieved April 14. 2012. from Marketing Minds: hypertext transfer protocol: //www. marketingminds. com. au/branding/apple_branding_strategy. hypertext markup language Apple Strategy A ; Corporate Culture — Proven Success Formula. ( 2011. March 28 ) . Retrieved April 13. 2012. from Chew overing: hypertext transfer protocol: //www. informing-arts. biz/blog/apple-envy-what-does-it-take-to-be-like- apple/ Apple’s â€Å"iPad† Rumored For Spring 2010. ( 2009. December 10 ) . Retrieved April 1. 2012. from Red Orbit: hypertext transfer protocol: //www. redorbit. com/news/technology/1797795/apples_ipad_rumored_for_spring_2010/ Apple’s Biggest Success and Failure. ( n. d. ) . Retrieved March 04. 2012. from iPhone Operating System: hypertext transfer protocol: //www. iphone-os. com/apples-biggest-successes-and-failures/ Apple’s Core Competency and Technology. ( 2009. October 27 ) . Retrieved March 04. 2012. from Open Surge Creative Solutions for Innovative People†¦ :hypertext transfer protocol: //www. opensurgegroup. com/about/about/news_files/3652aabe5e523d78d8b3f82a12b8723d- 6. hypertext markup language Apple’s foremost iPhone was made in 1983. ( 2012. January 2 ) . Retrieved March 04. 2012. from The Sydney Morning Herald: hypertext transfer protocol: //www. smh. com. au/digital-life/digital-life-news/apples-first-iphone-was- made-in-1983-20120102-1phne. hypertext markup language Apple’s patent supplication: Stop Samsung and Motorola from keeping us surety. ( n. d. ) . Retrieved Apriil 6. 2012. from hypertext transfer protocol: //news. yokel. com/apples-patent-plea-stop-samsung-motorola-holding-us- 001605679. hypertext markup language Apple’s patent supplication: Stop Samsung and Motorola from keeping us surety. ( 2012. February 8 ) . Retrieved April 7. 2012. from Digital Trends: hypertext transfer protocol: //news. yokel. com/apples-patent-plea-stop-samsung- motorola-holding-us-001605679. hypertext markup language iCloud To Change The Industry Dynamics. ( 2011. June 14 ) . Retrieved April 2. 2012. from Tech Readers: hypertext transfer protocol: //www. techreaders. com/2011/06/icloud-to-change-the-industry-dynamics/ S A ; P 500. Nasdaq Celebrate a Record-breaking One-fourth. but It’s All About Apple. ( 2012. April 3 ) . Retrieved April 3. 2012. from Investor Place: hypertext transfer protocol: //www. investorplace. com/2012/04/sp-500- BIBLIOGRAPHY ( Continued ) nasdaq-celebrate-record-breaking-quarters-but-its-all-about-apple-aapl-msft-intc-orcl-goog/ Schilling. M. ( 2009 ) . Strategic Management of Technological Innovation. 3rd Edition. In M. Schilling. Strategic Management of TechnologicalInnovation. 3rd Edition ( p. 221 ) . McGraw-Hill Learning Solutions. The Secret World of Apple Product Development. ( 2012. April 4 ) . Retrieved April 6. 2012. from Presta: hypertext transfer protocol: //blog. presta. com/apple/secret-apple-development/ Wikepedia The Free Encyclopedia. ( 2012. March 4 ) . Retrieved March 4. 2012. from Apple Inc. : hypertext transfer protocol: //en. wikipedia. org/wiki/Apple_Inc. Wikipedia The Free Encyclopedia. ( 2012. March 04 ) . Retrieved March 04. 2012. from iPad: hypertext transfer protocol: //en. wikipedia. org/wiki/IPad

Monday, April 20, 2020

Strategy Communication Marriott International free essay sample

The above mentioned learning objectives have been applied to the real-life case company Marriott International. Marriott International is a worldwide operating lodging company which opened its first hotel in 1957. It currently employees around 300. 000 people over 3. 500 properties and is focusing on continuous growth worldwide with their 18 brands. The Chinese market is at the moment one of the biggest expanding markets, they are focusing on growth outside the US in general. The major conclusion after analyzing all the facts which are relevant for this report is that the Marriott is a wonderful company whereby the employees are the basis of their success. The current differentiation strategy of Marriott fits with their mission and vision and is implemented successfully throughout the organization. After conducting research via various models it can be concluded that there is no need to develop a new strategy, since they do reach all their goals with the current strategy. Table of content SubjectPage Introduction4 Introduction to strategy5 Conducting a situation analysis7 Developing the strategic direction10 Formulating the strategy12 Implementing the strategy14 Monitoring and evaluating the strategic performance16 Conclusion19 Sources21 Introduction In this report the strategy of Marriott International will be elaborated via various analysis. We will write a custom essay sample on Strategy Communication Marriott International or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The outcome of several analysis such as SWOT, Porter’s 5 forces model and Mc Kinsey’s 7s model will analyze the current situation, determine if there is a need for a new strategy and how to measure and evaluate the current or new strategy. Introduction to Strategy Marriott International One of world’s biggest hotel chains in the world with more than 80 years experience in the hospitality industry wherefrom 50 years in the hotel industry. Marriott international is active in 70 countries and operates more than 3. 500 managed and franchised hotels. This 3. 500 hotels are spread over 18 different brands and operated with approximately 300. 000 associates. It is Marriott’s mission to stay ahead so its guests can, too * New innovations and signature experiences. * New ways to personalize each stay. * New hotels from the Caribbean to China. Marriott expects to add at least 80,000 to 90,000 hotel rooms to its portfolio from 2011 through 2013 with additional opportunities for 22,000 rooms to open in Europe and Asia during that same period. Marriott has plans to adapt and expand current brands, to meet the growing needs of customers in markets worldwide. The company will also be expanding its new brands outside of the United States. We are on the threshold of extraordinary growth for our company, ( J. W. Marriott, Jr. ) Marriott’s fundamental beliefs are enduring and the keys to its continued success. There is a â€Å"Marriott Way† they call it. It is about serving the associates, the customer and the community. These ideals serve as the cornerstone for all Marriott associates fulfilling the â€Å"Spirit to Serve†. The associates: The unshakeable conviction that our people are our most important asset * An environment that supports associate growth and personal development * A reputation for employing caring, dependable associates who are ethical and trustworthy * A home-like atmosphere and friendly workplace relationships * A performance-reward system that recognizes the important contributions of both hourly and management associates * Pride in the Marriott name, accomplishments, and record of success * A focus on growth managed and franchised properties, owners, and investors The guests: * A hands-on management style, i. . , management by walking around * Attention to detail * Openness to innovation and creativity in serving guests * Pride in the knowledge that our  guests can count on Marriotts unique blend of quality, consistency, personalized service, and recognition almost anywhere they travel in the world or whichever Marriott brand they choose The communities: * Demonstrated every day by associate and corporate support of local, national and global initiatives and programs * An important part of doing business the Marriott Way Marriott is a publicly held company listed on the New York Stock Exchange Organizational structure of the company Marriott-Branded Hotels are franchised and operated pursuant to three basic structures:   * A franchise agreement with the owner and operator of the hotel * A franchise agreement with the owner of the hotel who contracts with an independent management company to operate the hotel on its behalf * A franchise agreement with an independent management company that manages the hotel on behalf of the owner pursuant to a management agreement and a three party-owner agreement among the owner of the hotel, Marriott and the franchisee According to Porter’s Generic Strategies Marriott follows the Differentiation Strategy. This strategy will be elaborated in the chapter â€Å"Formulating the Strategy†. Marriott’s strategy is to expand their hotel portfolio by serving to excellence, contributing to the community and distribute their company in order to expand their market share. In the next chapter I will elaborate on their current internal and external situation. Conducting a situation analysis Strategy: Concentrate on growth optimization and drive profit by solidify product and service leadership. Structure: Marriott International covers a total of 18 hotel brands. To make sure each of these brands are able to present themselves in the same market, Marriott has chosen for a divisionalized form according to the organizational structures by Mintzberg. System: Different systems are used for internal and external communication; Fidelio Opera, GSI. Style: The style of the company is written in the â€Å"Code of Business Ethics†: â€Å"Commitment to human rights†, â€Å"Ethical and legal standards†, â€Å"Working with suppliers† and â€Å"Helping our workforce grow†. Staff: The most important as a Marriott employee is to have a Passion for people and live up the Spirit To Serve (Spirit To Serve can be found in the chapter â€Å"introduction to strategy†). Marriott has a global workforce compromised of associates from dozens of nations, speaking more than 50 languages, in 70 countries around the world. Skills: To be the world’s leading provider of hospitality services they take well care of our guest by offering them the best brand portfolio. To pursue this they develop a highly skilled workforce with extensive operational knowledge. In order to address a complex strategic situation, a SWOT analysis is very useful to support the 7S model (McKinsey). The SWOT analysis divides the internal aspects of the company as strengths and weaknesses. STRENGHTS| WEAKNESSES| * Technical innovations to ease the business process and increase hassle-free experience for the customers; * Higher brand recognition and recall makes the company priority choice for clients; * Global presence and strong brand portfolio diversifies the revenue sources. * Business model which has the potential to dilute the brand perception and limit the revenue growth; * High debt burden will affect the future capital generation and expansion projects. | To analyze the external environment of Marriott International the opportunities and threats will be explicated. OPPORTUNITIES| THREATS| * Strong growth in the hotel and motelindustry in emerging markets; * Improving hospitality market in the US; * Brand innovations and expansion. | * Vulnerability to terr orist attacks raises security and safety concerns; * Fragmented and intensely competitive lodging industry. Opportunities Emerging markets Remarkable growth from emerging markets like China and India over the past few years, because of more business travelers. China now is the largest market outside North America. Because of strong brand recognition it gives them the unique position to compete effectively with local and international players in the emerging markets. Improving hospitality Fast recovery from the global crisis with rising occupancy, upward average daily rate and revenue per available room. Brand innovations and expansion Marriott launches new brands and is expanding existing brands. Besides addition of the new brands, the company has invested in expanding its presence worldwide. Through brand introduction and expansion the company is changing itself to suit the needs and interests of the present business and leisure travelers. Threats Terrorist attacks Marriott has been a prime target of terrorist attacks. The company has suffered many bomb blasts in the past. These terrorist attacks have weakened the consumer confidence, which will probably affect the company’s business and reputation on the long term. Competitive lodging industry The company faces a strong competition. No player in the hotel business commands more than 20% of the market share. The intense competition results in a price war which makes Marriott’s luxurious brands uncompetitive, resulting in low market opportunities for the company. In the next chapter there will be created a new strategic direction with the mission and vision as guidelines. The conclusions of the SWOT have been taken in to account by creating these. Developing the strategic direction The mission and vision are the guide lines for an organization to use in everyday decisions to achieve the company’s goals. (Shoemaker, S. ) Marriott has provided specific core values which reaffirm and reinforce the culture of the company, but has not provided a mission statement in the traditional sense, or a vision statement. Mission Marriott is committed to being the best lodging and food service company in the world. About 50% of all Marriott brands around the globe are linked to the name Marriott, to stimulate the brand recognition. For example: Fairfield Inn by Marriott. Besides being the best lodging and food company in the world their goal is to create extraordinary customer service and shareholder value. They accomplish this by the way they treat their employees. Key elements for the Marriott’s culture are â€Å"Do Whatever it Takes to Take Care of the Customer, â€Å"Pay extraordinary attention to detail† and â€Å"Use their creativity to find new ways to meet the needs of customers†. The above mentioned points will definitely be part of the mission statement if provided in the traditional sense. New mission statement Marriott is committed to be the best lodging and food service company in the world, by treating employees and communities in ways that create extraordinary customer service. Innovations will ensure to stay ahead and personalize each stay, which results in extending the brand recognition and shareholder value. Vision According to Bill Marriott Jr. , Chief Executive Officer of Marriott International: I think the future and the vision for this company is to continue to foster, maintain and improve our company culture. The culture of Marriott is very strong and quite unique in the hospitality industry. Because of this strong culture they know that they will have stronger guest satisfaction and guests will return. New vision statement Marriott wants to become the leading provider and  facilitator of value-based luxury, leisure and  Ã‚  business experiences across the globe. We will embed global diversity and inclusion into our organization so that it is integral to how we do business. To achieve our growth goals outside of the U. S. , it is essential that our leaders truly embrace and understand different cultures. Reduce our environmental footprint and combat climate change. It might be a strategic decision of Marriott not providing a stated mission and vision statement since this may have the unintended effect that the company is less open to change initiated from the customers (Shoemaker, 2005). In the core values we see that â€Å"people† are a very important asset for Marriott, but what does that really mean? â€Å"Well, our company culture has been stated many ways. Basically, we believe in taking good care of our people and believe that if we do, theyll take good care of the guests and the customers and theyll return. This has been embedded in the philosophy of our company for over 81 years. (Bill Marriott) Because they take such good care of their people they know that their people will stay with them. Turnover will be low, and the turnover of employees is very expensive. Since the turnover will be low they know that their people will get better at their jobs and stay in longer. They keep on providing them with opportunities to keep the sp irit up and keep them motivated. The main focus for Marriott should be creating a clear mission and vision for each brand category as they are the guidelines for the company’s strategy. In the next chapter we will discuss if Marriott’s strategy fits with the ompany according to the mission, vision and SWOT analysis. Formulating the strategy For Marriott International to  be  a  successful company,  they should align external components   with  the  internal components. This alignment is called strategic planning. The strategy of the company is based on the mission, vision and SWOT analysis. Adjusts the  current strategy  of  the Marriott  well with  the company? Or are there changes required  to  ensure  success in the  future? To establish the current strategic profile, the theory of Porter’s Generic Strategies (Figure 1) is of great importance. As one of the best lodging and food companies in the world, Marriott is always on the move: launching innovative new brands, expanding in emerging markets and solidifying their position as a unique hospitality company. Referring to Porter’s Generic Strategies, this shows that they use the ‘Differentiation Strategy’. This strategy is reflected in the way they represent themselves by offering a wide brand portfolio. Some well known brands are: Marriott Hotels amp; Resorts, Renaissance Hotels and The Ritz-Carlton. Their brand  portfolio offers any and every type of stay experience guests are looking for and the uniqueness of the Marriott concept is that each of the brands is individually distinctive, but collectively powerful. As already mentioned, the company is always looking for innovation to serve their guests in the best way. Together with their focus and attention for personal and professional development of their employees. This are the  most  important  parts of the strategy,  if  you look at  the ever  changing market and  changing demands of  guests. It can be concluded that Marriott follows the correct strategy. It cannot be denied that Marriot has several major competitors within the hospitality market. Therefore it is important to get insight in the current and future market developments. The 5 forces model of Porter offers a solution here. How does the 5 forces model look like for Marriott? Threat of new entrants There is not much of a threat of potential entrants, which have the same size and are globally active, because of the existing hotel chains and the loyalty their customers have. This can discourage potential entrants. Threat of substitute products or service There is a small threat of substitutes since Marriott offers short and long term stay brands in various price classes. They are able to reach all target groups who would like to stay in a hotel or residence. Bargaining power of buyers The bargaining power of buyers is very great within the lodging industry since the buyers have a very wide range of providers which offer almost similar products. Customers will go where they have the best value for their money. As we have seen in de recent credit crunch the bargaining power of buyers increased, because they knew that companies were afraid of losing customers. Bargaining power of suppliers The bargaining power of suppliers and Marriott is a kind of equal since the suppliers need the business from the hotel and will try to offer good quality for good prices. Since Marriott needs reliable suppliers and it is a very intensive process to find a new supplier which is able live up to the standards from the hotel it will trade the suppliers well. The current strategy should not be changed. It is important for them to keep focused on their core values and corporate culture which leads to customer loyalty and innovation within Marriott International. By doing this they will be able to distinguish themselves from their competitors. Implementing the strategy As discussed in the chapter ‘Formulating a Strategy’ Marriott International follows the correct strategy. This strategy has been used and proved successful. Therefore there is not formulated a new strategy which has to be implemented. But it may be important for the Marriott to better deepen their current â€Å"Differentiation Strategy†. This is especially important to continue differentiating themselves from competitors. Treacy and Wiersema ‘The value disciplines’ By means of the ‘Value disciplines’ model from Treacy and Wiersema can be determined in which of the three strategies the organization excels. Fact is that the organization has to be on a sufficient level with the other two values as well. Marriott International follows the strategy of ‘Customer Intimacy’. What does this exactly mean for the organization? They focus on continuously adaption of the supply to the needs and wishes of the customers. Besides that they invest continuously in customer loyalty, customer retention, reliability and exceeding expectations. It thus means that the organization is focused to develop a long and close relationship with the customers. Hereby they are in an optimal position to provide the customers in their needs. The organization makes sure that the customer get exactly what they wish for. Customized Products, services and service are important measurement points for this strategy. Treacy and Wiersema’s ‘Customer Intimacy’ strategy is accordingly to Porter’s ‘Differentiation Strategy’ in relation to Marriott International as mentioned in the chapter ‘Formulating a Strategy’. To execute this strategy very much knowledge about the customer is necessary, which Marriott built up step by step over the years. This customer knowledge is the most important possession and the most important competitive weapon for the organization. Brand Portfolio As mentioned earlier, Marriott International has a very broad brand portfolio. They are able to serve different target groups, because of this wide range of brands. This also means that ‘Customer Intimacy cannot always be the leading strategy. ‘Product Leadership’ and ‘Operational Excellence’ are sometimes the leading strategies, depending on which segment the organization tries to reach. To strengthen the ‘Differentiation Strategy’ and ‘Customer Intimacy’ strategy, it is important that the core values of the company for everyone in the organization are clear. Therefore Marriott International developed the ‘Code of Business Ethics’ for managers and employees. ‘The core values established by the Marriott family over 80 years ago have served our company well and will continue to guide our growth into the future. Foremost of these core values is the enduring belief that our associates are our greatest assets. ’ When you look at the overall picture of the Marriott International as an organization, there is no doubt that they follow and carry out the ‘Customer Intimacy’ strategy. Since Marriott has such a great brand portfolio and operates in different (price)segments the two other value disciplines are very important in addition to the ‘Customer Intimacy’. Concluded can be that Marriott International does very well, because they have a good balance between the applied strategies within the organization and the way they apply them for the different brands. But above all, that the core values from the organization make sure that not only the top of the organization is informed about the current strategy, but that all employees show and carry out wherein the organization excels. When Marriott comes at a point wherein they need to implement a new strategy they can use the EFQM excellence model. It can be used to implement a strategy, and redesign and develop organizational structures and processes. Monitoring amp; Evaluating the Strategic Performance After discussing the subjects ‘Introduction to strategy’, ‘Conducting a situation analysis’, ‘Developing a strategic direction’, ‘Formulating a strategy’ and ‘Implementing a strategy’, we arrived at the last but most important part of this academic report: ‘Monitoring and Evaluating Strategic Performance’ of Marriott International. Organizations can  develop  a strategy,  but if  they do not  monitor and measure  whether the  goals  of this  strategy  are reached, formulating a strategy makes no sense. It is certain that evaluating and monitoring are the most important parts of the whole ‘strategy process’. It is shown that the current strategy of Marriott International is adequate and there is no reason to switch to a new strategy. However, it is important  to consider if the current strategy aligns the business goals  which have emerged  in the mission and  vision. A model that offers a solution to do this is the ‘Business Balanced Scorecard’, by Robert Kaplan en David Norton. What is the balanced scorecard model exactly? ‘The balanced scorecard is a strategic planning and management system  used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance via multiple measures against strategic goals’, according to Norton and Kaplan (1992). How can the balanced scorecard be valuable for Marriott International? The balanced scorecard measures a company’s performance across four perspectives: * Financial perspective: ‘What is important for our shareholders? ; The financial objectives focus on the terms of revenue growth and mix, cost reduction and profitability, and asset utilization and investment strategy. * Customers: ‘How do customers perceive us? ’. Customer service and satisfaction are viewed as important issues for the organization. As poor customer performance ultimately leads to a company’s decline â⠂¬â€œ dissatisfied customers will find other suppliers to fulfill their needs. Measuring satisfaction, retention, market and account share provides an insight into how customers perceive the company. Possible indicators nclude customer profitability, return policy, handling service calls, market share in target segments, and claims and complaints handling. * Internal business processes: ‘Which internal processes can add value? ’; Indicators for this perspective give management an insight into the effectiveness of their operations. Quality, response and cycle time, costs, new product development, time to market, but also break even time realized and new sales as a percentage of total sales are indicators for measuring the performance of the company’s operations. * Learning and growth: ‘Are we innovative and ready for the future? ; Indicators for the learning and growth perspective provide an insight into how successful human recourses management and knowledg e and innovation management are. Possible indicators are employee satisfaction and retention, revenue/value added per employee, strategic redundancy in job skills, new ideas per employee and information availability relative to need. The balanced scorecard forces a company to focus on a balanced set of key performance indicators which are recognizable throughout the organization, and which will lead ultimately to substantial and lasting performance improvement. Marriott has set the following KPI’s. By applying the Balanced score card and set their KPI’s they are able to measure and evaluate their performance. And eventually adjust and redirect their strategy in the right way. Conclusion The Marriott’s way is build on their core values, in which employees, local communities and their guests are the most important. The organizations follows the differentiation strategy which fits best because of their wide brand portfolio. An internal analysis has been conducted with McKinsey’s 7S model I have concluded that they concentrate on growth, optimization of profit and roduct and service leadership. To pursue this they develop a highly skilled workforce with extensive operational knowledge following the divisionalized form according to the organizational structures by Mintzberg. A weakness is the business model which has the potential to dilute the brand perception and limit the revenue growth by analyzing the external si tuation I concluded that there is a strong growth in the hotel and motel industry in emerging markets a threat at the same time is a fragmented and intensely competitive lodging industry. Remarkable is that Marriott not provided a mission or vision statement in the traditional sense. It might be a strategic decision but I would recommend them to focus on creating these, as they are the guidelines for the company’s strategy. According to Porter’s Generic Strategies Marriott follows the ‘Differentiation Strategy’. The company is always looking for innovation to serve their guests in the best way; they offer every type of stay experience. Together with their focus and attention for development of their employees. For Marriott to be able to distinguish themselves from their competitors, according to Porter’s 5 forces model, is that they need to keep focused on their core values and corporate culture which leads to customer loyalty and innovation. Marriott International follows the correct strategy. This strategy has been used and proved successful. Therefore there is not formulated a new strategy which has to be implemented. But it may be important for the Marriott to better deepen their current â€Å"Differentiation Strategy†. This is especially important to continue differentiating themselves from competitors. They could do this by the strategy of ‘Customer Intimacy’ from Treacy and Wiersma. It is shown that the current strategy of Marriott International is adequate and there is no reason to switch to a new strategy. However, it is important  to consider if the current strategy aligns the business goals  which have emerged  in the mission and  vision. A model that offers a solution to do this is the ‘Business Balanced Scorecard’, by Robert Kaplan en David Norton This model measures a company’s performance. By applying the Balanced score card and their set KPI’s they are able to measure and evaluate their performance. And eventually adjust and redirect their strategy in the right way. We can conclude that Marriott is doing very well within the lodging industry. If they keep on focusing on their growth, special attention for their employees and guests and willingness to change when necessary they will maintain their position as one of the biggest players within the hospitality market. Sources Books: Marriott, J. W. , Brown Kathi Ann (1997), The Spirit To Serve Marriott’s Way, Harper Collins Publishers. Henry Mintzberg (1979), The structuring of organizations, Prentice Hall. Pascale, R. T. (1990), Managing on the Edge, Simon amp; Schuster, New York, NY. Shoemaker, S. (2005). â€Å"Customer service. Hospitality Design†. The Mc Graw-Hill Companies. Mintzberg, H. (2005), Strategy Safari: A guided tour through the fields of strategic management, Prentice hall, 1998. Porter, Michael E. (1998), Competitive Strategy, Techniques for Analyzing Industries and Competitors, Free Press, New York. Drs. P. Pietersma, drs. Ing. K. Rippen, ir. T. Janssen, dr. E. Agasi, drs. M. van Mierle, drs. L Nijkamp (2007), Het Strategieboek 1, Berenschot, 2007. Treacy, M. and Wiersema, F. (1995), The Discipline of Market Leaders: Choose your customers, narrow your focus, dominate your market, HarperCollins. Assen, van M. , Berg. vd G. , Pietersma, P. (2009), Key Management Models: The 60+ models every manager needs to know, second editon, Prentice Hall. Kaplan, R. and Norton, D. (1996) â€Å"The Balanced Scorecard: Translating strategy into action†, Cambridge, Harvard Business School Press. Journals: O’neill. John W, Matilla, Anna S. 2010), â€Å"Hotel Brand Strategy†, Vol. 51, Cornell University. Armstrong, J. S. (1982), â€Å"The value of formal planning for strategic decisions† Strategic Management Journal, Vol. 3. Datamonitor Research company (2011), â€Å"Marriott International company profile† Datamonitor Vol. July. John W. ONeill and Anna S. Mattila (2010), â€Å"Hotel Brand Strategy†, Vol 51 Cornell Hospitality Quar terly. Chekitan S. Dev, John D. Buschman and John T. Bowen (2010), â€Å"Hospitality Marketing: A Retrospective Analysis (1960-2010) and Predictions (2010-2020)† Vol 51. , Cornell Hospitality Quarterly. Porter, Michael E, Kramer, Mark R, (2006) â€Å"Strategy amp; Society, The link between competitive advantage and corporate social responsibility†, Harvard Business Review. Kaplan, Robert S. , Norton, David P. , Barrows Jr. , Edward A. (2008), â€Å"Developing the Strategy: Vision, Value Gaps, and Analysis†, Harvard Business School Publishing. Swaan Arons, Henk, Waalewijn, Philip, (1999)â€Å"A Knowledge Base Representing Porter’s Five Forces Model†, Erasmus University Rotterdam. Cliff Bowman (2008), â€Å"Generic strategies: a substitute for thinking? †, The Ashridge Journal. John, W. O’Neill, A, Matilla, S. (2010) â€Å"Hotel Brand Stratery† Vol. 51, Cornell Hospitality Quarterly. Chekitan Dev. , Zheng Zhou, Kevin. , Brown, Jim, Agarwal, Sanjeev (2009), â€Å" Customer Orientation or Competitor Orientation: Which Marketing Strategy Has a Higher Payoff for Hotel Brands† Vol. 50, Cornell Hospitality Quarterly. John W. , Oâ€℠¢Neill, Anna S. Matilla (2004), â€Å"Hotel Brand Strategy: Its Relationship to Guest Satisfaction and Room Revenue† Vol. 28, Journal of Hospitality amp; Tourism Research. Hinkin, Timothy R, Tracey Bruce J. (2010), â€Å"What makes It So Great? An Analysis of Human Recourses Practices among Fortune’s Best Companies to Work For†, Vol. 51, Cornell Hospitality Quarterly. Kaplan, R and Norton, D, (1992), â€Å"The Balanced Scorecard: Measures that drive performance†, Vol. 70, Harvard business review. Gregory A. Denton and Bruce White, (2000) â€Å"Implementing a Balanced-scorecard Approach to Managing Hotel Operations: The Case of White Lodging Services†, Vol. 41. Cornell Hotel and Restaurant Administration Quarterly. Websites: Hotel news now (2010). â€Å"Marriott outlines growth plans†, available at: http://www. otelnewsnow. com/Articles. aspx/4314/Marriott-outlines-growth-plans (Last accessed 8 December 2011. ) Marriott International (2011). â€Å"corporate responsibility, culture, hotel development, investors† available at: http://www. marriott. com/marriott/aboutmarriott. mi (Last accessed 8 December 2011) Bill Marriott (2008). â€Å"My vision for the future of Marriott.. our corpo rate culture† available at: http://www. blogs. marriott. com/marriott-on-the-move/2008/05/my-vision-for-the-future-of-marriott-our-corporate-culture. html (Last accessed 8 December 2011)

Sunday, March 15, 2020

buy custom Wal-Mart Merchandising Strategy essay

buy custom Wal-Mart Merchandising Strategy essay For a company to succeed both in the domestic and international markets, it has to embrace the right merchandising strategies. This is because of the fact that, in the current market situation, the approach of one size fits all cannot work due to increased competition between firms, higher costs of production, different marketing strategies among other factors (Lohman, 2012). Based on this fact, the strategies ought to vary significantly, depending on the category as well as the objective to be achieved by the company for its brand. Therefore, all the strategies must be carefully crafted in order to enable the firm to target certain goals like being able to invite new customers, raise foot traffic among other factors that will increase sales (Lohman, 2012). One of the companies which has perfected this art both in the local and international markets is Wal-Mart Stores, Inc. Wal-Mart Stores, Inc. is a multinational retail corporation based in the United States; it operates multiple chain stores and warehouses across the globe (Wal-Mart Corporate, 2014). Currently, the company has more than 11,000 stores which operate under 55 various banners. As of 2014, the company has been rated as the largest firm by revenue share as indicated by the Fortune Global 500 list (Wal-Mart Corporate, 2014). According to the case study, the firm has leveraged its success due to low products pices and efficient logistical and operation systems. In addition, the company has an effective system of information, which enables it to keep all inventories at a minimum level, thus being able to avoid the aspect of under or overstocking, which in most cases results to reduced profitability (Lyons, 2007). From the case study, it is evident that Wal-Mart has made notable success in expanding its retail shops in the international markets. There are various factors which made it possible for the firm to attain this level of international success. Its competitors, on the other hand, have significantly failed. First, as seen in Mexico in the 1990s, the firm has established a joint venture with the local retail shops. Since expansion to international markets is a rather capital-intensive affair, joint ventures between Wal-Mart and the local firms helped the former to reduce its operational costs, thus making it able to offer its products at lower prices compared to its competitors (Lyons, 2007). The other factor which has resulted to the success of Wal-Mart in the international markets is the ability to understand the culture of the local communities. For instance, in Mexico, the firm learnt that, unlike in the US, the majority of its customers did not have cars, thus they used to buy products in small quantities. The company also tends to hire local managers and othher employees, a factor which enables the firm to understand the local market better (Lyons, 2007). In order to change the shopping habits, the company has been able to educate the locals on the need to embrace the United States merchandising culture; Wal-Mart has already conducted similar practice in Mexico and China. From a thorough analysis of the case study, it is clear that in order to ensure the success of Wal-Mart in international ventures, the firm has to motivate its work force through unionizing its employees as witnessed in 2006 in China. This ensures higher productivity both in the short- and long-term projects. In addition, the firm needs to understand the culture of the local population before engaging in any international venture. For instance, the managements inability of the firm to understand the fact that consumers in South Korea and Germany are attracted by high quality merchandise rather than discounted products made the firm pull out of these two countries in 2006 (Lyons, 2007). In conclusion, it is evident that Wal-Mart could translate its merchandizing strategy wholesale to another country and succeed due to the managements previous experiences. However, the companys leadership should thoroughly study the country it wants to expand its business to, since every market is unique and requires the firm to modify its approach and strategies. Buy custom Wal-Mart Merchandising Strategy essay