The National Income Essay Example | Topics and Well Written Essays - 1250 words

The National Income - Essay Example Thus, net exports denote the difference what a country can produce and what it actually consumes. If the output it produces is insufficient to satisfy consumption, investment, and government expenditures, it will tend to source output from other countries. On the other hand, the net capital outflow is the difference between domestic savings and domestic investment while the trade balance is shown as the total amount that the country receives for its net exports. Through the national income identity discussed above, it can be seen that net capital outflow is always equal to the country's trade balance. If the trade balance and the net capital outflow is positive, the country is running a trade surplus which means that it is a lender in the international financial market and that its exports is greater than its imports. However, if it is negative, it is running a trade deficit which means that it is a borrower in the financial market and imports is greater than exports. Following from this, the impact of any policy on the balance of trade can be identified and assessed by considering its effect in the country's savings and investment. Logically, any policy which causes savings and investment to increase supports a trade surplus while one which causes decline in savings and investment will lead to a trade deficit. In order to ... There are two type of exchange rates: nominal which is the relative price of currency of two countries while real is the relative price of goods of two countries. These two are related in the sense that the real exchange rate is equal to the nominal exchange rate multiplied by the ratio of price levels in the two countries. Thus, if the real exchange rate is high, foreign goods are relatively cheap, and domestic goods are relatively expensive. On the other hand, if the real exchange rate is low, foreign goods are relatively expensive, and domestic goods are relatively cheap. The real exchange rate is directly related to net exports in the sense that when real exchange rate is high and domestic goods are less expensive, it is expected that net exports will be greater as domestic goods will appeal more to other countries and exports are higher. Another determinant of real exchange rate is net capital outflow. It should be noted that the equilibrium real exchange rate is the rate at which the quantity of net exports demanded equals to the net capital outflow. On the other hand, since the nominal exchange rate is determined by the prices of commodities in one country compared to the other, the price level is its most significant determinant. Empirical evidence shows that the high level of inflation which makes domestic goods priced higher will tend to cause a depreciating currency. Chapter 12 The Mundell-Fleming model has been recognized as a dominant policy paradigm for the study of open-economy monetary and fiscal policy. It is the same as the IS-LM Model in the sense that both emphasize the interaction between the goods and money market. Also, these models assume that price is fixed while showing what affects short-run

Savings and Loans Crisis Essay Example for Free

Savings and Loans Crisis Essay INTRODUCTION In the 1980’s, the savings and loan (SL) industry was in turmoil with the watershed event of this being the implementation of price fixing legislation in favour of home ownership in the 1930’s. Even though it was the basis of the crisis, the trigger lies in more fundamental concepts, including fiscal policy, mismanagement of assets and liabilities, pure imprudence by SL institutions, brokered deposits and the cyclicality of the regulation/deregulation process and this was fuelled by economic reactions such as inflation. It would be ‘unfair’ to attribute it to only one factor. Therefore, to properly investigate the crisis and with a view of having all round perspective of the crisis, this report will discuss this financial disaster’s main causes. The impact of the crisis was borne mostly by the SL industry, the savings and commercial banks in the US and more generally, the US economy. This report will further cover the corrective measures undertaken by regulators and the government with the aim of saving the SL sector as the number of institutions with worsening financial conditions steeply increased. The consequences of this crisis persisted until the early 1990’s and this long term effect is understood by analysing the regulations enacted in the aftermath of the crisis. The main turning point has been the enactment of the Financial Institutions Reform, Recovery and Enforcement Act in 1989. Finally, there are essential lessons to be learned from the SL crisis, not only for the SL institutions, but also the banking industry, regulators and the government. CAUSES In the 1930s the SL industry was a conservative residential mortgage sector surrounded by legislation put in place during that period to promote home ownership. At the same time it has its own regulator which is the federal savings and home loan banking loan, and its own insurance firm to insure deposits at SL institutions. However the regulatory and interest rate environment started to change dramatically as from the 1960s when congress applied the Regulation Q to the SL industry by putting a ceiling on the interest rate that SLs can pay to depositors. The purpose was to help thrift institutions to extend interest rate ceiling to them in order to reduce their cost of liabilities and protect them from deposit rate wars since there were inflationary pressures in the middle till late 1960s. Regulation Q was price fixing, and in trying to fix the prices, Regulation Q caused distortion where the costs outweigh any benefits it may have offered. Regulation Q created a cross subsidy, passed from saver to home buyer, that allowed SLs to hold down their interest costs and thereby continue to earn, for a few more years, an apparently adequate interest margin on the fixed-rate mortgages they had at that recent past years. The problem was that the SL industry was not competing effectively for funds with commercial banks and securities market leading to large things in the amount of money available for mortgage lending. The ceiling on interest rate that SL could offer to depositors as per the Regulation Q led dampening of competition for depositors funds between bank and SL. But as new money market funds began to compete fiercely during the 1970s for depositors’ money by offering interest rates set by the market, SLs suffered significantly withdrawal of deposits during periods of high interest rates. This caused outflows from financial institution into higher yielding investment such as capital market instrument, government securities and money market funds. This process is known as disintermediation. Disintermediation has several undesirable consequences. Most important, it both restricted the availability of credit to consumers and increased its cost, particularly for home mortgages, the same consequences affected small and medium sized businesses that did not have access to the commercial paper market. In additional, because normal cash outlays increased to meet deposit withdrawals while cash inflows decreased as new funds were diverted to alternative investments, disintermediation slowed the growth of financial institutions and caused them liquidity problems. To have the cash available to meet withdrawal demands, banks and thrifts were often forced either to borrow money at above-market interest rates or to sell assets, often at a loss from book value. At the same time, rise in oil prices in 1979 pushed inflation and headline interest rates up. Growing inflation in the 1970s received two huge boosts: the first comprised the late-1973 and 1979 oil shocks from OPEC (the Organization of Petroleum Exporting Countries). Soaring oil prices compelled most American businesses to raise their prices as well, with inflationary results. The second boost to inflation came in the form of food harvest failures around the world, which created soaring prices on the world food market. Again, U.S. companies that imported food responded with an inflationary rise in their prices. In order to combat the increase in inflation, there was a rise in interest rates to encourage people to save and spend less. The Federal Reserve opted for tightening monetary measures in reaction to inflationary concerns. As a result of the subsequent monetary tightening, interest rates rose abruptly and significantly. Interest rates soared from 9.06% in June 1979 to 15.2% in March 1980. Such drastic change in base rates caused the yield curve to become inverted. The spread between the 10 year Treasury bond and the 3-month T-Bill became negative as seen in the table below reaching 373 basis points in 1980. (http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf) The graph below shows the variation of US Treasury three-month T-Bill. The large rise and the volatility of short term interest rates is evident from the graph. (http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf) The following 10-year Treasury against the effective Federal Funds Rate spread also illustrates how the yield curve inverted during the SL crisis. (http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf) With high volatility of interest rates during these periods, the SL industry failed to tackle the risk inherent in the funding of long term, fixed mortgages by means of short term deposits. In other words, there was a mismatch of asset/liability with a negative gap and rising short term interest rates. Aftermath In the1982’s, to attempt at resuscitating the SL industry, Congress tried to deal with the crisis by enacting the Depository Institutions Deregulation and Monetary Control Act in 1980 and the Garn-St Germain Depository Institutions Act in 1982, allowed lower capital requirements, which were based largely on book values rather than more market-value oriented techniques, grossly overstate the health of financial institutions. Regulators relaxed regulatory restrictions by decreasing the net worth requirement from 4% to 3% of total deposits, with additional flexibility of not complying with the generally accepted accounting principles (GAAP). The process of deregulation further included the extension for the period of amortisation of supervisory goodwill and the Bank Board removes the specific limitations for the SL shareholders, changing the minimum 400 shareholders restriction to only one, with no one shareholder or group holding more than 10% and 25% respectively and the acceptance of means of payment other than cash. In particular, rules on net worth changed so that thrifts could continue to operate even at historically low levels. Also, â€Å"supervisory goodwill† was used to balance out the books in terms of capital requirements and accounting numbers. This goodwill had no economic sense and simply helped to compensate any institutions, in a merger, when taking over economically impaired assets of insolvent institutions. All in all, the changes in accounting and capital treatment of supervisory goodwill enabled SL’s to post stronger accounting and capital numbers even though the underlying economic situation had deteriorated. There was a cancellation of the ceiling of the loan to value ratio as well. Forbearance or the decline in regulatory oversight was also a major factor of the debacle. Most importantly, savings and loan interest rate ceilings were removed. SL’s had a large proportion of variable rate liabilities (deposits) funding fixed-rate assets they held 84.5% of their assets as home mortgages. These institutions had a negative GAP as the amount of RSL was larger than that of RSA. GAP = RSA RSL Therefore, they were exposed to any rise in interest rates as the yield on the assets were fixed while the cost of liabilities increased. With the rapid increase in base rate in the 1980’s, FI’s cost of RSL rose faster than they could adjust their return on their assets. They had to maintain a high level of interest paid on deposit to avoid deposit withdrawal. The Net Interest Income – the difference between interest on assets and cost of liabilities decreased significantly. NII = Asset Return – Cost of Liabilities On average, the returns on home loans were 9% with an average deposit rate of 7% which implied a 2% net interest income. Given the tight regulations surrounding the SL’s, these institutions relied in the 2% net interest income as their main source of income. However, as the base rate rose dramatically, the NII dropped to negative figures, reaching -1.0% in 1981. Many institutions lost huge amounts of money. Savings and Loans specialised in originating and holding home mortgage loans that were relatively long term assets with fixed interest rates. However, these were funded by relatively short term deposits whose interest rates were variable. There was a maturity mismatch that was exposed to risk of interest rate rise. With the market value of the assets being more volatile because of its longer maturity, and as a consequence a longer duration, the rise in interest rate decreased the value of the mortgages to very low levels. The value of the liabilities decreased as well but to a smaller extent. Since net worth is the difference between market value of assets and market value of liabilities, this led to negative equity of financial institutions. Δ E = (DA DLg) x A x Δr/(1+r) Since DA DLg, with Δr 0, change in net worth value ΔE is negative. The leverage adjusted duration gap between the assets and liabilities was so large and with a large rise in interest rate, the equity value decreased to being negative. By the early 1980s, savings and loans throughout the country were insolvent by about $110 billion and the fund was reporting only $6 billion in reserves (Barth, 1991; Brumbaugh, 1988; Kane, 1989) The legislation also allowed savings and loans to begin to diversify into commercial real estate loans and other loans commercial banks could already make. Congress hoped that if SL’s invested in riskier, and thus, higher yielding assets, they would be able to offset the loss they previously made. The savings and loans were also allowed to originate adjustable-rate home loans. By 1983, most SLs were deemed economically profitable but 9% of the SL industry was insolvent. However, the Federal Home Loan Bank Board (FHLBB) and the Bank Board, went ahead with their plan of regulating the industry by imposing a 7% net worth limit for new entrants in the thrift industry so as to promote safe risk management practices and investments. Although all these developments were intended to help savings and loans, they gave rise to a subsequent twist in the crisis. The new changes did indeed allow savings and loans to reduce their interest rate risks but the changes exposed savings and loans to new risks mainly credit risks. While defaults on the home mortgages were low, defaults and associated losses on other types of loans and investments are typically much higher. By combining interest rate risk with credit risk, spread over a wider geographical area, experienced institutions had greater opportunities to choose a prudent overall balance of risk and return. However, many savings and loans began making commercial real estate loans, activities in which they were relatively inexperienced. Since investing in real estate loans entailed unique risks and required specific skills, SL’s eventually made losses on the real estate loans. These credit quality problems are reflected in the net income of the industry plunging once again, but even more than in the early 1980s, when the yield curve inverted. The industry lost nearly $21 billion in 1987 and 1988, and almost another $8 billion in 1989. Many open but insolvent savings and loans had incentives to take excessive risks and â€Å"gambled for resurrection† because of the phenomenon of moral hazard. If ever something turned wrong, the federal deposit insurance fund would bear the losses; yet the owners would reap the rewards if everything went well. The legislation, however, did not change how premiums were set for federal deposit insurance, meaning that riskier institutions and prudent ones were charged the same premium. Actually, the level of insured deposits was raised from $40,000 to $100,000. The new, lower capital requirements and broader opportunities to lend and invest allowed some savings and loan to take larger risks. With federally insured deposits and the ability to attract more deposits by offering higher rates of interest, deeply troubled savings and loans always had ready access to additional funds. Deregulation encouraged increased risk-taking by SL’s. However, in the mid- to late 1980s, with considerable real estate loans and investments, regional recessions struck the USA, which reduced commercial real estate values. In particular, an unexpected plunge in the price of oil in 1986 contributed to recession. To make matters worse, the Congress passed the Tax Reform Act of 1986 that more than eliminated the tax benefits to commercial real estate ownership it had conveyed only a few years earlier. Commercial real estate values fell dramatically as a result. This severely affected the asset value of the SL’s. In 1987, the Bank Board emphasised the importance of capitalisation by imposing a supervisory approval for SLs which engage in investments that are above 2.5 the multiplier of their tangible capital base. The main turning point was the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), restructuring the industry as a whole by setting up the Resolution Trust Corporation which in total resolved or liquidated 747 thrifts, with assets valued at $394 billion, jettisoning both the FHLBB and FSLIC and setting up a new regulatory institution Office of Thrift Supervision. The key to this act was that instead of trying to save the SLs which were barely solvent, it dissolved them and focused on the solvent ones to reform the industry. With the assistance of market fundamentals – favourable conditions of interest rates, the reinstatement of GAAP accounting and real estate market, the industry stabilised. LESSONS LEARNT The thrift crisis had a bailout plan of $153 billion, of which around 80% was financed by taxpayers. The number of institutions in the SL industry receded considerably until 1995 and before then, the ability of the regulators and the government to deal with the crisis was questioned many times. What followed was a series of court battles, corruption charges and major restructuring. Therefore, consequences were substantial enough for everyone to extract some observations and lessons. The starting point of it all was overregulation, which outlined the restrictions and conditions under which an SL would function. That included rigidity of the institutions to be flexible at a time economic conditions were changing and the financial sector was advancing. With fixed interest rates, it proved difficult for the SL to engage in competition as their means of investing was limited. One crucial point is that additional regulations do not necessarily mean fewer risks. SLs had to assume additional exposure to interest rate risk and alongside with banks, they were prevented from optimising their credit risk exposure. The government sometimes does not modify the regulations as fast as the structure of the industry is changing leading to new risks emerging and the cycle goes on. To keep up with advancement, the government has to put in place tighter risk management policies and controls. However, regulators and government should not direct the investment decisions of institutions. Rather, investments should be in line with market and economic forces. At a later stage, the industry was deregulated in order to remedy the situation. However, this translated into a decrease in market discipline as the SLs made high risk investments as they relied on the safety net of federal guarantee to cover any losses. Moral hazard, adverse selection and passive management were noted. Therefore, it exposes the disadvantage of FSLIC at that time which encouraged the SLs to take long-term and unreported risks. The deregulation, reducing the capital requirements, left the thrift industry more vulnerable to economic changes. From the failure of resuscitating the industry, it was deduced that forbearance treatment towards insolvent institutions might not always be the best option as it can lead to a freeze in lending and stifle the economy. One of the lessons from the thrift crisis which has been consistently taken into account over the years was the reliance on capital ratios. During the deregulation period of the crisis, there was no monitoring of the capital bases of the thrifts which ultimately lead to insolvency. From then on, institutions had to follow certain standard capital requirements put in place by regulators. However, this focus proved recently in the credit crunch to be detrimental, showing that banks favour trust and confidence. It is important to realise that capital ratios and other accounting ratios might not reveal the real economic strength of the institution. The crisis led to more disclosure and market value accounting. It has been understood that it would have been best to restrict involvement of public funds as a means of saving the industry. Using state or public funds to buy-out thrifts below value is not in accord with public welfare. A solution would have been to subdivide the thrifts into insured and uninsured ones with varying degrees of supervisory regulations concerning deposits and investments. One lesson learned was the emergence of an adjustable insurance premium rate which became a function of the institution’s regulatory rating, risk and capital levels. CONCLUSION For some years the final bill for the SL crisis remained uncertain. However, it is known now that, the thrift crisis cost an extraordinary$153 billion – one of the most expensive financial sector crises the world has seen. Of this, the US taxpayer paid out $124 billion while the thrift industry itself paid $29 million. The consequences of the SL crisis for the structure and regulation of the US financial industry were profound. The number of institutions in the SL industry fell by about half between 1986 and 1995, partly due to the closure of around 1,000 institutions by regulators, the most intense series of institution failures since the 1930s. The failures prompted an overhaul of the regulatory structure for US banking and thrifts, a shake-up in the system of deposit insurance and implied Government guarantees. Regulators shifted towards a policy of earlier intervention in failing institutions so that the principal costs are more likely to be borne by shareholders than other stakeholders. There was also a shift towards more risk-sensitive regulatory regimes, with respect to both net worth assessments and the payments to deposit insurance funds, while deposit insurance reform made it less likely that taxpayers would shoulder so great a burden in any future crisis. At a wider level, the SL crisis taught politicians, regulators and bankers how misleading rules-driven regulatory and accounting numbers can be in relation to risky bank activities. At different stages of the crisis, reporting of the financial condition of SLs was deliberately selected by interested parties to cover up the true economic extent of the unfolding disaster. It was a risk reporting failure on grand scale that greatly worsened the long term economic consequences fort the ultimate stakeholder: the US taxpayer. REFERENCES 1. Myth: Carter ruined the economy; Reagan saved it. http://www.huppi.com/kangaroo/L-carterreagan.htm [Accessed 31 October 2010 to 18 November 2010] 2. The U.S. banking debacle of the 1980’s : A lesson in government mismanagement http://www.thefreemanonline.org/featured/the-us-banking-debacle-of-the-1980s-a-lesson-in-government-mismanagement/ [Accessed 31 October 2010 to 18 November 2010] 3. Inverted Yield Curve Research Report, Milken Institute http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf [Accessed 31 October 2010 to 18 November 2010 4. The Cost of the Savings and Loans Crisis, FDIC Banking Review http://useconomy.about.com/library/s-and-l-crisis.pdf [Accessed 31 October 2010 to 18 November 2010] 5. The SL Crisis: A Chrono-Bibliography, FDIC http://www.fdic.gov/bank/historical/s%26l/index.html [Accessed 31 October 2010 to 18 November 2010] 6. The Savings and Loan Crisis http://wapedia.mobi/en/Savings_and_loan_crisis.html [Accessed 31 October 2010 to 18 November 2010] 7. US Savings and Loans Crisis, Sungard Bancware Erisk http://www.prmia.org/pdf/Case_Studies/US_SL.pdf [Accessed 31 October 2010 to 18 November 2010] 8. Savings and Loans Crisis, FDIC Report Vol. 1 http://www.fdic.gov/bank/historical/history/167_188.pdf [Accessed 31 October 2010 to 18 November 2010] 9. The Economic Effects of the Savings and Loans Crisis, Congressional Budget Office http://www.cbo.gov/ftpdocs/100xx/doc10073/1992_01_theeconeffectsofthesavings.pdf [Accessed 31 October 2010 to 18 November 2010] 10. The Cost of Savings and Loans Crisis: Truth and Consequences, FDIC Banking Review http://fcx.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf [Accessed 31 October 2010 to 18 November 2010]

The ‘Choose Cadbury’ Marketing Strategy Essay -- Business and Manageme

The ‘Choose Cadbury’ Marketing Strategy The ‘glass and a half’, corporate purple, and the Cadbury script has become synonymous with Cadbury. Cadbury Schweppes have used these design elements to great effect in developing the implication of goodness that this imagery suggests. In the late 1980s, another important element, known as ‘taste’ was emphasised. Regardless of national preferences about how chocolate should taste (e.g. dark chocolate is very popular to Europeans, whereas Australians prefer creamier milk chocolate), the implication was clear that, Cadbury Schweppes provides taste and texture that, appeals to all consumers. For example, Cadbury Miniature Heroes includes a variety of chocolates such as, dark milk chocolate (e.g. Cadbury Dairy Milk), creamier milk chocolate (e.g. Cadbury Dream), chocolate with trace of nuts (e.g. CDM Whole Nut), etc. In the early 1990s, further emphasise was made on ‘taste’. For example, the strapline ‘Chocolate is Cadbury’, which was built upon previous brand values, enables Cadbury to stake its claim and taking ownership of the term ‘chocolate’ and the chocolate eating experience. In the early 2000, Cadbury Schweppes introduced a new global marketing strategy, known as the ‘Choose Cadbury’. The ‘Choose Cadbury’ strategy was developed from a result of extensive research on consumer behaviour and awareness. The ‘Choose Cadbury’ strategy is a campaign that clearly shows how a brand can develop and how various messa...

Hot Cheetos Essay

Teenagers and children today are not only suffering from serious health issues, but also are putting their lives at risk. It is not only the fact that they choose to eat unhealthy, but more so that they have these delicious, mouthwatering, and cheap foods right in their cupboards. â€Å"Junk food†, as stated by Gregory Lopez, soared during the 1980’s and 1990’s, doubling among adults in the U.S. and tripling among children (Natural News). Studies show that the number one â€Å"Junk food† consumed by children and teenagers were Hot Cheetos. Not only may gastritis come from the consumption of Hot Cheetos, but are also at arm’s length for children, following up with health issues that are quite devastating and are also addicting, to top things off. Hot Cheetos were invented in the 1900’s, as a simple experiment. At first it was seen as a simple and innocent creation, but later on took a toll on the children. I was able to discuss the Hot Cheetos topic with my cousin Guadalupe and understand the effects these chips caused her. At first she did not feel any sort of symptoms or pains, but little by little, she began experiencing a pain in her stomach. She began throwing-up everything she ate, right after eating the chips. She would spend sleepless nights getting up and down, just to throw up, because Hot Cheetos irritated her stomach way too much! â€Å"As soon as I ate Hot Cheetos, I would feel my stomach begin to burn up, but I did not understand why. If everyone else could eat them, why couldn’t I. Sometimes I wondered if I was the only one.†Clearly she wasn’t the only one, and her stomach pains had a name. As addressed by ABC News, Hot Cheetos cause gastritis and a change of pH in one’s stomach. â€Å"Super spicy chips and snack foods have come under attack as being unhealthy,† ABC News addressed. The health issue is not so much of an issue, but more directly, what the effects of the spiciness can cause the body to undergo. Doctors have seen cases where kids are going into the ER with gastritis, â€Å"an inflamed stomach lining.† According to Andrew Medina, he experienced stomach pain on and off for weeks before seeing a doctor, as told by ABC News.  "It’s like if you have a bruise or something. It really hurts a lot.† Regardless of the symptoms Andrew, along with other children still consumed 20-30 bags including snacks, a month. Not only are kids messing up their stomachs, but more so making unnecessary visits to the ER. Dr. Martha Rivera, a pediatrician at White Memorial Medical Center in Los  Angeles said, â€Å"We have a population who loves to eat the hot spicy, not real foods, and they come in with these real complaints.† Dr. Rivera was not only a witness of the negative effects of Hot Cheetos, but also came to the awful conclusion that kids do not think of their health for once. Following up with Dr. Rivera’s comment, Dr. Robert Glatter, an ER physician, at Lenox Hill Hospital in New York, agreed that kids are constantly eating this snack that has quantities of unreal spicy flavoring. According to Glatter, he has not had many cases where patients come in complaining that their stomach is burning up due to consuming large amounts of spicy salsa. More cases of visits to the ER are seen when ingesting unreal foods, rather than natural ones, like the spicy salsa. It makes sense that spicy salsa does not cause as much problems as the one on Hot Cheetos, because where one is made of natural ingredients, the other one is not. Not only are we feeding venom to our bodies, but also killing it, little by little. Think how much in excess and unnecessary ingredients are used when making unhealthy foods, rather than when one makes healthy foods. Hot Cheetos are known to be, â€Å"an affordable snack that is sweet and calorie-dense† and is available in urban environments as stated by the Yale-New Haven Teachers Institute. Not only did the Yale-New Haven Teachers find that living in the poorer and urban parts of the city highly affected the health and well-being of children, but more so that because of this â€Å"flammable† unhealthy food, the rates of obesity were increasing. Studies shown that the poorer the community was, the more convenient stores there were. â€Å"This trend is statistically significant across the United States with 1.3 times as many convenience stores as compared to middle-income urban neighborhoods.† Although this is a very good technique for any corporation, the ones suffering are the children and their health. Any child would be delighted to have one of these â€Å"convenience stores† at arms-length, but it is the parent’s job to incorporate the child’s mind into knowing what is good and what is not. Hot Cheetos have become an addiction for students. Guadalupe could not understand why Hot Cheetos were so addicting for her and could not get out of the habit of eating them. Whenever she would go to the store, she would strictly look for these chips and think of all the wonderful things she could do with them. â€Å"I would always buy a bag of chips, take it home and shower it with Tapatio and extra lemon juice.† Even though she knew that  doing this was very unhealthy, she chose to do it either way because of the exquisite feeling you feel due to the smell of it. â€Å"Once you start eating them, they are kind of addicting, and you can’t help it, you feel like you can do anything and everything is possible.† Studies have shown that Hot Cheetos trigger a response, which is similar to those created by controlled substances in addicted individuals; something called â€Å"hyper palatable foods.† These hyper palatable foods have become an addiction among students of Noble Street Charter School Network and the entire Rockford school district has banned Flamin’ Hot Cheetos, due to nutritional concerns as addressed by Monica Eng. â€Å"Although Hot Cheetos deliver high levels of salt, fat and artificial flavors with little nutrients or fiber in return, the same can be said for similar snacks.† Regardless of the lack of healthy nutrients, there are many other snacks that are just as bad as Hot Cheetos, but still are not the best choice. Also, because of the lack of nutrients, obesity rates have tripled since 1980, as expressed by the Chicago Tribune. Hot Cheetos have not only been shown to make people addicted (students in particular), but also have high levels of unhealthy n utrients. Due to the lack of nutrients and â€Å"addicting† chemicals did the Chicago Tribune argue against Hot Cheetos, but won nothing, because students are still eating them or purchasing from anywhere close by that sells them. Hot Cheetos will always be sold, but it is up to the adult, as a parent to take charge of their children’s health, before lamenting something. Studies and nutritionists can only do so much in trying to help us to know what it is we are putting into our bodies. As stated by ABC News, the Yale-New Haven Teachers, and the Chicago Tribune Hot Cheetos are not a healthy snack for children, teenagers, or anybody. Not only does it cause major health problems, like obesity and gastritis but it is also an addicting substance that we might see as scrumptious and tasty, but in reality, it is something that is causing children to have mishaps and unnecessary visits to the ER. It is the parent’s job to know more and take care of their child’s well-being.

Scoping and Screening in Environmental Impact Assesssment

AN OPTIONAL ESSAY ON COMPARING AND CONTRASTING THE ROLES OF â€Å"SCREENING† AND â€Å"SCOPING† IN ENVIRONMENTAL IMPACT ASSESSMENT PROCESS. ENVIRONMENTAL IMPACT ASSESSMENT COURSE UNIT PLAN60411/PLAN40321 STUDENT ID :8528550 INTRODUCTION Environmental Impact assessment is a systematic process that examines, analyses the environmental consequences of development or development action in advance (Glasson,J. el al 2005).It is a logical process for establishing and sustaining an environment of quality by incorporating environmental considerations into decision making; specifying and clarifying the environmental aspects of development proposals to decision makers; indicating ways of mitigation and proffering project alternatives. It involves crucial stages for its optimum desirability and success these include â€Å"screening† and â€Å"scoping†. This paper of discourse will clearly compare and contrast the roles of these indispensible tools used in environmenta l impact assessment process.DEFINATION OF TERMS Screening is a mechanism which seeks to focus on those projects with potentially significant adverse environmental impact or whose impacts are not fully known. Scoping is the process of identifying from a broad range of potential problems, a number of priority issues to be addressed by an environmental impact assessment. (Wathem,P 2004) SCOPE OF STUDY From the foregoing, we can construe that they are essential stages of environmental impact assessment.Screening and scoping are both preliminary stages of an environmental impact assessment, and executed systematically in stages which must be done in a logical and professional manner, especially in the case of an integrated environmental impact assessment approach. They both have approaches for the scrutiny of a proposed project for consequently crucial in decision making. Both share a major role: the execution of a successful environmental impact assessment as an effective protection and management tool, as resourceful as possible.Despite what roles they have in common, these components of requisite have distinctive features and approaches in the roles they play in the environmental impact assessment process. Screening is focused on the significance of an impact in the environment, while scoping works on the range of issues to be defined after level of impact significance. They have different approaches to their functionality; screening uses the following approaches: * Schedule 1 (EU: Annex 1) Environmental impact assessment is mandatory * Schedule 2 (EU: Annex 2)Environmental impact assessment is discretionary, according to thresholds. * Schedule 3 (EU: Annex 3) Further consideration of Schedule 2 projects example environmental sensitivity. The EIA regulations England SI No 1824 2011 While scoping uses * Scoping Checklist * Scoping Matrix * Network programming European commission guidance on EIA: Scoping(2001) Screening uses the Initial Environmental Examination o r evaluation (IEE) as its checks and balances. On the other hand, scoping uses Scoping and report/opinion and public input and participation through a Terms of Reference (TOR).Project screening, precedes project scoping. Hence, screening must be carried out before project scoping. It is recommended and not mandatory to public involvement and stakeholders in screening, scoping differing from screening deems it is mandatory and recommendable for public participants to be involved at the stage of environmental impact assessment. CONCLUSION It is usually difficult to overemphasis the roles played by screening and scoping in environmental impact assessment irrespective of how far they are in contrast or how close they are in comparison.What is imperative is that the success of an environmental impact assessment depends largely on how well they are conducted. REFERENCES Glasson, J. et al (2005): Introduction to impact Assessment; Routledge, Abingdon, 3rd Edition Wathern, P. (2004): Enviro nmental Impact Assessment, Theory And Practice: west Sussex London Journal On Environmental Impact Assessment Training (2002); Topic 4, UNEP

Maxwell essays

Maxwell essays Maxwell was born and raised in Brooklyn, New York, on May 23 1973. His mother is of Puerto Rican descent and his father was West Indian. Sadly, his father died in a plane crash when Maxwell was just 3 years old. He adopted his middle name as his stage moniker, (Maxwell) keeping his real identity a closely guarded secret out of concern for his family's privacy. Growing up Maxwell spent much of his youth alone, since he found it difficult mixing with children in his own neighborhood. His fellow classmates nicknamed him 'Maxwell House Coffee' and often referred to him as "the quiet nerd who sat at the back of the classroom". It was not until music entered Maxwell's life that he began to feel more comfortable with himself, and who he was. A friend of his gave him a keyboard to borrow at the age of 16, and he applied his own tutelage by locking himself in his bedroom where he'd practice for hours at a time. In order to support himself through studies and extend his collection of musical instruments, Maxwell held down 2 jobs - one in a movie theatre and the other working as a waiter. It was whilst working as a waiter that Maxwell learnt to develop his social skills, improving significantly in the essence of 'people communication' and interacting with others on a more personal level. Having slowly developed a 4-track studio, Maxwell purchased numerous other instruments and went on to become a self-taught musician. He was primarily a musician to begin with, but became a singer later, since he didn't know anyone else who could sing. At the age of 19, Maxwell had recorded several demos' that had gained a lot of interest from the press and public alike. Initially influenced by early-'80s urban R ...

Write First, Edit Later

Write First, Edit Later Write First, Edit Later Write First, Edit Later By Michael You took too many English classes. Someone has told you that its more important to say it right than to say it at all. Well, it is important to write correctly. It makes your communication clearer, and your reputation brighter. But its usually better to say what you mean poorly than to say nothing. Why? Because once you write it, you can edit it. Or you can ask someone else to. Ernest Hemingway said, The first draft of anything is garbage. Well, garbage wasnt the word he actually used, but you get the idea. If Hemingway, one of the most influential prose writers in the English language, thought that his first drafts were garbage, you should feel just fine if thats what your first draft looks like. Garbage is honorable. Its hard to improve on perfection, but its really easy to improve on garbage. Reading it again will give you all sorts of ideas for improvement. But, you say, Ernest Hemingway had an editor who was paid to rework his stuff. What if you dont have anyone to revise your writing, and youre depressed by the thought of having to do it yourself? Let your writing sit for a while. It may make more sense if you sleep on it. Or, it may make less sense after you have slept on it. At least youll know which. Find someone to read it for you, to make suggestions, or even to edit it for you. You dont need someone who is a great writer themselves. Sometimes its better to find someone with nothing more than a good head on their shoulders and the ability to read English words. Ask questions. Any sensible person can tell you if he or she understood what you wrote. And if your reader didnt understand, ask what her or she thought you said. That will give you ideas for improvement, I assure you, depending how far off the mark they were. Run an ad in Craigslist, offering to pay someone a small sum to edit your writing. The ad is free, its easy to run, and the work can be done cheaply. You may find that you get what you pay for, but you can decide how much its worth to you. Find a writing critique group. Writers groups are mostly for creative writers: poets, playwrights and novelists. But for business writing, you could ask someone in your local civic club or chamber of commerce for advice. The point is to free yourself from the worry that youre writing in stone. Youre not. Anything you say can and should be considered changeable. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Writing Basics category, check our popular posts, or choose a related post below:Congratulations on or for?Deck the HallsNarrative, Plot, and Story

Tess of the dUrbervilles Review

'Tess of the d'Urbervilles' Review Originally serialized in the newspaper The Graphic, Thomas Hardys Tess of the dUrbervilles was first published as a book in 1891. This work was Hardys second-to-the-last novel, Jude the Obscure being his final one, and both are considered among the best works of the 19th century. Set in rural England, the novel tells the story of a poor girl, Tess Durbeyfield, who is sent by her parents to a supposedly noble family in the hope of finding a fortune and a gentleman for a husband. The young girl is instead seduced and meets her doom. Story Structure The novel is divided into seven sections, titled as phases. While it may seem usual to many readers, critics have discussed the significance of this term in relation to the progress of the plot and its moral implications. Various phases of the novel have been named according to various life phases of Hardys heroine: The Maiden, Maiden No More, and so on to the final phase, Fulfillment. Tess of the dUrberville is essentially a third-person narrative, but most of the events (all significant events, in fact) are seen through the eyes of Tess. The order of these events follows a simple chronological sequence, a quality that augments the ambiance of a simple rural life. Where we see Hardys real mastery is the difference in the language of people from the social classes (e.g. the Clares in contrast with the farm workers). Hardy also sometimes speaks directly to the readers to accentuating the effect of select events. Tess is helpless against and mostly submissive to, those around her. But, she suffers not only because of the seducer who destroys her but also because her beloved does not save her. Despite her suffering and weakness in the face of her suffering, she demonstrates long-suffering patience and endurance. Tess takes pleasure in toiling on the dairy farms, and she seems almost invincible to the trials of life. Given her enduring strength through all of her troubles, in some sense, the only appropriate ending was her death on the gallows. Her story became the ultimate tragedy. The Victorians In Tess of the dUrberville, Thomas Hardy targets the Victorian values of nobility right from the title of his novel. In contrast to the safe and innocent Tess Durbeyfield, Tess dUrbervilles is never at peace, even though she has been sent to become a dUrbervilles in the hopes of finding a fortune. The seeds of tragedy are sown when Tesss father, Jack, is told by a parson that he is the descendant of a family of knights. Hardy comments upon the hypocritical standards in masculine concepts of purity. Angel Clares forsakes his wife, Tess, in a classic instance of the rift between belief and practice. Given Angels religious background and his allegedly humanistic views, his indifference to Tess produces a striking contrast of character with Tess who persists in her love - against all odds. In Tess of the dUrbervilles, Thomas Hardy has directly satirized nature. In the third chapter of Phase the First, for example, he targets both nature and its exaltation by poets and philosophers: whence the poet whose philosophy is in these days deemed as profound and trustworthy... gets his authority for speaking of Natures holy plan. In the fifth chapter of the same phase, Hardy ironically comments on Natures role in guiding humans. Nature does not often say See! to her poor creature at a time when seeing could lead to happy doing; or reply Here to a bodys cry of Where? till the hide-and-seek has become an irksome, outworn game. Themes and Issues Tess of the dUrbervilles is rich in its involvement with several themes and issues, and there are many quotes from the book that synthesize these themes. Like most other Hardy novels, rural life is a prominent issue in the story. The hardships and drudgery of rustic lifestyle are explored fully through the travel and work experiences of Tess. Religious orthodoxy and social values are questioned in the novel. The issue of fate versus freedom of action is another important aspect of Tess of the dUrbervilles. While the main storyline may sound fatalistic, Hardy does not miss the opportunity to point out that the darkest of tragedies could be prevented by human action and consideration: Humanity.

Bacillus Subtilis Research Paper Example | Topics and Well Written Essays - 500 words - 1

Bacillus Subtilis - Research Paper Example Further, the use of Mosel agar also helped to isolate the bacteria. This lab report consists of the results obtained for the isolation process. In this lab, the main objective was to isolateBacillus subtilis which is a gram-positive bacteria. The bacteria exist naturally in soil or vegetation; and within a mesophilic temperature range of 25-35 degrees Celsius. The bacterium has rod-shaped cells hence leading to the name bacillus. Usually, it leaves in harsh conditions, a situation leading to the formation of endospores which are stress resistant (Boone et al, 2001). The characteristics of the bacteria which allows for the uptake of of external DNA also provided a hint in isolating the microbe from its culture. The characteristics of the organism makes it significant to make use of gram staining and mosel agar to help in the isolation process. The following is the image showing Bacillus subtilis colony The processed sample of the bacterium was treated through suspending it in a physiological saline for 15 minutes. The temperature for the treatment process was kept at 100 degrees Celsius to ensure that all the vegetative forms involved were all killed. The culture was then isolated in a nutrient agar. Gram staining method was then applied to guide in genus identification (Dworkin & Fulkow, 2006). The shape of the rods and extent was then examined from gram stains. Further , Mosel agar was used in isolating the individual colony. Glucose nitrate was also helpful idenfying the associated growth. The color of the growth was examined and recorded. On performing gram staining, there was formation of slender rods and the realization of gram positive nature, to represent Bacillus subtilis. This helped in isolating the microbe from B. Cereus which assumed the shape of thick swollen rods. The treatment under 100 degrees Celsius was useful in isolating the species from its vegetative forms since the bacteria itself

Economic Sustainability, Changing Labor Market through the EU Policies Literature review

Economic Sustainability, Changing Labor Market through the EU Policies - Literature review Example Literature that bears discussions on sustainability as investment policies will be tackled by this review, along with strategic and long-term developments in the EU region. It shall also be relevant to cover literature addressing the purposes of EU and the common interests upheld by its member nations. This will be connected with the literature on the multiplier effect model.  The resources found for this realm are mainly books, which have been appropriate materials that enabled achieving the objectives of presenting and discussing concepts related to the study.The European Union (EU) creates an impact on national political and administrative systems, as well as domestic politics and policies. The research perspective of â€Å"Europeanization† brings into focus that Europe plays a significant role in the usual bouts of the political life of politicians, national bureaucrats, and the wider public, blowing fresh air into old debates of European integration, policy-making, and European governance (Lenschow Andrea 2004, p. 56). The shift of political responsibilities and possibly, public loyalty to the European level has implied a relative weakening of national state structures, while there are some debates claiming that European-level arrangements have strengthened national governments (Lenschow   2004,   p. 56). The separate treatments of European and national politics were ended by the concept of multi-level governance in which the multitude of political and societal actors is considered potential parts of a dynamic network while the vertical levels of governance are interlinked in the concept of multi-level governance. The EU governance structure has a top-down process, which produces an impact on the domestic structures of EU member states (Cowles, et al., 2001 in Lenschow   2004, p. 57). The top-down impact of the EU on its member states suggests reorienting the direction and shape of politics in a way that EU political and economic movements a nd dynamics become a part of the larger organizational process of policy making (Lenschow, 2004, p. 58). There also appears a horizontal transfer of concepts and policies between member states of the EU, in which EU plays a facilitating role for inter-state transfers. Although an inter-state transfer or diffusion exists among states through horizontal, state-to-state transfer processes taking place independently of the existence of the EU, the EU provides the arena for inter-state communication or facilitation of such horizontal processes. It assumes that the EU is the direct or the indirect provider of a necessary impulse for domestic change in that it represents a set of rules and a discursive framework leading to domestic change. Hence, the EU serves as a facilitator of discourses and rules in the political arena of the region between and among member states.

Challenges facing consumers in the UK Essay Example | Topics and Well Written Essays - 1500 words

Challenges facing consumers in the UK - Essay Example Consumers in the UK are often faced with a number of challenges.The challenges are due to a rise in energy prices,rise in housing,horse meat scandal,and unhealthy competition.Competition is the essence of life but more often,in competition,the market would always want to take advantage of consumers lest the consumers be protected from exploitation This is why competition laws are instituted. Competition laws are about applying the law to ensure that there is an healthy competition between companies without interference with each other’s rights (Whish, & Bailey, 2012). The competition laws are also healthy because they protect the customer or consumers from harmful behaviors of ill mannered companies (Monti, 2007). Competition laws are fields of interests because they aid in creating a wide variety of choices for consumers that it widens consumers’ options, it encourages efficiency and enterprise, and it also helps in the reduction of prices and improvement of quality. H ousing is a major setback to the citizens of UK. The value of houses is high for the common citizens. However, there are individuals and companies that have come up to set houses for rentals. These have created competition that is bringing competition. Competition helps in pushing for low prices that make goods and services accessible to all. This ensures that virtually everybody can get access to good housing thus an improvement in peoples’ livelihood (Cseres, 2005). ... For companies to get good market share, they have to ensure that their products are of good quality. This is the one of the ways that a business can gain competitive advantage over their competitors. In this respect, better quality of goods and services could mean that companies would bring products that can last longer or serve their customers in a better way (Kokkoris, & Lianos, 2010). This could also mean better after-sale services, and a general friendly customer service. This would mean that customers are treated with respect and it also mean that customers are treated as ends in themselves but not as mere means of getting profits. Oil companies have been facing a number of challenges further transferring their costs and challenges to the final consumers. Putting competition laws into perspective also ensures that companies offer more choices to the market (Agnew, 1985). This means that companies would come with different options and different unique products which can meet the needs of their target market in an efficient way than the rest of the offers available in the market. Companies strive to meet these demands to command the market while offering better services with reasonable balanced prices (Zimmer, 2012). In order to maintain such standards as to deliver varied choices, a company has to be innovative so as to remain relevant to time and choices (Jones, & Sufrin, 2007). Innovation implies that companies constantly produce better products, their designs have to be improved, and products services and business techniques have to be appealing to the consumers (Henning-Bodewig, 2006). Better competition also helps in training business to remain relevant to the global economy and competitions.

Leadership and Team-working Essay Example | Topics and Well Written Essays - 500 words

Leadership and Team-working - Essay Example After all the leader is only an individual with limited capacity and it would be an exaggeration to credit to him or her all the performance of a team. Yukl however mentioned that â€Å"it [would be] helpful to examine the collective process that determine team performance. Leaders can improve team performance by influencing these processes in a positive way† (Yukl, 2013 pg 361) and having said this, the definition has acknowledged that the efficacy of a leader is dependent on his or her ability to engage the members of the team collectively and make it function as a team. Directing the team towards a common goal requires the members to be motivated by the leader. The definition given was inadequate because it does not provide the method to motivate team member to be directed towards a common goal. This leadership motivation includes visioning, expressing confidence in the team and celebrating progress. It is also important to involve team members in making decisions to affirm that they belong to the team. Managerial functions is also a necessary part of leadership such as selecting competent team members and coaching/training them to be able to perform well. An effective leader must also identify the obstructions for effective team working and be able to break down these barriers. These barriers could be miscommunication and factionalism that could divide the team and render it nonfunctional. Parker and Stone provided an answer on how these obstructions be overcome by highlighting the importance of communication and relationships between team members and calls for the effective interpersonal skill for the leader to overcome obstructions of effective team working (Parker and Stone, 2002). The classic case that can be cited on how a leader has effectively improved a team performance is the legendary Steve Jobs, Apple’s co-founder. During the absence of Steve Jobs, Apple was nearing bankruptcy but when he took over the company,

Public Diplomacy and Media Research Paper Example | Topics and Well Written Essays - 3250 words

Public Diplomacy and Media - Research Paper Example Journalists operate within an ethical framework and are responsible for informing the society through media. Considering issues of propaganda stories, and factors like evidence gathering and working along with justice departments journalists may need to rely on press release statements, by quoting or printing their statements when informing the society. One, misinformation and lies to capture the public’s attention could discredit the journalists and media group they work for, least to mention the violation of the code that governs media reporting. Though the demand for news is high, accuracy and authenticity are also critical. Second, in such time when public relations has risen and embraced by many institutions, journalism seems to be shrinking; most journalists would seek out certain information from organizations’ publicity agents while internet technology gives an opportunity for PR to now bypass the press and get to directly communicate to the public.The western d omination in the media sphere has shaped and influenced foreign publics for quite a long period, which links it to its hard power and advantages over other countries. However, other countries have risen and developed strong means of persuasion capable of influencing the public discourse beyond their State boundaries through international broadcasting and cultural diplomacy other than the traditional government related policies. International broadcasting: Global influence has been achieved in the broader sense.

Leadership and Team-working Essay Example | Topics and Well Written Essays - 500 words

Leadership and Team-working - Essay Example After all the leader is only an individual with limited capacity and it would be an exaggeration to credit to him or her all the performance of a team. Yukl however mentioned that â€Å"it [would be] helpful to examine the collective process that determine team performance. Leaders can improve team performance by influencing these processes in a positive way† (Yukl, 2013 pg 361) and having said this, the definition has acknowledged that the efficacy of a leader is dependent on his or her ability to engage the members of the team collectively and make it function as a team. Directing the team towards a common goal requires the members to be motivated by the leader. The definition given was inadequate because it does not provide the method to motivate team member to be directed towards a common goal. This leadership motivation includes visioning, expressing confidence in the team and celebrating progress. It is also important to involve team members in making decisions to affirm that they belong to the team. Managerial functions is also a necessary part of leadership such as selecting competent team members and coaching/training them to be able to perform well. An effective leader must also identify the obstructions for effective team working and be able to break down these barriers. These barriers could be miscommunication and factionalism that could divide the team and render it nonfunctional. Parker and Stone provided an answer on how these obstructions be overcome by highlighting the importance of communication and relationships between team members and calls for the effective interpersonal skill for the leader to overcome obstructions of effective team working (Parker and Stone, 2002). The classic case that can be cited on how a leader has effectively improved a team performance is the legendary Steve Jobs, Apple’s co-founder. During the absence of Steve Jobs, Apple was nearing bankruptcy but when he took over the company,

Research Paper on the Psychology of Women Essay

Research Paper on the Psychology of Women - Essay Example en from an early age many times determines the type of vocation and thus pay scale women may believe they must conform to and be satisfied with instead of being determined by their own inherent talents and aptitude for learning. Though females comprise almost half of the workforce, they are bunched together in professions that are traditionally viewed as ‘women’s jobs’ which usually means they receive less compensation for their efforts (U.S. Department of Labor, 2003). The labor force is a system that is segregated on the basis of gender. In 2003, of those employed as administrative assistants and secretaries, more than 96 percent were women who also comprise more than 80 percent of elementary and middle school teachers while 90 percent of those employed in the nursing profession are women according to the Women’s Bureau of the U.S. Department of Labor. These figures support previous studies that confirm the propensity for women to select educational paths and subsequently careers which historically have been deemed by society as the proper role for women (Hopkins & McManus, 1998). Conversely, few women can be found employed in typical ‘blue collar’ vocations that re quire higher levels of physical exertion. For instance, only about 12 percent of all law enforcement officials, eight percent of civil, three percent of construction workers and two percent of electricians are women (U.S. Department of Labor, 2003). The same gender bias prevails in certain areas of intellectual endeavors as well. For example, according to the October 1990 issue of Notices, â€Å"of the 991 doctorates awarded in mathematics by institutions in the U.S. and Canada in 1989-1990, 18 percent of which were awarded to women† (Schafer, 1991). While the lack of women employed in more physical jobs can be explained at least to some degree, the reasons that women are not usually considered as equals to their male counterparts in the sciences and mathematics fields is more of a

Providing equal opportunity for employment Essay Example for Free

Providing equal opportunity for employment Essay RECRUITMENT GUIDE Chern’s will provide equal opportunity for employment to all persons regardless of any discrimination based race, color, sex, religion, origin, age or disability and will strive to achieve full and equal employment opportunity throughout its organization. Steps 1)Identify Job openings through human resource planning/ strategic plan. Any Employee resignations/terminations could be helpful in identifying any internal job openings. 2) Develop position requirement by specifying job description/ job specifications. Identify job duties and responsibilities in it keeping in mind essential functions of the job which are critical for the position (minimum requirement or any preferred qualification). 3) Develop the recruiting plan for posting period and placement goals and implement it. 4) Post the position and build the diverse pool of application. Develop and use application forms- One type of application form that can be used to predict performance is a biographical information blank (BIB) also known as biodata form which is a detailed job application form requesting biographical data found to be predictive of success on the job, about the background, experiences, and preferences. Respond is the score. They are good as they are difficult to fake. 5) Review application material and develop the short list. Recruiting from within the organization ( As Chern\s believes in internal recruiting so they could use different internal recruiting methods like Job posting( Notifying current employees about Vacant positions. Alternatively, Skills inventories ensure that internal candidates are identified and considered for transfer or promotion when opportunities arise). Some of the outside recruiting sources could be employee referrals as employees get bonuses if they refer someone. Alternatively, contacting former employees someone who already has worked with a company and had better knowledge of its culture and expectations. Educational institutions and online recruiting are best when the budget is low. One of the priority could be to hire a more diverse group. 6) Interview selected applicant- ask the only job-related questions, document selection process. The interview process is crucial. The approaches described below are simple, good practice and are relevant to the majority and minority candidates. * Develop questions based on the required and preferred skills and qualifications listed in the Job Description (JD). Candidates will respond differently based on work history, experience and skill level. * Be sure to ask the same set of core questions, listen carefully and allow candidates to respond adequately. Be prepared for candidates questions. The primary objective of the interview is to determine if the candidate can perform specific duties. * Take good notes during the meeting and immediately after, documenting the responses and job-related criteria. * Review duties and responsibilities of the job using the JD, individual qualifications, work history, relevant experience/training/educational background, career goals, travel requirements, equipment used and facilities, hours required, attendance requirements, performance expectations, any on-the-job training and staff development opportunities. * Identify potential management candidates clearly on interview notes. 7) Select finalist and verify job-related credentials- conducting reference checks 8) Make contingent job offer- request background check and education verification. 9) Close the notice of vacancy. 10) Schedule and conduct new employee processing. B) INCREASE FAIRNESS PERCEPTION When recruitment process is fair, and recruiters treat all applicants honestly and respectfully, it improves the chances of applicants accepting an offer for the job. The recruitment process should be relevant to the job and be consistent across all applicants. Make sure hiring is done to fill a real vacancy. It should be easy for candidates to apply.Also, explain the recruitment process to the applicant and give them the opportunity to show why they should be hired. Clear job description could help avoid discrimination of any sort. All applicants should be treated fairly throughout the selection and hiring process. High levels of fairness maintained throughout the recruitment process give Chern the best chance of recruiting top talent. Keep applicants informed of their progress or lack of progress through the process. Interviews should be conducted using standardized, approved methods with all questions to be predetermined by management. According to Stan M. Gully and Jean M. Phillips, authors of Strategic Staffing, there are three types of perceptions of fairness that applicants can feel related to a company’s recruitment and selection process. These are distributive, procedural and interactional fairness. Distributive is similar to how fair an applicant feels the hiring or promotion system is. Procedural refers to candidates beliefs that a company’s policies and procedures that guide the hiring or promotion decision were fair. It Includes the screening tools, tests, interview process as it relates to personality or integrity tests. Interactional fairness has to do with an applicant’s perception of treatment during the hiring process. If an applicant is no longer considered to be hired, they s hould be informed about is as soon as possible. Candidates feel important and create a positive image for those companies who follow them up on their applications and interview. When these things do not occur, the employer may find that there have been negative spillover effects as a consequence. When someone has a positive experience, he or she tells others and view the organization in a positive light. The same is true with a negative experience. The issue is that when someone does have a negative experience, he or she is much more likely to tell others about the experience and to discontinue association with the company. A good recruiter should be open to giving as well as receiving feedback. When using internal or external recruiters, Chern should ensure that the recruiter possesses characteristics that support candidates having a positive experience. These include being familiar with the position as well as the company. A recruiter who cannot answer questions about the job they are recruiting for or the company appears incompetent to the applicant, and this image is then attached to the company as well. Active listening skills, enthusiasm, intelligence, and trustworthiness all reflect well on the company. C and D) EMPLOYER BRAND Chern\s should define its mission and values that would flow through its employer branding communications. An ideal branding mission would be to inspire and influence others to connect with organizations core values. Like, Creating an environment where everyone feels welcome. Numerous methods could help in branding. Use of technology Digital marketing could attract new applicants as well engage and to retain the old one. Use of social media like facebook, twitter, and other sites helps the company to attract talent and reach masses. Employees who perform well and are there in the company from long can share their experiences through these sites or create their blog to let new candidates know what their experiences and success and failure stories have been so far. It would help talent connect and understand company\s culture. Photographs of any main events or about company\s environment could also be posted to drive traffic and interaction. It provides clear view of the organization. Communicating the brand image to employees from recruitment, into orientation and throughout their time with Chern’s will lead to the stronger brand image in the industry. It creates a positive image in their mind and makes them feel valued. What does company stand for should be listed on career page, known by all staff? Promote the family-oriented image the company holds with current employees and provide benefits that fit their needs will support the brand image. Having this firmly rooted family oriented foundation is the structure that supports employee empowerment and provides evidence of how the company values their people. When employees can understand the direction of their employer, see evidence that the employer cares about their well-being, they provide the best word of mouth advertising.

Your Life Chances And Opportunities

Your Life Chances And Opportunities The likelihood of a child succeeding in life is still largely determined by their familys income and social position. The social circumstances that children are born into can still have major effects on future outcomes and these must be identified in order to enhance Britains goal of equality for all. This essay will begin by introducing the debates which centre on this topic. It will then go on to examine four key domains which affect a Childs future life chances: family income, education, class status and family background and the impact these have on future life chances and outcome before concluding on the topic. The concept of life chances was originally introduced by Max Weber who believed that factors such as low, economic position, status and power were interlinked and together presented the problem of poorer life chances in the future. In current literature life chances signifies the opportunities which are available for people to improve there quality of life in the future for example access to quality education. The importance of parents influences on there childs subsequent achievemnts and therefore there life chances is illustrated by Keane and Wolpin (1997) who found that 90% of the variation in lifetime chances and welfare can be attributed to the inequality in skills at age 16, which suggests that a chuilds life chances is mostly related to the social circumstances and decisions of there parents from birth to the age of 16 This could be directly: well educated parents, all things being equal, will probably provide a more intellectually stimulating home-life than those parents who left school early. Other influences will be indirect: better-educated parents may have higher than average incomes and hence be able to finance educational excursions, or in other ways to provide life enhancing experiences for their offspring. some of these additional opportunities will be cumulative, reinforcing other positive characteristics, while others may serve to compensate for some forms of disadvantage. Some people believe that it is strictly genes that affect our opportunities in life. Research focusing on the causal relationship between genes and subsequent IQ, range from 0 to 80% this provides inconsistent results. Recent research, has suggested that genetic and environmental factors are not distinct determinants of intelligence and life chances. Instead it is the interaction between these two factors which gives rise to a childs intelligence levels. The role that nurture has to play in developing intelligence is clearly demonstrated from data published by Inequality in the early cognitive development of British children. The data suggested that the social circumstances of the family influenced future educational attainment. Those children brought up in families with low Socio-economic Status (SES) with attainment levels ranked as low, at 22 months, were also prone to have low attainment at age ten. On the other hand those children from a high SES background were as likely to sho w high attainment at age ten, even if their attainment was ranked low at 22 months. This data suggests that it is nurture and the social circumstances of the family which influences the future chances of these children and not their initial genetic abilities. Mayer notes that children who are born into low income parents also seem to have less success than those parents who have more money. Children from low income families also tend to score lower on measurers of cognitive ability, more likely to drop put of school, to have behavioural problems and essentially earn less in later life. This is drastically demonstrated in a 1970 British cohort survey showing that at age 26 young adults experience an earnings penalty of 9% if they were brought up in a household with an income below half the average (after controlling for educational attainment) therefore this suggests that young people from poor backgrounds are disproportionately observed at the lower end of the earnings distribution when they are in work. Further research in the US by Isaac (2007) which focused on the intergenerational aspect of income focusing on families economic position and how this is influenced by that of there parents: He found that of the children born to parents i n the bottom fifth of the economic distribution, 42 percent remain in this section as adults with only 23 percent rising to the second fifth, meanwhile 32% of children born to parents at the top of the income distribution remain at the top, with only 23 percent moving downwards to the second fifth. From this research alone it is clear to see that a parents income is influencing there childrens future income opportunities. One possible reason for this difference is that of social class. The role of SES is well-documented in the literature concerning life chances. Using the National Child Development Stufies and the British Cohort study, Carneiro et al (2007) and Blanden et al (2006) illustrated that there is clearly a strong relationship between a childs social and cognitive abilities and their parents SES. This has been demonstrated by Fienstein (2003) who found that those children who were originally brought up in low socio economic status background who scored poorly on cognitive tests at an early age were more likely to remain with low scores as they progressed through the life course, however those children from a higher socio economic status with lowe scores were much more likely to catch up. These results from the NCDS and the BCS do allow for informative feedback However in order to test the validity of these findings it is very important that these relationships are tested throughout generations. This recent research has been carried out by Sylva et al (2007) who analysed data from a recent programme the Effective Pre-School and Primary Education (EPPE) programme which aimed to test childrens cognitive attainment (reading and mathematics) from that age of three to the end of Key Stage 2. This study illustrated that even in recent times the socio economic status of parents is ti ll having huge influences on there childrens mathematics and reading skills from the age of three to then end of key stage 2. This data shows that there is a clear relationship between the SES of parents and the subsequent development and life outcome of there children. Families with a low socioeconomic status very often lack the required social, financial and educational supports that typify families with high socioeconomic statuss. Those families from poor backgrounds are also likely to have inadequate access to resources within the community that promote and support childrens development and school readiness. Education plays a major role in helping children to acquire the skills required for acquiring jobs, at the same time as introducing specific virtues that stratify people from high SES to lower SES. It is one of the most influential factors in demolishing intergenerational characteristics and there are strong patterns between socio economic status and educational achievement The study by the Sutton trust report (2002) found that of the richest fifth of the population 44% of young people had a degree, compared with only 10% from the poorest fifth. Those from high income groups are still over four times as likely to graduate as those from low income groups. These inequalities in degree acquirement persist across diverse income groups, The social economic status of a family can affect children in various one way in which it affects the future outcomes of children is that of social capital, this refers to the social connections and attendant norms and values, including aspirations Families are a key foundation for social capital. Those middle class families are likely to have greater access to social capital than working class families: the social networks of the middle class tend to be more diverse than those of the working class. In particular the middle class have more extensive weak ties with e.g. former colleagues, acquaintances and friends of friends. middle class parents can give their children access to these networks of weak ties and associated information and other support. middle class children have further opportunities to develop social networks at university and elsewhere Students from low SES backgrounds who attend poorly funded schools do not perform as well as those from a high SES. Seyfried (1998) stated that low SES students tend to score up to 10% lower on the national assessment of educational programs than those students from Higher SES. This difference has been explained by Eamon (2005) as the low SES of these families prevents access to quality and essential resources which subsequently leads to stress and conflicts within the home this inevitably affects a Childs ability to perform well in educational settings. The relationship between educational attainment and SES also holds for secondary school students. Bradley and Taylor (2004) analyse Youth Cohort Studies data and find that young people whose parents are in highly skilled (particularly professional) occupations are more likely to obtain good exam results than young people whose parents have lower skill levels. The role models and influences of the home are significant and Berliner (2005) attempts to point out that SES is a much larger problem than people like to think. Arguing that socio economic status is just one aspects of a long list of integrated and intergenerational effects this can have on the family and the individual. The social circumstances at home are a huge predicator of later life chances. One key factor which is influencing achievements is the huge changes in family structure over recent years. Increasing numbers of children are being brought up in step families or in lone parent families. And althouh the key factor in developing to the best potential is the family loving environment, this increase kin lone parents is increasing the likelihood of poverty in the future. (Cabinet Office) In the United Kingdom, there are 5.9 million single parents as of 2005, with 3.1 million children At-home good parenting has a bigger effect on childrens achievement at primary level than differences in quality of schools, evident across all social classes and all ethnic groups. Evidence from Demo and Acock (1991) suggests that children from mother only families seem to experience various disadvantages such as higher truancy rates, lower levels of education and more delinquent activity. All of these factors are likely to effect them in the short term and more problematically in the long term effecting there life long chances Emrish and Francesconi carried out a study into the affect of single parenthoods on future outcomes. Almost two in five of the young adults had spent a period of time in a single-parent family. These children tended to obtain poorer educational attainments especially young men.The study found that among men, the probability of children from single parent families is 18% compared to that of a 22% chance for those living in an in tact family. One of the most influential reasons for this was that single-parent-families tended to have fewer economic resources available. This difference wasnt as high for females and this identifies the differences which need to be considered. A further social circumstance of those who live in high SES backgrounds is that they are more likely to have parents who themselves went through to higher education. There exists considerable evidence for the inter-generational effects of parents education on children. Feinstein (1999) stratifies children based on their parents educational qualifications and assesses their progress over time. He uses the BCS and finds that: Children whose parents both have at least A-levels are 14 percentage points higher in the distribution of test outcomes measured at the age of 22 months than those whose parents have no qualifications, and seven percentage points higher than those whose parents are in the middle education group (who have some qualifications, but do not both have A-Levels or higher). Although it seems as though social circumstances of the family have a huge impact on the life course and life chances of an individual. It is important to understand that Individuals do have the freedom to act on their own choices and free will. It is true that people can make a decision to do something whatever way there societal circumstances have been guiding them. One very interesting concept is how some individuals react to the adversity that they face in social circumstances from birth. Resilience means the strategies that people use to cope with adversities, such as income poverty, violent conflict, class differences and education inequalities. There has been a range of research investigating whether these poor social circumstances that children are born into can be overcome in the future. Research into resilience has identified a range pof individual attributes and social contexts associated with high levels of resilience in children throughout there life course with various levels including individual level, level of relationships and community resources. Although there are social circumstances which can put children at high risk of certain life outcomes at birth it can be argues that with the correct relationships and support these can be overcome to intervene in the intergenerational concept. (Masten 1994; Masten, Best and Garmezy 1990) . Some individuals appear to thrive despite sharing the characteristics and conditions of high risk inequalities(e.g., Anthony 1987; Rutter 1985; Werner and Smith 2001 Bernard (2004) analysed research into this matter looking at both qualitative and quantitative research and found that children consistently manage to overcome the social adversities they are presented with in the family and go on to lead positive lives. Most research into this area suggests that on average 70 to 75% of children who seem at risk of intergenerational affects tackle these and go on to lead healthy and positive lives. (Bernard 2004). One study by Werner and Smith (1982) followed a group of 700 children born in Kauai (Hawaii) in 1995 using a longitudinal study. With data collected at six different ages, showed that despite having been challenged with a variety of high risk factors as they grow up they still went on to achieve positive outcomes in adulthood. From the research in this area it is important to understand that there are always individual differences in the way people go on to lead there life course, independent of the social circumstances to which they were born into. Therefore life chances are in part affected by the social circumstances to which you are born into and these circumstances are likely to present risk factors for future achievement however there is always a degree of choice and independence in overcoming the intergenerational affects. McCall, R.B., Owens, E. B. (1996 ). Resilient children: Factors that protect against psychosocial stressors. Developments, 10, 4 (December 1996), 5-10. University of Pittsburgh Office of Child Development. J Ermisch and M Francesconi, Family Matters, Discussion Paper No. 1591, February 1997 single parenbthoss

Sir Gawain and the Green Knight :: Sir Gawain and the Green Knight

Sir Gawain and the Green Knight - Gawain Finds The Green Knight's Castle PASSAGE ANALYSIS LINES 763-841 Sir Gawain and the Green Knight is an Arthurian story about the first adventure of Sir Gawain (King Arthur's nephew). The author and date of this romance are not exactly known but may be dated circa 1375-1400, because the author seems to be a contemporary of Geoffrey Chaucer. From the very start of the story, the author gives a grand introduction for Arthur and his court, and then Arthur's men are described as "bold boys" (line 21) which means that they are brave, but only boys. If they are so brave why then did the author not describe them as men? Chaucer uses this kind of irony to describe his characters in "The General Prologue" of The Canterbury Tales. Chaucer made no direct judgements on his characters in the "General Prologue," nor does the unknown author of Sir Gawain and the Green Knight. This particular passage (lines 763-841) from Sir Gawain and the Green Knight deals primarily with Gawain, Arthur's most courteous and well-mannered knight, finding the castle of the Green Kn ight, whose name is Bercilak, and then there is a lengthy description given of the castle. Gawain is on a journey to find the Green Knight almost one year later. He promised to take his hits from the Green Knight. The most important item in this passage is the description of the castle. Bercilak's castle is well protected and similar to other castles during this period. This castle is unlike others, however, because it is magical and because of its symbolism. Castles in the Middle Ages A Summary of Sir Gawain and the Green Knight Analysis of Passage In this particular passage, Gawain is a knight who is on a journey with deep faith in his religion. This is expressed through his fervent prayers to Christ and Mary. No one is here to help him except God who he speaks to and asks to hear mass on Christmas Eve. He humbles himself "meekly before God" in the snow and cold. His prayers are then answered immediately. Bercilak's castle appears out of nowhere, green with trees and grass as if it were springtime. It is almost as if the castle were provided for Gawain by God. He is at Bercilak's court, but of course, does not know this until the end. After praying, he crosses himself three times and then this grand estate appears before him like magic. Sir Gawain and the Green Knight :: Sir Gawain and the Green Knight Sir Gawain and the Green Knight - Gawain Finds The Green Knight's Castle PASSAGE ANALYSIS LINES 763-841 Sir Gawain and the Green Knight is an Arthurian story about the first adventure of Sir Gawain (King Arthur's nephew). The author and date of this romance are not exactly known but may be dated circa 1375-1400, because the author seems to be a contemporary of Geoffrey Chaucer. From the very start of the story, the author gives a grand introduction for Arthur and his court, and then Arthur's men are described as "bold boys" (line 21) which means that they are brave, but only boys. If they are so brave why then did the author not describe them as men? Chaucer uses this kind of irony to describe his characters in "The General Prologue" of The Canterbury Tales. Chaucer made no direct judgements on his characters in the "General Prologue," nor does the unknown author of Sir Gawain and the Green Knight. This particular passage (lines 763-841) from Sir Gawain and the Green Knight deals primarily with Gawain, Arthur's most courteous and well-mannered knight, finding the castle of the Green Kn ight, whose name is Bercilak, and then there is a lengthy description given of the castle. Gawain is on a journey to find the Green Knight almost one year later. He promised to take his hits from the Green Knight. The most important item in this passage is the description of the castle. Bercilak's castle is well protected and similar to other castles during this period. This castle is unlike others, however, because it is magical and because of its symbolism. Castles in the Middle Ages A Summary of Sir Gawain and the Green Knight Analysis of Passage In this particular passage, Gawain is a knight who is on a journey with deep faith in his religion. This is expressed through his fervent prayers to Christ and Mary. No one is here to help him except God who he speaks to and asks to hear mass on Christmas Eve. He humbles himself "meekly before God" in the snow and cold. His prayers are then answered immediately. Bercilak's castle appears out of nowhere, green with trees and grass as if it were springtime. It is almost as if the castle were provided for Gawain by God. He is at Bercilak's court, but of course, does not know this until the end. After praying, he crosses himself three times and then this grand estate appears before him like magic.

Rhone-Poulenc Rorer, Inc Case-Study

Almost every aspect of the complexity of the merger can be explained through Rhone-Poulenc’s financial constraints. RP’s motives to acquire Rorer were to create crucial capital for its own strategic entry into pharmaceuticals. RP could not buy Rorer either in cash or shares due to the following factors: First, RP had limited ability to pay with borrowed cash. The company was more levered than other firms in the industry. Rhone-Poulenc didn’t want to borrow all the cash because it would have affected in a negative way to its balance sheet despite the fact that it borrowed for the cash portion of the deal.Second, Rhone-Poulenc couldn’t pay with internally generated cash because, during the announcement time, RP was a net cash user in connection with its great capital spending requirements and the recession felling on chemicals markets. Third, RP could not pay with debt securities. It is logical that if the company was too highly levered to borrow and pay in cash, it was too highly levered to swap debt securities for shares. Fourth, Rhone-Poulenc could not pay with RP common shares or with cash raised from selling equity.A deal based on shares would not have been approved by old shareholders because the deal would have diluted the value of individual shares and it would have not been profitable because the RP’s management believed the company’s share price was undervalued. Rhone-Poulenc could not offer standard common stock because it didn’t have any, so it had to offer only nonvoting certificate of investment as a state-owned company as it was.2. In case of Rhone-Poulenc Rorer, Inc, the shareholders of Rorer received a CVR that enabled them to receive additional gains from the possible shortfall of the future stock price and to persuade the Rorer shareholders to continue as the minority equity investors in the Rhone-Poulenc Rorer, Inc. Rhone-Poulenc could not pay with RP common shares or with cash raised from selli ng equity. A deal based on shares would not have been approved by old shareholders because the deal would have diluted the value of individual shares and it would have not been profitable because the RP’s management believed the company’s share price was undervalued.Rhone-Poulenc could not offer standard common stock because it didn’t have any, so it had to offer only nonvoting certificate of investment as a state-owned company as it was. 3. The assumption is that RP is not going to use its right to extend the maturity of the CVRs, and they are thus expiring in July 31, 1993. We have used the binomial tree to value the CVRs as a put option. The value of a CVR is thus $5. 54, and the aggregate value is $231. 64 million. Secondly, we have calculated the value of the CVRs in August 1991, assuming this is the date when the case was written.In addition, I am still assuming that RP isn’t going to extend the maturity. I’ve used almost the same method as i n the previous calculation and the value of a CVR is $2. 78, and the aggregate value is thus $116. 34 million. 4. The investor can see the offering quite attractive. This is due to the fact that they now have limited their downside risks with the put option. This means the minority have an effective hedge against the possibility of failure of the upcoming merger. Rhone-Poulenc managed to entice all the shareholders of the acquired Rorer with its somewhat complicated three-stage transaction.The initial tender offer and giving the rights to control RP’s HPB was attractive enough for Rorer to accept the deal. The Contingent Value Rights gave the minority shareholders the rights they thought were valuable enough to close the deal. Rorer believed that the whole package was indeed worth of $36. 50 per share. Rorer benefited from the announcement of this deal and gained about $632 million in new value. However, RP’s non-voting common shares decreased 4. 4 percent, or $175 mil lion, in value. The fact is, all in all, that RP has a huge liability due to the CVRs.In the worst case scenario, the share price falls below $26. 00 and the liability would thus be ($49. 13 – $26. 00) * 41. 8 million = $966. 83 million, which is the maximum amount of RP’s liability. The maximum liability was perfectly hedged, providing RP a delta neutral position. Extra. RP would prefer the share price to stay higher than $49. 13 until 1993, and $53. 06 until 1994. This is because in these cases RP would not be obliged to pay CVR-holders the cash payments. Thus if the share price would be higher than $49. 13 in the expiration date of the CVRs, RP would not extend the maturity of the Contingent Value RightsIntroduction A merger between Rorer Group, Inc and the Human Pharmaceutical Business (HPB) of Rhone-Poulenc (RP) S. A. generated a major multinational pharmaceutical company, Rhone-Poulenc Rorer (RPR) on July 31, 1990. The expectations concerning takeover of Rorer ha d aroused in the late 1980s when the considerably low cash balance and rising level of debt seemed to slow down its strategy of growth by acquisitions. The rumors had reassurance in 1989 when Rorer made a bid to take over the pharmaceutical business of A. H. Robins and lost the opportunity.Just a short time after this, the $3. 2 billion merger of Rorer and RP was announced. A year later the company had shown rapid post-merger integration and initial synergy gains. RP had practically no position in the United States and Japan, but on the other hand it had a strong market share in some European Community markets. Thanks to Rorer’s U. S. connections, the new company ranked among the top three in Europe and had improved its position in the United States. Rorer’s Robert Cawthorn continued as RPR’s CEO and almost all the new senior executives came from Rhone-Poulenc.The markets expected RP to slowly take over the company because it owned 68% of RPR’s shares. Th e French government owned 100% of Rhone-Poulenc’s voting common stock. RP was the seventh largest chemical manufacturer in the world and it gave the minority shareholders a contingent value right (CVR) that promised to pay them on July 31, 1993, any shortfall between $49. 13 and the then prevailing stock price. Rorer Goup, Inc’s main factor in its growth strategy had been a program of acquisitions, because sales growth in the company’s existing product lines was characterized as mature.As usual, there were several skeptics associated to this merger. They were worried about the cultural integration and independence. The skeptics pointed out the company is French, yet the management team is mainly American, they have a American-style mission statement (â€Å"Our Mission is to become the BEST pharmaceutical company in the world by dedicating our resources, our talents, and our energies to help improve human health and the quality of life of people throughout the w orld†) and the lack of interest of the American executives to learn French. The market outlook for the industry wasn’t favorable for the company.The cost of new-product development in the industry was rising and yet the number of new drug applications worldwide had fallen. It was also predicted that the governments would get tougher on the cost of drugs in an effort to slow down rapidly rising health costs. Other risks to consider were patent expiration and competition from low-priced generic drug manufacturers and decreasing product life cycles. In turn, the world population was aging, analysts noted that computers and biotechnology were aiding new-product development and different analysts recommended to buy the RPR’s stock on the long term. . The $3. 2 billion merger was consummated in a three-stage transaction, by which Rhone-Poulenc obtained 68% of Rorer’s common stock (91. 6 shares), which was enough to permit Rhone-Poulenc to consolidate Rorerâ€⠄¢s results for financial reporting. First, Rhone-Poulenc would tender for 50. 1% (43. 2 million shares) of Rorer’s common stock for $36. 50 cash per share. Rhone-Poulenc increased its debt/capital ratio to 45% by borrowing the funds to finance the tender offer. The debt/capital ratio was considerably high compared to its competitors ratio of 20-30%.Second, Rorer assumed $265 million of RP debt (guaranteed by RP), made a $20 million cash payment to RP, and issued 48. 4 million new common shares to RP in exchange for RP’s HPB division. Analysts believed that Rorer’s bylaws would require at least 85% of all shares be voted in favor of the issuance of new shares and, more generally, of this entire transaction. Third, Rhone-Poulenc issued the 41. 8 million CVRs to the remaining minority shareholders in Rorer. A CVR entitled the holder to the right, at the end of three years (July 31, 1993) or four years, at RP’s option, to a cash payment of US$49. 13 (or $53. 6 if the payment were made at the end of four years) reduced by the higher of the value of the RPR share at that date or $26. Thus, if the value of the RPR share exceeded $49. 13 (or $53. 06), there would be no payment. The maximum amount of RP’s liability on December 31, 1990, was 5 165 million French francs at the date of the issuance of the rights. The maximum amount of RP’s liability at the date of issuance was hedged. Any changes in the value of the CVRs resulting from fluctuations in exchange rates, as well as the amortization of the cost of the hedge, were recorded directly into the consolidated equity of RP.The CVRs were quoted on the American Stock Exchange and traded independently of the shares of EPE, which were listed on the New York Stock Exchange. Rorer and RP jointly released its own estimate of the package value of CRV and minority share in RPR to be worth $36. 50 and thus equal to the price at which RP was offering for shares of RPR. Rorer’s in vestors responded positively to the merger arrangements. Rorer shares increased by 28% net of the changes in the Standard & Poor’s 500 index over the week during the week of the announcement. This gain equaled about $632 million in new value.Simultaneously, RP’s nonvoting common shares lost 4. 4% net of market during the announcement week, or about $175 million. Almost every aspect of the complexity of the merger can be explained through Rhone-Poulenc’s financial constraints. RP’s motives to acquire Rorer were to create crucial capital for its own strategic entry into pharmaceuticals. RP could not buy Rorer either in cash or shares due to the following factors: First, RP had limited ability to pay with borrowed cash. The company was more levered than other firms in the industry.Rhone-Poulenc didn’t want to borrow all the cash because it would have affected in a negative way to its balance sheet despite the fact that it borrowed for the cash portion of the deal. Second, Rhone-Poulenc couldn’t pay with internally generated cash because, during the announcement time, RP was a net cash user in connection with its great capital spending requirements and the recession felling on chemicals markets. Third, RP could not pay with debt securities. It is logical that if the company was too highly levered to borrow and pay in cash, it was too highly levered to swap debt securities for shares.Fourth, Rhone-Poulenc could not pay with RP common shares or with cash raised from selling equity. A deal based on shares would not have been approved by old shareholders because the deal would have diluted the value of individual shares and it would have not been profitable because the RP’s management believed the company’s share price was undervalued. Rhone-Poulenc could not offer standard common stock because it didn’t have any, so it had to offer only nonvoting certificate of investment as a state-owned company as it wa s.The form of the deal solved Rhone-Poulenc’s financial problems and it made possible for the firm to generate capital for its human pharmaceutical business and raise equity via obtaining Rorer’s shareholders to remain as minority equity investors in the Rhone-Poulenc Rorer, Inc. It would be natural to RP to want to issue equity for part of the deal but for the reasons mentioned above, it could not do so. 2. Contingent Value Right (CVR) is a type of right given to shareholders of an acquired company that ensures them to receive additional benefit if a specified event occurs.CVRs are handy tools that may help deal makers surmount challenging deal design problems. The use of CVRs is relatively rare, but they are useful when the seller company is seeking protection for the remaining minority shareholders who might be vulnerable to unfair treatment by the acquirer, the seller’s board may be concerned the buyer’s share price may not retain its value if the dea l’s projected synergies are not achieved, the integration is not smooth, or the buyer’s legacy business does not perform as expected.In case of Rhone-Poulenc Rorer, Inc, the shareholders of Rorer received a CVR that enabled them to receive additional gains from the possible shortfall of the future stock price and to persuade the Rorer shareholders to continue as the minority equity investors in the Rhone-Poulenc Rorer, Inc. Rhone-Poulenc could not pay with RP common shares or with cash raised from selling equity. A deal based on shares would not have been approved by old shareholders because the deal would have diluted the value of individual shares and it would have not been profitable because the RP’s management believed the company’s share price was undervalued.Rhone-Poulenc could not offer standard common stock because it didn’t have any, so it had to offer only nonvoting certificate of investment as a state-owned company as it was. Shareholder s selling their Rorer shares to Rhone-Poulenc were paid in three forms. They received totaling $1. 7 billion, shares in Rhone-Poulenc Rorer and CVRs. If, at the end of three years, the RPR share price did not exceed $98, Rhone-Poulenc had to pay CVR holders the difference between the share price and $98, to an upper limit of $46 per CVR.If the RPR share price was below $52 on August 1, 1993, RP would have to pay the CVR holders $1 billion (in FRF over 5 billion). By the end of 1991, the price of the CVR had fallen by 4/5 of its value. Its close at under $1 reflected the good performance of the group. RP took the opportunity to buy all the CVRs it had been offered. During the first year after issue, the group gathered in 20. 7 million CVRs, half the total number issued. 3. The assumption is that RP is not going to use its right to extend the maturity of the CVRs, and they are thus expiring in July 31, 1993.We have used the binomial tree (Exhibit A) to value the CVRs as a put option. The value of a CVR is thus $5. 54, and the aggregate value is $231. 64 million. I have assumed risk-free rate of 8. 20 percent, which is the yield of a 3-year U. S. Treasury note. The standard deviation was given, 18 percent, and we have used it to calculate u and d enabling me to calculate p also. We have used $36. 50 as S(0). Secondly, we have calculated the value of the CVRs in August 1991, assuming this is the date when the case was written. In addition, we are still assuming that RP isn’t going to extend the maturity.We have used almost the same method as above (Exhibit B) and the value of a CVR is $2. 78, and the aggregate value is thus $116. 34 million. Only difference is that we used 0. 172 (=0,18*(SQRT(11/12)) as standard deviation, since there is not full year until maturity. We have used 8. 09 percent as the risk-free rate, which is the yield of a 2-year Treasury note. The share price in August 1, 1991 was $45. 75, which is the value of S(0) in my calculations. As we can see, the value of the CVR is considerably smaller in the latter case, due to the decrease in the time value of the put option. 4. The investor can see the offering quite attractive.This is due to the fact that they now have limited their downside risks with the put option. This means the minority have an effective hedge against the possibility of failure of the upcoming merger. The investors are receiving a cash payment of $49. 13 (or $53. 06 in the case of RP extending the maturity) minus the then prevailing share price or $26. 00. In one hand their shares can gain possible extra value and in the other they have a limit for the possible losses. Rhone-Poulenc managed to entice all the shareholders of the acquired Rorer with its somewhat complicated three-stage transaction.The initial tender offer and giving the rights to control RP’s HPB was attractive enough for Rorer to accept the deal. The Contingent Value Rights gave the minority shareholders the rights they though t were valuable enough to close the deal. Rorer believed that the whole package was indeed worth of $36. 50 per share. Rorer benefited from the announcement of this deal and gained about $632 million in new value. However, RP’s non-voting common shares decreased 4. 4 percent, or $175 million, in value. The fact is, all in all, that RP has a huge liability due to the CVRs.In the worst case scenario, the share price falls below $26. 00 and the liability would thus be ($49. 13 – $26. 00) * 41. 8 million = $966. 83 million, which is the maximum amount of RP’s liability. The maximum liability was perfectly hedged, providing RP a delta neutral position. This is possible through adjusting the ratio of CVRs and RPR equity, in the case of price changes of these CVRs. Extra question RP would prefer the share price to stay higher than $49. 13 until 1993, and $53. 06 until 1994. This is because in these cases RP would not be obliged to pay CVR-holders the cash payments.Thus if the share price would be higher than $49. 13 in the expiration date of the CVRs, RP would not extend the maturity of the Contingent Value Rights. I have calculated the value of the CVRs in case the maturity is extended until 1994. The calculations are in the Exhibit C, and the value of a CVR is thus $5. 57 and the aggregate value is $232. 89 million. In 1993, if the share price is S(uud) = $43. 70, the CVRs’ maturity might be extended, because now there would be a possibility of the share price to increase to $52. 32 and the extension would have been preferable.