Marketing in Practice Essay Example | Topics and Well Written Essays - 3250 words

Marketing in Practice - Essay Example Research was done that indicated the student’s use of the online digital library and the data collected showed that many students are not actually using the services of the library and this impairs reaching the objectives of the plan. This report thus gives an in-depth account of social marketing theory and the related secondary materials that were used to understand the situation of the Birmingham library. With reference to this, appropriate objective and recommendation are given in this report to ensure that the students adopt the new provision as expected by the university; it is to be achieved using social marketing for behaviour change (Weinreich 2011, p.45). Action plan for the implementation of the recommendation is also given as well as the controls of the same program in Birmingham library. Introduction The tradition and role of social marketing is to ensure that marketing is applied together with other concepts and techniques that will culminate into the social good of the targeted group of people (Alder 2010, p.24). The difference between social marketing and commercial marketing should thus be palpable, in social marketing; the driving agenda is not finances as the case with commercial marketing, they tend skew their interest to pursue social good (Pintado, 2007: p. 32). Birmingham Library is a university library that houses all genres of academic materials from sciences to humanities, with the population of the student’s numbers increasing every academic intake (Krol 2010, p.38). There is urgent need then to ensure that some of the services that are currently offered physically in the library are decentralized so that students can have access to the information even without visiting the library premises (Lazer, William, and Eugene 2006, p.20). This proposed idea is supposed to use online library services to enable students to access online books using their tablets, lap top computers, and phone while they are outside that university l ibrary (Kotler and Nancy 2008, p.16). This development will not only help in decongesting the library that is currently receiving high level of traffic movement of students but will also be useful in serving the student’s convenience of using library services in various places including within the hostel without having to move into the library (Burcher 2012, p.19). The university thus wants to use social marketing as a way of advising the students on the available options of accessing the library services without having to borrow physical books (Penford, 2011: p. 37). This is deemed to be of social good to the student as they will have the books in soft copy and can use them anytime without having to visit the library every time. On the other hand, the university will also benefit in the sense that they will be able to accommodate the needs of all the students because only those students who want to engage in those issues that cannot be done outside the library will be in at any particular time. The university will also mitigate on the losses that are realized when textbooks are borrowed by the students from the library (Sarki, 2006: p. 12). This move will be highly beneficial to the student’s body and they should be advised to explore this option through social marketing

Supply and demand Essay Example for Free

Supply and demand Essay Coffee is the world’s second largest traded commodity it is used not only for drinking but for soft drinks and cosmetics as well, it is second only to oil according to all imports and exports from all countries. They are two main types Arabica coffee (most people are used to this and are more popular) and there is Robusta coffee. In the last two years the prices of coffee have been gradually falling (Ycharts. (2013). Coffee Arabica Price) alongside this, the supply of coffee has also been falling. Although there have been some price fluctuations at times and this could end up really affecting an economy that depends on coffee. The reason that this is such a big deal is because the countries that heavily depend on coffee exports are usually developing countries and with the price of coffee falls, so does their rate of development, these countries involve countries such as Vietnam, Ethiopia, Peru and Guatemala who are all within the world’s top ten coffee producers (Justin Doom. (2011). World’s Top 10 Coffee-Producing Countries in 2010-2011). When these economies are weakened, they face to their governments, who need to somehow intervene in the coffee market and try to stabilise the prices so that they can reach their ultimate goal to continue to develop. Price stability in the coffee market is an ideal scenario in a market where the prices for coffee do not alter drastically. They may raise a little or fall, but never by a noticeable amount, and are easy to predict, which can help coffee producers plan for the far future. It is not only important to coffee producers, but to the economy as whole, if the prices for coffee are unstable, for some countries this could have a huge impact on the inflation levels. The diagram below describes how an unstable price for coffee can increase and affect the short run aggregate supply and cause the general price level for the economy to rise and therefore causing inflation as they did in July 2012 (Ycharts. (2013). There are several reasons why the prices of coffee have been fluctuating, but still gradually falling. The first reason is that coffee or coffee beans are extracted from plants. These plants must first be grown, then harvested. There is only so much mankind can do to ensure that there is always excess coffee however sometimes natural disasters can occur, and there is nothing that farmers can do to prevent this, when natural disasters occurs it means that farmers will have small yields and supply for coffee will be low, for example Colombia, one of the world’s leading coffee producers and exporters, in recent years have been experiencing poor weather conditions which have led to production falling by 12% to 7. 809 million bags in 2011 which is a record low that hasn’t been seen since 1976. This can cause the price to increase seeing as coffee is the world’s second most demanded commodity. These poor conditions consisted of excessive heavy rainfall, disease, pest and limited sunlight (Zacks Equity Research. 2 (2012)). The graph below shows how the supply for coffee has decrease leading to a rise in price On the other hand this is just an example for Colombia and for the rest of the world the prices for coffee have been falling for the last four years, this is due to wealthy individuals and companies use their money to invest in the global coffee suppliers, and other large coffee producers such as Brazil (the world number three) has been turning out high yield and is expected to do so in following years. Fain Shaffer, president of infinity trading crop expects coffee to be traded by one dollar to a pound of coffee, figures which have not been seen since September 2006. (Alexandra Wexler. (09/17/2013)) Coffee prices may currently be relatively stable at the moment however according to research conducted by the Royal Botanical Edinburgh along with Ethiopian scientists and London’s Botanical Garden, Kew, have predicted that wild Arabica coffee will be extinct by the year 2080. If the prices begin to fall, all of a sudden the prices for coffee will no longer be stable. No country operates on a 100% free market. All economies are mixed, some tend to be freer than others, however should a country find that prices are volatile or unfair, they can always rely on the government to intervene, aka government intervention. One way a government could help stabilise the price of coffee is through buffer stock schemes, these schemes focus on the prices of coffee and try to stabilize the price, they do this by first establishing the intervention price, this is a price the government thinks is most suitable for coffee. Once this has been established the government will then buy up a lot of coffee when the price is at its lowest, they continue to do this until prices for 3 coffee begin to rise again, and to balance out the price to make sure it is at the intervention price. They are constantly buying coffee to balance out the price. This is an effective method in theory however in real life they do not work out as planned because the people in charge of the buffer stock tend to get greedy and try to maximise profits rather than help the economy as a whole and end up just constantly buying till they go bust. A good example of a successful buffer stock scheme is in Brazil, for years Conab, Brazil’s official crop bureau has been buying coffee at low prices and uses it to help local producers when the selling price for coffee is too low. Between 2003-2004 Conab had just under four million KGs accumulated. (Geoff Riley. (2012)) Another issue with this is that it is very difficult for a government to raise enough money to buy up enough coffee to influence the natural supply and demand. It is also expensive to store large amounts of coffee and because it is an agricultural good it has a shelf life. Another method the government could intervene is through Subsidies. A subsidy is a grant given by the government in order to increase production, this would help producers who have produce low yields due to high taxation and or high costs If the government could make coffee more attractive this could help stabilise the price if supply started to fall. This however is not a very effective method because it can only help bring the supply of coffee back up, and it may be able to work to well, if producers begin to produce excess supply the prices of coffee could start to increase sharply leaving the prices unstable yet again. Buffer stock schemes are the most ideal way for a government to ensure price stability, and the success of the scheme depends heavily on whether or not the Government can provide proper facilities to accommodate huge quantities of coffee and are able to afford to buy enough Coffee to be able to alter the market forces so that if prices go to high they can bring them down and if they go to low that they can bring them back up again, if not it could result in huge losses for the economy and even end up setting the country back. The supply and demand of coffee can and always will be prone to quick sudden changes due to circumstances that are unavoidable.

Components of Supply Chain Management

Components of Supply Chain Management A supply chain may be defined as the number of business practices that move goods from that of raw materials through supply, production and the final distribution of the goods to the customer. Most manufacturing organizations have a supply chain of some description. It is considered that all effective management practices must take into consideration the efficiencies of the component within the chain in order to avoid loss of quality and important customers within the business. THE PROCESS Within any supply chain there are five key elements: 1) Production 2) Supply 3) Inventory 4) Location and 5) Transportation and Information. Each of these is examined in turn. Production In order to facilitate strategic decision making relative to production it is important to understand both what the client wants and equally what the market demands. This leads to the development of supply chain agility and indicates how many products will need to be completed; the sequence to be completed, the individual components required and which plants are capable of producing them. Each of these decisions needs to focus on items such as inventory management, quality, capacity and the volume of goods to be produced in order to meet the customer need. In addition what techniques of quality control need to be introduced in order to meet the required standards of production? Supply This relates to the facility being able to produce efficient and economical goods whilst maintaining high levels of quality. This can be very hard for companies to achieve, particularly when the product incorporates external sub components made outside of the firm. Hence there is a need to QA external products as meeting a required standard of quality. This not only applies to imported finished goods but also the quality of raw materials being used. When selecting a supplier it is a careful balance of cost, quality, reliability and flexibility. A good supplier relationship helps to build a strategic business relationship. Inventory Other important decisions relate to stock or inventory and as such it is a very fine balance between holding too much inventory and not enough. This becomes an important aspect of supply chain management and it is important to retain optimum levels of stock at different locations without holding too much inventory which creates under-utilized capital. There is also the risk of obsolescence for those goods that exceed their storage dates. Control policies need to examine the procedure for retention of inventory and this involves close customer relationship management. Location Strategic decisions are focused upon such items as the location of production plants, distribution and stock facilities and the location of these facilities to the market. Once customers are established it is important that they are services by having production facilities within close proximity to them. This was an important part of the success of the Industrial Revolution in Britain the mines producing raw materials i.e. Coal, Coke etc. were close to the factories that needed to burn them for power and fuel, together with the steel plants that needed the coal for the furnaces. Transportation Information Transportation decisions are an important part of satisfying customer demand. (Rockford Consulting, 2012). Creating innovation requires good organization of information. Computers and software provide important valuable assists in the achievement of these objectives but it still remains important to conduct regular business process analysis and eliminate any redundancies or duplication of effort. THE THREE COMPONENTS OF SUPPLY CHAIN MANAGEMENT There are three essential important components of Supply Chain Management: Business Processes Management Components Network Structure Each of these can be examined in turn: Business Processes It is the business processes that define both the activities and flow of information within the organization. For example: order processing, customer services, distribution etc. It is important to gain a firm understanding of the business processes by conducting business process analysis. This enables the processes to be optimized by streamlining, elimination of redundant processes and building enhanced processes. Network structure This identifies those partners who collaborate in the supply chain. They are the important key business players. Relationships can be placed into categories for example: Strategic Partners, Manufacturing, Operational and Reserve list. Management Components The management component contains the company philosophy for doing business and the methods that it will deploy in order to carry this out. This should be a clear Executive framework that supports a reliable decision making process. It is important that the managers embrace the culture of the Company and this is clearly demonstrated to both the customers and those who work within the organization. (Jesperson, B.D. 2005) INTERPRETING LOGISTICS IN THE SUPPLY CHAIN Logistics may be defined as the function that manages the movement of the materials in the supply chain. This is the movement of materials from the initial supply to that of the final delivery to the customer. The concept of logistics embraces a number of distinct activities like procurement, warehousing, inventory management, order processing, recycling and distribution etc. (Sadler, I. 2007) Benefits of logistics Management- Managers will be better informed and make smarter decisions if they understand the business processes within their organization. This is critical in the achievement of business goals. Efficient logistics management is also an important vehicle in the development of the business marketing strategy. The roots of logistics management can be traced back to WW2 and the military application of mobilizing resources and materials. These early concepts were further evolved in the 1960s with physical distribution management. In the 1990s the advances in communication with Electronic Data Interchange (EDI) enabled electronic transfer of information between organizations. We now have Global Positioning (GP) technology that enables precise tracking of goods on a truly globalized basis. The use of logistics software has the benefit of placing controls within the system and ensures that proper routing choices are made. This includes the selection of the correct carriers and optimal shipping routes. These time savings provide a considerable return on investment. EXPLORATION OF NEW CONCEPTS The external supply chain advances beyond the basic concepts of supply chain management. It brings into play all of the additional business links and the complex levels of interactivity. The integration of all of these steps is extremely complex. One such business that has stepped up to the challenge is that of Ford Motor Company in the USA. They have vertically integrated every aspect of the business from mining to manufacturing. The main driver of these new concepts has clearly been centred on customer satisfaction. One of the goals of integrated supply chain management is to remove barriers in order to allow the free flow of materials. One such barrier is that of shared resources in the supply chain. One new approach is removing this barrier and thereby changing the focus to that of buyer focus. Two existing approaches on the removal of barriers are that of lean thinking and agile manufacturing. Shared resources create a problem by adding to the complexity of planning and control, as such creating a barrier. Buyer focus looks towards splitting the buyer process into more manageable components in order to meet improved performance criteria. In this concept resources are singled out in order to serve one buyer. Hence one buyer serves the whole range of supply products. Supply chain management is a relatively new concept. The origins can be traced back as recent as 26 years to a Booze Allen Consultant named Keith Oliver. It was Oliver who defined the term and provided the early foundation concepts to what we now know today as integrated supply chain management. It was the Japanese who really adopted this approach in manufacturing and adapted the techniques of just-in-time and Ken Ban; these techniques becoming universally accepted and adopted throughout the west. The large software vendors like Oracle and SAP were looking towards computer software solutions for the automation of these complex processes. Despite making advances in this area it is still difficult to point towards a single standard or procedure for adoption in Supply Chain Management. (Thorsten Blecker, 2006) Software Applications JDA is an example of a software Company that claims to have in excess of 6000 world-wide customers and their software covers the entire spectrum of supply chain management. Another leading player in this field is that of the software firm Logility. Other leading software suppliers like ORACLE and SAP have integrated these applications into the more wider ranging Enterprise Planning software solutions. MITIGATING RISKS IN THE SUPPLY CHAIN Financial Control The key towards the management of financial risks in Transportation costs is by having an effective budgetary control system. Planned levels of expenditure (budgets) are made for all levels of operating costs and these are measured against Actual results in the monthly accounts. These will produce variances, either positive (underspend) or negative (overspend). Those negative variances that fall outside of a prescribed tolerance level e.g. +/- 10% of the budget figure, should be made the point of financial investigation and appropriate remedial action taken. This could be the result of increased supplier costs, unplanned overspend, an increase in the quality of materials and hence costs. There may be numerous reasons but the objective should be to get the expenditure back within the budget tolerance limit. ( Sodhi, M.S. 2012) Financial control should also be linked to Project Management. In particular examination of contingency plans for alternate suppliers within the supply chain. Lack of appropriate alternative suppliers can expose the firm to unplanned financial risks and cost escalation. The concept of Analytical Risk Mitigation is an approach that explores the relationship between cost and change and this is linked to economic considerations like supply and demand, marginal cost statements, break even analysis. This approach allows firms to deploy risk mitigation strategies that diversify or spread the nature of the risk thereby minimizing the amount of cost disruption to the business. Economic Measures This ties in with logistics and ensuring that measures are taken to mitigate expenditure within the transportation of goods within the supply chain. Logistics may be defined as the function that manages the movement of the materials in the supply chain. This is the movement of materials from the initial supply to that of the final delivery to the customer. The concept of logistics embraces a number of distinct activities like procurement, warehousing, inventory management, order processing, recycling and distribution etc. Benefits of logistics management means that managers will be better informed and make smarter decisions if they understand the business processes within their organization. This is critical in the achievement of business goals. Efficient logistics management is also an important vehicle in the development of the business marketing strategy. The use of logistics software has the benefit of placing controls within the system and ensures that proper routing choices are made. This includes the selection of the correct carriers and optimal shipping routes. These time savings provide a considerable return on investment and reduces the level of risk involved. One of the goals of the integrated supply chain is to remove barriers in order to allow the free flow of materials. One such barrier is that of shared resources in the supply chain. One new approach is removing this barrier and thereby changing the focus to that of buyer focus. Two existing approaches on the removal of barriers are that of lean thinking and agile manufacturing. Shared resources create a problem by adding to the complexity of planning and control, as such creating a barrier. Buyer focus looks towards splitting the buyer process into more manageable components in order to meet improved performance criteria. In this concept resources are singled out in order to serve one buyer. Hence one buyer serves the whole range of supply products. Risks and responses should be reported to the project sponsor and other management stakeholders on project status and progress reports. Risk management items should be also part of regularly scheduled project Steering Committee meetings. When risk events occur, the impact and actual damage to the project are assessed. Appropriate corrective response plans, workarounds and action items are executed. When a risk event does occur, it becomes an issue that has an impact on the project deliverables and as such it is important that these are resolved at the earliest opportunity The probability and impact matrix is a vehicle whereby the Project Manager and his team determine elements of risks involved in the project and the activities or phases where these may impact the project. CONCLUSIONS The larger more complex business operations are moving towards the installation of Enterprise Resource Planning (ERP) systems that embrace supply chain management. These integrated systems use a single relational database management (rdbms) system. If these are installed properly they can offer significant competitive advantages to the firm. There are however some drawbacks in that they are extremely expensive to set up and install. In addition they propose both complex and expensive maintenance procedures. Some products like that of SAP have had a limited expert resource base to draw from. This has resulted in large in-house training programs and as such added a further layer of expense to the cost of software acquisition. Those firms that have trodden down this path agree that this is an investment over time. The rewards show at a later date once you gain formal control over inventories and the movement of goods in the organization. (Madu, C.N. 2005)

Brave new world and how it influenced my life Essay -- essays research

A Different World; A Different Person All forms of art have greatly influenced my life and have had an enormous effect on me as a person. Throughout high school, of all the great works of literature, poetry, and other types of art that have given me a feeling of joy, my senior year I discovered one piece of literature that stands out and opens my eyes to the world around me. Art, literature and music not only intrigue and inspire me, but also despite all of the thought provoking choices at hand, Brave New World, by Aldous Huxley, has had the greatest affect on my opinion of the world. I believe that this story is similar to what our society is becoming and has opened my outlook on the world. Aldous Huxley greatly described an innovated world in which all matters of truth and individuality are gone. The characters in this book are born into a caste system, in which they are conditioned to think and act according to which caste level they belong. Although, he did not predict that the human race would actually yield to this sad, loveless lifestyle, surprisingly they adapted rather quickly. After reading Brave New World, I was not only rudely awakened by the lifestyles of this race, but also shown what is truly important. With cloning being one of the new discoveries in today’s society, I can see how mankind could become a sea of walking machines, easily compared to those in Brave New World. From birth, the characters are told how to act, think and dress. To an extent, our soci...

Avoiding Groupthink Essay

The case study we are addressing this week involves how a team and Project Manager avoid Groupthink and its pitfalls. In order to understand what group think is you have to refer to Irving Janus who coined the phrase back in 1972. He related that Group Think is when a group makes a decision based on group pressure; it can lead to faulty decisions. Janus, 1972) Some of the symptoms that Irving Janus documented of group think are Illusion of invulnerability, Collective rationalization, Belief in inherent morality, Stereotyped views of out-groups, Direct pressure on dissenters, Self-censorship, Illusion of unanimity, and Self-appointed ‘mind guards’. (Janus, 1972) In our book, Making the Team: A Guide for Managers states that there are three (3) key symptoms that take root and they are Over Estimation of the Group, Closed Mindedness and Pressure towards Uniformity. These will be the 3 areas I am going to focus on. Over Estimation of the Group Now that we know what group think is we can move on to how a team and Project Manager might avoid the mistakes and downfalls of Group Think situations. (Thompson, 2008) When a team is falling into a group think methodology a Project Manager must be able to recognize the signs before any decisions are made and set in motion. If the group is making statements that start with we feel, we think, or we suspect it is a good indicator that they just don’t know or are just following along with the consensus of the group. Group think can cause problems when everyone goes with the flow especially on a wrong decision. In using group think methodology management has to weigh the pros and cons of the group’s decision from all sides. Sometimes a little more research prior to implementing a group think decisions should be done or a devil’s advocate should be assigned into the group think matrix in order to prevent team members from being led down a garden path. The one thing I have noticed when in a group think situation, the group always looks for someone to be the mouthpiece for the group, this person usually has strong leadership skills but can be short sited and very opinionated which rubs off on the group as a whole. Some team members tend to have difficulty explaining or relating what is on their mind in a group setting, they rather tell their ideas one on one because they are an introvert by nature! They would rather have the extrovert take charge and be the one who voices the opinions or decisions of the group. They tend to stay out of the lime light. Project Managers should encourage team members to bring out concerns or objections to issues that are being discussed and/or considered, he/she should not influence the team with his or her own preferences to the issue, he/she should play the devil’s advocate and guide conflict in a positive manner, the group should be allowed to be evaluated by other groups and critiqued in an unbiased manner, splitting the group into different sub groups to bring out and investigate different alternative solutions or methods that could be used, call meetings with the group to discuss and evaluate any decisions prior to instituting them and develop alternatives for each methodology prior to giving final approvals. (Thompson, 2008) A good Project Manager should keep his group focused on the project at hand, have weekly meetings to check progress of his team to ensure that discussions are being conducted that is giving the group the necessary conflict for them to evaluate potential risks and dangers involved with the decisions they are recommending. The Project Manager should make the team aware that they can bring up ideas or doubts about any issue without the fear of being ridiculed or rejected by other team members. The ultimate goal is for the Project Manager to make his team work as a team through having all members contributing their knowledge and skills in making the project a success.

Personality and state of mind Essay

The use of knowledge in Victor’s character is magnified in the monster – they need to know more and have a thirst to succeed.  In other ways, the two individuals are inversions of each other. Victor is described by Walton as being young and handsome; an intelligent man, with a good personality and state of mind. The monster, however, as explained in a quote above, has the physical appearance of being ugly, inhuman and beastly, certainly a quality common in an evil doppelnger. Victor seems to be, from his narrative, arrogant, selfish and antisocial, whereas the monster is selfless with a want to be sociable. For this reason, it could be possible to presume Victor as the monster’s doppelgnger instead of the other way around. After all, Victor does not have the courage to acknowledge his mistakes, when the monster openly accuses himself and accepts that he has done wrong.  Ã¢â‚¬Å"I am alone, and miserable; man will not associate with me; but one as deformed and horrible as myself would not deny herself to me. My companion must be of the same species, and have the same defects. This being you must create.† MONSTER â€Å"You must create a female for me, with whom I can live in the interchange of those sympathies necessary for my being. This you alone can do; and I demand it of you as a right which you must not refuse to concede.†Ã‚  Ã¢â‚¬Å"I returned home, and entering the house, presented myself to the family. My haggard and wild appearance awoke intense alarm †¦ I had no right to claim their sympathies.† These three quotes from the monster and Victor’s narratives give more information concerning the two characters.  Victor is surprised when he hears the monster is not an evil being, craving for the destruction of anything in his path, but a tender human. The fact that the monster is miserable is Victor’s fault. He created the monster with his deformities without thinking of the consequences and he rejected him. Victor denies any tie with his creation, so saying that a mate of the same species would not deny herself to the monster could be tactical blackmail in order to persuade Victor to honour his request. Up until the conclusion of the story, Victor says nothing of his flaws, yet the first time the monster is able to speak; he acknowledges that he has faults, physically and mentally, as we all do. The parent/child relationship between them is reversed at this stage because the monster is ordering Victor to grant his request, although by asking this, he is being selfish, who is to say that his created companion will want to love him and be with him? This is a quality that is seen in Victor from the beginning. The monster has ideas about what love is and what is should be, taken from the DeLaceys – even though they are in poverty, they love each other and are happy. In fact, loneliness is not necessarily implied when a person is alone, but loneliness can breed in large groups of people. The monster, even though he is demanding of Victor, is pleading for help and does not have the power to give himself what he thinks he needs to be happy. He has no one else to turn to. Shelley uses a number of double negatives, such as in the second quote above; â€Å"you must not refuse to concede†; which could stand for the monster and Victor.  During the third quote, Victor is experiencing what it is like to be the monster. Because of his appearance, he does not deserve sympathy or any sort of compassion. Does this make Victor a more terrible person that the monster? So far, I have only explored the reasons for Frankenstein being the monster. What I have written has no relevance what so ever to the 21st century, or does it?  Victor, in a late piece of his narrative, refers twice to the consequences of his actions and how his scientific discoveries would affect the future.  Ã¢â‚¬Å"A race of devils would be propagated upon the earth, who might make the very existence of the species of man a condition precarious and full of terror. Had I a right, for my own benefit, to inflict this curse upon further generations?† VICTOR This links very closely with designer babies. By this time, Victor has lost all previously earned sympathy for the monster and seems to have learned from his previous mistakes.  Ã¢â‚¬Å"I shuddered to think that future ages might curse me as their pest, whose selfishness had not hesitated to buy its own piece at the price, perhaps, of the existence of the whole human race.† This is the first section of the novel in which Victor has taken some responsibility for his careless behaviour. This can also be contrasted with Victors hopes and dreams of fame as a young man venturing into the world of science.  Frankenstein wanted to create something perfect – elite – something that could take over the world, which is linked to designer babies. ‘Designer babies’ is an issue that we are being faced with now in our society. Questions raised against the notion include: Is it moral? Are we playing God? Is if fair? How far are we prepared to go? What are the constraints of science? Where is the diversity of human spirit? Does it reflect fascism?  However, there are also people who believe in the thought, promoting questions like: Why not move forward with technology? How do we know what will happen if we don’t find out? What is wrong with bringing happiness into people’s lives? Who are we to say stop?  We have no answers to the questions being asked, but overall, there seems to be a negative opinion concerning the concept. People argue that children born under these circumstances could be discriminated against. There is also unfairness involved, because such procedures cost money, although, it could allow couples to have a child when otherwise they may not have been able to. Unfortunately, this takes money away from other sectors of public and private healthcare, for example, cancer research.  Cloning could bring the physicality of a person back to life, which is exactly what Victor did.  The same kinds of questions are raised with cloning as with designer babies: Is it ethical? What is the reason for it? Is it natural? What is to stop an elite force being created?

British Petroleum Company, Ltd. Essay Example

British Petroleum Company, Ltd. Essay Example British Petroleum Company, Ltd. Essay British Petroleum Company, Ltd. Essay Formed in 1909, British Petroleum (BP) was the world’s seventh largest industrial company and the third largest oil company based on 1986 sales figures. As a part of its decentralization plan which prepares for the privatization of the nationalized industries, the British Government initiated a sale of BP’s stock in March 1987. Later on BP announced an offering of new stock in conjunction with the government sale in July 1987. Underwriting agreement was made between BP and both the domestic and international underwriters on 15 Oct 1987.The offering date was set for 30 Oct 1987. The price for both the fixed-price offer and the international offer was set at ? 3. 30 payable in three installments. While the first installment of ? 1. 20 was due immediately upon sale, the second and third installment of ? 1. 05 were due on 30 Aug 1988 and 27 April 1989 respectively. Right after the underwriting agreement was made, the stock market suffered its largest decline in history. The underwriters of the BP issue faced substantial losses as a result of the drop in BP price.Refusing to rescind the deal, the British government announced on 29 Oct 1987 that the offering would proceed as planned, and the Bank of England would offer a repurchase plan for the underwriters. The bank would buy for ? 0. 7 any and all partly paid BP shares that would begin trading the following day. Those who sold their shares to the bank would then be relieved of the second and third installments. The offer to repurchase shares would expire on 6 Jan 1988. Case ObjectivesWith the drop of BP’s stock value and the Bank of England’s offer of the repurchase plan, the objectives of this case study is to 1) Evaluate from the point of view of the U. S. underwriters the value of the repurchase plan, so as to help decide if they should sell their partly paid BP stock to the Bank of England instead of holding on it to sell it to the individual investors after the offering date; 2) To compare the value for the repurchase plan with the total change in equity value of the U. S. underwriters, so as to have an extra reference on the value of the repurchase plan. Discussion The Repurchase Plan as a Put Option According to the case, anyone who owned partly paid BP shares could sell them at any time to the Bank of England for ? 0. 7 regardless of the then prevailing market price. We have concluded that this offers the equivalent of the Bank of England writing a put option with the strike price of ? 0. 7 plus the present value of the remaining two installments of the price of the BP shares. To be more specific, since the option could be exercised anytime during the life of the offer, it should be treated as an American option. Â ¦ Methodology The Black-Scholes ModelAfter the identification of the repurchase plan as a put option, it comes to the vital part of the case study- valuation of the option. As stated earlier, the repurchase offer resembles an American put option which means the Binomial model would be more appropriate for the calculation of the option price. We are aware that the a major limitation with the Black-Scholes model is its incompetence in pricing an American option due to the fact that it only calculates the option price at expiration. However, the statistics given are not sufficient enough for us to precisely compute the price of an American option.Furthermore, the main objective of this report is to estimate the value of the repurchase offer as a whole rather than calculating the exact price of the option at a specific date. That being said, we would treat the option as a European option for the sake of simplicity. For European options, the binomial model tends to converge with the Black-Scholes formula as the number of steps increases. Since the statistics of days after the announcement of the repurchase plan are fairly limited, we have decided that the Black-Scholes Model would perform better for this case scenario. Assumptions Limitations Term Structure As the period between the announcement and expiration date of the repurchase plan is a little bit more than 2 months (From 29 Oct 1987 to 6 Jan 1988), we have chosen to use the term structure of 3 months (Exhibit 8), which is closest to this period, for the pu rpose of our calculation. Volatility In selecting the data to calculate for the volatility, we did recognize that using the daily stock prices from 16 to 19 Oct 1987 (Exhibit 7) should be problematic with the stock market crash.As the Black-Scholes model assumes a lognormal distribution of volatility, using the Black-Scholes model to process this set of extreme data would lead us to the assumption risk, which is the risk that the Black-Scholes is inappropriate to be used to value options for the period. Alternatively, we considered about avoiding the crash period by only using the data before or after the crash (i. e. from beginning of Oct to 16th or from 19th to the end of the month). However, as we only have one month data on hand, further cutting half of it would leave us too little data for a fair calculation.However, if we do have data of a longer period, we would choose to use the data after the crash as it would be better matched with the case. Â ¦ Stock Price As we see a he althy financial status of BP according to its income statements and balance sheets (Exhibit 1-3), it is assumed that the stock price of BP will never drop to zero in the period. To support this, we have calculated the book value per share of BP, which is USD3. 73. (Please refer to the work sheet Book Value of BP in the Excel file for calculation details. Â ¦ Trading Days The number of trading days in a year is assumed to be 252 according to the usual practice for the calculation of volatility. Â ¦ Calculation Results With the help of the Black-Scholes model, we come up with the answer of USD0. 38 as the value of the put option, which is equivalent to the value of the repurchase plan to the U. S. underwriters at the end of 30 Oct 1987. (For details on the calculations, please refer to the work sheets of Black-Scholes Model and Volatility in the Excel file. )Apart from using the Black-Scholes model, we also calculated the implied put option/repurchase plan value by calculating the c hange in equity value of the publicly traded U. S. underwriters between 29 Oct 1987 and 30 Oct 1987 for comparison (Please refer to the work sheets of Equity Value Change and Black-Scholes Model for the calculation details). Before the results were being worked out and compared, we have assumed the two values to be close to each other, as we assumed a semi-strong form of market efficiency, with which stock prices are believed to reflect all publicly available information.In this case, as the announcement of the repurchase plan was made to the public on 29 Oct 1987 after the close of the London and New York markets, we believed the change in stock prices of the U. S. underwriters should reflect the value of the repurchase plan on the next trading date (i. e. 30 Oct 1987), with the assumption of the repurchase plan being the only factor influence the stock prices on that day. However, the two values that we got turned out to be more inconsistent with each other than we thought, with U SD0. 8 as the value from Black-Scholes model and USD1. 02 as the implied value from the equity value change. Assuming the market participants are rational, the change in the equity price of the US listed underwriters should correctly reflected the true price of the repurchase plan (i. e. the put option). If the put option was USD1. 02, the volatility of the stock price of BP should be 145. 49% under the Black-Scholes model (calculated by trial and error) instead of 60. 11% (Please refer to the work sheets of Volatility for the calculation details).The great difference between the two volatilities may be due to insufficient of data (especially the price change after the market crash) as provided by the case and the Black-Scholes Model may not be applicable in the time when the stock market is fragile. Apart from using Black-Scholes model and market reaction to the stock price of the US listed underwriters, we use another way to evaluate the put option. We estimated that the book valu e per BP share as of 30 Oct 1987 was USD 3. 73. Normally, the stock price should not below the book value per share.Otherwise, it would provide an incentive for the major shareholder to privatize the company. As of 30 Oct 1987, the share price of BP was USD4. 56 (? 2. 65 X 1. 722 (the exchange rate of USD to GBP). The difference of the share price and book value per share as of 30 Oct 1987 was USD0. 83. If the estimated book value per share was correct, the room for the drop of BP would be USD0. 83. When we compared the put option price implied by the market (i. e. USD1. 02) with USD0. 83, we see that there is a premium of USD0. 19.The premium may be the reward for the insurance protection factor and time value of the put option. The premium may also reveal the market overreacted to the information of repurchase plan. Conclusion BP’s stock offering was an important part of the British Government’s decentralization plan back then. The repurchase plan had not only succes sfully prevented a political setback, it had also worked well as a protective arrangement of the British Government to ease the nerve of the panicking domestic and international investors amidst the aftermath of the largest stock market decline in history.The limitations discussed above may have inevitably caused some error in the computation of the implied volatility of the stock price of BP after the announcement of the repurchase plan. However, from the prevailing up movement of the stock prices of the four US investment banks and BP, we could see that the response to the plan from the financial market was excellent.