Acknowledgement Examples Essay

* First and foremost, we would like to thank to our supervisor of this project, Miss Shyamala for the valuable guidance and advice. She inspired us greatly to work in this project. Her willingness to motivate us contributed tremendously to our project. We also would like to thank her for showing us some example that related to the topic of our project. Besides, we would like to thank the authority of Multimedia University (MMU) for providing us with a good environment and facilities to complete this project. Also, we would like to take this opportunity to thank to the Centre of Affiliated Diploma Programme (CADP) of Multimedia University (MMU) for offering this subject, Computing Project. It gave us an opportunity to participate and learn about the operation of flights ticket reservation. In addition, we would also like to thank Malaysia Airline System (MAS) which provide us valuable information as the guidance of our project. Finally, an honorable mention goes to our families and friends for their understandings and supports on us in completing this project. Without helps of the particular that mentioned above, we would face many difficulties while doing this * Apart from the efforts of myself, the success of any project depends largely on the encouragement and guidelines of many others. I take this opportunity to express my gratitude to the people who have been instrumental in the successful completion of this project. I would like to show my greatest appreciation to Prof. James Geller. I can’t say thank you enough for his tremendous support and help. I feel motivated and encouraged every time I attend his meeting. Without his encouragement and guidance this project would not have materialized. The guidance and support received from all the members who contributed and who are contributing to this project, was vital for the success of the project. I am grateful for their constant support and help. * I would like to gratefully acknowledge the enthusiastic supervision of Dr. Ali Rezazadeh during this work. I thank Prof. Garth Swanson for the technical discussions on the spectral response model and Dr. S. E. Kanellopoulos for the help with optical measurements and relevant discussions. Postgraduates of the Physical Electronics Research Group are thanked for numerous stimulating discussions, help with experimental setup and general advice; in particular I would like to acknowledge the help of Dr. Jim Luck for his support. Sean Wootton, Kevin Smith and Nick Nicola are thanked for their assistance with all types of technical problems – at all times. I am grateful to all my friends from International Hall, University of London, for being the surrogate family during the many years I stayed there and for their continued moral support there after. From the staff, Donald Mann and Margaret Wilson are especially thanked for their care and attention. Finally, I am forever indebted to my parents and Anita for their understanding, endless patience and encouragement when it was most required. I am also grateful to Naela and Tanvir for their support.

Dividend Policy and Stock Price Behaviour in Indian Corporate Sector: a Panel Data Approach

Dividend Policy and Stock Price Behaviour in Indian Corporate Sector: A panel data approach Upananda Pani? Abstract: This paper attempts to explore the possible links between dividend policy and stock price behaviour in Indian corporate sector. A sample of 500 listed companies from BSE are examined for the years 1996-2006. Dividend policy has always been a source of controversy despite years of theoretical and empirical research both in developed countries and emerging economies. The present paper features a panel data approach to analyze the relationship between dividend-retention ratio and stock-price behaviour while controlling the variables like size and long-term debt-equity ratio of the firm. The sample is taken across six different industries namely electricity, food and beverage, mining, non-metallic, textile and service sector. The results are based on the fixed-effect model, as these perform statistically better than random effects and pooled OLS model. Results of the fixed-effect models indicate that dividend-retention ratio along with size and debtequity ratio plays a significant role in explaining variations in stock returns. The fixed effect models show the presence of firm level effect in explaining the possible links between dividend policy and stock price behaviour of the firm. In another words it exhibits the possibility of â€Å"clientele effect† effect in case of some industries. Therefore the model helps to understand the intricacies of dividend policy and stock-return behaviour in Indian corporate sector for the same period. Although the results are not robust enough as in the case of developed markets but shades some more interesting facets to the existing corporate finance literature on dividend policy in India. Kew Words: Dividened Policy, Stock Price, Corporate Finance, Fixed Effect Model JEL Code: G30, G35 Research Scholar, Indian Institute of Technology, Khragpur-721302. The author can be contacted [email  protected] ac. in ? 1 1. Introduction Dividend policy still remains an academic debate amid the clouding picture of its importance among the financial economists till today. There are few aspects of corporate financial policy where the gap between the academics and the practitioners is larger than that of the dividend policy. From Miller & Modigliani (1961)1, ,Gordon & Linter to Fama & French (2001)2 ,the research on the topic exhibits conflicting trends in dividend payments & firm value. The academic consensus shows that dividends really don’t matter very much for the market nor is relevant, when firms pay dividend as a signal to the investors. Both corporate officials and investment analysts, still continue to insist that a firm’s dividend policy matters a great deal for conveying the information to the stakeholders. One side of the argument on the basis of economic theory is, it doesn’t matter or is irrelevant. But the practitioners believe it as information content to the public, which reflects seriousness of the problem that is inherent in the reaction mechanisms of the market to the dividend policy announcements. I want to foreground an explanation before the practitioners, why, in the face of all this evidence of price increase in response to dividend announcements, otherwise sensible academics believe that a firm’s dividend policy really doesn’t make much difference. At the same time, I’11 argue that the dividends do matter for a firm. Dividend Policy & Share prices The dividend policy of a firm becomes the choice of financial strategy when investment decisions are taken as given. It is also imperative to know whether the firm will go for internal or external source of financing for its investment project. There are a number of factors affecting the dividend policy decisions of a firm such as investor’s preference, earnings, investment opportunities; annual vs. target capital structure, flotation costs, signaling, stability & Government policies and taxation. In the presence of asymmetric information, signaling is one of the crucial factors that influence the market. Dividends may convey information about the company, so it suggests the possibility of its influence 2 on the stock market. Paying large dividends reduces risk and thus influence stock price (Gordon, 1963) and is a proxy for the future earnings (Baskin, 1989) Baskin (1989) takes a slightly different approach and examines the influence of dividend policy on stock price volatility, as opposed to that on stock returns. He advances four basic models which relate dividends to stock price risk. He terms these as the duration effect, the rate of return effect, the arbitrage pricing effect and the informational effect. The difficulty in many empirical works examining the linkage between dividend policy and stock volatility or returns lies in the setting up of adequate control over the factors that influence both. For example, the accounting system generates information on several relationships that are considered by many to be measures of risk. Baskin (1989) suggests the use of the following control variables in testing the significance of the relationship between dividend yield and price volatility are operating earnings, the size of the firm, the level of debt, the payout ratio and the level of growth. So he had tried to explain the underlying linkage between dividend policies (dividend yield and dividend payout ratio) and stock price risk in his empirical work on USA. A number of theoretical mechanisms have been suggested that cause dividend yield and payout ratios to vary inversely with common stock volatility. As dividends can be cash dividends, stock dividends, stock splits & share repurchases, the question comes about the nature of the dividend & its impact on the share price and whether market is more volatile to high dividend yield share than normal share comes into the picture. There is a need to study the sensitivity of market to the nature of dividends. The linkage etween dividends & share price should be examined by controlling other factors which are responsible for affecting the dividend policy of a firm. Study of dividend policy and stock price in India As Indian stock market is one of the most volatile stock market in the world. As the no of private corporations are growing day by day, & financial markets becoming more developed, there need of the study of different policy implications by corporate sector. 3 There are a number of stu dies existing on the determinants of dividends3 behaviour in Indian context. All the studies have determined the dividend behaviour from the perspective of the factors influencing the dividend behaviour in the short run as well as in the long run4. But a very few literature captures the intricacies of market reaction to the dividend announcement by Indian corporate sector. The study by Reddy, Y S (2003) on dividend behavior of Indian corporate firms over the period 1990 – 2003 shows a conflicting picture of the dividend policy of firms across different industries. The study explores dividend trends for a large sample of stocks traded on the NSE and BSE, indicate that the percentage of companies paying dividends has declined from 60. 5 percent in 1990 to 32. 1 percent in 2003 and that only a few firms have consistently paid the same levels of dividends. Further, dividend-paying companies are more profitable, large in size and growth doesn't seem to deter Indian firms from paying higher dividends. Analysis of influence of changes in tax regime on dividend behavior shows that the tradeoff or tax-preference theory does not appear to hold true in the Indian context. This paper shows the contradictory results from the previous one. The limitations of these papers are they have taken only cash dividends for analyzing the determinant behaviour. The present paper is structured as follows as introduction. The subsequent section II follows the theoretical strands and section III highlights ed model for the purpose. The section IV denotes the data sources and variable construction. The section V shows empirical results and discussion. The last and final section displays the findings. II. Theoretical Strands and Literatures study The dividend irrelevance theory of Modigliani and Miller (1961) proposed the absence of any significant impact of the dividend policy on the value of shares because it’s impact is offset exactly by other means of financing and is thus irrelevant. This theory was formulated by assuming perfect market conditions, which didn’t take into account the imperfections like taxes, transaction cost or asymmetric information. Consequently, dividend policies have little impact on the market value of the firms. In a perfectly competitive market situation both the company, through its profit retention, and the 4 hareholders, through their dividends, might invest in the same assets, and hence, who’s making the investment does not matter for the economy as a whole. However, since the capital market is neither perfect nor complete the dividend irrelevance proposition needs to be applied carefully by focusing on effects of taxes, information content, agency cost and other relevant affecting variables. The Gordon model (1959) stock valuation model states the fair value of a stock should equal to the stock-dividend per share and the difference between the discount rate and the long-term dividend growth rate. The model assumes that the firm’s dividend will grow at a constant rate and that the discount rate stays the same for ever. The theory suggests if there will be an increase in dividend rate there will be simultaneously an increase in stock value of the firm. Fama (1998) is the advocate of modern corporate finance theory, which states that firms should be managed to create and maximize value. Here the value depicts the total price of a firm commands in the market that is the sum of the values of its equity and debt. Thus, the criteria and rules for correct financial decisions are oriented towards maximization of the total value of the firm. In theory, value maximization is appealing because it is associated with efficient allocation of resources, provided the capital market operates efficiently. That is, it rewards the most to firms that channel their resources to the best uses. Extensive empirical work on capital Market behaviour shows that the prices of corporate securities indeed respond to firms’ decisions in a way that appears to be consistent with expectations about the appreciation or depreciation of value in the market. The theory emphasizes the importance of corporate financing decisions on the value of the firm in the market. Thirumalvan & Sunita (2005) studied the impact of Share repurchases & Dividend announcements on Stock prices in the context of Indian Corporate sector during the period (2002-2004). They examined the signalling effect of Stock repurchases and Dividend announcements. The study examined abnormal returns across various repurchases level. They have taken the firms listed in the BSE Index for the purpose of 5 empirical investigation. The study covers the impact on stock prices five days prior and after the dividend announcement. The result exhibits the upward trend of share price movement after the dividend announcement. The crucial point of their findings is that positive signalling existed only for a day after the announcements. After which the extent of positivism of shares starts declining. Their finding shows that market reaction in the Indian context to events or announcements such as share repurchases and dividends generally fluctuate around day or two. The study can be cited as important for the present study. Sen and Ray (2003) have explained an interesting phenomenon regarding the key determinants of stock price in India. The study is based upon the stocks comprising the BSE index over a period 1988-2000. The empirical study revealed dividend pay-out is by far the single important factor affecting stock prices. The second factor comes earning per share which has very weak impact on the share prices. So the study explored one of the crucial factor dividend pay-out ratios having impact on Indian stock price. Black and Scholes (1974) in their study on the effects of dividend yield & dividend policy on common stock prices & returns They stated uninformed demand for dividends can result from dividend decisions which in turn derive from imperfections such as taxes, transaction costs and institutional investment constraints. Given the above background, the study makes an attempt to examine the effect of dividends and retention earnings on the stock price behaviour in Indian corporate sector in a partial macro economic framework. III. Proposed Derived Model In analyzing dividend and stock price behaviour, the most important point to begin with is an objective function representing a firm’s preference regarding dividend-retention mix instead of taking only dividend yield or payout ratio. Because the objective function is related to firm’s main motives & there has been a shift in it’s motives due to the dominance of joint stock corporations & the associated characteristics of separation of ownership & control. This shift can be characterized from the sole motive as maximization of rate of return on capital to other set of motives such as sales maximization, expansion of business. This set of motives contributing to an increase in the market value of the firm, also, is in consonance with the managing agency system of operation, which is a characteristics of Indian companies. Moreover, the separation of ownership & control also implies a difference in the objectives & preferences between firm’s management & its shareholders. From the shareholders side, their preferences depend upon mainly their income level & the degree of understanding of corporate stock –dealings & associated tax implications. Nevertheless, the behaviour of the shareholders may be generalized as that they prefer stable dividend rates & that the effect of taxes is only on the preference of the shareholders as the shareholders, who belong to the richer classes prefer low dividends and high retained earnings. The opposite is applicable in the case of middle income group of shareholders. On the other hand, the management behaviour can be relatively & conceptually distinguished between a ‘passive’ & an ‘active’ type5. The motives of passive management are similar to those of the shareholders & it efforts to ensure stable dividend. But firm also requires sufficient profit retentions to satisfy the firm’s long-term needs such as investment demand & liquidity needs etc. But the ‘active’ management aims at increasing the market value of the firm & the market price of shares as well. So while its credibility requires to emphasize on the shareholders preference, it’s general tendency would be to reduce dividends on the basis of different excuses like high tax rates on distributions, ‘tax shelter’ benefits. Given the vast diversity of stockholders, it is not surprising that, over time, stockholders tend to invest in firm’s whose dividend policies match their preferences. Stockholders in high tax brackets who do not need the cash flow from dividend payments tend to invest in those companies which either pay low or no dividends. By contrast, stock holders with low tax bracket will invest in companies with high dividends. This clustering of stock-holders in companies with dividend policies that match their preferences is called as clientele effect. So it suggests that firms get the investors they deserve since the dividend policy of a firm attracts 7 investors who like it. Second, it means that firms will have a difficult time changing an established dividend policy, even if it makes complete sense to do so. However in practice, it is reasonably assumed that managements are neither extremely ‘passive’ nor extremely ‘active’ and shareholders are neither rich nor badly dependent or dividend income alone but contain all the elements in different combinations. Thus, let’s consider a typical firm having a map of dividend preference curves, each indicating a specific level of utility obtained by alternative combinations of dividends & retentions. So the dividend preference function can be noted as: U = f (Dn, R) (3. 1) Where, Dn and R are the dividend and retention net of all taxes at all levels. The utility level can be seen as monotonically related to the motives of the management with respect to the shareholders preference. The shape of the utility curves might be a result of a process of accounting for their relative performances & the factors influencing such preferences as well. The second step is to represent the hypothesis that dividends affect stock prices or market value of the firm. The utility function can be represented as the function for optimizing the market value of the firm. The market value of the firm can be represented as Market value of the Firm = ? ? Dividends ? f ? Net profit , ? Re tained earnings ? ? ? (3. 2) The market value of the firm here is basically represented on the basis of Accounting Earning Analysis. Here the Net profit is derived from the current investment of the firm. The higher the net profit the higher will be the stock price. The market value of the firm also depends upon the ratio of Dividends to Retained Earnings because the profit is basically segregated into either dividend or retained earnings. If clientele effect is not present in the firm then higher dividends will lead to higher value of the share price whereas if the investors are rich then they will prefer lower dividend to retention. The 8 return on equity entirely depends on the net worth6 of a company. Equity return of a company depends upon dividends and retained earnings. If a company is going for dividends then the retained earning will be less, leading the firm to go for either newequity issues or External financing. If the flotation cost7 is high, the company will go for external financing which will be costlier for the firm than internal financing through equity. So the firm has to maximize the dividend to retained earnings ratio for any new investment aimed at firm’s growth. We can represent it through the following function; ? D? Pt = f ? Y , ? ? R? (3. 3) Where Y represents the net profit of the firm D represents ratio of dividends to retention earning of the firm. The ratio of R ividends to retained earnings acts as a proxy for future cash flow of the firm and share price, Pt , acts as the proxy for the absolute market value of the firm. While calculating the stock return on an equity share, we are basically interested to calculate the change in current price with respect it’s price in the previous period. So the equation (3. 3) can be represented as ? Pt ? ?P ? 0 ? ? ? ? = f ? Y , D ? , ? P R? ? ? ? 0 ? (3. 4) The eqn (3. 4) represents the change with respect to base price. We have assumed a CobbDouglas type of function represented as the following ? Pt ? ? Y ? ? D ? 2 ui ? ? = A? ? ? e ? P ? R ? P ? ? 0? ? ? ? 0? ?1 ? (3. 5) The equation (3. 5) can be expressed alternatively as 9 ?Y ? ?P? ?D? ln ? t ? = ln A + ? 1 ln ? ? + ? 2 ln? ? + ui ? P ? ?P ? ?R? ? 0? ? 0? (3. 6) We can write the above equation as ?Y ? ?D? ln Vit = ? i + ? 1 ln? ? + ? 2 ln? ? + uit ? P ? ?R? ? 0? (3. 7) Where ln A = ? i = 1†¦ N t = 1†¦ T, There may be potential links between size and volatility of stock returns of the firm. The size of the firm also exhibits crucial link between size and volatility. Small firms are likely to be less diversified in their activities and subject less investor’s scrutiny for the firm. But research is still confined to large listed companies. The Information on the stocks of smaller listed companies could conceivably be less informed and illiquid in nature. These firms are subject to greater price volatility as a result of above posed factors. So a control variable, long-run debt equity ratio is being added . When asymmetric information comes into the picture, there is also likely to be a link between borrowing & dividend policy. Baskin (1989) suggests that firms with a dispersed body of shareholders may be more disposed towards using dividend policy as a signaling device. The dividend policy may also be a function of size and there is a need to introduce size as a control variable. There is also a need of introducing control variables, which will reflect the corporate leverage. The earlier models have been aimed at capturing the effect of stock price and dividends but very few of them have tried to include the control variables such as debt-equity ratio and size of the firm. So in the present study, the focus is to fillup the limitations of the previous studies by using context-specific Panel-Data models including the control variables like leverage ratio and size of the firm. Through panel data estimation we can observe firm effect8 and time effect throughout the sample period. So now the eqn (3. 7) can be stated as ? Y ? ?D? ?D? ln Vit = ? i + ? 1 ln? ? + ? 2 ln? ? + ? 3 ( SZ ) + ? 4 ? ? +  µi + ? it ? P ? ?E? ?R? ? 0? (3. 8) Where V = value of the firm SZ = Ln (Total Assets) 10  µ i = firm specific component ? it = disturbance term IV. Analytical Framework We have already discussed the proposed model to be tested here to analyze the impact of dividends on stock returns. So in this section we will analyze the methodological issues over our proposed derived model. Simultaneously we will discuss other options available for the analysis. We will first analyze the results of different industry and then aggregate data over all the industry. The proposed model is here is ? Y ? ?D? ?D? Ln Vit = ? i + ? 1 ln? ? + ? 2 ln? ? + ? 3 ( SZ ) + ? 4 ? ? +  µi + ? it ? P ? ?R? ?E? ? 0? 4. 1 Where SZ = Ln (Total Assets)  µ i = Firm specific component ? it = Disturbance term Here the null Hypothesis is dividend or D/R ratio affects stock return i. e. H0: D/R affects Vit . We will test the results of the classical linear regression model and other tests. Then we will proceed to see if Panel data models improve the estimation. So we will propose different models before proceeding to fixed effect model. We will define four basic models to be tested before proceeding towards final estimation. 1. y it = ? + ? it (No group effect or xs) 2. y it = ? i + ? it (Group dummies only) 3. y it = ? + ? ?X it + ? it (Repressors only) 4. y it = ? i + ? ?X it + ? it (Xs and group effects) Model 1 on 2: H0: (no group effects on the mean of y) Model 1 on 3; H0: (no fit in the regression of y on xs) Model 1 on 4; H0: (no group effects or fit in regression) 11 Model 2 on 4; H0: (group effects but no fit in regression) Model 3 on 4; H0: (fit in regression but no group effects) We have tested the data set for applying the panel data models with the above five different hypothesis. The LR, F and LM Test along with the Hausman Specification test favors the use of fixed effect models for Food and Beverage, Mining Industry and Nonmetallic Industry whereas the diagnostic tests rejects the use of fixed effect models for Other services, Textile industry, and Mining industry. The Aggregate data is also not satisfying the qualifying criterion for applying Fixed effect models. V. Data Sources and Sample Design The study mainly relies on the Prowess database of the CMIE (centre for monitoring on Indian economy) in India in order to mitigate the above noted objectives. Since the present study aims at exploring the dividend and stock return volatility with the assumptions of â€Å"semi strong efficiency† in the stock market a sample of 500 companies from â€Å"A1† and â€Å"B1† group of shares is selected for the empirical analysis. All of them are spread across six different industries namely Electricity, Food and Beverage, Mining, Non-metallic, Textile and Service Sector. The first filtering criterion for selecting the stocks is their consistency with the dividend payment history for the study period 19962006. The second filtering criterion used for the selection is that the market-capitalization of these companies should be more than ten crores. The third filtering criterion is that the scrip must be traded continuously without any interruption during the above mentioned period. However, the study has conceptualized the dependent variable (i. e. market value of the firm) and the explanatory variables such as size of the firm, dividends to retain earning ratio, and debt to equity ratio. The stock return is considered as proxy for the market value of the firm (dependent variable) and for other subsequent variable, Ln (total assets of the firm) have taken as a proxy. 12 Sock Return: Market value of the firm which is the dependent variable of our interest is being represented by Stock Return . This can be calculated by taking closing share prices of each company. Stock returns should be calculated using the log return of the closing price of the stock, where the Closing price is defined as the last trade price of the stock. Vit = ln (Pt/Pt-1). Net profit Here the net profit is taken as the profit after taxes. Average book value of equity Profit after taxes is calculated as the difference between the profit before taxes and tax for the year. PBIT or Profit before interest and taxes is generally calculated as the sum of operating profit and non-operating surplus/ deficit. This represents a measure of profit which is not influence by financial leverage and the tax factor. Hence, it is pre-eminently suitable for inter-firm comparison. Hence it is assumed that higher Net profit of a firm leads to higher share prices as opposed to stock returns. It is denoted as Y in the study. P0 Dividend ? D? ? ? This can be calculated by adding together all the annual Re tained earnings ? R ? cash dividends paid to common shareholders & then dividing this summation by the total no of outstanding equity shares in each year. The average of all available years will be used. Retained earnings is calculated as the difference between profit before taxes and dividends and dividend by the total no of outstanding equity shares each year . Like Earnings, dividends act as proxy for the future profitability . Therefore this ratio is expected to have positive relationship with the stock return. Long term debt (Debt to Equity ratio) is calculated as the sum of each company’s debentures, mortgages & loans with a maturity greater than one year to total equity is to be calculated. The average over all the years will be used. 13 Size of the Firm (SIZE) The variable size should be constructed in such a way that it will reflect the value of the firm in real terms. Here the natural log of Total assets is being used as a proxy for size. VI. Empirical Estimation and Results Discussion The basic principles of fixed-effect model have already been discussed in the previous section. So in this section we attempt to estimate our proposed model. In this section we present the results in two sections. We present first the results of those industries that how the applicability of fixed effect models by our previous section of hypothesis testing. And those industries that don’t satisfy our criterion in another sections (table 4. 9). Here we test the other models and the significance of our target variables. The results from the regression analysis are discussed in two sub-sections. The first section is the result of the Table 8, which exclusively covers the regression result of one-way fixed effect model for Electricity, Food and Beverage and Non-Metallic Industry. The other section of the result from the Table 9,covers the regression from the other three industries that did not satisfy the filtering criterion of hypothesis for fixed effect model. These industries are other services, Textile and Mining. In the last section we discuss about the results of aggregate data. Electricity Industry:As we have already discussed in the previous chapter, we have taken one-way fixed effect model. The result for the electricity industry can be summarized as follows. Before estimating the final model, we have tested different combination of variables. The estimation of one way fixed firm effects multivariate regressions illustrate that controlling for the underlying time-invariant heterogeneity of firms has significant effect on results. The coefficient for PAT/P0 is 9. 32 which is significant at 5% level of significance. It explains 9. 32% variation in the model. The variable D/R is also exhibiting positive relationship with stock-returns. It implies higher the dividend paid 14 to the investor higher will be the return in the long-run. The co-efficient for D/R is 2. 48 which is significant at 1% level. This implies validity of the model through the dividends and retention. The coefficient of leverage ratio or D/E ratio is -1. 89% which is significant at 10% level. The negative sign of the coefficient implies the negative relationship between the stock return and D/E. As the leverage ratio will be higher then it will have a negative impact on the stock-return. The coefficient for another variable size is . 96 which is coming insignificant at any level of confidence. The standard error is also coming very high at 12. 54. The R2 for the model is 0. 44, which is explaining 44% variation for variation in the dependent variable stockreturn. The p value of F-test is significant at 1% level. The computed F-tests (Fixed firm effect versus pooled OLS) of the null hypothesis that all coefficients are jointly equal to zero are rejected. The one-way fixed effect model explains the relationship more clearly as it explains more than 50% level of variation of firm-specific component in the model. So the over all explanatory power of the model is high in the Electricity Industry. Food and Beverage Industry:- The computed F-test results favors the use of the fixed-effect model over the Pooled OLS is justifiable over the test of OLS vs. Fixed effect model. The Hausman statistics is also high suggesting the use of the fixed effect model over the random effect model. Before estimating the model with variables D/R, PAT/P0, D/E and SZ with Stock return, we have tried with different combination of independent variables with the stock-return. The Current model gave the high R2 and low standard errors. The coefficients for the variables D/R, PAT/P0, D/E and SZ are 3. 05, 11. 09,-1. 41, . 68 respectively. Here the variables D/R and PAT/P0 are significant at 1% and 5% level of significance. The coefficients for the control variable which is included to control the heteroscedasticity is significant for size of the firm which explains 68% variations in the stock-return is and the coefficient for the debt-equity ratio is -1. 41. The most important result is that the dividend retention ratio is positive and explains 11. 09% variation in stock return. The R2 is 0. 36, explaining 36% variation in the dependent 15 variable i. e. Stock return. The F-test for Pooled OLS Vs Fixed effect turns out to be significant and the null-hypothesis that all the co-efficients are zero is rejected here. Non-metallic industry:- The coefficients for the variables D/R, PAT/P0, D/E and SZ are . 024, 10. 58,0 -. 88 and 30. 5 respectively. The variables are significant at 5%, 1%, and 10 %( Sz. ) level of significance in T-test for testing the null-hypothesis that the means of the co- efficients are zero. The sign of the D/R remains positive here. It explains positive relationship with the stock-return. So the D/R ratio explains 11. 98% variation in the stock-return behaviour of the firms. It supports the null-hypothesis that D/R affects the stock prices. Another important observation is that the coefficient of size of the firm is 30. , which is quite high in comparison to the other industry. The variables are insignificant in other models like pooled OLS, so the F-test rejected the hypothesis that all co-efficients are jointly equal to zero. The R2 is coming with improved performance of 0. 46%, which is high in comparison with other two industries. After all Non-metallic industry is showing robust result with th e expected sign as proposed in methodology. Results from the Table 9:- We have presented another analysis for other services, Textile Industry and Mining industry because these industries are not satisfying the criterion for the fixed effect model. So the next best alternative is to test it with pooled OLS and Random effect model. We have done comparison with these three models for these industries. Other Services Industry:- If we compare the results of the fixed effect model and Random effect model here, then some interesting picture emerges. The co-efficients for the fixed firm effect model for the variables D/R, PAT/P0, D/E and SZ are coming 6. 37, . 33,-10. 54, 2. 61 respectively. Among the co-efficients D/R and D/E are significant at 10% level of 16 significance. D/R is surprisingly significant with a positive sign according to our prior expectation. We then compare the R2 value of two models, which is very low i. e. 0. 09 for fixed firm effect model and 0. 11 for the random effect model. Although R2 turns out to be very low the variable D/R and D/E ratio is exhibiting correct sign as per the hypothesis is concerned. The F-test for comparing the coefficients are equal to zero or not is becoming insignificant for the variables. This can be observed through the p-value which comes out 0. 9870. This is not significant at 1%, 5%and 10% level of significance. In the Random effect model the Coeff for the variables D/R, PAT/P0, D/E and SZ are 4. 9, 0. 53,-8. 09 and 13. 96 respectively. The R2 improves by two points to 0. 11 the target variable D/R ratio remain insignificant in the model. May be the cause for insignificant variables and low explanatory power of the model is due to improper specification which is affected by the industry characteristics. The firms in the Services industry generally went for less dividends and more retenti on in the study period. These are high growth firms which require more flow of money for the projects. So the investors got return through the capital gains here. Textile Industry:- If we observe the Coeff for the variables D/R, PAT/P0, D/E and SZ, the values are 5. 28, . 10, -1. 73,5. 95 and for the Random effect model the values are coming out 4. 83,. 17,-1. 30 and 0. 87 respectively. The results show some unexpected outcomes in the model. The signs of the Coeff are as per prior expectation but D/E ratio is out significant at 5% level in fixed firm effect model and other variables are remaining highly insignificant with R2, 0. 04 . In the Random effect model, the target variable D/R is significant at 5% level and PAT/P0, D/E ratio are significant at 10%, 1% level of significance respectively. The R2 for the random effect model has improved to 0. 13%. When we compare the result between two models, random effect model turns out to be more robust than the fixed effect model. 17 Mining Industry:- The values of the co-efficients for the variable D/R, PAT/P0, D/E and SZ, are 17. 07, 14. 75,-13. 77, 4. 09 and for the Random effect model the co-efficients are 16. 01, 10. 08,-6. 63 and 1. 66 respectively. In fixed effect model three Coeff. of PAT/P0, D/R and D/E ratio remain significant at 5%, 1%, and 10% respectively. The R2 for the fixed firm effect model remains at 0. 0 and for the random effect model it is 0. 14. We cannot judge the models by the R2 only because we have to check out the significance of the variables. So given these conditions, the fixed effect model is more appropriate in the Mining industry. Aggregate Industry Data:- As we have examined above the different industry wise data, only three Electricity, Food and Beverage and Non-metallic satisfy the tests for use of the fixed firm effect model whereas other three industries namely Textile, Mining and Other services do not satisfy the test criterion in favour of fixed effect model. Aggregate industry data doesn’t shows any robustness for using fixed-effect model over other possible models such as pooled OLS and Random Effect model. The results from fixed-effect models is having leverage over the random effect model results . The aggregate data of whole industries is affected by those industries, which are not satisfying the criterion for fixed effect model. The overall explanatory power of the Aggregate industry data are affected the fluctuations in other industries as the data set is characterized by different industry. So when we run the regression of one-way fixed effect model, the R2 is also exhibiting very low at 0. 12 only. The value of the Coeff of the variables D/R, PAT/P0, D/E and SZ are coming out 3. 10, . 34,-. 60, -. 15 respectively. If we observe the sign of the variables D/R, D/E and PAT/P0 remains as per prior expectation. Among the Coeff of variables, PAT/P0 and D/E come out significant at 1% and 5% level of significance. Whereas if we compare the result with random effect model, we will find that no variables are significant and the R2 turns out to be very low at 0. 08 18 only. The p-value of F-test is also coming very high at 0. 6, which is well above the 0. 01and 0. 05 level of significance. The use of the fixed effect model in aggregate data explained the variation of the independent variables more clearly than Random effect model and Pooled OLS model. VII. Conclusion We have tried to explore the relationship of dividends and stock return by using a simple Specification of stock r eturn as a function of net profit and dividend-retention ratio with two control variable such as size & debt-equity ratio of the firm. There was an attempt to test different structural tests before proceeding towards the final estimation through panel-data modeling. The exclusive tests of different model allow us to go for the use of panel-data modeling. As we have given six different industry classifications for the study, we have tested the proposed model for each industry separately with different combination of variables. The results display statistical significance and linearity when the industry classifications are given. The regression on aggregate data remains in significant. .However, the direction of relationship between the dependent variable is as per prior expectation. In other words dividend retention ratio is positively related with the stock-returns. In case of aggregate data which consists of all firms above from industry classifications, the regression lacks statistical significance, the null hypothesis that there is no relationship between the dependent variable and independent variable cannot be rejected. 19 When the fixed firm effect regression is applied on sample firms of classified industry category-wise, we observe some industry specific peculiarities. Firms of Electricity, Food and beverage and Non-Metallic Product show some robustness in the results of the regression. The signs of the coefficient and their value remain significant in the analysis. Other three industries, textile, mining and other services are exhibiting insignificant coefficients values and very low R2. This conflicting trend of these variables is also visible when we have tried Pooled OLS and Random effect model. When we relax the industry classification and with the same data set and variables, fixed effect model shows the regression is significant at 0. 05 level of significance as the p value of getting a higher or equal value than calculated f-value is 0. 0497, which is we can reject the null hypothesis that all coefficients are equal to zero. Another important result is the sign of the leverage ratio and the coefficient remain as per prior expectation. The negative sign of the debt-equity ratio implies the negative relationship between the stock-return and debt-equity ratio. As the firm will go for more debt, then its value is going to be affected by stock-return. Size of the firm remains consistently positive but in many cases it turns out to be insignif icant. So we can not generalize about the variable size. So we can conclude that dividends have impact on the stock-return in Indian corporate sector, which is industry specific. The study explores that the dividend paying companies are large, profitable and growth rate of the firm does not seems to dissuade the dividend payment. Although the regression is not showing high R2 but Net profit and Dividend and Retention Ratio remains significant in other services, mining and Textile industries. 20 Appendix Electricity Industry (Table 1) Models R2 H0 LRTest Chisqu. 114. 3 pvalue F-test FVal. 52. 06 pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. Constant term only 2. Group effects only 3. X-variables only 4. X & group effect 5. Fit in Reg. but no Group effect. . 0000 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 001 0. 000 Chi 2 (1) 36. 21 p value; chi 2 =0. 000 0. 4245 123. 4 156. 6 0. 000 0. 000 113. 5 121. 9 0. 002 0. 010 1. 52 p ; chi 2 (1) 0. 2183 0. 2135 0. 63 141. 5 0. 100 128. 6 0. 000 0. 24 129. 5 0. 000 134. 7 0. 100 Note: – Large values of Hausman statistics argue in favour of the fixed effect model over the random effect model. 2. Large val ues of the LM statistics argue in favour of the one factor model (either Fixed or Random depends upon further Hausman Specification test) against the classical regression with no group effects. . A large value of the LM-statistics in the presence of a small Hausman statistics argues in favour of the random effect models. 4. If p ; 0. 10, then the test is significant at 90% confidence level, if p; 0. 05, then the test is significant at 95% level of confidence. If p; 0. 01, then the test is significant at 99% level of confidence. 5. The p-value of the LR test will be set to 1 if it is determined that your estimate is close enough to zero to be, in effect, zero for purposes of significance. Otherwise, the p-value displayed is set to one-half of the probability that a chi-square with 1 degree of freedom is greater than the calculated LR test statistic. 21 Food and Beverage Industry (Table 2) Models R2 H0 LRTest Chisqu. 113. 4 pvalue F-test FVal. 112. 9 pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. Constant term only 2. Group effects only 3. X-variables only 0. 000 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 0. 000 Chi 2(1) 34. 21 2. 53 0. 32 134. 2 0. 000 132. 5 0. 000 p ; chi 2(1) p; chi 2=0. 000 0. 41 4. X & group effect 0. 53 103. 5 142. 8 0. 000 0. 000 126. 5 176. 5 0. 004 0. 3831 0. 001 5. Fit in Reg. ut no Group effect. 0. 24 121. 7 0. 002 183. 5 0. 000 Mining Industry (Table 3) Models R2 H0 LRTest Chisqu. 116. 070 pvalue F-test F-Val. pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. Constant term only 2. Group effects only 3. X-variables only 4. X & group effect 0. 00 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 52. 084 0. 000 Chi 2(1) Chi 2 (1 ) 2. 02 p; chi2 (1) 0. 7318 0. 21 150. 894 0. 001 170. 23 0. 000 1. 21 p ; chi 2(1) 0. 32 161. 23 0. 003 232. 419 0. 000 0. 2721 0. 42 277. 186 0. 005 186. 03 0. 001 5. Fit in Reg. but no Group effect. 0. 15 172. 5 0. 000 58. 78 0. 000 22 Non-Metallic Industry (Table 4) Models R2 H0 LRTest Chisqu. 119. 070 pvalue F-test FVal. 21. 00 pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. Constant term only 2. Group effects only 3. X-variables only 4. X & group effect 0. 00 M1 on 2 M1 on 3 M1 on 4 M2 on 4 0. 000 0. 000 chi2(1) = 3. 92 chi2(3) = 1. 23 Prob;chi2 = 0. 0013 0. 21 154. 894 0. 000 31. 01 0. 000 Prob ; chi2 = 0. 0477 0. 13 165. 23 0. 000 12. 02 0. 064 0. 25 267. 186 0. 000 49. 64 0. 000 5. Fit in Reg. but no Group effect. 0. 31 M3 on 4 172. 05 0. 214 64. 57 0. 741 Models R2 Other services Industry (Table 5) H0 LRpFTest value test ChiFsqu. Val. 0. 060 11. 00 on 2 pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. Constant term only 2. Group effects only 3. Xvariables only 4. X & group effect 5. Fit in Reg. but no Group effect. 0. 01 M 1 109. 70 164. 89 0. 087 chi2(1) = 0. 30 chi2(4) = 1. 39 Prob;chi2 = 0. 8460 0. 24 M 1 on 3 0. 000 41. 01 0. 001 Prob ; chi2 = 0. 5812 175. 23 0. 000 52. 02 0. 020 0. 14 M1 on 4 217. 19 0. 000 79. 64 0. 000 0. 33 M 2 162. 05 on 4 M3 on 4 0. 000 95. 4 0. 000 23 Textile Industry (Table 6) Models R2 H0 LRTest Chisqu. 139. 070 pvalue F-test FVal. 71. 00 pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. Constant term only 2. Group effects only 3. X-variables only 4. X & group effect 5. Fit in Reg. but no Group effect. 0. 03 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 0. 000 chi2(1) = 7. 75 Prob ; chi2 = 0. 0054 = 3. 50 0. 14 124. 894 0. 000 44. 00 0. 000 Prob;chi2 = 0. 4774 0. 21 195. 23 0. 000 22. 02 0. 000 167. 186 0. 000 152. 05 0. 000 69. 67 96. 8 0. 000 0. 001 0. 43 Aggregate Data (Table 7) Models R2 H0 LRTest Chisqu. 169. 70 pvalue F-test FVal. 31. 01 pvalue LM-Test vs. Model-3 Haus. Spec. Fix vs. Ran. 1. Constant term only 2. Group effects only 3. X-variables only 4. X & group effect 5. Fit in Reg. but no Group effect. 0. 02 M1 on 2 M1 on 3 M1 on 4 M2 on 4 M3 on 4 0. 000 0. 00 chi2(1) = 0. 01 chi2(4) = 1. 28 0. 11 184. 94 0. 000 51. 01 0. 000 Prob ; chi2 = 0. 9425 Prob;chi2 = 0. 8649 0. 21 145. 23 0. 000 62. 42 0. 000 0. 24 257. 186 0. 000 172. 95 89. 84 0. 000 24 Table 8 Results of Fixed-effect model Industry Variables Coeff. Fixed effect model S. E R2 F. V PAT/P0 Electricity Industry D/R D/E Size PAT/P0 Food & Beverage D/R D/E Size P AT/P0 Non-Metallic D/R D/E Size 9. 32** 12. 48* -1. 89*** . 96 3. 05* 11. 97** -1. 41* . 68 . 024** 10. 58* -. 88 30. 5** 5. 84 . 0794 4. 38 12. 54 1. 63 . 18 0. 71 1. 79 . 04 1. 74 2. 72 4. 70 0. 46 0. 36 0. 44 F(4,56)=11. 49 P;F= 0. 000 F(4,256) = 1. 26 0. 01 F(4,232) = 12. 21 Prob ; F = 0. 0000 Note:-1. Fixed effect model has no constant term. 2. *, **, *** represents 10%, 5% and 1% level of significance respectively 25 Table 9 Comparison of results of fixed effect model and Random effect model. Industry Variables C. F PAT/P0 D/R Other services D/E 6. 37 (12. 52) 0. 33*** (. 443) 0. 09 -10. 54*** (24. 56) 2. 61 (15. 52) 5. 28 (1. 83) 0. 10 (. 704) -1. 73** (1. 28) 5. 95 (2. 73) 17. 07** (10. 57) 14. 75* (27. 90) -13. 77*** (10. 79) 4. 09 (5. 80) 3. 10* (. 095) D/R Aggregate Data D/E . 34 (. 10) -. 60** (1. 89) -. 15 0. 10 0. 04 F. E R 2 R. E F F (4,182) = 0. 08 p;F = 0. 870 -8. 09*** (16. 69) 13. 96** (8. 43) 4. 83*** (1. 51) . 172** (. 667) -1. 30* (1. 066) . 87 (. 459) 16. 01** (8. 67) 10. 08*** (22. 26) -6. 63 (7. 39) 1. 66 (4. 91) -. 011 (. 0945) . 31 (. 1051) -1. 06 (1. 40) 0. 14 0. 13 C. F 4. 69 (9. 81) 0. 053 (. 426) 0. 11 R2 W W chi2(4 =2. 86 p;chi 0. 5819 Size PAT/P0 D/R Textile D/E Size PAT/P0 D/R Mining D/E Size PAT/P0 F (24,244) =0. 33 p;F =0. 990 Wald Chi 2(4)=10. 36 p;chi 2=0. 0348 F (4,46) =2. 00 p;F =0. 1097 Wald Chi 2 (4) =6. 35 p;chi 2 = 0. 1747 F (124,1232) = 16. 49 p;F 0. 76057 Wald Chi 2 (4) 0. 08 = 2. 31 p; chi2 0. 8745 0. 12 Size 1. 55 (1. 037) Note:- *, **, *** represents 10%, 5% and 1% level of significance respectively 26 References:Aharony, J. and I. Swary, 1981, â€Å"Quarterly Dividends and Earnings Announcements and Stockholders' Returns: An Empirical Analysis,† Journal of Finance, Vol 36, 1-12. Altman, E. I. , 1968, â€Å"Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy†, Journal of Finance, Vol 23, pp 589-609. Altman,E. I and V. Kishore, 1996, â€Å"The Default Experience of U. S. Bonds†, Working Paper, Salomon Center. Altman, E. I. , 1994, â€Å"Defaults and Returns on High Yield Bonds†, Working Paper, Salomon Center, New York University. Amihud, Y. B. Christensen and H. Mendelson,1992,†Further Evidence on the Risk-Return Relationship,† Working Paper, New York University. Asquith, P. and D. W. Mullins, Jr. , 1983, â€Å"The Impact of Initiating Dividend Payments on Shareholder Wealth,† Journal of Business, Vol 56, 77-96. Bailey, W. â€Å"Canada's Dual Class Shares: Further Evidence on the Market Value of Cash Dividends,† Journal of Finance, 1988, v43 (5), 1143-1160. DeAngelo, H. and E. M. Rice, 1983, â€Å"Antitakeover Charter Amendments and Stockholder Wealth†, Journal of Financial Economics, Vol 11, 329-360. DeAngelo, H. and L. DeAngelo, 1985, â€Å"Managerial Ownership of Voting Rights: A Study of Public Corporations with Dual Classes of Common Stock,† Journal of Financial Economics, Vol 14, 33-69. DeAngelo, H. , L. DeAngelo and E. M. Rice, 1984, â€Å"Going Private: The Effects of a Study in the Creation, Transfer and Destruction of Shareholder Value, Homewood, Ill. , Irfan, C. M. and Nishat, M. (2003),†Key fundamental factors and long run stock price changes in an emerging market- A case study of Karachi stock exchange†, Paper presented at PSDE conference, Islamabad. Jensen, M. C. nd Meckling, W. H. (1976) Theory of the firm: Managerial behaviour agency costs and capital structure, Journal of Financial Economics, (October) 305-60 Linter, J. , (1956), â€Å"Distributions of incomes of corporations among dividends, retained earnings and taxes†, American economic Review, 46 (1): 97-113. 27 Mendenhall, W. , and T. Sincich, (1989), A second Course in Business Sta tistics: Regression Analysis, Macmillan, London, New York. Miller, M. H. and Rock K. (1985) Dividend policy under asymmetric information, Journal of Finance, 40, September, 1031-51 Molodowsky, N. 1995, â€Å"A Theory of Price- Earnings Ratios†, Financial Analysis Journal, Jan. –Feb. 29-3. Nishat, M. (1992),†Share prices, dividend and retained earnings behaviour in Pakistan stock Market†, The Indian Economic Journal, Vol. 40 October-December, No. 2. Parkinson, Michael, â€Å"The Extreme Value Method for Estimating the Variance of the Rate of Return†, Journal of Business, Vol. 53, No. 1, University of Florida, (Jan. , 1980), pp. 61-65. Rappoport, (1986), â€Å"The affordable dividend approach to equity valuation†, Financial Analysis Journal, 42 (4): 52-58. Rozeff, M. S. 1982) Growth, beta and agency costs as determinant of dividend payout ratios, Journal of Financial Research, Fall, 249-59 Sharpe, W. , 1964, Capital asset prices: A theory of mar ket equilibrium†, The Journal of Finance, 19(1): 425-442. End Notes:1 Miller, Merton, and Modigliani, Franco, (1961) Dividend Policy, Growth, and Valuation of Shares, Journal of Business. 34. PP. 411-433. 2 Fama, Eugene F. & French, Kenneth R. , 2001. â€Å"Disappearing dividends: changing firm characteristics or lower propensity to pay? ,† Journal of Financial Economics, Elsevier, vol. 60(1), pages 3-43, April. 3 The term ‘dividends’, is defined inclusively under the Income Tax Acts, 1922 and 1961. The definition of Dividends includes distributions from accumulated profits wheather capitalised or not, which reduces the assets of a company or in the form of 28 debentures issue, distributions on liquidation or in the form of loan or advances to the extent such distributions are attributable to to accumulated profits. The definition for certain companies of closely held category, the definition is more inclusive 4 Sarma, JVM. (1990). â€Å"Taxation and corporate dividend behaviour in India†, Y V Reddy (2003). The trends of dividend Behaviour in Indian corporate sector. NSE working paper. 5 Sarma, J V M (1990) , Taxation and Corporate Dividend Behaviour in India, Harman Publishing House. 6 Net worth of a company refers to the difference between Total assets and Total debt of a company. 7 It refers to the cost of new-equity issues to be borne by the company, under the condition of imperfect market. 8 Firm effect refers to the effect of factors affecting the behaviour of an individual firm, if it is constant overtime. The time effect refers to the economic condition of particular time point : it varies over time. 29

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Chemistry Assignment - Heat, Fire, Bohl model, Hydrogen - Essay Example The evidence that Bohr's model works is in the fact that, the moon is able to move around its orbital without crashing to the continent like Australia and it is also supported by Millikan's Oil Drop experiment that explains how an atom can exist only in definite amounts of quanta, hence "stationary states." Bohr calculated an equation that gives simplistic values for the radii or energy level shell at which the electrons could orbit in a "stationary state" where there is neither emissions nor absorptions of energies explained by the discontinuous transition between the different energy level shells. On the other hand, multi-electron elements have more electrons and more energy levels. . Hence when electrons are excited can move from one energy level to another: either higher or lower and in the process energy is given out. Therefore, electrons are many hence energy relationships cannot be done directly or not "solved".(Nelkon, p188)

Activity based costing Essay Example | Topics and Well Written Essays - 1500 words

Activity based costing - Essay Example With this new era of cost reduction and resource utilization,managers always have to come up with ways to maximize their bottom-line One of the newest ways how companies can get increased cost-savings is by using a technique called Activity Based Costing (ABC). The main objective of this type of system is proper identification of all cost categories and using basing decisions on this information. Most organizations that use ABC systems have two costing systems – the official costing system that is used for preparing external financial reports and the Activity Based Costing system that is used for internal decision making and for managing activities. Table of Contents Executive Summary 1 Table of Contents 2 Introduction 3 Recent Studies in ABC 3 Role of ABC in Industries 4 Role in Manufacturing 5 Role in Financial Services 6 Role in Health Services 7 Role in Retail 8 Role in Government 9 Limitations of ABC 10 Conclusion 11 Bibliography 12 Introduction The main objective of Acti vity Based Costing is to understand the various types of overheads that are affecting the business. In comparison, normal accounting attempts to separate the different type of costs and the focus is on the cost of goods sold (or cost of services rendered in case of service companies). In this section, analysis of the various aspects of Activity Based Costing will be done, and how it is used effectively by managers in order to create the maximum value for the company. A number of examples will also be looked into when it did not prove to be very effective for the organizations. The basis of Activity Based Costing is simple, non-manufacturing as well as manufacturing costs may be assigned to products. Moreover, some manufacturing costs may be excluded from product costs. All overhead costs are attached to a product and activity is used as a measure of all the costs involved. The overhead rates or activity rates may be based on the level of activity at capacity rather than on the budge ted level of activity. To compensate for the deficiencies of the conventional information systems, ABC requires firms to collect costs in specially constructed â€Å"activity pools† rather than service departments or overhead cost centers. Each of the pools corresponds to a group of similar business processes or activities that are homogeneous in that all costs assigned to the pool are influenced or driven by a common factor (Rafiq & Garg 2002). Recent Studies in ABC A study in the year 2005 concluded that nearly half (55%) of respondents suggested within their entirety that their companies were at that time making use of the Activity Based Costing either in an active fashion or in a pilot with another 32% considering use. Only one in ten which amounted to around 11% did not contemplate using the ABC. The manufacturing industry had the highest representation with 24%, followed by financial services at 18%, public sector at 16%, and communications at 8%. Other industries accou nted for less than 5% each. The same study found out that out of all the industries being considered, the communication industry is the most aggressive in adopting the ABC system (Timlin 1998). The primary reason for this being that the Activity Based Costing uses various activities to trace overhead directly to cost objects, such as products, processes, services, etc., avoiding the distortions of traditional costing systems. In order for the ABC system to be affective large investments will have to be made in IT to support this need for categorical information. Role of ABC in Industries Now taking a look at the different industries and trying to analyze how ABC system is used to achieve different goals according to the company. While company goals may vary greatly, the purpose here is to identify how Activity Based Co

Therapeutic Approaches Paper Assignment Example | Topics and Well Written Essays - 2000 words

Therapeutic Approaches Paper - Assignment Example The therapeutic relationship was established so as to create a means by which the health professions and the respective patient come get into a one on one conversation so as to archive effective beneficial changes to the respective patient (Bowie 1996). Therapeutic approach communications are mostly applicable in mental health centers and it is conducted by mental professionals who have a common purpose of solving emotional conflicts that that happen through the mind of the respective patients. Therapeutic relationship assurers the patients at hand of enough security in the information they give to the healthcare professionals. This enhances them to open up and give the accurate information about what is making them to have the emotional conflicts and thus getting the appropriate treatment. Therapeutic relationship was established after some major researches were conducted and it was scientifically proved that it really aided the health care professionals to foresee the appropriate d iagnosis and treatment that the patient required to cure the particular disease that he or she was suffering from (Gel so 1998). Rogers developed a therapeutic relationship model that was aimed at providing the respective patients with a chance of them understanding how their particular attitudes and feelings are being affected by their emotional conflicts and the appropriate treatment required to solve these problems is that the patients should achieve their full positive potential. Rogers discovered a number of conditions that that was essential to enhance effective changes to the client's personality. Some of these conditions include genuine of both the heath care therapist and the respective patient, professionalism of the health care therapist in his work, the patient openness to the healthcare therapist and many others. Rogers was focused on developing a therapeutic relationship model that will ensure that both the patients and the health care therapist were both involved in s olving the patient’s emotional conflicts (Gel so 1998). A health care professional is one who is able to put himself or herself in the shoes of the respective patient that they are attending and avoid any circumstances of being judgmental. The health care professionals should have a sympathetic and empathetic attitude towards their particular patients and this will enhance them to get familiar with the personality, feelings and so many other factors that relate to their patients. The health care professionals who conduct the therapeutic relationship posse’s very good communication skills which one of them is listening. An effective communication process occurs between two individuals. It is a two process and hence the two involved parties should give each other time to speak and listen (Forchuk, Westwel, and Hux 2000). The therapeutic health care professional has understood this communication skill and they are employing it professionally their day to day work. Every i ndividual desires to be heard as they speak in all circumstances and if by any chance the therapeutic health care professionals lack this special communicating skill then they end up not meeting the expectations of their patients (Steve 2000). Effective therapeutic communication also involves use nonverbal communication such

Sexism and Racism Based on Laurence Thomas' Sexism and Racism Assignment

Sexism and Racism Based on Laurence Thomas' Sexism and Racism - Assignment Example According to Thomas (240), sexism, unlike the case of racism, readily lends itself to a morally unobjectionable description. I  believe  it is morally wrong and unacceptable in the 21st century to discriminate or  view  the female gender as inferior to their male counterparts. It is only a male chauvinist who would try to  abuse  a woman on the  basis  that it is  right  since she is female. In the present world, it is  adorable  to see a man who treats and takes care of a woman than a  man  who is  rough  towards ladies.  Women are precious gems who  need  to be well taken care of and shown affection even in accordance to various  holy  books such as the bible and Quran.  It is also in this  light  that women in the present  world  are viewed  as future leaders due to their discipline and determination. Women have a large role to play in the society aside from the few roles that they were responsible for in the traditional settin g. The world has evolved in such a  manner  that we have women performing roles that  were traditionally viewed  as being for males such as engineering, medicine and piloting. Males have also taken on roles such as cleaning, which shows that  sexism  is slowly eroding away, and should not be allowed to  prejudice  against anyone.  It also goes without saying that ‘whatever a man can do, women can do better’ which is a common phrase employed to  kill  prejudice  and  sexism  among women (Thomas 240).  Women are just like men and should be regarded as their equals since it is likely that they can be like men and  better  if given the  chance. Hence sexism seems to be an issue that deters development in many communities and should be abolished in the  society  in whatever way possible. There should be real change in the  society  and men and women should reach a  point  and be  regarded  as equals. In such times, feminist s  need  to  come  in place in order to  empower  and  protect  the rights of women in society. Time and again, the  society  will not  mend  itself without the help of the same women coming  forth  and pressing charges on those who  discriminate  them. Though, in many societies, women  are usually belittled  and  regard  themselves as the inferior and the people to be taken care of, some people usually take advantage of their inferiority to  abuse  them (Thomas 241). Thomas views women as the  cause  of their inferiority since they are  submissive  to the set norms in the society. Many religions and cultures have  constantly  regarded women as inferior to men making them believe that hindering them from fighting for their rights. Even if, a feminist came to fight for the rights of such women, they would not be shocked to  get  much  opposition  from the same women they would be sacrificing to  free  from oppression . Women  constantly  suffer from  oppression  from male counter parts by being the weaker sex in the society. Hence the issue of sexism proves to be a  point  where other people take advantage of the weaker sex. In life, men are  naturally  bullies, and they get the chance  utilize  it  fully

Psychology (A Field Guide to the Workaholic) Essay

Psychology (A Field Guide to the Workaholic) - Essay Example They are akin to function like this even at the cost of their family, health and a good night's sleep! Any place other than their place of work does not augur well with them. Such wild workers are labeled as 'workaholics' and 'workophiles'. They live in their own wilderness of their work castles. Work becomes their only source of fortitude, security and identity. Their place of solace is work and work alone. Work also helps them escape from the world. Work emerges as a shield for them. There is only one track of life for them. To paraphrase Bible, "Live thy life by the sweat of thy work" - evolves as the most fundamental principle for them. "Workaholics are out of balance" for, as hard worker, they "will be at [their] desk, thinking about the ski slopes.workaholic[s] will be on the ski slopes thinking about [their] desk" (Goodman, 2006). This 'workaholic' pattern is coming up as a potential disease in United States where some institutions tend to work nearly 24 hours a day for seven days a week! Here, primary concerns are efficiency, customer satisfaction, and the wide spread principle and belief that stresses for "time is money". This trend is eating on the nerves of almost every modern United States (US) citizen. About four types of workaholics are there in US today. First, there are those who do their work quite near to perfection. Secondly, those who just remain at work place without doing much of their work. Thirdly, there are those who keep on making careless mistakes for they have not learnt to say "no". They will not stop even for a while. They will just go on doing their work relentlessly. The fourth types are those who are always busy with finding deepest details of their work even if such details are not required. The result is endless surging ahead of diversified individual and social stresses, tensions and uncalled for socially harmful tendencies like recurring personality complexes and likely suicidal possibilities leading to personality imbalances and social disharmony. For Gayle Porter, workaholics quite incapable of institutional team work and leadership. They try to concentrate all work in their hands only. They start considering work as their source of power apparently. They thus become highly emotional and possessive and obsessive about their work. As such, varied crises emerge. The workaholic tries to utilize this situation to his own advantage without much of an achievement and accomplishment levels. Workaholics suffer a lot due to their idiosyncrasies and esoteric whims. Instead of workaholics' obsession, those workers are able to do much better work in terms of quality and quantity who go for normal off days and permissible holidays for relaxation and enjoyment. Any type of obsession does not serve a positive purpose. Normal performance and steady progress of work leads to productive results. Opinion about the Article This article is an analytical piece of work. It serves its purpose of highlighting pejorative effects of obsessive patterns of behavior and working trends. Its emphasis on the need to function in a balanced way is also appropriate. The overall style and tenor of this piece is highly edifying for it warns against work and administrative excesses. This article also points to human questions of

Interview with the first gentleman Essay Example for Free

Interview with the first gentleman Essay MANILA -My news editor asked me to interview the husband of the highest official of the land, Mr. Miguel â€Å"Mike† Arroyo. On the day appointed, I was whisked in to the Malacanang palace, where after the formalities, i. e. , being frisked by presidential guards in combat fatigues, I was shown in to the Philippines’ equivalent of the Oval Office. Mr. Arroyo rose to shake my hand. He was not tall, but immense, very fat, and had a bored air about him. With him was an old man wearing glasses, who introduced himself as Jess Santos, a lawyer and the First Gentleman’s spokesperson. The interview went on as follows: Q: I hear you’ve been busy these days, filing libel cases against some journalists. Jess: Yes, that is correct. You know these newspaper guys, they’re a pain in the ass. Always noisy. But of course you can’t help it. We live in a democracy, and the Philippines is the most democratic in Asia. I hope you’ll agree. But when they attack the First Gentleman, using all kinds of defamatory imputation, using the media to spread these lies and calumniate and slur him so as to blemish his clean and untainted reputation, he has to fight back. And there’s nothing wrong in using the courts to seek justice. (The First Gentleman nods gravely.) Q: Are there any truths to these so-called lies against the First Gentleman? Jess: Oh, no! None at all. This allegation about unexplained wealth, it’s absurd. It isn’t wrong to be rich, you know. But the main point here, which you must not miss, and should be emphasized in your column or whatever, is that Mr. Arroyo is a gentleman. I mean, a gentleman in the real sense of the word. You don’t see a gentleman everyday, do you? He is very dignified, punctilious of honor, the epitome of chivalry, gallantry, and respect. (The First Gentleman nods, dozing off. ) Q: Is it true he dared the lawyer of a defendant to a fistfight in court? (The First Gentleman opens his eyes, looks at me, but says nothing. ) Jess: Well, you know how it is with honorable men like the First Gentleman. They are very sensitive when their honor is brought to ridicule. And in order to preserve his honor and integrity, it is but normal for the First Gentleman to react in his defense by calling the offending party to a fight, which shows that the First Gentleman is not a pushover, nor is he a weakling, but a chivalrous man like the knights of old who were not afraid to do battle to defend their honor. Q: I see. What about his rumored liaison with a pretty woman, allegedly his secretary? Jess: (assuming a pained expression): Please, please, do not dignify such baseless, malicious accusations. The First Gentleman would never enter into an unchaste relationship with a woman other than his wife, the President, because a true gentleman will never entertain any immoral thought, much more an illicit affair with a woman. (The First Gentleman looks at the ceiling as if remembering something. ) Q: According to a columnist, the First Gentleman stayed in a $20,000 suite at Caesar’s Palace in Las Vegas when he went there to watch the fight between your Manny Pacquiao and Erik Morales. Jess: That is not true. I doubt if you can find such a room in Las Vegas. And even if he did, the expenses may have been paid by friends. You know the First Gentleman, he has friends from high places. Q: Well, I admit I don’t know him that much. And I notice he isn’t saying anything. Can I interview him? Jess: Oh, sure. There’s nothing to worry about him. He is the perfect gentleman. Q: Well, sir, could you react to the accusation that you have a secret bank account in Germany? FG: (unsmiling)Who told you that? Q: Well, it’s on the papers, sir. Just trying to get your reaction firsthand. FG: Well, um, it’s a lot of shit, I mean, whoever wrote that article is an asshole, I mean, he must be an enemy of the state to say such matters. Why, I know, being the First Gentleman, that there are continuing threats to our national security. Q: I also hear this issue was brought up by a certain Congressman Cayetano who is now running for Senator. And this person has challenged you to issue a waiver so that he could prove who’s telling the truth. FG: (scowling). The worthless scumbag! Scoundrel! Bloody fool! Pardon me, but I can’t help myself. You see, this person has been using his parliamentary immunity to attack me at every turn. I’m sick of him. But I won’t be dragged into this controversy. Q: He also says you brought 50 million pesos in a helicopter in Mindanao to buy votes in the last election where your wife won as President. FG: That is a lie! Don’t believe the goddam son of a gun! Q: And he has just issued a public statement that he is daring you to engage him in a debate at Plaza Miranda to show who is telling the truth. FG: The nerve! I will not stoop down to his level. If he wants, I challenge him to a fistfight (rolls up his sleeves). Q: He also says you are crook and a liar and an adulterer. FG: (roaring). He said that? Tell him to just wait. Tomorrow I’ll file twenty counts of libel against him. I have fifty lawyers to work on that. Jess: Now there, there, please don’t get excited. A gentleman is never riled up. FG: Tell him I will get his goddam ass! Jess: Please sir, you’re a real gentleman. FG: I know that, I know. And I’ll prove to the #@! =* guy that I’m a *^%4# man of honor! (end of interview).

Sociological Explanations for Gender Differences in Crime

Sociological Explanations for Gender Differences in Crime Outline and assess sociological explanations for gender differences in patterns of crime. In recent years, based on the official statistics collected and recorded by the police, the number of people committing crime has increased rapidly. There are striking gender differences in the patterns of recorded crime. Women appear to commit fewer crimes than men and, when they do offend, women tend to commit different kinds of crime from men. The question is, does women really commit fewer crimes than men? Or men were born to have a criminal instinct inside them? From functionalists perspective, women do not commit crime because of sexual theory and differences in the socialisation. For example, women perform the expressive role in the home where they take the responsibility for socialising the children while men are socialised to be tough, rough and risk taking and this mean they are likely to commit acts of violence or take advantage of criminal opportunities when they present themselves. In addition, functionalists argue that gender differences in patterns of crime are due to the control theory. For example, women are controlled and more likely to be at home, they are not in the pubs or clubs getting drunk which makes them hardly exposed to commit crimes. While Interactionists refuse official statistics on crime and believe they are socially constructed. What is classed as crime or deviance is based on subjective decisions by agents of social controls (e.g. police and jury) which is also called as labelling theory. For instance, based on labeling theory, men get labeled as being violent and a criminal while women do not. Feminism, on the other hand, disagrees with both functionalism and interactionism, feminists theory is a radical theory. They accept that women do commit crime but they commit crime because of different reasons in comparison with other sociologists.There are a number of feminist perspectives. First and foremost, according to Marxist feminists, they claim that women are under oppression of a dominant power structure (patriarchal society). Marxist feminists argue that men often take advantage and greater control over women which indirectly reduces women opportunities to commit crime.We can see women are controlled by men not just in a wider society but also at home and work.For example, housewives are required to spend most of their time at home taking care of the children and do all the house chores which impose severe restrictions on their time and movement and indirectly minimise their opportunities to offend.Women who try to reject their role as housewives may find that their partners will force them to do it through domestic violence. As Dobash and Dobash (1979) show, many violent attacks result from mens dissatisfaction with their wives performance of domestic duties. These automatically shows that domestic violence are mostly committed by men. While at work, womens b ehaviour are controlled by male supervisors and managers and keep women in their places as most of them only given the opportunity to be in subordinate position.However, eventhough they are only given the lower position compare to men at work, women reduces their opportunities to involve in major criminal activity at work. Women are also controlled in public spaces by the threat or fear of male violence against them, especially sexual violence.Frances Heidensohn (1996) notes that sensationalist media reporting of rapes add to womens fear and frighten them into staying indoors. For example, Women are more likely to stay at home before night as they are afraid something will happen if they are outside.Furthermore, women are controlled in public by their fear of being defined as not respectable. These eventually prevent women from committing crime such as prostitution as it will deviate them from the norms of the society. In general, these patriarchal restrictions on womens lives mean they have fewer chances for crime. However Heidensohn recognizes that male dominated society can also push women into crime.For example, women are more likely to be poor as they did not get the opportunity to get a job in a higher position due to inequalities in gender. As a result, they will commit crime such as being a dru g dealer or prostitution for them to live in a decent life. Next, based on the results of unstructured interviews carried by Pat Carlen (1988) most convicted serious crime female criminals are working-class. People will turn to crime if they do not believe the rewards will be forthcoming and if the rewards of crime appear greater than the risks.Women are generally led to comform through the promise of two types of rewards or deals.Firstly, women will find a job which will give them material rewards with a comfortable standard of living and leisure opportunities which also called the class deal.Secondly, the gender deal for example, men promises their wives with material and emotional rewards if they conform to the norms of a traditional domestic gender role such as taking care of the children and doing housework. In return, if these rewards are not available or worth the effort women will choose to commit crime to replace the rewards. However in terms of class deal, women in working-class are more likely to offend than middle-class women.So even if working-class women put on efforts more than middle-class women do, they still have a limited way or could not even find an allowed way of earning a decent living and this will bring them to commit crime as a way for them to run from poverty. In terms of gender deal, because of the patriarchal family norms, most of the women either not had the chance to make the deal or saw few rewards and many disadvantages in family. As example, some of them might be subjected to domestic violence by partners.Many women cocluded that crime was the only route to a decent standard of living. They had nothing to lose and everything to gain, which is the reason why they do offend. Carlen conclude that, for these women, poverty and oppressive family life were the main causes of their criminality.In general, Heidonsohn shows that male dominated society which control women helps to prevent w omen from deviating while Carlen shows that the failure of patriarchal society in delivering the promised deals to some women removes the controls which prevent them from offending. Last but not least, according to liberation feminist which is the closest type of feminism to the consensus view of society, nowadays women has become liberated from patriarchy and led to a new type of female criminal and eventually rises the crime rate. As now women get the same opportunities received by men which have become more equal, such as in education, employment, and political activity they are now more likely to commit more serious crime such as violence and white-collar crimes. Women no longer commit traditional female crimes such as shoplifting and prostitution because they now have greater opportunities in the society.However, not all women got liberated, most of female criminals are working class who still commit traditional crimes.Liberation feminist point of view shows us the importance of investigating the relationship between changes in womens role affects changes in patterns of women offending.

Strategic business management

Strategic business management Introduction: Strategic business management has its roots in the thinking of the workforce; strategic thinking can no longer become a textual presence of words in the notebooks. The training programs and the meeting conducted at the sense of urgency do not mean that a company is on the right path. In the competitive era the stability of the market is doubted. Even though experts and analysts say the market is recovering from the slow down, the psychological impact that has changed the attitude of people had to be recovered, and it will take time on the long run. In this research of study certain tools and business strategies are used that exemplifies the impact that change bring in and how the company needs to manage the change. Resistance to chance would occur in the initial stages. The source of information that is used in this assignment. Comprises secondary data s by means of white papers, journals, magazines and case studies of the company were also used. The analysis part of this assignment includes the interpretation of psychological attitudes that exists when a change is implemented. And when a company decides to grow itself strategically impacts would be demographics and all the functional areas of the management such as production, operations, finance, human resource, marketing etc But all the outcomes of the results purely rely on the workforce and their attitude. The nature of the research is descriptive as the assignment examines the existing affairs of the company. And it also includes the Expost Facto method in sourcing of the datas. COMPANIES TAKEN IN TO CONSIDERATION FOR THE ASSIGNMENT: In this assignment as per the instructions laid down, as a must I have taken in to account the strategies and the process of International Business Machines one of the pioneers in information technology and computer hardware. And for the optional choice of opting the other company o have taken HONDA The power of Dreams, the reason I chose was personal and I always have a craze on the engine and the models of Honda. At the other end, Honda is known for its expansion and diversification in the recent past as they also pioneer in Intellectual Property Rights in getting the patent rights for their designs of engines. As this assignment needs a wide discussion on the change management I opted for Honda that has a strong workforce. TASK I SOURCES OF CHANGE AND ITS IMPACT CHANGE IS THE ONLY THING THAT CANNOT BE CHANGED without change it will be boredom for human beings and also for other living things. Liberalization, privatization and globalization all these have enhanced the frequency of occurrence of change. Competition exists everywhere smart people are defined by the way they adopt to change. Since the cultural impact plays a role in managing the change, traditional philosophy in the flow of communication in the management also defines the future. Information technology has created resistance to change, especially for the tradional and the baby boomers. As these generations of workforce stick on to the routine work and resist change. Not to blame them but its the responsibility for the management to sort out such things without dissatisfying. SOURCES OF CHANGE IN AN ORGANIZATION: PEST AND ITS ROLE ON CHANGE: Most of us would wonder the relation between a change and the PEST. _ SHAPE * MERGEFORMAT ____ POLITICAL: Legislative norms to be abided by the companies on the run might create a change in any of the management process. For example, few of the acts that had come in to enforcement like Paternity act and more had to be implemented by the human resource department. But the intentional movement and implications that are laid down by the ruling party should be abided by a company. This involves sudden change in the norms and the standard operating procedures followed by a company. But when again another party comes to ruling in the next 5 years another set of implications will be laid down at this time when a company is undergoing expansion it will face lot of resistance at this juncture. SOCIO CULTURAL: The employment opportunity that prevails in the current scenario is the worst of all times. The impact of the slowdown has thrown its roots psychologically in the mindset of the people and thus it has an impact on the productivity too. And the socio cultural patterns might also reflect on this as companies like Honda, IBM have a diversified workforce problems might arise when downsizing is done. The life style choices of the employees coming from various origins might also be reason to accept or refuse a change when a company diversifies its portfolio. And the cultural fit of new hires is also a subset that falls under this. TECHNOLOGICAL: Technological boom has helped the companies to automate work up to a great extent and the impact of the emerging technologies might have the urge to bring about a change in the organization. Internet intranet, remote and Tele Commuting has helped the workforce to balance their work and life. In order to beat the rivals and compete with them the Research and Development department has the key role and its is more or less dependent on the information technology. Change might also be viewed especially in this area. The transfer of technology when a company is in an expansion mode might also cause change and bring about problems. ECONOMICAL When a company is undergoing change either it is in an expansion mode the existing business cycle stage has its part for sure. Companies like HONDA, IBM are in the matured stage and so these factors contribute to the decisions that they take to opt for diversification. Pink slips and the unemployment rates along with the inflation and the growth rate have gone down. The U.S mortgage loan i.e., the sub prime crises has also hit the other markets and this is because of the reason the impact of globalization. The Labour costs and the availability of the manpower vs. the vacancies are also to be considered as these might force to bring about a change in an organization. TASK II INTERNATIONAL BUSINESS MACHINES AND ITS CHANGE (STRATEGIC MANAGEMENT) International Business Machines pioneering in hardware, software and also in IT service this baby was born in the year 1896. Herman Hollerith being the founder he maintains about 398,455 employees globally. With enormous diversifications across the world it has one if the best strategic team that opens its ears across the changes form time to time. Recession is said to occur recently, but IBM had learnt on how to cope up the changes that occurs due to recession. In the late 1986, IBM faced a recession this is sadi to be one of the worst time the company had faced but to be http://www.time.com/time/magazine/article/0,9171,1075217,00.html http://www.time.com/time/magazine/article/0,9171,1075217,00. (date:21-12-09, time: 3.35p.m) IBM The recession in 1986: In 1986, the IBM has slum down its market capability. Since 1981, the sales have slipped about 35% to 29%. It has sales around 3 million in personal computer in the year 1981. The market has continuously slipped in the year of 1986. The profit has comes down as 4% and the sales also move slowly. The market share ranges as 133% to 125% in a week. 9,370 computers are launched for the customer during the period of 1986. But it is inefficient to transport the computers to other branches. The customer should not wait till the computer reach to them. Only Loyal customer may wait for that. The IBM has decreased the retail sales during this period and they sales to the NYNEY, the New York based company. The recession was followed by the launch of nearly 9370 computers in the market. In this case the value chain got struck as the lead time to reach the customers got delayed. The primary stream of the value chain was good still the secondary chain including the retailers, dealers was having some problem. This might be because of the mass production that the company was in to. This led to dissatisfaction among the new customers as the word of mouth turned bad and at the other end the loyal customers might also get dissatisfied. And this led to a decision of destructing the sales that IBM was handing over to retail sales. http://www.time.com/time/magazine/article/0,9171,1075217,00.html (date:22-12-09, time: 5.15p.m) The EXIM norms that were laid down at south Korea and Japan led to imports at low tariffs and the logistics returns were not goods the other end the rivals were opting for smart thinking with the emergence of laptops and mini computers the rivals were capturing the market share and at the end of the day IBM was forced to push down the selling of computers. http://www.encyclopedia.com/doc/1G1-158239452.html (date:23-12-09, time: 3.45p.m) DEMOGRAPHIC FACTORS: In the case of IBM the fame that it had in its own origin was relatively high. It is very usual that the local market and the perceptions among the retailers and the customers would be positive. And at the other end, the corporate social responsibility that IBM has served to the origin would also serve as a catalyst for further prospects in the same region. And when it comes to the products competitive strength even though the value chain of IBM has proved to be poor, the product fitness is said to be quiet good an even it could be considered as a competitive edge. INFERENCE: The marketing strategies of IBM solely rely on the 4Ps Product, Price, Promotion, and Place. Hence, the inference from the analysis is that the competitors for IBM is more and even in the period of 1987, besides the decline they have grabbed lot of eco friendly awards for ensuring the hazardous wastes to be low. And to the surprise, IBM made it to a percentage of 96% which none of them scored. And the recent initiative that IBM had made in the name of GO GREEN IBM, in which when a project head shouts GO Green all the employees under his belt switches off the monitor they by reducing the green house gas content to the maximum. Coming to the market growth IBM is making ways to expand its market to a greater extent in the presence of competitors the strategies should be focusing on converting the strength at ease by making use of the opportunities. And also the intelligence team and the Research and development team should keep itself updated right starting from the job cuts and the cos t cutting impacts and its relation with the consumer behavior. IBM goes Green Business Week,29/12/09,06.00.p.m IBM IN THE EXPANSION MODE: The strategic team consisting of around 6-8 people in the IBM strategic department devised a growth strategy for expanding its services in all directions. At this juncture the management was much more concerned about ensuring the following things: Setting up a new R D plant in the areas to be diversified. The workforce at these places might consist of experts and also few people with a diversified mixture. The expansion should ensure that the resources by all means should be utilized effectively and efficiently. No room for psychological deviations should exist at the time of expansion. Headhunting a competent workforce candidates from the rivals at the area where the company is expanding After considering the golden rules IBM decided to sketch the road map for calking out the expansion. At the time of expansion IBM was concerned about achieving the growth by means of hike in sales, profits, assets and also the stake holder satisfaction by enhancing the value of returns. Cost cutting at the same of expansion was also a challenge that was hiding behind. Implementation of Total quality Management tools such as 6 sigma, 5S were the areas where IBM ensured perfection. For this a team of quality circles were also appointed and expenses over the Training and development were turning high but they were continuing it expecting Return on Investment through Proper Reinforcement that as possible only when IBM provides a conducive climate for working. This task was then focused towards the Human Resource Department. Several research and surveys were conducted to measure the existing working climate at IBM plants and necessary changes were also made to ensure the reinforcement is witnessed VERTICAL AND HORIZONTAL GROWTH PLANS OF IBM Soon after the plans got devised IBM started working at full phase, it was concentrating on enhancing the value chain in the secondary stream especially in the distributors and suppliers (retailers)and at the recent statistics IBM has gone for serving the customers at the door step. The use if SAP by means if ERP made the suppliers and the retailers to get connected directly. ERP VERTICAL GROWTH OF IBM: The need of Enterprise Resource planning across the service points was very high. IBM understood this and soon it acted on the opportunity. The extent of interaction went to such a level where the suppliers could place an order from the desktop of their service point to the production plant. This growth base was not easy as the implementation of ERP brought about psychological barriers. ERP implementation and Change Management: Both the backward and the forward integration was possible was IBM on the use of ERP. Still, resistance to change occurred at IBM and the company was pushed to the process of managing change. IBM CHANGE MANGEMENT STRATEGY THE LEWINS 3 STEP MODEL: IBM was in the process of managing the resistance to change that raised in the diversification of the plants as well as the implementation of ERP. UNFREEZING: IBM mad the communication transparent and so it also conveyed the plans for the growth in the individual career growth plan and devised ways to unfreeze the change. MOVEMENT: IBM ensured that the new state will reach soon and it also happened as per the devised plan. REFREEZING: IBM ensured the HR practice and the climate after their companies expansion at different areas did not affect the emotional quotient of the employees. Counseling and work life policies were also designed and certain fringe benefits also were provided Horizontal Growth: IBM also moved through the phase of horizontal growth and the acquisitions with the other companies like TOKYO OKHLOA and KOGYO CO LTD turned to be one of the successful strategic alliances by means of working through low consumption of solar energy. Diversification @ IBM: IBM devised new product lines and perfect products with the help of research and development dept .The diversification was a combination of both concentric as well as conglomerate. As the first involved in enhancing the production process with marketing strategies through the sales force and the later involved the merger in to the solar business industry. The new products at IBM after the year 1986 and the recent collaboration with LENOVO has also paved way for the emergence of laptops and other devices. IBM now is trying to capture the market where it has been lagging earlier the restructuring process at IBM under the guidance of CEO Louis U. Gerstner who rearranged the brand and the logos and also incorporated the GO GREEN. TASK III An international company and pioneer in manufacturing of engines. Equal competitor for the German automobile companies when no one dreamt of it this company right now stands as a leader in the automobile industry. The company surprised the customers and delighted them by selling its product CIVIC HYBRID. Yes of course its HONDA THE POWER OF DREAMS. These dreams were made true when a simple mechanic named Soichiro Honda founded the company in the year 1940 at Japan. Incepting with a normal 50 cc bike Honda has now emerged as the core competitor for the rivals. http://www.oppapers.com/essays/Honda-Passenger-Car-Industry/206913 http://www.1stgencivic.org/(date: 23-12-09, time: 5.45p.m) THE DOWNFALL OF HONDA: When we are asked to comment about HONDA we would say its leading company in the automobile industry, but the fact is like any other company Honda also faced a downturn and this was said to happen when the company failed to invest actual funds in to Research and development at the right time. This paved advantage to its competitors like Toyota and Nissan. As Honda was keen in designing the engine it failed to take in to account the customer perceptions and taste of the customers in other countries. Later, the company decided to opt for a strategic alliance to enhance the productivity and to capture the market share in the other countries other than its origin. When Hondas strategic alliance team was analyzing on which of the action to select it went for a mutual beneficial consortium with DONGFEN a Chinese company as this resulting in capturing of markets with cost cutting in the process that minimized waste of time and resource at certain levels. http://www.telegraph.co.uk/finance/newsbysector/transport/6259440/Hondas-UK-plant-is- leading-the-car-industrys-revival.html(date:24-12-09, time: 6.21p.m) OTHER ALLIANCES: Honda did not stop with a mutual consortium it also decided to take along step of opting for a Joint Venture with Siel Siddhartha and it produced nearly 38,849 and nearly 15.5 million engines and this decision turned to be one of the most important moves that actually leveraged the financial risk of Honda. Honda also opted for a joint venture with siel followed by a value chain partnership which actually has now made Honda to be one of the pioneers in automobile manufacturing with one of the best in class total quality management and it has now captured the customers and had made them to be at the top of ladder of loyalty. Thus these strategic alliances with the other companies by means of value chain partnerships and joint ventures followed by a mutual consortium. The following were the pros that Honda acquired because of the strategic alliance. Research and development team got stronger and the company was able to make focus on a specific target of customers that also paved way to a decline in the risk that is to be bared individually rather it turned to be mutual risk and profit sharing decision. Thus by holding hands through strategic alliance Honda was able to strengthen its base and acquire more of the market. http://www.myautoupdater.com/a29182-world-class-honda-car-parts-sold.cfm(date:24 -12-09, time: 5.35p.m) TASK IV ASSESSMENT OF RISK INVOLVED IN RUNNING A NBFC BUSINESS Risk is there everywhere, with out proper assessment of risk even a traditional company would collapse in a short span of time. Risk management has been given more importance in the field of non banking financial corporation. The recent slow down that has rooted out from the sub prime crises has made all the industry to rethink of its strategies in opening and sustaining in the existing market. The initial investments that is required to run the business is relatively high. Some of the risk factors are discussed below: The nature of the financial product might not be very attractive as the rivals will be more in number. Finding out the small gap in this segment would be the challenge. The negative of financing would be the competition that the company would face form the banking industry as customers are more aware of the shortcomings in this regard. In the team of marketing the attrition rate has witnessed to be very high amidst the financial crises. The fancy incentives are not stable and so the income and the job security are also not constant. The marketing department would sell of the loans to the consumers but the problem rises when the collection team keeps on insisting the customers to repay the amount when fails leads to loss in the concern. The present rates that is prescribed by the government of u,k to run a business related to non banking financial industry is quiet tough to maintain. And moreover the issues of the corporate governance and the disclosure of the financial statements are the issues. The policies are now made stringent rather it was lenient those days that led to the recession. The task of processing the loan for a new commercial vehicle becomes an important risk factor as the appraisal of the customer and his pay back ability could fail at any time and more over the loss incurred in case of the customer failing to repay the amount is relatively high than in that of refinancing. RECOMMENDATIONS: The recommendations that I would put forward in this issue would be to follow the risk management and assessment tools usage and also the use of porters competitive strategy would be an optimal solution for the NBFC business. Cost Leadership: The NBFC is a service oriented sector and so the cost would be much more on the interest rates and the IRR value that the company would yield on the long run. The implications that are laid down by the government should be followed strictly. And also the mortgage loans would have an impact. Differentiation: In order to differentiate the products the NBFC industry is all complicated with lot of products and the mode reaching the customers and converting them in to a loyal customer by offering special loans based on the track records would be the solution on this function. Cost Focus: Nothing much on the cost focus is needed provided the interest rates are low. The above strategies would find out an optimal solution for the business to run successfully. Sekaran Uma, Strategic Management, published by Tata Mc Graw Hill, 2005(date: 23-12-09, time: 6.14p.m) BIBLIOGRALPHY: Mcshane L. Steven VonGlinow Ann Mary Sharma R. Radha, Organizational Behaviour, Published by Tata McGraw Hill, 2006 (date: 22-12-09) Robbins Stephen P, Organisational Behaviour, 12th Edition, published by Prentice Hall Pvt. 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