The Comparison Study Of Financial Supervision Finance Essay - Free Essay Example

Sample details Pages: 21 Words: 6448 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Compare and contrast essay Did you like this example? From the early 2007, the financial crisis which was caused by the subprime crisis has spread to global and many of the economy through multiple channels, has caused a great impact and destruction in the international financial order. Since the crisis, governments take active measures to save, meanwhile, begin to reflection the cause of crisis. The international society generally recognized, lack of financial supervision is an important source of the crisis, under the circumstances when the risk preference of investors is increasing. The asset price bubbles which were brought by excessive inflation of real estate market increased market investors risk preference. At the same time, financial institution relaxed the management of credit risk under propel of interests. The great gap between supervision and speculation made regulators fail to find out when subprime loans circulated in the market by securitization, which finally caused the spread of the global financ ial crisis. After the crisis, U.S, EU and other main economies have actively introduced major financial supervision reform measures, the international community has accelerated the pace of regulatory cooperation at the same time. November 15th, 2008, the leaders of G20 group held a summit conference about financial market and world in Washington, U.S, this is the first time of G20 summit in history. In April and September of 2009, the second and third summit was held by the G20 leaders in London, UK and Pittsburgh, U.S, separately, some main issues like promote economic growth, against protectionism, the IMFs endowment and strength financial supervision were discussed during the conferences. In London Summit, leaders thought that is necessary to implementing regulation and supervision for all financial institutions, financial products and financial market which have systemic influences, the first put forward to let hedge funds in financial supervision. On September 25th, 2009, fi nancial stability council announced Overview of Progress in Implementing the London Summit Recommendations for Strengthening Financial Stability after the summit in Pittsburgh, introduced the measures and progress about implementing related suggestions of London summit and financial stability council. So far, a global financial regulatory reform tide was formed. On July 21st, 2010, President Barack Obama has signed into law the biggest overhaul of American financial regulation in decades. Thus, in less than two years after Lehman brothers bankruptcy and detonated the global financial crisis, this bill which named Dodd-Frank Wall Street Reform and Consumer Protection Act formally went into effect, the biggest reform of US financial regulation since the Great Depression was started. Federal Reserve chairman Ben Bernanke says, financial regulatory reform will strengthen supervision of enterprise which is big enough to pose risk to the financial system, prevent the crisis repeat, and keep the independence of The Fed in monetary policy. This international financial crisis has little impact of Chinas financial system, the main reason is insufficient of Chinas financial market development and innovation, which avoid the influence of external systemic risk. However, along with continuous development of the global economy integration process, accelerate open financial markets and the pace of financial innovation is the trend of the times, the connection of Chinas financial market and international financial market will increasingly close, the facing challenge and risk will more and more big. In the tide of international financial regulatory reform, China should base on the situation, actively learn from western developed countries financial regulatory reform experience, further perfect financial supervision. 2)outline In this paper, I would like to study about the financial supervision reform measures after the crisis comparatively, and find out what China can learn from them. In Chapter 1, I will introduce the background of financial regulatory reform after the crisis, the efforts of international society for perfecting the reform in financial supervision, and then the frame of this paper briefly. In Chapter 2, review some theoretical and empirical literature. I will define financial regulation and then begin with a brief history of financial regulation. After that, I will point out some major issues the regulation that still face. Such as financial supervision and the vacuum long-term existence, supervision philosophy have too much stress on microcosmic prudent supervision, coordination between national regulation and international supervision has problems, whether we should limit executive compensation in financial area, and so on. In the next Chapter, I will compare the reform measures of some main countries and areas (America, England, EU and Japan), to see what they have done to improve the financial supervision system, and find out common ground and differentia of these measures. In Chapter 4, I will first introduce the current situation of Chinas financial regulation system. Secondly, state briefly of problems that still exists, such as imperfect of legal system of financial regulation, poor coordination between financial institutions, regulators need to improve quality and social supervision environment needs further improvement . Finally, analysis reform direction and solutions of problems. In the last Chapter, I will conclude this paper and point out the insufficient parts of this paper, and how to improve it. II Literature Review III Analysis of financial supervision reform of US and UK 1)Major national financial supervision and change (A)American financial regulatory reform The U.S financial crisis was considered the most severe economic crisis since the 1930s depression. Throughout the crisis, the United States government and financial regulators has an unshakable resp onsibility to the cause and spread of the crisis. Facing the criticism of the outside to the U.S financial supervision system, American financial supervision system reform as follows: On 17th, June, 2009, the Obama government official announced the comprehensive financial regulatory reform plan, will build security perimeter from supervision of financial institutions and financial market, the protection of consumer rights and interests, crisis management and international cooperation, Expect to restore confidence in the U.S financial system. After more than a year of work and two weeks of negotiations, lawmakers finished melding different versions of Wall Street reform. And the House passed the bill on 21st, July, 2010, which is a declaration that the financial supervision system reform finally decided. Heres a breakdown of key measure in the bill. New oversight power: Creates a new 10-member oversight council consisting of financial regulators to look out for major problem s at financial firms and throughout the financial system. The Treasury Secretary gains a key role in enforcing tougher regulations on larger firms and watching for systemic risk. The council reserves the right to affirm that which financial institutions may impact on market system, thus put more strict regulatory requirements of these institutions in the capital and liquidity. Creating a consumer agency: Establishes an independent Consumer Financial Protection Bureau housed inside the Federal Reserve. Fees paid by bank fun the agency, which would set rules to curb unfair practices in consumer loans and credit cards. Regulating derivatives: Would force most derivatives to be bought and sold on clearinghouses and exchanges. Some derivatives, including those traded by agriculture companies and airlines to mitigate risk, would still be unregulated. Reining in risky bets: Limits the size and scope of banks investment activities. While the original proposal would have banned bank s from owning hedge funds, the bill would allow banks to sink up to 3% of capital into hedge funds or private equity funds. Also prevents banks from trading derivatives, even for their clients accounts. Banks would be forced to spin off their swaps desks that make these trades. Dealing with too big to fail firms: Creates a new process for unwinding big financial firms that resembles the powers that the Federal Deposit Insurance Corp, has to shut failing banks. Firms that sell mortgage-backed securities must keep at least 5% of the credit risk, unless the underlying loans meet new standards that reduce risk. Banks would be taxed to pay for unwinding banks after a collapse. Checking on the Fed: Gives regulators strengthened power to break up financial companies that have grown too big, but only if the firms threaten to destabilize the financial system. Meanwhile, allows Congress to order the Government Accountability Office to review Fed activities, excluding monetary policy. Au dits would be allowed two years after the Fed makes emergency loans and gives financial help to ailing financial firms. Curbing executive pay: The bill would also impose new rules for how all publicly-traded companies, not just banks and other financial firms, pay top executives. The Fed will supervise pay for executives and ensure executive compensation system will not lead to excessive risk. The Fed will provide guidance rather than programmatic formulate specific rules. Once found in enterprise salary system for high-risk business, the Fed has rights to intervene and stop. (B) Britains financial regulation reform As one of global financial centers, Britain also receives an extremely serious impact in this crisis, therefore it is also one of the most active countries to promote financial supervision reform. After the crisis, Britains financial supervision system relatively minor adjustments, one reason is that Britains financial regulatory reforms have been quick to the U nited States and the European Union. In June, 2000, Britain has passed Financial Services and Markets Act 2000, complete financial supervision from the supervised respectively to the combination of supervision. The financial services authority (FSA) which is founded according to the law has been described as the worlds most powerful comprehensive financial regulators, Britain also become the model of international financial regulatory reform. However, Britains regulatory system still cant prevent crisis. In 2007, the Northern Rock, which is one of the five mortgages lending institutions, dragged by American subprime mortgages, down on the brink of bankruptcy. After injection by the bank of England, Britains financial officials said, would establish a new Financial Stability Committee (FSC), to keep the FSA as the only role of regulators in banking. At the same time, plan to grant central bank the legal liability of keeping stable in the turbulence of the market, in order to make timely response during crisis. To maintain financial stability, on 8th July 2009, the HM Treasury (UK Treasury) published the White Paper titled Reforming Financial Markets, puts forward a series of reforms. First, maintain the Britains financial regulatory model Tripartite Authorities, which is consisted of the Financial Services Authority (FSA), the UK Treasury and the Bank of England (BOE), strengthen the FSAs governance arrangements and statutory framework. At the same time, introduce to create a new Council for Financial Stability (CFS), which will coordinate tripartite and intervene when in a significant risk. Second, formulate the British government entitle to nationalize deposit institutions when it appears risk which is serious harm of financial stability. Third, put forward four measures to prevent large financial institutions to appear risk, which are strengthened market discipline, enhanced prudential supervision, systemically significant financial institutio ns will be required to prepare detailed contingency plans for their own failure in advance and simplification of market infrastructure on securitization products and financial derivation. Forth, propose the principle of who make mistakes, who pay tax benefit, in order to protect the interests of taxpayers, resolve the cost problem of financial system risk. Meanwhile, expand the role for the Financial Service Compensation Scheme (FSCS). The White Paper envisages that it would be better to have some pre-funding. Fifth, the White Paper announces a range of measures designed to protect the interests of consumers and achieve a fair and competitive market for consumers. Finally, emphasize financial supervision of international cooperation. 2) Comparative analysis of major national financial regulatory reform Common ground Overview of these schemes, although the specific content and measures exist partly differences, which reflects different attitude and emphasis on vario us countries and regions in the reform of the financial supervision, but there are more similarities. For example, care about financial stability and systemic risk, enhance supervision coordination, protect consumers and investors, pay attention to international cooperation on supervision, etc, are all main content of reforms. Reform on recover regulatory lacunae In terms of institutions, all important systemic institutions will be brought into supervision. The financial crisis snagged the main defects of financial supervision system is systematic financial risks, outside financial derivatives, private equity funds and rating agencies out of regulation. Therefore, the key of financial reform bills is at this point. The United States, the European Union and the British reforms have expanded the scope and objects of supervision, brought all products which possible have systemic risks such as hedge funds, private equity fund, the fund of real estate and investment Banks into regu latory framework of financial stability, executed registration system to hedge funds and private equity fund, and required increasing openness and transparency of credit rating agencies. All reform bills offered fully free space to development of financial system on the basis of perfect financial supervision system. That is because under the atmosphere of financial globalization, there is increasingly fierce competition between national and regional financial markets. For a country or a region, if the financial system has been restricted, this will only drive its financial resources to areas where have more lax restrictions, thus impinge on financial competitiveness of this country or region. Reform on supervision coordination mechanism All planes strengthened supervision coordination through the establishment of institutionalized entities. In the financial crisis, whether the U.S, European Union which executed supervised respectively or Britain which implemented supervised , fail to survive. Therefore, the reform plans dont make evaluation and regulation for supervised and supervised respectively, but focus on establish coordination mechanism. At the EU-level, the three existing Committees of Supervisors would be replaced by three new European Supervisory Authorities, which will take on all the missions of the current Committees of Supervisors, but in addition have increased responsibilities, defined legal powers and greater authority. The United States proposed to set up Financial Services Oversight Council (FSOC) which is directed by the Treasury, filling the regulatory lacunae, coordinating dispute in policy implementation, determining the potential risks in financial institutions and marketing activities. The Britain decided to establish Financial Stability Committee (FSC), which is responsible in coordination for the financial risks and stability monitoring. Regulation on the systemic risk U.S trying to empower the Federal Reserve to mon itor the larger, deeper relevance to commercial banks, investment banking-based financial holding companies, large insurance companies and all possible enterprises which possible threat to financial stability. Britain plans to set up FSC in the Bank of England while the EU established the European Systemic Risk Council (ESRC) as the macro-regulatory to control systemic risk. However, although the reform has emphasized the supervision of systemic risk, but whether the corresponding reform measures could achieve results is questionable. Crisis handling on regulatory authorities In this crisis, the countrys assistance for problem financial institutions were very inadequate, first because of misjudgment of the crisis process and seriousness, the second is due to the absence of effective crisis management mechanism in financial regulatory authorities. To address the above problems, an important part of the reform programs is to clear the authority and procedures of regulatory autho rities in the crisis management. For example, the United States proposed to establish problem-solving mechanism of bank holding companies and non-bank financial institutions which were verge of bankruptcy, allow holding company to make an orderly bankruptcy resolution which may threaten the safety of the entire financial system if any of its bankruptcy, in order to avoid the disorderly liquidation and the government in the dilemma between rescue and financial collapse. Unlike the U.S, the UK has not developed a special bank insolvency law. To more effectively deal with failing banks, Banking Act 2009 established a comprehensive set of bank insolvency procedures and special handling mechanism. In this regard, the EU has done a great aspect of change. Protecting investor and consumers interests Investor and consumer protection is a major aspect which is promoted to improve by national reform. United States, has set up an independent consumer financial protection agencies, the United Kingdom also devotes a chapter to discuss support measures to protect consumers in the White Paper Reforming the financial market. The EU has also focused on financial regulatory reform program to strengthen consumer protection. An important issue exposed in the financial crisis is that complex owing to the modern financial products has made it is often difficult for microcosmic subject in market to understand its characteristics correctly and make the right assessment of the financial risk inside, thus cannot make judgments based on trading decisions, or even fall into the trap of fraud. Therefore, to protect investors and consumers right to know and the right to claim is in the common elements of the reform programs. Reform on salary system Too much emphasis on short-term performance and excessive risk preference of the incentive-restrictive mechanism is one of the causes of the crisis, compensation system becomes the common concern in the UK and the U.S reform pr ograms. In Reform program proposed by the U.S, regulatory agencies will publish standards and guidelines to make the financial company executive compensation and shareholders long-term value more harmonious, at the same time, to prevent possible hazards in the salary system which may harm by regulators safety and stabilization. In addition, gives shareholders the right to a nonbinding proxy vote on corporate pay packages, and calls for greater independence of the Remuneration Committee. Britain has announced the Pay Code of Practice, the FSA is reviewing its use and reflect in the financial business case. The FSA will analysis the existing factors in compensation mechanism which may have threat to financial stability, report annually to the Ministry of Finance, the pay practices of financial firms and their impact on financial stability, and put forward plans on salary system reform. Promoting international coordination and cooperation in financial supervision Among the various financial regulatory reform programs are put forward the necessary of strengthen coordination and cooperation of international financial regulation. In the process of financial globalization, the internationalization of financial activities and financial supervision localization constitute a basic contradiction, the occurrence and spread of this financial crisis is the response of this contradiction. In this case, no single country is capable of preventing and handling the crisis alone, so the countrys financial supervisory coordination and cooperation has become inevitable. The United States, for example, the specific measures in improving the international regulatory standards and promoting international cooperation achieve as many as 11. The British Reforming the Financial Market White Paper also proposed to strengthen construction of international financial regulatory framework with the core of Financial Stability Committee, identify and guard against potential financial risks around the world more effectively. In the EUs reform program, the international coordination of financial supervision is most important. Differentiations At the same time, because financial development is very different in the United States and Europe, the reform programs were significantly different emphases. The United States is committed to institutional settings. United States, as the birthplace of the crisis, its reform program has a major adjustment for the current financial regulatory system. Including locate super regulator of the Federal Reserve, establish Financial Service Regulatory Committee, bring hedge funds, private equity funds, venture capital funds and so on into the regulatory system, strengthen the OTC financial derivative products trading supervision. However, the reform program of the U.S retains the basic double bull pattern. Britain attempts to repair the reforms. In contrast, the UK reform is weak, not have big adjustment on the Tripartite Authorities financial regulatory model. The reform in the following three aspects: First, to increase the power of the UKs Financial Services Authority rules for monitoring; second is to establish the Financial Stability Committee; thirdly, greater emphasis reform on governance structure of financial sectors. We should say that U.S and British programs are re-defining on the countrys financial regulatory framework, regulatory elements and objects in varying degrees, emphasizing the establishment of two new regulatory bodies: one is a systematic risk management function of the body; another body is coordination regulation. Because of the particularity of the EU, the proposed pan-European financial supervision and the overall reform program may be restricted by the European Union Basic Law and member states law and sovereignty, so the EU program focuses on the strengthening supervision of credit rating agencies, international financial institutions and investment funds. IV Rele vance to China Situation of Chinas financial regulation On December 1st, 1948, the Peoples Bank of China (PBC) was established and began to exercise the functions of financial supervision. But Chinas real financial regulation began from 1984, when PBC began to exercise the functions as the central bank. Chinas financial regulators adopted a separate operation, separate supervision system, the functions of monetary control exercised by the Peoples Bank, the Banking Regulatory Commission, Securities Regulatory Commission, Insurance Regulatory Commission work together to exercise institutions regulatory functions. Insurance Regulatory Commission Insurance Industry Securities Regulatory Commission Securities Industry Central Bank General banking supervision The regulatory agencies not only response divisionally but also cooperate closely to compose a national financial supervision organization system. The biggest advantage for regulatory system which matche s decentralized management model is helpful to improve the level of supervision as well as institutional control efficiency, with advantages of highly specialized and careful division. But this kind of system (separate operation, separate supervision) is no longer suited to the realities of the international financial globalization. In nowadays, since an increasingly globalized financial markets and complex financial innovations, the boundaries between traditional and financial markets have weakened, cross-market financial products become increasingly common, cross-sectors coordination and cooperation of supervision is increasingly important. Chinas cross-shareholdings among financial institutions; securities companies, fund management companies to enter the interbank market; deposit insurance, stock mortgage business and other business development; big push of commercial bank intermediary business, all show Mixed trend in China has become increasingly apparent. In 2007, China be gan to steadily advance an integrated operation in the financial industry, carried out a comprehensive financial service innovation pilot in Hunan Province. In September in the same year, the Chinese inter-bank market dealers Association was formed, it will manage the inter-bank market discipline, while maintaining the normal inter-bank market competition in order to promote the healthy development of the market. Since 2007, the PBC continued to improve and stabilize level of monitoring the financial risk and assessment, steady progress in construction of financial supervision and coordination mechanisms. After the financial crisis, Bank of China set up an emergency working group of international financial crisis in time, to closely monitor the development trend of the crisis and domestic financial risks that may occur, and actively develop response plans, timely disposal of unexpected risk. In 2009, the PBC strengthened the international exchange and cooperation of financial sta bility, and actively participate in international financial regulatory reform, not only actively participate in researching and formulating international banking supervision rules, but also in the same year in June, joined the Financial Stability Council (FSC), in August, officially launched the Chinese Financial Sector Assessment Program (FSAP) work. Imperfection of Chinas financial regulatory system Compared with Western countries, Chinas financial supervision is still very short time. Chinas current system of separate supervision model has had great results, but the regulatory system has also exposed many shortcomings. Imperfect of the legal system of financial supervision First, the existing legal system of financial supervision is not complete, systematic is not strong. Chinas current legal system of financial supervision primarily composed by the Peoples Bank Law, Commercial Bank Law, Insurance Law, Securities Law, Banking Regulatory Law, Foreign Financial Institut ion Regulations and other laws ,regulations and departmental rules. On one hand, in the existing legal system, lack of legal mechanism design of emergency treatment for the financial crisis, the deposit insurance system is a blank area of legal regulation. On the other hand, in a number of normative legal documents which form the existing legal system of financial supervision, proportion of departmental rules is too large, meanwhile lack of authority to implement. At the same time, the convergence between the regulatory legal documents is not strong, even exists the phenomenon of duplication or conflict among some documents. These are bound to affect enhancement of the efficiency of financial supervision and financial regulation acts credibility. Second, the legal regulatory mechanism is not perfect; operability of legal norms is not strong. In Chinas existing legal system of financial supervision, market access, market inspectors, market exit, prudence demands have been covered so basically, but most are simple principle provisions, lack of relevant implementation details and practical is not strong, but also simplify the regulatory content, lags behind the status of the financial industry. With continuous advance of financial innovation, China still lack of corresponding legal regulation of some new financial services and products, market exit in the financial institutions also lack of legal norms. The lack of legal design for emergency legal mechanisms of the financial crisis, the legal regulation of credit institutions, the financial markets with industry self-regulatory mechanism, highlights imperfect of Chinas financial laws and regulatory mechanisms. Unestablished coordination mechanism of financial supervision On June 28th, 2004, China Banking Regulatory Commission, Securities Regulatory Commission, China Insurance Regulatory Commission officially announced the Memorandum of financial regulatory cooperation and division for three financial reg ulatory bodies. Since then, the Joint regulatory Conference Mechanism has become a major regulatory coordination mechanism; One Bank and Three Commissions may carry out communication and consultation according to the needs of their duties. But such communication and consultation are equal voluntary, without any binding force, resulting in the effect of a weak joint. In the case of current Chinese coordination mechanisms of financial regulators has not yet fully effective established, financial regulators need to strengthen synergies, coexistence of separate industry monitoring and multi supervise often lead to financial regulation vacuum and is difficult to avoid repetition, in particular in the Financial Mixed environment. Meanwhile, the machinery of separation of supervision and long supervision has a certain degree of control role for Chinese financial industrys Mixed and the international operation of financial market, not only easy to build up homogeneous risk, and is not co nducive to encourage financial innovation, stimulate power and demand for financial innovation. At the same time, when functional loss the guardian of property rights in the financial sector, domestic financial institutions self-regulatory role is relatively weak, self-discipline, self-development and self-risk internal control mechanism is difficult to create. The risk regulatory requirements of financial regulatory authorities havent transferred into risk management needs for financial institution themselves, so that financial regulators take too much responsibility, enhanced financial supervision costs, reduced the efficiency of financial supervision. Regulators quality need to be improved The overall quality of financial supervision team determines the effect of monitoring. When some professionals in the financial industry with not high moral quality, Chinas financial sector has also very serious shortage of talent. Currently to see the quality of Chinas monitoring team , the lack of expertise, knowledge narrow, lack of comprehensive analytical skills are common problems. This effect strength and depth of monitoring in varying degrees, while make it more difficult to carry out the coordination between departments. One reason is that financial practitioners follow-up education and training have fallen behind, and secondly, lack of accreditation. Third, China has a huge loss of excellent staff. Social regulatory environment need to be ameliorated The current financial operations have penetrated into all aspects of social and economic life. In China, there are many problems in strengthening the social environment of financial regulation; regulatory coverage and the efficiency of supervision have been restricted. Chinas accounting firm and the audit firms professional skills rarely up to the requirement of supervision, there are serious deficiencies in the system, and social control seriously lags behind. The general public has not strong financi al awareness; credit rating agencies have no authorities at all; information disclosure system still in its infancy; depositors only concerned about level of interest rates, do not ask good or bad of financial institutions credit; financial institutions interested in short-term speculative interests, even malicious management, all of these greatly increased the risk of financial institutions and the overall risk of Chinas financial system. Learn from major countries experience of financial supervision reform, improve Chinas financial regulatory system In the post-crisis era, when develop a market economy with Chinese characteristics, we cannot blindly copy other countries financial regulatory reform model, but should be combined with Chinas actual situation, improve the regulatory model to approach in line with Chinas national conditions. Attention to financial stability, strengthen the macro-prudential supervision The financial crisis is outbreak of total cumulative pro blems over the past years, which are cumulated in the process of rapid development of financial market and financial innovation, re-awakened the regulatory authorities to prevent systemic risk, to maintain overall financial stability. From long-term development of Chinas financial industry, on one hand, we need to closely follow up the research on macro-prudential supervision of the latest, on the other hand, should actively organize to research and establish macro-prudential regulatory system which conforms to our countrys market environment. First, should establish a clear framework for macro-prudential decision-making. Prudent macroeconomic policies should not only based on self-regulatory requirements, but also need a stable and corresponding laws and regulations based structure. Therefore, China should establish legal system to appropriate macro-prudential supervision, in order to monitor have legal support. At the same time, via abolish, modify, supplement and develop and o ther means, in a timely manner to complete and reconstruct the existing financial regulatory laws, rules and regulations. In addition, to ensure the quality of supervision, the regulators should develop regulatory objectives more clearly. Although many related indicators and guidelines yet mature in researching, for the time being difficult to quantify, but in the short term could consider the first use of qualitative and directional goals. Second, establish information sharing mechanism between Peoples Bank and financial supervision agencies. In 2009, for the effective prevention of systemic financial risks, and bring prudent management of macroeconomic into the countrys macro control and financial stability policy tools, the PBC has taken a series of measures. However, in practice, Macro-prudential regulation not only need micro-prudential data but also need more other data as the legal basis. Only macro-control departments fully coordinate and communicate with other agencies a nd departments, data and information sharing and utilization can be ensured. Thus, similar with other information-sharing mechanism of financial supervision, a shared database for appropriate macro-prudential supervision should be established. By transforming the existing structure of financial statistical database and statistical network, set up a financial information system which is unified, independent, automatic generation of statistical indicators and financial supervision indicators, to form a unified, centralized and efficient financial information sources, to achieve sharing of information resources. At the same time, to establish information sharing responsibility restraint system. Mainly definitude information sharing principles, standards, content and shall bear legal responsibility between PBC and financial supervisory authorities with regulations, to protect the quality of macro-prudential information sharing. Improve financial supervision and coordination mechanism , actively promoting full control, enhance awareness of regulatory costs The professional division of labor in financial regulatory system will inevitably bring the appropriate coordination problem. Proceeding from the reality in China, government may consider following the model of the U.S Federal Financial Institutions Examinations Council (FFIEC), to build a permanent financial coordination committee to coordinate the Peoples Bank, the Securities Regulatory Commission and China Insurance Regulatory Commissions work, and integrate these regulatory agencies, re-deployment of resources. Monitoring philosophy of Comprehensive coverage is the general trend of development of financial regulation. One of the main goals of U.S financial regulatory reform program is to eliminate vacuum and blind spots of regulation, to achieve the monitoring philosophy of full coverage. Chinas financial market development is the result of administrative decentralization, namely, the formation of fin ancial markets, the emergence of financial products and services, the establishment and operation of financial institutions are in the control range of regulatory bodies. Therefore, we can say that Chinas financial regulatory system has been adhering to a concept of comprehensive coverage, and has achieved good results in maintaining financial market stability, Chinas doesnt sound financial system has withstood the test in the Asian financial crisis and the financial crisis. Therefore, we must not only continue to uphold the regulatory concept of full coverage, also should put into practice in order to effectively guarantee the implementation and commitment of this idea. Construct Chinas financial regulatory system, the level of supervision needs to be emphasized, according to the needs of financial development and the risk levels of financial markets, institutions and products, control measures must be taken by different intensity, to improve multi-level, multi-mechanism, compre hensive regulatory system. In addition, we must strengthen the cost consciousness of financial supervision. Not only take into account the increasing direct cost of new regulatory agencies and the necessary costs of take measures of financial regulation, should also consider that these measures may lead to market losses, which is an opportunity cost when government regulators replace market regulation. (C) Improve supervision of financial innovation The outbreak of the financial crisis shows that financial innovation has its own flaws, if the regulatory system cannot keep up the pace of financial innovation, are prone to financial risks. But in China, the financial derivatives market and the whole financial market are underdeveloped; Chinas financial regulators restrict right on financial innovation too hard. Although avoid a similar high-risk in U.S financial markets, but also seriously constrained the ability of financial market innovation and hinder its further developme nt. This phenomenon causes inadequate supply of financial products and services, which cannot meet the needs of real economy and financial consumers and investors. At the same time, in the context of financial globalization, over the control is easy to undermine competitiveness and attractiveness of the financial system in homeland, leading to an outflow of financial resources. Reform and innovation in Chinas financial supervision is just the beginning of the stage, to meet the needs of the establishment of an open economy, to ensure the security and stability of financial markets, implement a full range of monitoring has become a priority. Combine the specific situation in our country, absorb and learn experiences and lessons from foreign financial regulatory reforms, at the same time, speed up the pace of financial innovation under the premise of risk control. Meanwhile, strictly regulate on the financial derivatives market, implement information disclosure, and maintain the tr ansparency of financial innovations, in order to promote financial innovation and the coordinated development of financial supervision. As raise the capital adequacy ratio, effective control non-rational expansion of innovation product scale, increasing the transparency of financial innovation, fully revealing the structure and risk of derivatives, protecting interests of investors, maintaining the market correctly. (D)One gold of supervision is protect consumers Consumers growing purchasing power of financial products and sustained, diversified financial consumer demands is the inexhaustible motive force to promote the financial volume expansion and optimization of financial structure. Comprehensive consumer protecting measures are a common feature of well-developed financial system, and an important factor which constitutes the international competitiveness of financial system. If the financial supervision only concern the interests demand of financial institutions at the expense of the effective protecting of consumer interests, would dampen consumer enthusiasm which will cause financial sector development loss the extensive public basis and social support. In Chinas financial transactions, the improper financial behavior of damaging consumers interests is not uncommon. False propaganda in marketing process of insurance products and various financial planning products is a very typical example. So, to make China do something in the international financial markets competition, we must exercise strict supervision on consumer financial products and services market, to promote these products transparent, fail, reasonable and make consumers get adequate information of financial products and services. Also, should promptly investigate all kinds of illegal activities which damage the financial interests of consumers, so that maximize protection of the interests of financial consumers. (E) Improve professional quality of financial regulators; create a s ocial environment for financial supervision With the acceleration of financial globalization, the role of financial regulators even more obvious, but at present a problem in China is the quality of monitoring is not so high. To establish a high-quality monitoring team rapidly and improve the financial regulatory system is equally important. First of all, change the regulatory philosophy, speed up the formation of ideas of risk monitoring location. Secondly, improve the training system, adopt various forms like be taken abroad to study in regulatory agencies, operate in regulated institutions and systematic training, in order to comprehensive improve all aspects of regulators thus as modern international financial knowledge, law, computer and network technology, foreign language and professional skills. Third, we must increase the training dynamics of basic supervision team, and attention to the role of grassroots monitoring team. Finally, should establish a scientific employing m echanism and evaluation mechanism. To improve the efficiency and quality of financial supervision, strengthen financial institutions transparency of fund application, financial management, business development and credit rating, etc, we should strengthen social supervision of financial institutions. Create a social environment of financial supervision, we should focus on strengthen the financial awareness and market rule education of members in market, improve the social credit system, standardize information disclosure mechanism, increase market hardware management; regulate and bound agency behavior of financial intermediaries, gradually establish and improve accounting system and credit rating system, express its financial supervisory role; strengthen national financial statistics, financial audit and disciplinary inspection and supervision functions of financial institutions, innovate supervisory mechanism, implement financial regulation fairly and efficiently to ensure finan cial security. At the same time, also through the power of the media, by strengthening publicity of financial regulatory knowledge and risk prevention awareness, to form a smooth and effective social control. (F) Strengthen international cooperation in financial supervision Financial globalization is also the globalization of financial risks, continued volatility in international financial markets will affect peoples expectations of domestic financial market, increasing the risk of domestic financial market. Chinas financial institutions and regulators should be careful to prevent international financial risks, strengthen supervision of cross-border capital flows, and propel financial liberalization in steady and orderly manner. In order to prevent and resolve international financial risks, we need to strengthen international cooperation in financial supervision. At present, China has joined the International Monetary Fund (IMF), World Bank, International Securities Commiss ion and other international financial organizations, and signed a financial memorandum of understanding with many countries and regions, has laid a good foundation to strengthen international cooperation in financial supervision. We should make better use of financial supervision and cooperation mechanisms, gain information to understand the policies or even requirements and joint active with certain specific targets. In addition, from the occurrence of the financial crisis, the crisis is not limited to a corner, but often a whole. When a financial group is affected, below the various branches and subsidiaries cannot possess. Thus, need to strengthen cross-border coordination and supervision, not only to regulate of the financial branch or subsidiaries of multinational corporations in China, but also through international cooperation in monitoring the companys parent company or group as whole. V Conclusion Don’t waste time! Our writers will create an original "The Comparison Study Of Financial Supervision Finance Essay" essay for you Create order

Essay on Effects of Binge Drinking on College Academics

Alcohol use among college students has always been a popular subject among teachers, parents, researchers, and even students. The actual act of drinking alcohol is not necessarily the problem, whether legal or not. The main problem is the act of binge drinking of college students, of age or not. Drinking modest amounts of alcohol may have some consequences, but binge drinking has more negative consequences than normal modest drinking. There are many examples as to the consequences that binge drinking can cause to college student’s lives, but one of the main consequences that students face as a result of frequent drinking is poor academic final grades. Binge drinking in college has been said to directly affect the GPA of college†¦show more content†¦The results of this study proved that a majority of the students ended up having a â€Å"C† average with 35.8%, and more students came out with an â€Å"F† average versus an â€Å"A† average. (Thombs et al., 2009) This information just brings to light how important it is to succeed in college, and how students should be trained at a young age how to prevent falling behind in college in order to succeed in school, and in life. One intervention study done by Pennsylvania State University (2010) with parents and high school students was to see the effects of student drinking in college if parents were involved in the decision making early on in high school. This study proved to show that students that took part in the study were less likely to find drinking in college interesting. These sorts of programs can lead to greater academic success in college stude nts. In another study done by Stephen Porter and John Pryor (2007), they related the number of drinks per week to time management and grades by separating the groups into gender and school type. Women typically seemed to spend less time drinking, especially at all women’s schools or research universities, than men at any kind of university. For the students who did seem to engage in heavier drinking, the smaller amountShow MoreRelatedA Study of College Drinking Essay examples1497 Words   |  6 PagesLiterature The literature on college binge drinking and student’s academic performance are for the most part; focused on an essential constituent or characteristic that has been revealed. During the past ten months, research has become an essential basis in regards to college binge drinking and the effects said behavior is having on those college students who choose to over-indulge. Given the situation over the literature pertaining to college binge drinking and poor academic grades, it is importantRead MoreBinge Drinking On College Campuses1459 Words   |  6 PagesMr. Paul October 28, 2014 Binge Drinking On College Campuses Over the past few years, there has been this big debate about whether the drinking age should be lowered to 18 or if it should stay at 21. Those in favor of lowering the drinking age to 18 argue that someone who is old enough to serve their country should be allowed to have a drink. Those who are in favor of keeping the minimum legal drinking age at 21 because of consequences regarding psychological developmentRead MoreTo Lower or Not to Lower the Legal Drinking Age to 18, That Is the Question881 Words   |  4 Pagesadults attend college with the hope of expanding their career opportunities, but are these young adults doing more than studying and homework? A new study suggests that binge drinking is on the rise among college students (Eisenberg n.p.). With an increase of alcohol consumption by underage drinkers, it only seems logical to lower the drinking age to prevent binge drinking, however there are far more consequences to be seen. Lowering the drinking age to 18 will not so lve the binge drinking problem amongRead MoreBinge Drinking On College Campuses1536 Words   |  7 PagesDr. Yacob Ali 30 November 2015 Binge Drinking on College Campuses Approximately four out of five college students drink alcohol (niaaa.nih.gov). Although alcohol does not have immediate negative effects, over consumption can lead to serious consequences. For example, 1,825 college students between the ages of 18 and 24 die each year from alcohol-related unintentional injuries (niaaa.nih.gov).Most alcohol-related injuries and accident are a result of binge drinking. The National Institute on AlcoholRead MoreAlcohol Issues on College Campuses1181 Words   |  5 PagesAlcohol Issues on College Campuses â€Å"Binge Drinking on College Campuses.† Center for Science in the Public for Science, Center for Science in the Public Interest. Web. 21Mar. 2012. The Center for Science in the Public Interest (CSPI) discusses that students enrolled in college are more likely to consume alcohol than their peers than do not attend college. They report that 1700 college students die yearly due to alcohol. The increasing number of college students drinking has resulted in higher incidencesRead MoreEssay on Informative Speech631 Words   |  3 Pagescategories: (1) Content (2) Organization (3) Sources (4) Achievement of specific purpose (5) Symbolization SPS: To inform my audience about binge drinking on college campuses. CIS: Binge drinking is a significant problem on college campuses, there are alarming statistics about the prevalence of binge drinking, and how binge drinking affects the lives of other students. Org Pattern: Topical Introduction I. Have you ever been to a party and drank too much? How much is too much? Read MoreThe s Perspective On Alcohol Abuse957 Words   |  4 Pageshis persuasiveness to be imprecise with no correlation between binge drinking and loneliness. For instance, his claims are supported based on personal experiences and personal observations such as students having difficulty making a new group of friends, being desperate to belong and creating an academic background. Unlike Weschler, Bruffee does not use scientific studies, real examples and realistic solutions to adequately connect binge drinkers and introverts; therefore, Bruffee is less successfulRead MoreThe Effects Of Alcohol On College Students Essay1312 Words   |  6 Pages(Fuertes Hoffman, 2016). Amongst all who consume alcohol, college students ages 18 to 24, have proven to consume more alcohol than any other age or group (Koyama Belli, 2011). Ruberman (2014) explained that college students between the ages of 18 to 24 are exper iencing a time in life when mental illness levels are high. College students are also enduring higher levels of stress than normal that stem from social pressures and new academic responsibilities (Bodenlos, Noonan, Wells, 2013). BeingRead MoreThe Effects Of Alcohol Abuse And Binge Drinking1523 Words   |  7 Pages College students will always encounter some type of â€Å"problem† during their college experience. A problem can be something simple such as a lack of adequate parking or more complex such as sexual harassment. â€Å"A new report from Student Monitor asked college students to identify the biggest problems on campus, and their top three answers were cost of education, stress, and alcohol abuse,† (Jacobs, 2014, p.1). College students will be affected by a number of problems during their college career. AsRead MoreOne More Drink For The Good Times925 Words   |  4 Pageslittle drinking this weekend!!† That statement is one heard among the college community nationwide nowadays. Binge drinking with others to gain new friendships, meet people, among other reasons, on college campuses is the thought process countless students believe today. â€Å"The Harvard School of Public Health found in 1993 that binge drinking is widespread on American campuses, particularly amo ng members of fraternities and sororities (Bruffee, 1999).† If college students think binge drinking and partying

Personal Problems Free Essays

Personal Problems George Orwell’s â€Å"Shooting an Elephant† is a simple essay with a strong message. Throughout the piece, the narrator faces the same conflict day after day and was â€Å"hated by large numbers of people† (Orwell 377). This level of hatred causes the narrator to make a decision against his beliefs and in favor of the imperialistic society. We will write a custom essay sample on Personal Problems or any similar topic only for you Order Now This decision is not based on the right thing to do, but to simply fit in. Orwell uses his perplexed narrator, a simple plot, and detailed setting to explain how individuals choose self-image over self-satisfaction. Orwell speaks in first person as a participant taking on the role of a European police officer in an anti-British colony, and is the perplexed individual caught amongst the action. The officer faces unforgiving natives who often meet him with â€Å"sneering yellow faces †¦ [and with] insults hooted after me†¦Ã¢â‚¬  (Orwell 378). Yet in irony, those same citizens expect protection from a raging elephant on the loose causing an internal barrier. The officer explains, â€Å"They did not like me, but with the magical rifle in my hands I was momentarily worth watching† (Orwell 380). It was at that moment when he realizes he is just â€Å"an absurd puppet† and is being used by the natives for whatever purpose they need. The plot in the essay is simple, straight forward, and follows the basic plot elements: the who, what, where, and why. In the first sentence, Orwell presents the narrator as the main character and the roles of the supporting characters. He describes the officer as an outcast, often targeted by the natives for amusement. Orwell wastes no time with deep rising actions, but quickly reaches the climax, exposing the internal conflict. The officer exclaims, â€Å"but even then I was not thinking particularly of my own skin, only of the watchful yellow faces behind,† and continues to describe how he was more afraid of looking like a fool in front of the natives than of the tyrant elephant (Orwell 381). Orwell keeps simplicity throughout his essay yet supplies great details; allowing the reader to feel the emotion and atmosphere of the setting. He uses plain language and few words to describe the cultural setting that is shaped from religious and political views. The officer often mentions the British rule and how the Buddhists and natives of the land were the worst (Orwell 379). The cultural differences between the British rule and natives were far from the same. Not only did this contribute to the internal conflicts of the officer, but to external conflicts of other British people in the colony. Orwell supports his theme of self-image over individual morals by using all the elements of literacy. The narrator’s conflict within himself was brought upon through his own actions and thoughts. As an officer he had a right to carry out the laws of the land, but would rather go against his beliefs to avoid ridicule wanting to fit in and not be laughed at. Nonetheless, even after he did what he thought the natives wanted, the officer still faces the same issues of internal conflict. He was trying to justify what was done to make him feel better, yet continues to have a guilty conscience. The officer even admits he â€Å"had done it solely to avoid looking a fool† (Orwell 382). In conclusion, Orwell presents a humble approach to a common problem of today. Although doing the moral thing is correct, most humans do what they feel is expected because someone’s eyes are always watching. Orwell cuts right to the point and wastes no time on useless material. The complicated character jumps out in the beginning and forecasts a simple plot. By using details about the location, Orwell supports his plot and places the essay in the middle of Southeast Asia. The location is important and better explains the relationship between authority figures and the religious differences. However, the choice is in the main character’s hands and instead of sticking to his beliefs, he would rather be a follower than forever a fool. How to cite Personal Problems, Papers

Established In 1904 as a Tobacco Company †Myassignmenthelp.Com

Question: Discuss About the Established In 1904 as a Tobacco Company? Answer: Introduction Coca-Cola Amatil (CCA) was initially started as a local manufacturer for beverages and foods and then expanded their business around six countries and is also creating possibilities for more than 100 years. Initially, they started their business as British Tobacco Company Limited during 1904 and soon started diversifying their business through purchase of printing company and moved to Australian beverages and food industry during 1963. Moreover, to focus on the snack foods and beverages, they set aside their interests for tobacco. Finally, Coca-Cola became the major stakeholders for the company and they named as Coca-Cola Amatil. Their mission is to delight their customers with exceptional brands portfolio and are always try to generate value for their partners through driving the productivity with minimization if cost. Further, they make a positive and distinctive contribution to the area in which they operate. Their well-known values are that they are open and straight forward, focus on tomorrow and today and take initiatives for the innovations. As per the company, their vision is the main factor that unites them and increases their energy level to do the best of what they perform. Their vision reflects their business scale and the people with whom they are connected create an emotional attachment with the company (Coca-Cola Amatil | Home, 2017). Product Mix CCA distributes and manufactures various alcoholic and non-alcoholic beverages and various food products all around Australia. Various products they are dealing with are as follows: Non-alcoholic beverages Energy and sports: Powerade Isotonic and Mother Juices: Crusta fruit juices and Goulburn Valley fruit juices Still drinks: Nestea, Pumped, Mount Franklin, Peats Ridge Water, Pump, flavoured milk from Goulburn Valley, vitamin water and Glaceau Carbonated soft drinks: Coke Zero, Coca-Cola, Diet coke with Vanila Flavour, Fanta, Appletiser, Kirks, Bisleri Chinotto, Sprite Zero, Lift and Sprite. Alcoholic beverages Scotch: Highland park, The famous Grouse, Tamdhu, The Machine and Laphroaig Bourbon: Old Crew, Bakers, Bookers, Jim Beam, Basil Haydens, Makers Mark Liqueurs: Harveys, Galliano, Cockburn, Bols, Courvoisier, Cognac and Sherry and Port Tequila: Sauza Food services Grinders coffee, Quirks Australia, packaged vegetable and food products from Goulburn valley and SPC Ardmona (Coca-Cola Amatil | Home, 2017). Production process The eastern creek distribution centre of Coca-Cola Amatil, which is situated at Sydney, employs 250 employees for their distribution centre. The facility has the capacity of producing 210 pallets out and 140 pallets in per hour. Pacific brewery has an annual capacity of 150 million litres that produces the premium beers. On the other hand, the bluetongue Brewery has the capacity of 50 million litres per year and can produce 1 million bottles per day for the beverages. Using these above facilities, CCA produces various products that are mentioned above under the product mix (Coca-Cola Amatil | Home, 2017). There production process involves the following activities: Product and package changeovers Cleaning procedures of the equipments Preventive activities for maintenance (Kaplan Anderson, 2013). Ingredient batch making and processing Using the systems to report and record the production data accurately Monitoring the activity process, troubleshooting and follow-up the proper escalations (Kaplan Atkinson, 2015). Activity based costing in manufacturing firms Activity based costing (ABC) is one of the most widely used method of costing and it allocates the overhead cost for the indirect costs through using the activities. ABC is a crucial aspect for reliable and accurate cost information for producing the true cost and presenting the financial data (Frazier, 2014). Implementation process, changes and applications under the ABC system are represented as a guide for better understanding of the ABC in the manufacturing firms. In most of the cases, the organization is unaware about the creation and origin of the costs that are involved in the manufacturing processes of the company. Further, they are not even concerned regarding the formation of the costing strategies. If the employees are aware about the benefits of proper costing that can save lot of money and contribute to the sustainability of the company, they will for sure try out for the better costing system (Balakrishnan, Labro Soderstrom, 2014). With the growth of business, the business executives become more concerned regarding the operational costs and are pressurised for increasing the strategies and profits. ABC system is there for so many years. It is identified that the ABC system improves the consistency for the information related to costs, better representation for the organizational cost and assists in producing true cost. Various manufacturing organizations use the activity based costing for the costing of the product, analysis of customers profitability, profitability analysis of product line and pricing of the products and services. The ABC system is the leading method for costing for producing the most accurate and reliable costing information for the manufacturing organizations (Simons, 2013). Knowing the strategy for the ABC is the crucial factors for getting better understanding of the costing system. The company can create better corporate focus and better strategy if the costs can be understood in better way. ABC refines the system of costing through focussing on the fundamental objects of cost and individual activities. The term activity is described as the unit, task or event with a particular purpose, for instance, distribution of products, operation of machines, setting-up of machines and designing the products (Saunders Cornett, 2014). To be stated in more simple way, ABS system is systematic use the effect and cost methods for for allocating the activity costs to the products, customers, services or any other objects of cost. Further, the ABC system is regarded as a tool for accounting that established the breakthrough role in the wide segment of cost and it can be applied in manufacturing or retail sector from the large corporations to sole proprietorship. Many managers and the accountants thinks that the inventory cost methods give accurate figures for cost, however, in practice this is not the case. The actual cost for any particular product is management better through calculation of the other associated costs (Mitra, 2016). Most of the companies are required to have better idea regarding the general costing for assuring the unified approach to the operations. Some benefits of ABC systems are Improve the business procedures: under the ABC systems, the procedures of the business assigns the overheads of the manufacturing processes on the basis of the cost driver of the products or the factors that are used for the generation of cost. Cost are assigned per product and the outcome clearly shows that which business are performing well and which are not and which one need to be improved. ABC system can be used to recognize the activities that are non-value added and assists in better allocation of overheads. It also contributes to regular improvement of the business procedures (Govindan, K., Khodaverdi, R., Jafarian, A. (2013). Recognize the wastes: ABC system takes into account the costs in the same way in which the production is performed and allows the business to understand better that where the overhead costs are going. Further, the overall services and products quality can be improved as the data from the ABC give the details regarding the cost and production issues that are required to be solved (Estampe et al., 2013). Data accuracy: reports shown as per the ABC systems are more accurate as compared to the traditional method. Further, the data obtained from the ABC system can be used for minimization of cost as the management are in better position to identify the products where most overheads are associated (DRURY, 2013). An organization can target the efforts into the methodology of ABC that will recognize the categories of costing in better way. Further the non-value added services are recognized in better way. However, there are some complex procedures involved in the manufacturing process where the application of ABC systems required in-depth knowledge. It is expected that the system will become simpler with the implementation and will become easier to execute. Irrespective of the benefits, the software and the systems shall be proved as user-friendly before implementation of the ABC systems. The ABC and the other improvements considerably enhance the ability of an organization to set its focus and respond to the requirements. It further reduces the complexities and minimizes the money and time in association with other benefits from the ABC systems. Activity-based costing for Coca-Cola Amatil Various costs are involved in the implementation of ABC system in CCA. These are: Direct cost It includes the labour cost and material cost as shown below Hypothetical direct cost for Coca-Cola Amatil Particulars Product A Product B Product C Total Produced and sold units 5,00,000 3,50,000 6,50,000 15,00,000 Selling price per unit $ 12 $ 8 $ 15 Direct material cost per unit $ 4 $ 3 $ 6 Direct labour cost per unit $ 3 $ 2 $ 4 Revenue from sales $ 60,00,000 $ 28,00,000 $ 97,50,000 $ 185,50,000 Direct costs Direct material cost $ 20,00,000 $ 10,50,000 $ 39,00,000 $ 69,50,000 Direct labour cost per unit $ 15,00,000 $ 7,00,000 $ 26,00,000 $ 48,00,000 Total direct costs $ 35,00,000 $ 17,50,000 $ 65,00,000 $ 117,50,000 Manufacturing overhead cost Manufacturing overhead costs are as follows: Purchase orders on the basis of number of purchase orders: $ 1200 per unit of cost drivers Product packaging on the basis of number of packages packed: $ 0.50 per unit of cost drivers Machine set up based on number of set-ups: $1000 per unit of cost drivers Machine calibration and testing based on number of tests: $ 200 per unit of cost drivers Cleaning and maintenance based on number of batch runs: $ 800 per unit of cost drivers Manufacturing overhead activities It includes the machine set-up costs, packaging of products cost, machine calibration and testing costs, machine cleaning and maintenance cost and order costs for material purchase Finanacial. Estimation of costs for the manufacturing overhead activities Cost drivers Activities Activity pool Activity units Unit cost Product A Product B Product C Total Cost Purchase orders No. of Purchase order $ 1,200.00 50 35 65 $ 1,80,000 Product packaging No. of packages packed $ 0.50 500000 350000 650000 $ 7,50,000 Machine set-up No. of set-ups $ 1,000.00 100 70 130 $ 3,00,000 Machine calibration testing No. of tests $ 200.00 750 500 1000 $ 4,50,000 Cleaning and maintenance No. of batch runs $ 800.00 150 100 175 $ 3,40,000 Total cost $ 20,20,000 Assigning the cost of the manufacturing overheads Allocation under ABC Activity pool Product A Cost per unit Product B Cost per unit Product C Cost per unit Purchase orders $ 60,000 0.12 $ 42,000 0.12 $ 78,000 0.12 Product packaging $ 2,50,000 0.5 $ 1,75,000 0.5 $ 3,25,000 0.5 Machine set-up $ 1,00,000 0.2 $ 70,000 0.2 $ 1,30,000 0.2 Machine calibration testing $ 1,50,000 0.3 $ 1,00,000 0.29 $ 2,00,000 0.31 Cleaning and maintenance $ 1,20,000 0.24 $ 80,000 0.23 $ 1,40,000 0.22 Total $ 6,80,000 $ 1.36 $ 4,67,000 $ 1.33 $ 8,73,000 $ 1.34 Bill of activities for each product Particulars Product A Product B Product C Produced and sold units 5,00,000 3,50,000 6,50,000 Selling price per unit $ 12 $ 8 $ 15 Direct cost per unit $ 7 $ 5 $ 10 Indirect cost per unit $ 1.36 $ 1.33 $ 1.34 Total Cost per unit $ 8.36 $ 6.33 $ 11.34 Gross profit per unit $ 3.64 $ 1.67 $ 3.66 Gross profit margin 30% 21% 24% It can be seen from the above table that the gross profit margin for product A, Product B and Product C is 30%, 21% and 24% respectively. It is identified that product A is more profitable as compared to the other two products and product B is the least profitable as the selling price for product B is the least and the direct cost and indirect cost are also high and that led to gross profit of only $ 1.67 per unit, which is least among the three products. Recommendation and conclusion It has been included from the above discussion that the ABC system contrasts with the traditional methods of allocation of overheads that assign the overheads using the arbitrary percentage of allocation whereas, the ABC system allocates the overheads based on the cost driver of each product. The ABC system can be used to recognize the individual profitable and unprofitable products, to recognize the actual cost of the product, so that the pricing strategy can be established and to reveal the unnecessary costs that can be eliminated. However, the ABC system requires the in-depth knowledge regarding the resources and activities that are allocated to overheads. Therefore, the experts shall be well versed with the ABC system. Further, cost drivers and the activities must be recognized properly to allocate the overheads in appropriate manner. Moreover, if the overhead cost is less for the company them implementation of ABC will not be fruitful as the implementation of ABC requires huge c ost. Although the implementation of ABC is not easy and simple, using ABC to trace the activity costs assist in development of better forecasting, better planning and better strategies. However, the most significant part of ABC is that it enables to save lots of money. For any business, the bottom line is to maximize the wealth of the shareholders. Therefore, if an organization has clearer picture for the costs of each activity, it will be in a better position to earn higher profits References Balakrishnan, R., Labro, E., Soderstrom, N. S. (2014). Cost structure and sticky costs.Journal of management accounting research,26(2), 91-116. Coca-Cola Amatil | Home. (2017). Ccamatil.com. Retrieved 13 May 2017, from https://www.ccamatil.com/ DRURY, C. M. (2013).Management and cost accounting. Springer. Estampe, D., Lamouri, S., Paris, J. L., Brahim-Djelloul, S. (2013). A framework for analysing supply chain performance evaluation models.International Journal of Production Economics,142(2), 247-258. Frazier, W. E. (2014). Metal additive manufacturing: a review.Journal of Materials Engineering and Performance,23(6), 1917-1928. Govindan, K., Khodaverdi, R., Jafarian, A. (2013). A fuzzy multi criteria approach for measuring sustainability performance of a supplier based on triple bottom line approach.Journal of Cleaner Production,47, 345-354. Hunger, J. D., Wheelen, T. L. (2014).Essentials of strategic management. Pearson. Kaplan, R. S., Atkinson, A. A. (2015).Advanced management accounting. PHI Learning. Kaplan, R., Anderson, S. R. (2013).Time-driven activity-based costing: a simpler and more powerful path to higher profits. Harvard business press. Mitra, A. (2016).Fundamentals of quality control and improvement. John Wiley Sons. Saunders, A., Cornett, M. M. (2014).Financial institutions management. McGraw-Hill Education,. Simons, R. (2013).Performance Measurement and Control Systems for Implementing Strategy Text and Cases: Pearson New International Edition. Pearson Higher Ed.

LOreal Nederland B.V

Poor brand image L’ Oreal Group is faced with a challenge in the introduction of two products in Netherlands. The two products include Belle Couleur and Synergie. L’Oreal Group sales have been on an upward trend as a result of the large size of market for cosmetic products. In France, its domestic market, the firm has witnessed a 10.2% growth in sales which is equivalent to 9.67 billion Euros (Mann 2010, 6).Advertising We will write a custom essay sample on L’Oreal Nederland B.V specifically for you for only $16.05 $11/page Learn More In its quest to attain its profit maximization objective, the firm’s management team has made a decision to venture the Dutch market. Introduction of the new product was to be undertaken by Laboratories Garnier which was its major competitor. Despite Laboratories Garnier being recognized in France prior to its acquisition, very few Dutch customers knew of the firm’s products. This arises f rom the fact that Laboratories Garnier had not established a strong brand image in Netherlands. The low brand image in the market limits the probability of the two products succeeding. In its decision to expand its operations within Netherlands, L’Oreal Group management team should conduct a comprehensive evaluation of the two products in order to determine the probability of success. The management team should undertake this by only introducing products with identifiable differential advantage in the market. L’Oreal Group management team is faced with a challenge on how to ensure that the product penetrate the market. Key issue The key issue facing the firm is lack of awareness of Garnier’s products through which the firm intends to introduce its products. In addition, the two products are facing stiff competition from other established competitors. The firm is faced with a challenge of attracting customers to purchase the new product. This arises from the fact that customers in the Dutch market feel attached to their traditional brands which makes them reluctant to try new beauty products. Competitors in the Dutch skin care market have a well established customer loyalty. The loyalty resulted from the effective distribution strategy adopted.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Personalized service is one of the ways through which firms in the beauty industry can create customer loyalty. In addition, some of the players in the industry are multinational and regional companies which are widely recognized in the market. In comparison to these firms, L’Oreal Group has a relatively low competitive advantage. According to Jones (2010, 359), the beauty industry is very competitive as a result of the high rate of innovation resulting from increased research and development. Lack of an effective market penetration and promotion strateg y poses a threat in the introduction of the two products. Evaluation If the firm does not formulate an effective market penetration strategy for its products, there is a high probability that the firm will perform poorly in terms of sales. The resultant effect is that its long term survival will be threatened. The Dutch market is feasible for the firm to introduce its products. One of the key factors which are enhancing the market feasibility is the demographic characteristics of the population. Aging is one of the factors which have contributed to an increment in the rate of consumption for anti-aging products (Patzer 2006, 47). A significant proportion of Dutch women are aging. There are projections that this trend will continue into the future. By 2020, it is estimated that the number of individuals aged 65 years and above of the total population will increase to 18% from its 2010 projection level of 14.9% (Schroots, Ballesteros and Rudinger1999, 83). Introduction of Synergie and Belle Couleur beauty products stands a high probability of success considering that they are anti-aging skin and hair products. This means that the two products are in line with the customer requirement. In addition, successful introduction of the two products in the Dutch market is paramount considering the shift in role amongst the female gender. Females are venturing in various careers leading into an increment in their disposable income. Increase in consumers’ disposable income results into an increment in consumer purchasing power (Lamb, Hair and McDaniel 2008, 365). Due to an upward shift in their disposable income, the Dutch women have increased their daily consumption for beauty products.Advertising We will write a custom essay sample on L’Oreal Nederland B.V specifically for you for only $16.05 $11/page Learn More This represents a significant shift in consumers purchasing behavior considering the fact that the Dutch women used t o purchase beauty products such as facial creams two times a year on average. Whilst the market feasibility for L’ Oreal Group in Netherlands is high, it is vital for the firm’s management team to consider the most effective way of introducing the two products in the market and also create market awareness effectively. Possible considerations Promotion plays an important role in the operation of a firm (Botha, Strydom and Brink 2005, 135). As a result, promotion strategy has been integrated as one of the key components of strategic marketing by firms in various economic sectors in their quest to attain their profit maximization objective. Through a well formulated promotional strategy, a firm is able to create awareness of its products and services to its prospective customers. Considering the reluctant nature of Dutch women to try new beauty products, developing an effective promotional strategy is paramount. This arises from the fact that increased awareness of the p roducts characteristics and benefits will play a significant role in creating customer confidence. There is a high probability of the products succeeding amongst the Dutch women considering the increment in demand for beauty products which have â€Å"natural† characteristics. Considering the fact that Laboratories Garnier does not have a well developed brand image in Netherlands, it is vital for L’Oreal Group to consider developing a promotional strategy will enhance its product awareness. According to Strydom and Brink (2005, 135), product awareness is very important in the customers’ decision making process (Mills and Law 2005, 29). Product and service awareness plays a significant role in the consumers purchasing pattern. The more the consumers are aware of a product, the high the probability of them making a purchase. With regard to beauty products in Netherlands, their success in the market is directly related to their brand image. Therefore, if the brand i mage is low, there is a high probability that the product will not succeed. The fact that most Dutch women are not conversant with the product description of French beauty products underscores the importance of creating product awareness.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Apart from development of a product awareness strategy, it is also important for the firm’s management team to consider improving customer product loyalty. Customer loyalty will play a significant role in ensuring repeat purchase behavior of the customers. To create customer loyalty, it is vital for the firm’s management team to ensure that the research and development being undertaken results into development of beauty products which meet the market demand. Increment in the intensity of competitiveness within the retail environment presents a challenge to firms (Ranchhord and Maradi 2007, 77). This arises from the fact that competition leads into a reduction in customer switching cost (Egan and Thomas 1998, 68). Ranchhord and Maradi are of the opinion that customer loyalty is a fundamental issue in such a case. Considering the competitive nature of the beauty industry in Netherlands due to existence of other multinational companies such as Procter and Gamble Company, creation of customer loyalty is vital in the firm’s effort to position itself effectively in the market. The resultant effect is that the firm will be able to develop a high competitive advantage for it to survive in the market. Alternatives A number of alternatives could be considered to address the key issue: That L’Oreal Group faces a challenge in introducing its two beauty products (Synergie and Belle Colourie) as a result of poor brand image of Garnier. Considering the market feasibility in Netherlands beauty industry, L’Oreal Group should ensure that it capitalizes on the market opportunities presented and introduce the two products. In order to effectively penetrate the market, the firm’s management team should consider the following alternatives. The firm should not introduce the two products via Laboratories Garnier considering its low brand image in Netherlands. Alternatively, L’Oreal Group’s management team should consider outsou rcing the services of well established marketing agencies in Netherlands. This will increase the probability of the customers accepting the product. Evaluation Undertaking product introduction process by itself is a wise decision for the firm to consider in is effort to penetrate the new market niche. This is due to the fact that the firm will develop an upper-edge in understanding the market dynamics. On the other hand, distributing the products via intermediaries will also be of benefit to the firm. This is due to the fact that the local agents will be conversant with the market. A comprehensive criterion should be used in selecting the intermediary to carry a firm’s product in the foreign market. According to Perner (2008, 3) selection of the firm to carry a firms product in its introduction phase is a key determinant in the product’s success or failure. Perner asserts that if the product is not amongst the firm’s preferred products, chances of the product s ucceeding are limited. Recommendations To ensure that introduction of the two products is successful; L’Oreal Group’s management team should consider a number of issues. The firm should consider incorporating the concept of Integrated Marketing Communication (IMC) in an effort to create sustainable market awareness. Integrated marketing communication will ensure that there is effective and efficient creation of market awareness. This arises from the fact that both traditional and emerging market communication models are integrated (Kitchen and Pelsmacker 2004, 45). As a result, a considerable number of individual customers will be aware of the product’s market existence. Incorporation of IMC will ensure the customers access sufficient product information. Considering the fact that the product can be consumed by both the young and elderly consumers, integration of IMC will be effective in ensuring that the customers access the product information. Sufficient prod uct information will enable the firm to dispel any fears which the customers may have regarding its products. The resultant effect is that there will be increment in the customers’ level of confidence to enable them incorporate the new product in the process of making decisions regarding consumption of beauty products. In order to develop a repeat purchase behavior amongst the customers, L’Oreal Group management team should consider implementing Customer Relationship Management (CRM) in its operation. This will ensure that that all its operations are focused at ensuring that the customers attain a high level of satisfaction. The effect is that the firm will be able to attain customer inertia. This means that the probability of customers switching to other products will be minimized. To ensure maximization of the benefits associated with the CRM strategy, L’Oreal Group management team should consider implementing the CRM software. The software should be linked to the internet so as to enable it access customers’ feedback efficiently. CRM software will act as a link between the customers and the firm’s marketing team. This means that there is a high probability of marketing team understanding changes in customer product requirement. Depending on market feedback, it will be possible for the firm to conduct product innovations effectively to suite the customer’s requirements. Reference List Botha, Johan, Strydom, Johan and Brink, Annekie. 2005. Introduction to marketing. Chicago: Juta and Company Limited. Egan, Colin and Thomas, Michael. 1998. The CIM handbook of strategic marketing. New Jersey: Butterworth Heinemann. Jones, Geoffrey. 2010. Beauty imagined: A history of the global beauty industry. Oxford: Oxford University Press. Kitchen, Paul. and Pelsmacker, Peter. 2004. Integrated marketing communication: a  primer. London: Routledge. Lamb, Charles, Hair, Jones. and McDaniel, Collins. 2008. Essentials of marketing. Ne w York: Cengage Learning. Mann, Rebecca. 2010. The L’Oreal Group reports solid first-half sales.  https://www.moodiedavittreport.com/the-loreal-group-reports-solid-first-half-sales/ . Mills, Juline and Law, Rob. 2005. Handbook of consumer behavior: tourism and the  internet. London: Routledge. Patzer, Gordon. 2006. The power and paradox of physical attractiveness. London: Universal-Publishers. Perners, Lars. 2010. Introduction to marketing. Los Angeles: University of South California. Ranchod, Ashk and Marandi, Ebi. 2007. CIM coursebook 07/08 strategic marketing in  practice. New Jersey: Butterworth-Heinemann. Schroots, James, Ballesteros, Francis and Rudinger, Gerrad. 1999. Aging in Europe. Oxford: IOS Press. This essay on L’Oreal Nederland B.V was written and submitted by user Edward Sullivan to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Microsoft strategic alliance with Nokia The WritePass Journal

Microsoft strategic alliance with Nokia Abstract Microsoft strategic alliance with Nokia , p39). This was the first major step that the new CEO took. The unexpected cooperation with the Microsoft Corporation elicited several debates regarding Nokia as well as about the general smartphones market (Schwarzinger, 2012, p.53). The IDC (International Data Corporation), which is a company for market analysis, and monitors the smartphones market, predicted that the Windows Phones would become the second largest provider of software for smartphones globally (Grant, R 2010, p. 31). The analysis and prediction is based on the strategic alliance between Nokia and Microsoft Corporation. Combined with the projected growth in the sales of smartphones and the predictions given by the ICD, then why is it that there was negative action by the financial market when he news of the two giant companies collaborating came out? This is one of the questions that many financial analysts have been asking themselves. This paper examines the strategic alliance between the two giant companies by eva luating their external and internal environments. It will also examine three different growth strategies and then select the most appropriate one. External Analysis The Five Forces Framework of Nokia The present competition that Nokia is facing in the phone industry has greatly affected its market share. However, it still holds a considerable share of the market in the industry that is ever changing. The microenvironment is the internal factors that affect the customers, staff, competitors and the shareholders (Henry, 2008, p.24). The five forces model is the most appropriate for the evaluation of the microenvironment of Nokia as it takes into consideration the clients, suppliers, competitors as well as the new entrants. The power of suppliers: moderate Although the company relies on its suppliers to provide equipment, there are numerous large manufacturers of equipment that they can turn to (Baron, 2008, p53). Currently, Microsoft is the supplier of software for the company and they have a high bargaining power together. In addition, the company is in a good position to bargain as well as negotiate with any mobile phone hardware producer because there are a large number of the suppliers of equipment, which are readily and easily accessible should their current suppliers attempt to ask for more money with them. Moreover, the alliance with the Microsoft Corporation is regarded as a coup for Nokia and not Microsoft. The Microsoft Corporation may have more power in the negotiation of price along with the share as the pact is of more significance to Nokia that the Microsoft Corporation. The power of buyers: high The customers have an increasing power because of increasing variety of alternatives available in the sector of mobile telecommunication. Majority of Nokia’s competitors also offer the same packages and the sector is very sensitive to matters like the prices with clients seeking the best value for their money. Majority of the customers are also tied into the long-lasting contracts and thus having to change from one mobile phone to another is hard and costly for consumers. The sector has a very competitive market that has a variety of choices, which makes the customers to have much power as they can choose to go to the various competitors of Nokia if they are not contented with what the company is providing. The threat of new entrants: low The market of mobile phone is well-established and a lucrative one, and there is a relatively low threat of new entrants, as the technology that is needed to rival the devices that are already existing is very advanced. This is something that cannot be achieved easily by any company. The barriers to entry into the market are very high, as any potential new entrants need a lot of investment in marketing and technology so that they can be in a position of challenging the companied that are already established (Hill, et al, 2009, p.53). The threat of any potential new entrants is not probable as the initial cost that is required to enter the industry is very high and requires a lot of investment in time to be in a position of competing against the organizations that are already established. Currently, Nokia has a 29 percent of the entire global mobile telecommunications market and for any new entrant to get a little bit of their market needs a long-term scheming or even products that are highly innovative as compared to any other seen in the market (McGuigan, et al 2010, p. 41). For this to be possible, the new competitor needs very high investment for marketing and RD, in order to get positive result. The threat of substitutes: Very low It is beyond reasonable doubt that mobile phones are an everyday essential in human being’s lives presently and they would not find it easy to replace, as consumers will not be in a position of having constant contact when they are not near their houses, family members or even friends (Baron, 2008, p.53). Nonetheless, the consumers may make contacts with individuals through other forms of media like email address, home telephones and social networks. However, it will not be easy for people to keep in contact in their daily lives, as the forms of communication are not convenient. Contrary, smart phones come with several functions and specifications, meaning there are many substitutes offered that focus on just a single function. Presently, mobile phones are an everyday requirement in the lives of human beings because of the fundamental functions they are capable of performing and can all be found in a single handset. Only smart phones have the ability to make phone calls, send messages, and browse the internet in a single device. Another thing that makes them an extremely critical device to human beings is the fact that it enables them to communicate constantly and at any place. Thus, the threat of alternatives is very low because a mobile phone is not only for making calls or for sending messages but many some other functions. Without the mobile phones, people will find it very difficult to have a replacement, since it can provide a lot to them all in one device. People also rely on the mobile phones greatly and might not easily find an alternative that has the whole functions of a mobile handset. Competitive rivalry: low The competitors of Nokia turned to smartphones and androids early enough while Nokia delayed in releasing their first smart phones, and hence lagging behind competitors like Apple and HTC (Hahn, and Kibora, 2008, p. 12). Their strategic alliance with Microsoft, though offers some lifeline, still needs some time before catching up with the rest. There is high competition from big corporations like Blackberry, LG and Sony Erickson. The industry of mobile phone has very high rivalry and needs huge amounts of investment in marketing and the RB to be able to compete with the established companies (Stonehouse, et al, 2007, p.43). Nokia had a slow shift into the market of smartphone, and this has left them trailing their competitors. Therefore, there is extremely high competitive rivalry and the company needs to be alert of their rivals’ threat on their business especially with the Apple iPhone and RIM Blackberry’s rising popularity. Competitive rivalry in the industry is the principal threat to the Nokia Company because they are seriously behind in the market of Smartphone and it really needs a lot of efforts to raise their market share. Internal Analysis SWOT Analysis SWOT analysis is the most appropriate tool for the strategic planning analysis by companies’ management. It is a critical tool to the improvement of business because it embraced or followed the concept that success in the digital economy is the deployment of an incorporated value chain that extends beyond and across the business Saylor (McGuigan, et al 2010, p. 17). Nokia is a leading company in the mobile phones industry and its strategic alliance with Microsoft is expected to be a game changer. It is therefore important to look at the company’s internal environment. Strengths Grant (2010, p.55) says that Nokia currently enjoying more that 32 percent market share in the mobile phone industry, and this is expected to even increase following the new pact with Microsoft as they will be provided with operating system affordably and sufficiently. Both Nokia and Microsoft are well respected and trusted brands as they have been there since the start of the mobile phones and have been able to retain the trust of customers. Now in their association with Microsoft, they have regained strength in the market of smartphone, as it is a pact that has brought together two giants in their respective sectors. Having a strong brand name is an advantage since it enhances consistency; however, it is no secret that their brand name has had some wavering and now considered promotion of brand (Grant, 2010, p.43). The alliance between the two companies also means that Nokia has a secure and steady supplier market in Microsoft, where there will be enough time to concentrate on inno vation, production and marketing. The company has a strong internal R+D. Nokia became one of the first companies to the market despite not dominating the market of Smartphone, the company became one of the because of their exceptional R+D program. The new chief executive officer has brought some new ideas to the organization and influenced its entire image. Weaknesses Nokia has had its market share drop from the end of the last year in the industry of Smartphone. They have not been able to realize that Smartphones are a way of life amongst the users currently, with support software for the mobile phones that are very low. These are in the forms of applications, contrary to Blackberry and Apple that both have their individual App World. Nokia has an insight of only building phones that are brick shaped, which gives them lack of prestige in the present market of (Smartphonen, 2011, p.35). There are weak subdivisions in the company; they own as well as manage the Symbian but have abandoned it and instead gone for the windows 7, meaning than Symbian is now making losses (Saylor, 2012, p.54). Opportunities The corporation has the chance of developing their own version of the App store OVI, since their new mobile phones are being launched and hopefully accepted in the market. The company also has an opportunity of developing more products with the Microsoft Corporation and explores more opportunities that might come up from the deal. Diverse self-sufficient and valuable portfolio; Microsoft could also do diversification of their immense portfolio and dispose parts of it that is not profitable in the probable future. Threats If further loss of the share of market for Nokia continues being lost to the other big producers of Smartphones, they would actually consider withdrawal from the industry of Smartphones. The industry of mobile phones is not different from that of fashion with a quite quick turnaround. Nokia are investing lots of funds in trying to have a successful penetration into the market. By the time they succeed in doing so, the market could possibly have again shifted and had another serious breakthrough into another kind of mobile phone (Saylor, 2012, p.57). With the mobile phones software in the present day industry being as critical as the hardware, it is important that the Microsoft Corporation do not have excessive power as if the novel devices are a great success. It would not be good for the Nokia Company if Microsoft chose to raise their price on the pact or even walk out of it all together. Issues and challenges facing the company The challenges for Microsoft and Nokia alliance are overwhelming. Microsoft has still not been able to rise above the minuscule share of the market in the United States or even globally, even despite joining forces with Nokia. The Blackberry’s implosion was actually the best chance for Microsoft to get hold of its market share, but that did not happen. The company has to put in a lot of effort to carve out its niche in a world that has been dominated by the Android and iOS (Saylor, 2012, p.59). Missing apps The Windows Phone still has the same old problem despite now being with more Nokia; that is the lack of a sufficient app ecosystem (Donner, and Steenson, 2008, p.35). Microsoft is not getting anything from Nokia in terms of software that was not already in the Windows Phone. This is because the strongest mobile software asset of Nokia, which is its maps business, was not part of the agreement. After more than three years into the deal, Windows Phone still does not have table stakes apps as such like the native customers of Instgram and YouTube. The stance in the tablets is excessively bleaker. The Windows RT, which is the version designed for tablets specifically, is a very big flop and the Window 8 applied on tablets has not done any better in the market. The iPhone has successfully turned mobile phones, together with business mobile phones into a wholly consumer business (Saylor, 2012, p.70). This has an implication that the acquisition of Nokia has dragged the Microsoft Corporatio n into a sector that it should have avoided as much as possible. In other words, Microsoft is not a good consumer organization. Still it is not easy to see what the new CEO who has a good record of accomplishment in the companies he worked before has brought into the Nokia Company. The Xbox Problem The Xbox is a one consumer bright spot of Microsoft. Even without taking into account, the Xbox’s sunk cost and the fumbled Xbox One’s release, the segment of Devices and Entertainment is too small, particularly in the profit share that cannot make any significant difference (Goggin, 2011, p.23). With very little expectation for immense growth in the game console and set top box industry, the Xbox is going to make no difference for the company. Reinforce success Every business requires reinforcement and mobile phone industry is no exception. Another area of power or strength is the web services, especially those serving business and not the ones that are consumer-facing. Although Microsoft is behind Google in several aspects, it is much ahead of Apple, which usually appears as having very little idea about the web services as it is much into the devices (Saylor, 2012, p.73). This is something the two companies have not taken advantage of, and they might realize it a little bit late if the other companies have realized their shortcomings and countered them accordingly. Brand image For any business to be successful in the market, brand image must be at its best because it is what consumers will be looking for. This is because everyone wants to consume a product they are well familiar with. For the Nokia Company, its brand image has dwindles constantly to a great deal such that people are no longer comfortable buying and using its products. This is something that might make it difficult for them to regain their initial status as the leading mobile phone maker, despite alliance with Microsoft (Saylor, 2012, p.79). They might pump in a lot of money in an attempt to save the situation but may as well flop if proper marketing and investment in technology is not done to win back its customers. If things do not work out for the company as expected, then it will be a big loss for Microsoft as it entered into a partnership with a company that was already going down. Generation of Strategic growth options Every section of an organization is affected by a marketing strategy. It is all about the use of everything at the business’ disposal in creation of value for others. Customers are also included in this but workers as well as shareholders benefit. The marketing strategy’s major purpose is setting out the means by which the marketing objectives that are agreed are to be accomplished. One of the most appropriate ways to analyze the different strategies that can be used by an organization in growing the business is with the ANSOFF Matrix (Schwarzinger, 2012, p. 42). The model takes into account the opportunities of providing available and new products and services within the present and new markets together with the levels of risk that come with them. Below are possible three strategic options that can be employed by the company: Market penetration The aim of this strategy is selling products to a market that already exists. This has been proposed because Nokia has an already existing market even though it seems to be losing it at a higher rate. Market development This strategy refers to the completion of market development successfully (Hahn and Kibora, 2008). The method has been proposed because the Nokia Company appears to have lost touch with the huge client base that it enjoyed when it was performing still well. 5.3. Product development This section of the Ansoff matrix aims at being updated as regards the latest technology in the industry. The strategy has been proposed because the company appears to be lagging behind in terms of innovation, and this is where their competitors have fully taken advantage of to win the game (Kovvali, 2011, p.73). Evaluation of strategic growth options Market penetration The aim of this strategy is selling products to a market that already exists. Nokia has an already existing market even though it seems to be losing it at a higher rate. For the company to be able to achieve this, there are several things that needs to be done such as: changing the pricing plan; this should be done in a manner such that it is competitor or penetration based. Changing the pricing plan means that they will be reducing prices of their products in an attempt to attract more customers or even maintaining the existing ones. However, in doing so, the quality of the products must also be high as consumers do not only go for the price but they want to enjoy the value for their money. For the prices to be reduced as much as possible and to ensure sustainability, a lot of resources needs to be pumped in, which the company may also not be having, considering the financial crisis that it faced (Kovvali, 2011, p.63). Introduce discounting; the company can also introduce discountin g services whereby customers pay certain amount of money in buying a particular product or quantity. Starting up a different promotion campaign or considering changes on the present one; shifting from one campaign strategy to another or improving on the available one may also help the company in getting the message home, thus attracting more customers. 6.2. Market development This strategy refers to the completion of market development successfully. Nokia Company appears to have lost touch with the huge client base that it enjoyed when it was performing still well. The company has an option of penetrating or developing new markets that its products has not reached. This can be done through targeting a completely new client base and carrying out vigorous product promotions in order to attract them. Some other means through which this can be achieved is researching and selling the products to a different market segment in instances of poor market share and saturation (Kovvali, 2011, p.79). They can also change the periods that adverts are run on television and change the places in which the display of print adverts happen. This is the best way of ensuring that the products appeal to a completely new market. The company can also reduce the present prices of its products to help in attracting a wider range of clients. 6.3. Product development This section of the Ansoff matrix aims at being updated as regards the latest technology in the industry (Bull, 2007). The company appears to be lagging behind in terms of innovation, and this is where their competitors have fully taken advantage of to win the game. The mobile phone industry is just like fashion where trends come up each day and players in the market try to beat each other by being creative and innovation in an attempt to win the customers as much as possible. Companies like Samsung have rose to great heights due to their technological inventions and they are really doing well in the Smartphone market. They have been coming up with new applications that have been appealing to customers and that are why they are really selling (Kovvali, 2011, p. 34) Nokia should pump in a lot of cash and invest heavily in technology because it is the only way to succeed in the business. Description of selected strategy Product development The selected strategy for at Nokia is product development. Nearly everyone knows that this has been the biggest undoing of the company as they have not been able to keep up with the pace at which technology is growing. Just as said earlier, the mobile phone industry is just like fashion where trends come up each day and players in the market try to beat each other by being creative and innovation in an attempt to win the customers as much as possible. Therefore, the company has no option but to invest in technology if at all they are serious about regaining the lost market share. They should produce some high-tech products with a lot of features that fit specific market segment. With the strategic alliance with Microsoft, the company stands a good chance of recovering as this is an opportunity to get a source of finances that they require to keep up with the new technological development (Saylor, 2012, p.89). Microsoft is also known for its creativity and this alliance puts Nokia in a good position because they will be able to get the best operation systems that are updated to meet the current market requirements. Moreover, the alliance will enable the company to have a pool of new ideas as together two giants that have been leaders in their respective industries for several years. Conclusion It is no doubt that the alliance between Nokia and Microsoft is the best decision ever made by the management because it is a chance of recovering from the fall to try to catch up with the current industry leaders. Pundits see it as a major coup for Nokia, but Microsoft also stands to gain from the pact. Nokia should use this opportunity to venture fully into the Smartphone market by doing product development. They should invest heavily in technology and even employ more staff that can bring meaningful changes. The company has been doing well in the other growth strategies such as market penetration and market development, but has not been doing product development. From the evaluation of the growth strategies above, product development is the only one that has remained and it is the only way that the company can attempt so as to come closer to its competitors or even beat them in the market. The Smartphones market is still growing and there are several opportunities that are yet to be exploited and with Microsoft on board, it only needs proper strategies to conquer the market. However, if proper measures and strategies are not in place then the highly hyped alliance might as well be a waste of time and resources as other companies will continue steadily while Nokia continue to fall steadily. References Baron, N 2008, ‘Adjusting the Volume: Technology and Multitasking in Discourse Control’, in Katz, J. (Ed.) 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