Od of Whole Food Market Essay

Introduction Organizational behavior and structure are key factors in leading a company to be efficient and successful. Organizational diagnosis models have been created to allow companies to audit themselves to be sure that they are utilizing these key factors correctly. When a firm conducts an organizational diagnosis it is performed to identify strengths and weaknesses in its systems thus developing measures to improve the organizations performance. Knowing which model to use is crucial because misusing models could lead to inaccurate findings. In the following pages I will discuss and compare numerous models to include the 7S Model, the Congruence Model, and the Burke-Litwin Model. After discussing a few issues that Whole Foods Market (WFM) is facing I will recommend which model is best suited for them and explain why. Force Field Analysis This model uses an organizational diagnosis to identify driving forces affecting a company (Falletta, 2005). Force Field analysis enables a company to identify what causes change and what hinders change within a certain organization. This will allow an organization to develop measures that will allow the organizations driving forces to be maximized while the restraining forces are at the same time limited to allow the organization to be more efficient. The drawback to this model is that it is extremely simple and is not the best model for defining specific problems it more or less will allow a company to reach a desired state of affairs and nothing else. Leavitt’s Model This model has task variables, technological variables, structure variables and human variables. The model can be used to evaluate how to change in one of the variables will affect the others, and is best applied in analysis concerning organizational structure and human resources. The strength in this model lays in its simplicity but this can also be viewed as a weakness because the output from the model cannot provide direct causal statements relating to the variables. Likert System Analysis This analysis is best applied in an organization to examine issues relating to motivation, communication, interaction, goal setting, decision making,  control and performance. The Likert System is important in analyzing management systems within an organization and how they affect performance (Falletta, 2005). This model evaluates employee perceptions and how they affect individual and group performance. The main strength of this model is that is uses determined scales which make assessment more qualitative and easier. The drawback of this model is that it is really only good for examining the social aspect affecting an organization and doesn’t consider what affects that processes, structure and the environment have on an organization. McKinsey 7S Framework Variables that are examined in this model include style, staff, systems, skills, strategy, structure, and shared values. This model is applied in an organization to investigate whether or not their inputs such as structure, skills, and strategy align with company objectives (Falletta, 2005). A change in any of the variables will eventually cause changes in the other variables. The model has strength in the form of being able to analyze essential variables that affect an organizations performance and it is simpler to use than some of the other models. However, the model does not take into consideration environmental effects on a company’s effectiveness and operations. Burke-Litwin Model This model includes the following variables; management practices work unit climate, mission and strategy, organizational structure, leadership, task requirements and individual skills, individual needs and values, culture, systems, motivation, and finally individual and organizational performance. The Burke-Litwin Model can be used to investigate not only internal but external factors that influence an organization and further goes to show how the factors interact (Martins & Coetzee, 2009). Most believe this to be one of the most robust and overall better OD models to use for analysis because it provides the nature and direction of influence of organizational variables. This model also provides a difference between transformational and transactional dynamics. The strength of this model is that it is able to analyze organizational structure, task requirements, individual skills, and the external environment all at the same time. Congruence Model This model contains inputs, throughputs, and outputs and is best used in an organization to identify the degree to which the needs, objectives and structures of one part of an organization are congruent to the needs, objectives and structure of another part (Falletta, 2005). Its strength is in the obvious ability it has to show organizations how to improve efficiency and effectiveness. The model’s main weakness is that it does not evaluate effect of demands made by the environment (Nadler & Tushman, 1980). Current Issues WFM is Facing Perhaps the largest issue that WFM faces is the price of their goods. The fact of the matter is not everyone who wants natural and organic foods can enjoy the WFM experience. There is no surprise in the fact that organic and natural food is more expensive than other groceries and in times of economic downtown if customers don’t feel they are getting a good deal then they will most likely seek cheaper alternatives. What this means is when someone’s budget shrinks they won’t be able to purchase as much at WFM vs. one of their competitors. Another issue that is just as important to WFM is new entrants to the organic and natural foods market with companies like Wal Mart, Kroger and other larger, cheaper supermarkets. These big name companies are starting to create their own private label brands to compete with WFM but since a majority of their business is derived from products that aren’t natural and organic they can cut prices in this segment of the market to attract customers to their store while not taking a huge loss in profits. The final issue facing WFM is the threat of substitute products and services. One major competitor of WFM is Trader Joe’s Co. who also offers upscale groceries such as health foods and organic produce. One strength of WFM over Wal Mart and Kroger are their unique store atmospheres that most big box stores lack but companies like Trader Joe’s threaten WFM with their own â€Å"Mom and Pop† substitute atmosphere. Another company like this was Wild Oats which WFM was able to acquire to lessen some of their competition. What Model is Best for WFM? Given the set of organizational diagnosis models from Falletta, I believe the most useful one for analyzing Whole Foods Market will be the Burke-Litwin Model. According to Falletta, and many others in the realm of OD say that this model provides a strong approach for analyzing relationships among leadership an d strategy, financial decisions and operational issues. All three of the issues that WFM is facing I believe could benefit from some changes via this OD model. The fact that this model investigates internal and external factors influencing an organization and further helps show how factors interact sets this model ahead of many of the earlier OD models that exist and some even discussed above. For example an external factor like how the economy is doing largely affects WFM because customers know there are cheaper alternatives and early OD models like the Force Field Model would not be able to use this factor to help better situate the company. The Burke-Litwin Model however will take the external environment into consideration during its diagnosis. In fact all three issues listed above that WFM is facing can be categorized as dealing mostly with external environment issues. Something that only an open systems model could handle. Another reason I believe that The B-L Model should be used by WFM is the fact that it can distinguish between the culture and climate of an organization and also between transformational and transactional dynamics (Falletta, 2005). Obviously in the big picture this fact is important because almost no other model does this. This is important for WFM because their brand, image, store atmosphere are crucial in keeping their customers and getting new customers so not being able to diagnose these areas correctly could be traumatic for them. I think transformational and transactional leadership principles can largely affect an organization . Specifically I think that if a good transformational leadership principle is enacted throughout an organization it is visible to the outside through things such as employees motivation and personality towards customers. This is important for WFM because of the type of atmosphere they are trying to create inside their stores. Using this model could help diagnose this variable and give another reason to customers to shop at WFM and not at one  of its competitors who is offering a substitute product. I believe the same principle applies to the variables of climate and culture. Most of the other models combine these two variables but as we know now these two variables need to be set apart and the B-L model is the model that allows for that. As already mentioned above the companies climate and culture are two things that can be controlled and if used effectively cannot only help the business for obvious reasons but I believe these are two variables that would especially help WFM because these are variables that outsiders can pick up on when things are going good or even wrong. Take Apple for example, the climate and culture of this company create a mysterious phenomenon that brings its customers closer to the company. You can’t say this for Microsoft or Samsung. This is something that WFM could use more of to again out compete with Trader Joe’s. Conclusion In closing, since the 50’s there have been numerous OD models created and each one building upon the last. Organizations today now have many options when it comes to OD and which model to use but knowing which model to use is just as important as getting an accurate OD. By comparing all the models and identifying the issues an organization currently has one can better diagnose the situation. For WFM I believe the Burke-Litwin Model would best suit them and solve the issues described above.

What does china has an ageing population?

China, the second larges country in the world, is facing a serious problem — ageing population. Before 1979, when Mao was the chairman of China, he persuaded women to have lots of babies in order to finish his plan – the Great Leap Forward. This is the start of the ageing population in China. In January 1958, Mao launched the second five year plan known as the Great Leap Forward. 1Mao wanted China to become a world power. He wanted to catch up with the west by ending Chinese dependence upon agriculture. His aim was to catch up with UK in the industry products in ten years time and with America in 15 years time. In order to do this, he will need lots of peasants but many of them die during this progress. This is why Mao encouraged women to have lots of children. In the DTM, the birth rate at stage 2 and 3 are both very high and this is due to requirement of Mao. China's population base increased â€Å"only† by another 100,000,000 on top of its 432,000,000 base.2 The magnitude of China total population increase so much that even the People's Republic of China found it hard to support. This is when One Child Policy (ICP) came in to control the over growing population. ICP is the birth control policy of the government of the People's Republic of China (PRC)3. When Deng Xiao Ping took over the power at 1978, he realized the overpopulation is a roadblock to economic development and also the death rate will increase due to the lack of food and water, then he came out with the ICP idea. In general, this policy is very successful because the birth rate has been reduced gradually starting at the middle of stage 3 in the DTM. The 1982 fertility survey shows the total fertility rate falling from around 6.0in the mid-1950s to well below 4.0in 19614. However, ICP leads to some other problem such as the ageing population. Since the ICP is introduced, the population has successfully decreased. However, the infant mortality increases at the same time. This is because as a Chinese tradition, the boys carry the family name but now, the families are only allow to have one child therefore the chance of having a boy is less then before. Because of this, some families may choose to kill the baby if it's a girl in order to carry the family name. This is not the only effect of ICP, since most families choose to have a boy rather than a girl, there will be more males than female in the future. The difference will also increase as the time pass by. As years go by, the medical care develops a lot in China therefore the life expectancy increase at the same time. Since the birth rate was so high is 1960s but then decrease so much when ICP is introduced, there are depend people then independent people. This slows down the economic development of China. When there are more dependent then the government will need to pay more than it earns. Since the dependent people can not earn their own living, the government will have to give them money and because the numbers of dependent people are so many, the money that was given to the dependents is more than the money China earns. The birth rate keeps dropping in China is due to one other main reason – as most of the people are now educated, they understand that if you want to raise up your children as best as you can, one child is more than enough. Also, the cost of having two children is normally too expensive for lower or middle classes. The time that is taken to look after them is too much if both parents are working. These are the main reasons why most of the parents choose not to have more than one child. In conclusion, China has an ageing population a problem is because the birth rate was really high when Mao was the chairman but then it decreases so much that ICP was introduced. The differences between that get worse and develop as the ageing population. Because of this problem, the economic developments is held back since the input and output is not balance due to part of the income is given to those dependent people. The death rate will increase dramatically when the dependent people die. This will affects reputation of China too.

Bacterial And Viral Infections Essay Research Paper

Bacterial And Viral Infections Essay, Research Paper Bing portion of the Sports Medicine profession, Athletic Trainers have to be ready for anything and everything when it comes to handling their jocks. This includes acknowledgment, rating, instruction and bar of assorted jobs. One specific facet of this is holding a basic cognition of contagious diseases that is seen all excessively normally in Athletics. Some illustrations of this include Tinea Pedis ( Athlete # 8217 ; s Foot ) , Conjunctivitis ( tap oculus ) , and Tinea Corporis ( tinea ) . Although these conditions aren # 8217 ; t life endangering, they are annoying and can intend remotion from drama for the person. Early acknowledgment by the jock and Athletic Trainer means immediate intervention and loss of pattern can be kept to a lower limit. Tinea Pedis, normally known as # 8220 ; Athlete # 8217 ; s Foot # 8221 ; , is one of the most prevailing and distinguishable conditions a individual can contract. Over 10 % of the population develops Athlete # 8217 ; s Foot every twelvemonth and 75 % of the US population will hold Athlete # 8217 ; s Foot sometime in their lives ( Hamann, 1994 ) . It seldom occurs before pubescence and is found more often in stripling and immature grownup males. Tinea Pedis is normally contracted by walking barefoot on moisture 2 floors around swimming pools and public showers that are contaminated. These countries stay warm and moist all the clip and this promotes abundant growing of the Fungis. While all jocks are prone to this job because of profuse sudating on a day-to-day footing, swimmers are the beginning of a great figure of Tinea Pedis instances. Diagnosis of Athlete # 8217 ; s Foot is normally made from history and clinical scrutiny. Microscopic scrutiny of a wet saddle horse of skin scrapings in a 10 % K hydroxide solution can uncover branched fungal signifiers, therefore corroborating the diagnosing. It is largely found between the 3rd and 4th and 4th and 5th toes but may widen onto the plantar or dorsal forefoot. As stated above, moist environment promotes the growing of the Fungis and Gram-negative bacteriums that is besides present on the tegument in these countries. The normal sourness of the tegument is decreased, which favors the growing of these pathogens. Fungi ab initio damage the outer bed of the cuticle and that causes the dry and lepidote Athlete # 8217 ; s pes visual aspect. As the action of Fungi and bacteriums continue, redness additions and fluid may be excreted from the affected countries. This causes more hurting, inflammation and itchiness. If left untreated, bacterial growing could rule and take 3 to eroding of the plantar tegument. Some marks and symptoms of Tinea Pedis are damp, soft red or grey-white graduated tables on the pess, cracked, skining and dead tegument countries. Sometimes little blisters can organize on the pes and itchiness is common. There are several self-care processs for Athlete # 8217 ; s Foot. Wash pess two times a twenty-four hours and dry well. Apply OTC anti-fungal pulverization, pick or spray between toes, socks and places. Wear clean socks made of cotton or wool because the natural fibres absorb some of the wet. Change socks during the twenty-four hours to assist pess remain dry and wear places that provide some airing, like sandals. Finally alternate places daily to allow each brace air out between erosions. If symptoms do non lessen after making all of the above, send the jock to a doctor for farther rating and intervention. To decrease the odds of your jocks undertaking Athlete # 8217 ; s Foot, educate them on bar. An Athletic Trainer can depic t marks and symptoms of this status so the jocks can catch it in its early phases. They are the 1s looking at their pess every twenty-four hours. An effectual manner to halt the spread Athlete # 8217 ; s Foot is to wear sandals in cabinet suites, showers and on the pool deck. 4 Besides from the Tinea household, Tinea Corporis ( tinea ) is found wholly excessively common in jocks. Once once more males are more frequently infected than females. The beings that cause ringworm can populate in worlds, animate beings and dirt. Tinea Corporis is contracted through direct or indirect contact with tegument of an septic individual. It is besides transmitted through floors, shower stables, benches that are contaminated. A less common manner in athleticss, but a manner none the lupus erythematosus is through petting septic puppies or kitties. Athletes are really susceptible to undertaking tinea because of the organic structure to personify contact they endure on a day-to-day footing. The damp part of the lesion is powerful with the disease and that assorted with perspiration can acquire everyplace. Athletic Trainers can descry Ringworm from the Swim squad to the hoops squad. However the greatest figure of persons who get ringworm every twelvemonth in sports are the gra pplers. They have changeless close contact and fluids are spread from the septic individual, to his opposition, so his opposition wrestles another individual and so on and so on. The mats are contaminated and when the grapplers come into the Training Room, the tabular arraies are contaminated as good. The marks and symptoms of Ringworm Begin with ruddy, somewhat 5 elevated lepidote spots. The lesions are pealing shaped and new spots arise on the fringe while the cardinal country clears up. This leads to the â€Å"ringworm appearance† . A great figure of people believe there is really a worm turning under the surface of the tegument but this is wholly untrue. The fringe may be dry and lepidote or moist and crusted. Tinea Corporis is found normally in non-hairy countries like the face, bole, weaponries and legs. Treatment for this status is really similar to that off Tinea Pedis. Wash the country often with soap and H2O. Apply OTC topical anti-fungal pick to the affected country as directed. Many Training Suites are already equipped with this pick. The jock should be excluded from swimming pools and activities that could expose others, including pattern while the lesion is unfastened. If the jock must take part in pattern, make certain the country is wholly and decently covered. A bioclusive covering, patch or tape can be used to dress the country. By the clip athletes, particularly grapplers, reach the collegial degree of competition they fundamentally know if they have ringworm. Daily introspection of the jock can catch the ruddy spot in its early phases and proper attention can get down instantly to 6 prevent distributing to other teammates. There are merchandises out on the market that can assist forestall transmittal of Tinea Corporis. An illustration of this is Kenshield. It is a froth that when applied becomes an unseeable protectant and barrier. Kenshield is specifically designed for sports and won # 8217 ; t rinse off with sweat. However, these merchandises can be expensive. A 22oz. Can of Kenshild, for illustration, is $ 18.00. This merchandise International Relations and Security Network # 8217 ; T merely for jocks but is highly utile in protecting Athletic Trainers themselves. In add-on to Tinea Pedis and Corporis, Conjunctivitis ( tap oculus ) is really common in Athletics. Conjunctivitis is an redness of the conjunctiva, which the name would propose. The conjunctiva is a moist, delicate membrane that lines the interior of the palpebras and covers the Whites of the eyes. The fluids in an septic oculus is highly contagious. A individual may merely hold pinkeye in one oculus but if they itch the septic one and so rub the other, the infection is that easy distribute. If an jock touches their oculus and so embrace person or touches a doorhandle, other people are at hazard of going infected. Using other athlete # 8217 ; s apparels, towels, 7 oculus make-up or dark glassess can set him or her at increased odds. Conjunctivitis can normally distribute like wildfire throughout a swimming squad because of the sharing of goggles and towels. Sometimes the inflammation that is the first symptom is normally mistaken for annoyance from the Cl in the pool. Signs and symptoms of Conjunctivitis include scratchy or painful esthesis, lacrimation, and itchy and conceited eyes. The oculus is overly ruddy, resembling a # 8220 ; bloodshot oculus # 8221 ; . The most defining mark is difficulty opening eyes in the forenoon because the palpebras are # 8220 ; crusted # 8221 ; shut from mucose. There are two sorts of Conjunctivitis: viral and bacterial. Both produce really similar symptoms but the bacterial strain symptoms appear between 24-72 hours after exposure whereas the viral strain can run anyplace from 12 hours to 12 yearss. There are non many ways to handle Conjunctivitis. Sometimes, if left untreated, can run its class in a few ye arss but a bulk opt to see a physician to have oculus beads. To forestall spread of pink oculus, promote your jocks non to portion anything that would come near to touching the oculus. Catching pink oculus in the first twenty-four hours or so and get downing intervention, the jock may 8 forestall the spreading of the infection to the other oculus or to other teammates. In decision, the Athletic Training profession plays a major function in maintaining jocks healthy and viing in the athleticss they love by holding proper cognition of different diseases and infections. Even conditions that may non look of import like Tinea Pedis, Tinea Corporis and Conjunctivitis can do an jock free valuable playing clip. By being able to place the above jobs, cognizing how they are transmitted and how to forestall farther spread, the Athletic Trainer is taking major stairss to assist their jocks and maintain them every bit healthy as they can be. Bibliography Mentions Fedukowicz, H. ( 1985 ) . External Infections of the Eye. Appleton-Century Crafts. Hyndiuk, T. ( 1986 ) . Infections of the Eye. Little, Brown and Company. Easty, D.L. ( 1985 ) . Virus Disease of the Eye. Yearbook Medical Publishing Inc. Ogilvie, S. ( 1997 ) . Symptoms and Signs in Clinical Medicine. Butterworth A ; Heinmann. Holmberg, K. ( 1989 ) . Diagnosis and Therapy of Systemic Fungal Infections. Raven Press. Hamann, B. ( 1994 ) . Disease: Designation, Prevention, and Control. Mosby. Marder, R. ( 1997 ) . Sports Injuries of the Ankle and Foot. Springer. William claude dukenfields, K. ( 1997 ) . Medical Problems in Athletes. Blackwell Science. Sauer, G. ( 1996 ) . Manual of Skin Diseases. Lippincott-Raven.

Business and service marketing 1 Essay Example | Topics and Well Written Essays - 1500 words

Business and service marketing 1 - Essay Example Those with existing brand value have been successful in reaping the benefits of e-commerce. Tesco, the giant retailer, is UK’s largest retailer in terms of market share and the world’s biggest e-grocer (Yoruk & Radosevic, 2000). Sustained competitive advantage can be gained by offering what creates value for the customers. Porter defines value as ‘what buyers are willing to pay’. Bevan and Murphy (2001) contend that firms can do this by either lowering the costs or doing something different from competitors. Tesco had initially launched their online channel Tesco Direct but today they have moved beyond online grocery retailing and offer a wide range of products. Their website www.tesco.com enables the customers to buy online from their familiar local store. The pricing and inventory system is linked directly to Tesco.com so that the customers can select the good at the prices they are used to (MÃ ¼ller-Lankenau, Klein & Wehmeyer, 2004). They charge a nominal fee as delivery charges for their online customers. Besides, Tesco had the first-mover advantages in introducing online grocery shopping but in addition, it gained its market leading position by educating and empowering its customers to ta ke up the online channel (Tse, 2005). This created the point of differentiation which added value to its service offering, thereby giving it the competitive advantage. Another point of differentiation in its services that Tesco has created is that it is the only retailer whose site is accessible by the disabled or the impaired people. The government of UK is attempting to make improve the quality of their life so that they live as normal a life as others. Tesco has taken the step and integrated accessibility into the main stream grocery site (Mairs, 2006). This accessible website was created for the partially sighted and blind people but had more of the normal visitors as well. This helped it to improve its customer base and the bran

Urban sustainable development Research Paper Example | Topics and Well Written Essays - 2500 words - 1

Urban sustainable development - Research Paper Example Many major cities across the world are undergoing immense struggle in their efforts to accommodate the ever-rising populations and tackle the multi-dimensional challenges of urban development (Haughton, 1994). If the present inclinations continue into the near future, only a few states are likely to reap from the numerous aids of sustainable urban development (Sustainable Development Solution Network, 2013). Thus, there is an urgent need for cities to develop and integrate succinct models of sustainable development so that they can become better placed in confronting the challenges of the new century. The major aim of this paper is to discuss and analyze the concept of sustainable development with special attention to sustainable development in an urban context. The discussion begins with a precise definition of sustainable development before proceeding to an analysis of the incentives that led to the development of the concept of sustainable development over time. Finally, the paper discusses the effect of sustainable development on the planning of maintainable cities in the 21st century. This discussion is made clear by using the case study of Hong Kong city as one of the cities whose developments have been greatly influenced by the concept of sustainable development. Sustainable development can be perceived as a kind of development that addresses the needs of the current population without undue compromise to the capability of the future populations in fulfilling their needs (Rogers, 2008). To a larger extent, sustainable development encapsulates three different aspects of sustainability. These are economic, social, and environmental sustainability. It is important to note that these aspects form the basic premises of sustainable development. There is a consensus that a sustainable development entails an integrated and comprehensive approach to social, economic, and environmental aspects and processes. Several initiatives on sustainable

HUMAN RESOURCES MANAGEMENTas coherent and strategic management Essay

HUMAN RESOURCES MANAGEMENTas coherent and strategic management - Essay Example The term 'human resource,' first emerged in 1950's, coined by Peter Druker in one of his seminars and traces back to organisational development and human capital theory. HRM is controversial and debatable surrounded by great academic diversity. Confusion is caused because of the 'ambiguous pedigree' of the concept (Noon, 1992). There is a lack of clarity, the term can be viewed as being broad. HRM is a concept regarded as being enigmatic / obscure due to ideological, empirical and theoretical reasons and in many cases because of micro politics (Storey, 1992). Difficulties in defining HRM and the lack of a universally accepted definition implies that HRM is an innovation that takes on the meaning of whatever the person speaking at the time wants it to be (Torrington, 1989). Questions arise over the existence of HRM (Armstrong, 2000), over its meaning and status; is HRM a 'map,' 'model' or 'theory' (Noon, 1992) and of whether it is distinct from the traditional rhetoric of personnel an d industrial relations management. ... However, there must also be something extra if HRM is to be considered as a new innovative approach. Distinction by integration similarly leads to debate as integration is viewed differently. Again, lack of clarity leads back to the thought of HRM being whatever an organisation wants it to be. There is an apparent scale in operation which takes into account hard and soft HRM. Hard versions of HRM place emphasis on: "Strategic interventions to secure full utilisation of labour resources" (Worsfold, 1999, 340). This type of people management may be expected within the manufacturing industry, on the production line which is product and profit driven rather than service. Whereas soft versions of HRM emphasise: "Strategic interventions for commitment and development" (Worsfold, 1999, 340). Soft HRM would appear to be more synonymous with service industries, where the product is generally intangible, customers often receive an experience provided by the 'human resource,' thus commitment is sought. The human resource is perhaps more valuable, their impact greater and they may not be as easily replaced as perhaps a production operative in the manufacturing industry. Hard HRM relates back to the human relations movement from where personnel management can claim some of its origins and presents workers as a commodity, a resource to be exploited: "to be used dispassionately and in a formal rational manner" (Storey, 1992, 26). Hard HRM reflects the capitalist tradition, operating against workers' interests with no significance regarded to their well being, exploitation being paternalist and benevolent (Guest, 1999). "Essentially workers are simply resources to be squeezed and disposed of as business

Jpmorgan income&growth PLC Essay Example | Topics and Well Written Essays - 1500 words - 1

Jpmorgan income&growth PLC - Essay Example The professors further theorized about the market value a any given firm being determined by not only the earning power of the given firm, but also by the risk associated to he underlying assets of the firm with the firms value being independent of the way it chooses to finance its investment or the distribution of the dividends. The capital structure theorists who are perceived to be orthodox are mainly divided into two different groups with the fundamentalists like Modigliani and Miller making arguments bout the world approaching perfection very much closely with the imperfections which might be offsetting to a great extent which consequently makes gearing not to matter in the real sense. Amongst the scholars classified as the revisionists include finance text authors who are famous for writing for a wide group of audience for whom theoretical ingenuity may in real terms not imply to the highest value but instead make attempts towards accommodating, though, within the confines of o rthodoxy in what is described as the stark difference between Modigliani and Millers both theoretical analysis and empirical observations as regards to the importance that has been based on a firms capital structure not only by the firm itself, but by also the investors (Findlay and Williams, 1985). It is therefore evident that what they are in real sense arguing about is the importance of imperfections which further which further attributes to the reason making gearing very important hence they play quite a critical role in making us understand why different firms make the gearing decisions the way they do. This study will therefore critically analyze both the fundamentalist and revisionist positions. The Modigliani and Miller argument is mainly founded on the following basic assumptions; That there is absence of taxes, the absence of the costs of transactions, that there are no costs of bankruptcy, that there exists equivalence in the costs of borrowing not only for the companies, but also the investors, that there exists symmetry in the flow of market information as regards to both the companies and investors being in know how with the given information (Edwards, 1987). Lastly, the theory is based on the assumption that there exists no significant effect as regards the effect of debt on the earnings of the company before interest and taxes (Findlay and Williams, 1985). It must however be noted that the reality existent in the real world is that there are taxes, costs of bankruptcy, the costs of transactions, existence of various differences in not only the costs of borrowing, but also the asymmetries in the flow of information and the effects debts has on earnings. Thus, to gain a better understanding of the failures of Modigliani and Miller (MM) economic models of gearing, we will first briefly look at both prepositions. Modigliani and Miller’s Capital-structure Irrelevance proposition The capital structure irrelevance proposition propagated by Modi gliani and Miller makes assumptions of the lack of both taxes and the costs of bankruptcy. According to the proposition, they argue that the weighted cost of capital of any given company remains constant in disregard to the numerous changes in the structure of any firm’s capital structure. A good example would the rate of borrowing of a given firm which would result in no tax benefits resulting from payments of interest hence resulting to no changes or benefits as regards the companies weighted average cost of

Business Failures Essay Example | Topics and Well Written Essays - 250 words

Business Failures - Essay Example This does not necessarily means that the organization needs to keep the money locked up in bank or in hand. Instead the organization should invest the money in assets and investment options that can be easily converted into case when required. For example the company can invest the money in a bank’s saving account to earn returns on this amount of money (Whittington, 2012, p.631). Another issue that organization may fail in relation to financial management is overestimation and underestimation of budgeted revenues as well as expenses that the business may incur in future. In order to ensure that the company continues to operate successfully and the company has the required financial resources to pay off its loan, the company should indulge in underestimation of the sales of the company (Etzel, 2007, p.175). In order to estimate the sales the company can conduct interviews with the customers regarding their intention to purchase the goods and services and how often they may do so (Jenster, 2009,

Global Recession Essay Example | Topics and Well Written Essays - 2000 words

Global Recession - Essay Example The boom in the housing market preceding the crisis was created through offering and promoting unregulated subprime mortgages in pursuit of stimulating demands to combat the slowing down in the aftermath of the busting of the dotcom bubble which led to a growth in the housing market that exceeded incomes finally culminating to the collapse. To understand the present global recession and its causes, it is pertinent to first understand any economic recession theoretically. According to Keynesian effective demand framework, a fall in real aggregate national income is triggered by a reduction in the effective aggregate demand (AD) which is composed of planned real aggregate consumption expenditure (C), a function of real aggregate national income itself, planned real aggregate investment expenditure (I), a function of the rate of returns on investment (r), Government Expenditure (G) which is usually taken to be autonomously determined and finally net export demand (defined as the difference between export demand and import demand, i.e., X - M). Now, in the Keynesian framework, there is sufficiently excess capacity to ensure prices and wages are sticky in the short run and thus a fall in aggregate demands leads to a fall in output. This fall again dampens demand for consumption expenditure which in turn leads to reduced agg regate demand and in turn reduced real aggregate output. This mechanism continues and the real aggregate income goes on falling which is tantamount to a recession. Thus it emerges that a recession must be triggered by a fall in any of the components of effective aggregate demand. (Mankiw, 2002) In fact a recession is a part of a business cycle that the economic growth of all advanced economies experiences. The idea of the business cycle is that the growth path of real aggregate output follows an oscillatory trend with the rise gradually moving onto a peak where after a reduction or contraction follows until it reaches a bottom and begins to move up once more. The movement towards the peak from the bottom or the trough is the period of expansion while the movement down from the peak to the trough is the period of recession. A period of recession is identified to be a depression if the real aggregate national income falls below the long run average trend. (McConnell & Brue, 2005) The expansion of the economy is supported and sometimes facilitated by monetary expansion on part of the monetary authority. This includes measures such as reducing the rate of interest to induce higher investment demand. This boosts the aggregate demand thereby leading to an upward spiral of rising real aggregate income. However, as the demand for investment rises there is a rise in interest rates which increase the cost of production. Further the rise in incomes which motivates greater consumer spending, thereby lead to higher commodity prices. Increased demand to invest in financial assets leads to risen asset prices. All these factors combined lead to a fall in real aggregate demand and thus a slowing down of the economy thereby triggering the downward movement (Foldvary, 2007). Often, to prevent or to restrict this downward movement, governments resort to expansionary monetary and fiscal policies to stimulate demands and motivate increased investment and consumer spending. As will be showed in what follows, the present