Facebook IPO Essay

Facebook, a social networking site, has grown at an exponential rate that far surpasses market expectation, so much so that its growth rate is referred to as the â€Å" Facebook phenomenal†. In 2004, Facebook had 1million monthly active users, and in comparison, it had reached 845million monthly active users in 2011. This phenomenal led to one of the biggest initial public offerings (IPO) the market had seen in recent years, with total capital raised to be valued at $16B, given the $38 per share offering price. Facebook was valued at around $96.6B in total. Prior to the IPO, the market perceived the valuation with positive approval signaled by both Facebook’s private market share auctions and analyst’s reviews. However, as it will be examined below, Facebook has been significantly over-valued by the underwriters. In addition, the market changed its opinion of Facebook shortly after the IPO, criticizing the valuation of the company was too high. The differences in market reaction showcase shortfalls in valuation, and it is recommended that analysts and Facebook should have used real option to valuate its market value. Over-valuation There are three main reasons why Facebook is overvalued at $38 per share. Aggressive Assumptions made by underwriters The first reason is the $38 per share price is based on overly aggressive assumptions made on Facebook’s future revenue. Facebook generates its revenue in two ways – display advertisements on its website and retain royalties from third-party developers for using Facebook’s online payment platform. Out of the two streams of revenue, advertisement accounts for about 82% of the total revenue, and royalty payment only accounts for 18%. Lead underwriter Morgan Stanley, has justified its pricing based on the assumptions that Facebook’s revenue will grow moderately considering the increasing popularity of its mobile app. Morgan Stanley estimated Facebook revenue to grow at 28% CAGR from 2013 – 2016, with advertising revenue growing at 31% and payment revenue growing at 17% per year. However, it is arguable that these assumptions are overly aggressive, and they will be extremely hard to realize. Upon examining the future prospect of revenue generated from advertising, it can be said that the estimated 31% growth rate cannot be achieved. First of all, given the online advertising market size, and current Facebook market share, Facebook will not be able to achieve the projected annual growth. In 2011, Facebook’s share of the online advertising market is 27% of the $25B industry. It is projected that the online advertising sector will grow to $45B in 2015, and given Facebook’s current market share, Facebook should be able to generate $12.15B in advertising revenue in 2015. However, this only accounts for 20% CAGR. Second, it is uncertain whether Facebook will be able to continue maintain its 27% market share. Facebook disclosed to the public that its current advertisers do not have long-term advertising commitment with Facebook, and many of its advertisers only spend a small proportion of their marketing budget with Facebook. In addition, many companies have started to question the effectiveness Facebook ads. Facebook differentiates its service by emphasizing the premise that ads are more effective if a friend recommends it on Facebook compares to traditional online advertising. It can be observed that companies, such as GM, are starting to doubt the effectiveness of the so-called social advertising by pulling out their ads on Facebook. This can significantly impact Facebook’s share of online marketing in the future. In addition, Facebook disclosed to the public that it might not be able to retain advertisers if it does not reduce its current ad price. However, considering that Facebook is already pricing its ads lower compares to other websites – Facebook charges $0.58 per click vis-à  -vis the industry norm of $1, it is hard to argue that Facebook will maintain its current revenue level even if it retains 27% of market share as it continues to reduce its ad price. Given the factors mentioned, it can be concluded that the estimated 31% growth rate in advertising revenue is overly aggressive. In addition, Morgan Stanley estimated royalty revenue would grow by 17%; however, by looking at the current royalty revenue, it is unlikely that Facebook will achieve the predicated growth rate. Facebook collects royalty payments from developers that use its payment infrastructure to charge players. Currently, Zynga accounts for a substantial portion of the royalty. Considering the intensified competition that Zynga is facing, and its lack of ability to monetize mobile apps, Zynga will continue to experience sagging growth and will not be able to contribute a substantial amount of royalty to Facebook in the foreseeable future. Thus, it is unlikely that Facebook will achieve 17% growth in its royalty revenue. Lastly, Morgan Stanley made these aggressive assumptions based on the premise that Facebook will be able to monetize its mobile app. However, Facebook has not been able to monetize its mobile app to-date. In addition, with the growing number of users using the mobile app as a substitute for accessing Facebook, Facebook is starting to see a decrease in its revenue, which led to the decrease in its stock prices after the IPO. Overall, the assumptions made by underwriters to justify the $38 per share IPO price are overly aggressive. Estimated fair value of common shares is much lower than $38 Facebook has estimated its Class B common stock to be at $30.89 per share as of Jan 31, 2012, and even if one continues with the aggressive estimation method that Facebook used, one will not reach the $38 per share valuation. Facebook adopted a mix of Discounted Cash Flow Method (â€Å" DCFM†), Guideline Public Company Method (â€Å"GPCM†), and Market Transaction Method (â€Å"MTM†) to determine its business enterprise value and fair value of its private share price prior to the IPO. To achieve the price of $30.89, Facebook assigns a 50% weight to the MTM, where it considers the volume of transaction of its private shares, the timing of these transactions, the pricing of private shares in the secondary market, and whether the investors involved in the transaction have access to Facebook’s financial information. It then assigns 25% weight to GPCM and DCFM each to determine fair value. GPCM uses multiples of financial ratios in comparable companies in the same industry, and DCFM sums up the net present value of future cash flow at a discount rate of 15%. The discount rate is conservative, given the risk free rate is at 2.3%, beta for IT services is at 1.06, and the market risk premium of 7%. The assigned weight of the method is questionable. Facebook assigns a significant weight to MTM due to the large volume of third-party private stock sales. But considering that the volume transaction and pricing of the private shares were driven by the hype of the Facebook IPO and the positive reactions from the market prior to the IPO, it is hard to justify that the MTM valuation represents the true value of Facebook instead of an inflated hyped-up value. It is arguable that Facebook should have assigned less weight to MTM, and more weight to DCFM and GPCM. In addition, it is hard to justify the $7.11 increase of fair market value in a span of 4 months considering that Facebook share only increased by $5.35 in estimated fair market value between 2011 and 2012. The methods discussed above and the historical estimates support the conclusion that Facebook IPO price is over-priced. Comparable Company Valuation The last reason is based on multiples generated by comparable companies, namely Google and Apple, it can be calculated that Facebook valuation is not close to the $96.6B valuation. See Appendix A. Market Reactions The market has perceived the IPO with positive remarks. One analyst even valued Facebook to be at $234B compares to the $96.6B IPO valuation. Most analysts either thought Facebook was valued right on the spot or thought it was undervalued. The hype about the stock was more obvious in the private market. Prior to its IPO, Facebook stocks were trading at a high of $42 compares to its $30 estimated fair market value. In contrast, immediately after the fall, most analysts jumped on the bandwagon of claiming the underwriters have overvalued the company. Some investors even blamed Mark Zuckerberg for failing to signal to the investors that the company has been overvalued. The difference in market reaction showcased three shortfalls in valuation. They are objective valuation method that fails to account for dynamic business environment, asymmetry of information, and low level of corporate governance. First, the valuation method that most analysts used to valuate Facebook is based on some types of discounted cash flow method. Analysts will look at future growth prospective of the company, and discount the estimated profit by a discount rate that would be appropriate to capture risks that are foreseeable given the historical financial record. In addition, the traditional discounted cash flow method depends on obtaining information that would allow one to correctly forecast future earnings and free cash flow, and to assess the strength of company management and future earning abilities. The model ignores that companies could change their business practices to the dynamic business environment that cannot be properly valuated based on historical data. Facebook does not provide adequate information to allow analysts to generate reliable valuations. It has limited record of its profits, its revenue has been highly volatile, and the business environment it operates in changes frequently. One instance that the underwriters may have overlooked is Facebook’s ability to monetize its mobile app as mentioned above. The underwriters may have ignored the importance of substitution of web-accessed Facebook usage by the mobile app accessed usage at the time of the valuation given that this risk was not reflected in historical revenue record. The second challenge relates to valuation is asymmetry of information, which is arguable that it had drove up investor expectation that a â€Å"free lunch† scenario will take place. Morgan Stanley was sued and fined for only disclosing softer revenue and profit forecasts to selective investors prior to the IPO and for failing to disclose the cannibalization of Facebook revenue by the increasing popularity of its mobile app adequately to retail investors through the prospectus. Investors with the additional information were able to make a better-informed decision of whether to purchase Facebook share or not. The asymmetry of information also led to market hype. Investors, without the softer revenue and profit forecasts, interpreted the market price to be much higher than the private trade price prior to the IPO and the IPO price. This drove the private share price to $42 from $34 on the secondary market. Investors thought by buying shares before IPO, they would be able to rip a bigger profit considering that the market price will be higher than $38. Lastly, the asymmetry of information led investors to believe that it will be extremely hard to buy Facebook stocks at IPO price given the mentality that the demand for the shares will not meet the supply despite the fact that  ¾ of Class B shares are locked in to be sold at a later time. The market hype, combined with the surging demand of shares and the lack of investor rationality drove the valuation of the company to be higher than what it really is. The last challenge is the lack of corporate governance. As investors have pointed out, the CEO of the company and the underwriters should have disclosed the information adequately in the prospectus. The lack of corporate governance could be driven by the lack of serious fine for improper disclosure of information. Morgan Stanley was only fined $5M compares to the $68M underwriting fee it gained from the deal. Also, the lack of governance was driven by hubris and greed. The underwriters stand to gain a bigger underwriting fee for a higher IPO price, and the company stands to gain more capital for higher IPO price. In addition, it is also easier for the underwriter to justify its valuation for a company that cannot be properly valuated based on the traditional discounted cash flow method. The combinations of driver lead to lack of corporate governance in this case. Suggested Valuation Method It is suggested that analysts and Facebook should have used real options to valuate the company given the volatility of the business environment Facebook is in, and the ever-changing business practices to meet these volatilities. Real option valuation allows the company to include R&D, brand development, and technology initiatives to be built into its valuation. It is also flexible enough to account for company’s ability to change its business practices in the future. Valuation will change in accordance to the options that management will take to delay, expand, contract, switch uses, outsource or abandon projects. Real options would allow Facebook to valuate its new platforms, new mobile apps, and new technology initiatives to renovate Facebook’s current operations. In addition, real option does capture the benefits of discounted cash flow model by assigning weights to future cash flow given the past company performance in the market. Given the current Facebook operation model, it is commended that real options should be used to valuate the company. Conclusion It is extremely hard to valuate a company properly, especially given a company, such as Facebook, which does not have a long history of stable income nor information that would solidify its future earnings. Market reaction prior to and after the Facebook IPO indicates issues within the current valuation models that companies and analysts are using. It is recommended that companies should start to consider using the real option method to valuate companies with similar business characteristics as Facebook. Bibliography Primary source: Facebook. (2012). Registration statement – facebook inc.. (p. 47). Retrieved from http://sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm. Secondary source: Berthelsen, C. (2012). Massachusetts hits morgan stanley on facebook ipo. Wall Street Journal , Retrieved from http://online.wsj.com/article/SB10001424127887324407504578185580869680410.html. Buley, T. (2009). Facing up to facebook’s value. Forbes, Retrieved from http://www.forbes.com/2009/04/06/facebook-advertising-rates-technology-internet-facebook.html. Damodaran. (2012). Betas by sector. Retrieved from http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/Betas.html. Dunand, E. (2012). Morgan stanley fined $5 million over facebook ipo. Reuters, Retrieved from http://www.cnbc.com/id/100322264. Gustin, S. (2012). Do facebook ads work? . Time Magazine, Retrieved from http://business.time.com/2012/08/07/do-facebook-ads-work/. Joiner, S. (Interviewee), & Ruggeri, C. (Interviewee) (n.d.). Valuation issues in a down market Mergers and Acquisitions series : Part 1. [Audio podcast]. Retrieved from http://www.deloitte.com/view/en_LB/lb/centers/cfo-center/3e9619288f709210VgnVCM200000bb42f00aRCRD.htm?theme=cfo. Latimore, D. (2002). Calculating value during uncertainty: Getting real with â€Å"real options†. Retrieved from http://www-935.ibm.com/services/hk/igs/pdf/g510-3248-calculating-value.pdf. Martin, S. (2012). Zynga shares slide nearly 5%. USA Today, Retrieved from http://www.usatoday.com/story/tech/2012/12/17/zynga-apple-app-store-ios-iphone/1775403/. Olanoff, D. (2012, 12 17). Morgan stanley fined $5m over facebook research and handling of ipo by massachusetts. Retrieved from http://techcrunch.com/2012/12/17/morgan-stanley-fined-5m-over-facebook-research-by-massachusetts/. Raice, S. (2012). Is facebook worth $100 billion? . Wall Street Journal , Retrieved from http://online.wsj.com/article/SB10001424052702304584404576442950773361780.html. Smith, R. (2012). Hot item: Pre-ipo facebook shares. Wall Street Journal , Retrieved from http://online.wsj.com/article/SB10001424052970203833004577249512827646658.html. US Treasury. (2012). Daily treasury long term rate data. Retrieved from http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=longtermrate. ——————————————– [ 1 ]. Facebook. (2012). Registration statement – facebook inc.. (p. 47). Retrieved from http://sec.gov/Archives/edgar/data/1326801/000119312512034517/d287954ds1.htm. [ 2 ]. Ibid. p.1 [ 3 ]. Ibid. p.13 [ 4 ]. Olanoff, D. (2012, 12 17). Morgan stanley fined $5m over facebook research and handling of ipo by massachusetts. Retrieved from http://techcrunch.com/2012/12/17/morgan-stanley-fined-5m-over-facebook-research-by-massachusetts/. [ 5 ]. Ibid. [ 6 ]. Raice, S. (2012). Is facebook worth $100 billion? . Wall Street Journal , Retrieved from http://online.wsj.com/article/SB10001424052702304584404576442950773361780.html. [ 7 ]. Ibid. [ 8 ]. Supra Note 1 at p.13. [ 9 ]. Gustin, S. (2012). Do facebook ads work? . Time Magazine, Retrieved from http://business.time.com/2012/08/07/do-facebook-ads-work/. [ 10 ]. Buley, T. (2009). Facing up to facebook’s value. Forbes, Retrieved from http://www.forbes.com/2009/04/06/facebook-advertising-rates-technology-internet-facebook.html. [ 11 ]. Martin, S. (2012). Zynga shares slide nearly 5%. USA Today, Retrieved from http://www.usatoday.com/story/tech/2012/12/17/zynga-apple-app-store-ios-iphone/1775403/. [ 12 ]. Supra Note 1 at p.14. [ 13 ]. Supra Note 1 at p.76. [ 14 ]. Ibid at p.77. [ 15 ]. Ibid. [ 16 ]. Damodaran. (2012). Betas by sector. Retrieved from http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/Betas.html; US Treasury. (2012). Daily treasury long term rate data. Retrieved from http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=longtermrate. Re = 2.3%+1.06(7%) = 9.72% Facebook does not have any long term debt. [ 17 ]. Supra Note 1 at p.78. [ 18 ]. Ibid at p.77 and 78. The estimated fair value of Facebook’s shares $25.54 on Mar 31, 2011, and $30.89 on Jan 31, 2012. [ 19 ]. Supra Note 6. [ 20 ]. Smith, R. (2012). Hot item: Pre-ipo facebook shares. Wall Street Journal , Retrieved from http://online.wsj.com/article/SB10001424052970203833004577249512827646658.html. [ 21 ]. Joiner, S. (Interviewee), & Ruggeri, C. (Interviewee) (n.d.). Valuation issues in a down market Mergers and Acquisitions series : Part 1. [Audio podcast]. Retrieved from http://www.deloitte.com/view/en_LB/lb/centers/cfo-center/3e9619288f709210VgnVCM200000bb42f00aRCRD.htm?theme=cfo. [ 22 ]. Berthelsen, C. (2012). Massachusetts hits morgan stanley on facebook ipo. Wall Street Journal , Retrieved from http://online.wsj.com/article/SB10001424127887324407504578185580869680410.html. [ 23 ]. Supra Note 20.

Dirty, Pretty Things

The movie Dirty Pretty Things was directed by Stephen Frears.   He directed films like Hero and the award-winning High Fidelity.   The movie stars Chiwetel Ejiofor as Okwe and Audrey Tautou as Senay who are the two main characters of the film.   The story begins with Okwe as a cab driving looking for passengers in the airport.   After the end of his shift as cab driver, the story reveals that he has a second job at the front desk of the Baltic Hotel as a receptionist. In the Baltic Hotel, viewers are introduced to the rest of the cast.   Senay is a young Turkish Muslim woman working as a cleaning lady.   Other key players are Ivan, the hotel’s greeter, Seà ±or â€Å"Sneaky† Juan, the hotel operator, and Juliette, a prostitute.   In between Okwe’s 2 jobs, he regularly meets with Guo Yi, a legal immigrant working at a mortuary and his friend. The film is about Okwe and emigrant workers trying to survive in life in London.   In Britain’s beautiful city, they are the invisible people that do what must be done in order to keep the city running.   They are the ones that drive, clean, and prostitute themselves for a city that fails to acknowledge their presence.   In surviving, they labor and work hard but they are not recognized as legal citizens.   Gui Yi expresses this when he tells Okwe, â€Å"you are illegal†¦ you have nothing†¦ you are nothing.† Because they have no identity, there is also an element of abuse.   Senay was forced to leave her job at the Baltic Hotel because of the Immigration Enforcement Directive.   They were investigating her because she is not supposed to be employed or receive any rent for a period of 6 months.   In fleeing, she gets a job in a sweatshop making clothes.   Her boss finds out that Immigration Enforcement was after her and decided to blackmail her into performing sexual favors. The story is also about secrets hidden away to keep a faà §ade of beauty and to make it seem like nothing is wrong.   Okwe finds in the lavatory of hotel room 510 a human heart.   Unknowingly, he has stumbled into a dark secret that the hotel operator Sneaky is hiding.   The hotel operator preys on immigrants, getting them to sell their kidneys for a passport – an identity.   In return, Sneaky gets  £10,000, profiting from desperate people who will face death just to finally have an identity. Sneaky also manages to uncover Okwe’s dark past.   Okwe was a Nigerian doctor charged with murdering his wife and is now in London after fleeing from his home country to escape prosecution.   Sneaky offered Okwe a job as the person to perform the operations so that human hearts from dead migrants no longer find their way into lavatories.   The story plays out and Okwe finally agrees to perform the operation on Senay.   But Okwe and Senay conspired instead to drug Sneaky and perform the operation on him instead and sold his kidney. After selling Sneaky’s kidney, the 2 main characters finally had enough money to escape.   The movie was also about running and hiding, as migrant workers without legal identities are forced to escape from one authority to the next.   With enough money, Senay flies to her cousin in New York and Okwe returns home to his daughter Valerie in Nigeria.   With the money the running was finally over for Okwe and Senay and their parting at London’s airport is symbolic.   For Senay, she finally got an identity, leaving behind â€Å"Senay† and becoming â€Å"Isabella†.   For Okwe, he finally faced his fear of persecution to go back to Nigeria and his daughter, Valerie. I recommend the film for anyone who appreciates films that depict genuine stories, away from the fantasies that a lot of films today offer.   Dirty Pretty Things shows a great, beautiful city like London from the perspective of regular people with everything to gain and a great deal to hide. Stephen Frears successfully presents viewers with a taste of the hardship that invisible people undergo just to survive.

Semiotic Analysis Paper Essay Example | Topics and Well Written Essays - 1500 words

Semiotic Analysis Paper - Essay Example Thus by making use of print media, the recruiter is also attempting to make use of this power to enforce new thoughts and replace stereotypes. The depth of semiotics can be determined by the impact they have â€Å"at the point of consumption† (Eagleton, 1983), so we need to evaluate the explicit cues in light of the context in which they appear. When we look at the purpose of the message we can infer that the it was meant to be delivered to a mass audience at the same time, for this purpose print media or out-of-home media can be very effective (Machin, 2004). The message uses visuals as well as text to attract the attention of a large audience towards the noble profession of nursing. As we perform the semiotic analysis of the image, we infer that the visuals in the image are just the tip of the iceberg; this image delivers a great deal of implicit meaning. Since the advertisement is designed to attract younger audience towards the nursing profession, it effectively makes use of semiotic elements in a very aesthetically pleasing manner to deliver the message. According to Nava, young people today are very perceptual towards advertising, so aside from differentiating the marketing element of an advertisement, treat advertisements as aesthetically pleasing objects (1992, pp 15-21). Signifiers There are a number of signifiers present in this image. The first signifier here is a man wearing green scrubs with a stethoscope around his shoulder. The nurse appears to be a middle-aged man of African origin who has a confident smile on their face. The back ground is blurred so more emphasis can be made on this signifier. The second signifier is a group of four smaller images on the bottom-right side. The images show nurses performing very critical and life-saving duties in healthcare. The nurses in these images are also male. The third signifier is the headline on the top right corner that says â€Å"My nurse is a Hero, he saved my life†. The text is writte n in all-caps in a large font and is in white colour so that it stands out from the image in the back ground. It is also written within inverted commas which show that it is a statement by a person. The fourth signifier is the sub-heading which says â€Å"Are you man enough to save a life?† this text is in smaller font and appears at the bottom of the four smaller images. This text too is in white but not in all-caps. It also appears between inverted commas which show that it is a stated question for the audience of the advertisement. The fifth signifier is the logo of the recruiter which appears at the bottom right corner of the image. It is placed in a footer which is blue so that the logo stands out. The Sign The sign in this image is a little complex. To start with when one thinks of the term nurse, almost inevitably the image of a woman appears. On the contrary the term â€Å"nurse† is not gender-specific; a nurse could be a man. Another sign in this picture is th at although the man is wearing stethoscope around his shoulders and wearing scrubs, we infer from the heading that he is a nurse and not a doctor. Most people relate stethoscopes to doctors and it becomes confusing when nurses are not wearing uniforms to distinguish them. Signified Presently women outnumber men a great deal in the nursing profession. This has little to do with their capabilities or lifestyles and more to do with the stereotypes of the profession. The term â€Å"male nurses† is as inappropriate as â€Å"

Effects of Terrorism on World Population Essay Example | Topics and Well Written Essays - 750 words

Effects of Terrorism on World Population - Essay Example Part of the United States’ response was to wage a war on a terrorist-sponsoring state, Afghanistan, in an attempt to destroy the group responsible for the attack, which is another effect of terrorism. In addition to political effects, terrorism brings with it economic consequences, which will be made clearer with the September 11 example, and psychological consequences, which will be illustrated using other examples of terrorism from the past century. Overall, the effects of terrorism on a society are grievous and intentional, and they stem from that intentional, schematic use of aggression to inflict harm on civilian populations. Politically, terrorism evokes war and the usual costs of war: military-related deaths (as evidenced by Operating Enduring Freedom), restrictions on personal liberties (as evidenced by the Patriot Act of 2001), and decreased trust in governments and public officials to provide safety and security to the nation. Since 2001 with the beginning of Operati on Enduring Freedom, approximately 2,796 coalition fatalities have occurred, which is a significant impact on communities within the United States, Great Britain, and elsewhere (casualties). The Patriot Act of 2001, which was passed as a means of intercepting and obstructing terrorism, allows federal law enforcement to intercept private communications between American citizens. In addition to restrictions on personal liberties, terrorism generally results in public distrust of governments and public officials. Distrust in government during a time of crisis is generally a source of social destabilization, a form of nihilism that is the ultimate goal of terrorism. Correspondingly, terrorism has definite economic consequences for the regions and countries suffering from its effects. A primary measure of economic productivity, such as GDP, may provide an immediate perspective on how impactful terrorism is on a macroeconomy. According to one analysis, the September 11th attacks reduced r eal GDP growth in 2001 by 0.5%, and increased unemployment rate by 0.11% (or approximately 598,000 jobs) (Roberts). In addition, forecasted GDP growth for 2002 fell sharply because of the attacks, indicating a loss of consumer confidence as a result. Politically and economically, the cost of national defense skyrocketed after the terrorist attacks, which, as economic Paul Krugman notes, is a result of the â€Å"political program enabled by terrorism† (Balogun 115). Sometimes, and ideally from the perspective of a terrorist, the actual attack will significantly influence economic targets. The World Trade Center, for instance, contained essential information for multinational corporations, which was completely lost in the attacks. In addition, the attacks occurred mainly in New York City, which houses the New York Stock Exchange that closed for a week following the attacks—a closure that represented the stoppage of the global economy. Lastly, at a more individual level, the psychological consequences of terrorism are equally severe. All Americans were afflicted with a similar sort of paranoia (often fueled by race) in the days, weeks, and even months after the September 11 attacks.

BUSINESS FUNCTIONS & PROCESSES Essay Example | Topics and Well Written Essays - 2750 words

BUSINESS FUNCTIONS & PROCESSES - Essay Example 57). In some cases, the concept of share price performance has been thought to be another important tool used in assessing the success of a company. However, it is important to understand that the success of a business organisation is often the sum total of all the different business process and functions (Chroneer, Johansson &Malmstrom 2015, p. 95). In this understanding, business managers are supposed to ensure that they create functional teams in their respective organizations in order to harmonize the different efforts to cause a general uniform success and achievement of the business goals and objectives. In many companies and other business organizations, success often means effective performance of the share price or simply general profitability. The process of comparing profitability in the industry among different firms is often aimed at establishing profitable companies in order to undertake the comparison process. However, this approach is not always the best because different companies and business organizations do not particular comparators because the respective business mix lacks similarity (Sedek 2012, p. 509). It goes without mention that in general, the success of the organization’s different organisation is the main point of concern when it comes to assessing the overall success of the firm. It is therefore this kind of understanding that this paper draws its main source of concern, examining the contribution made by the human resource department in its compensation role towards ensuring that the business creates and consolidates on its market share. Baldwin & Wilkinson (2000), explains that in every organisation, effective management of people and resources is an important process that is thought to be the core of its success (57). Whether businesses have the department in charge of people management or not, there will always be a person charged with ensuring that the welfare of staff is

Leadership assessmt 2 Essay Example | Topics and Well Written Essays - 500 words

Leadership assessmt 2 - Essay Example Davis created a team to lead a centralized call center. One of the purposes of the call center was to become proactive in planning and inventory forecasting. The use of teamwork encouraged by Davis helped the company improve its organizational culture. The firm has become more flexible and adaptive which made the company more aligned with the business environment of the 21st century. Davis encouraged in state competition. He did not use competition between states to lower the risk of dysfunctional behavior occurring due to the consequences of competition. The use of competition can lead to negative behaviors such as people lying to each other and mistrust among colleagues. Competitor can also lead to people stepping on each other in order to get ahead in the corporate ladder. Another potential negative aspect of competition is that it can intensify the work conditions and environment which can lead to work related stress. Employees can become burn out due to the excessive use of competition. Competition can encourage individualism instead of cooperation. Employees that got involvement in team sports in the past are more likely to become good team players in the corporate world. Recruiters of talent look positively to a candidate having prior involvement in sporting teams. Team sports teach players important skills such as learning to cooperate with others and build bonds of trust among teammates. Sports also teach people values, discipline, and encourage good physical health. Sports teach people how to work together as a cohesive and united team. Being a good team player in the business world is an asset because cooperation and teamwork are skills that needed in corporate America. In order to implement teamwork at CCA Davis opened up the lines of communication among the workers and the managerial staff. Open communication enables the free flow of ideas. These ideas can be used by teammates to find

Commercial Realities in Project Management Coursework

Commercial Realities in Project Management - Coursework Example .....................................................................................6 Swot analysis ...........................................................................................................................9 Conclusion ..............................................................................................................................12 Recommendation .....................................................................................................................13 Introduction Project management is a discipline that involves management of resources in a project to achieve the set goals and objectives. Project managers’ plan, organizes, and controls all the activities of the project to realise the set goals. The project must be appraised by use of various methods to determine its viability. Somalia is a country that does not a centre of training its cadets. There is a lot of expenditure in training the cadets outside the country. Somalia and xyz defence team wants to initiate F-15, Tornado and Typhoon Aircrafts Maintenance Training Facility and complete training program. There is demand for the facility from Somalia and other foreign nations. This project will involve large sums of money, and many logistics must be put in place. There will be many interested parties involved, and therefore there will be many issues arising. These activities includes; purchase, supply, finance and contract management issues. Somalia requires an in-depth analysis of the project to assess it viability. In the process of establishing F-15, Tornado and Typhoon Aircrafts Maintenance Training Facility and complete training program, there will be many contacts between Somalia and other firms. The procurement firms must ensure that the goods procured are of the right quality. Supply of low quality goods will amount to breach of contract. If the construction is done with the low quality materials, it is the procurement firm to take the losses. Manage ment is a doctrine that is useful in the successful running of the business organization. Through management, the various business owners are able to delegate some authority to their subordinates. This is necessary enough to ensure the effective running of the business or project. A project entails many different activities that are all correlated in ensuring the success of the overall business endeavour. Duties, challenges, obligations are assigned to the employees of any organizational setting. Delegation is an essential part in the management. Project management is a part of management that concentrates on the effective management of a project until its completion. Through technological usage of resources that are not costly and cheap in the end one is able to make skilful use of the available resources to put into practice the application of the project. Proper monitoring of all the transactions that transpire during the project will ensure its overall success. Evaluation tools are in existence in the establishment of viability of any business portfolio. The use of Net Present Value, IRR, and other mathematical tools enable one to establish mathematically the viability of any business endeavour. In most government projects, the government is entitled to inspect all the materials. Many potential disputes are likely to arise since it is an enormous investment. These must be handled with clear laws governing the contracts. The project will be evaluated by use of various methods to ascertain its viability. Since it is a capital-intensive project,

How to raise self-esteem Essay Example | Topics and Well Written Essays - 750 words

How to raise self-esteem - Essay Example Theories have viewed self esteem as a basic human need or motivation (Maslow, 1987). This paper will discuss how people may raise their self esteem, with an emphasis on single, homeless mothers. Experiences in people’s lives are key factors of self esteem development. The negative or positive life experiences people have create attitudes toward the self which may be favorable, developing positive self worth feelings. They may also be unfavorable, developing negative self worth feelings. Single mothers go through emotional experiences like feelings of isolation and loneliness (Jordan, Spencer, & Zanna, 2003). The frustrations accompanied by being a single mother may lead to harmful levels of anxiety and stress, which can also affect the children. Dwelling on events that led to single motherhood and blaming oneself makes the process of gaining self esteem and moving on difficult. To assist single mothers improve their self esteem, and, therefore, reduce stress in their lives, they need encouragement to change how they view themselves. Practicing tolerance on themselves is a key point, which starts by accepting their strengths and weaknesses as part and parcel of them ( Jordan, Spencer, & Zanna, 2003). They should then employ the use of power of positive thinking while focusing on successful parts of their lives, which could be a devoted family or the influence they have once had in their community. Another step towards building high self esteem is learning to accept positive and constructive criticism (Branden, 2001). Criticism need not be seen as diminishing, rather as an eye opener to what individuals can improve in themselves. Single mothers should take the initiative to invite and accept criticism and use it to change and improve their overall image (Jordan, Spencer, & Zanna, 2003). Those with low esteem must learn to set challenges and goals for themselves and be optimistic about achieving them. Failure

Marketing Segmentation Essay Example for Free

Marketing Segmentation Essay

Academic Integrity Essay Example for Free

Academic Integrity Essay Andre Gide once said: â€Å"Be faithful to that which exists within yourself.† That is, even if cheating does not hurt others, it hurts the one who cheats. This is the meaning of integrity. It means acting in a way of which one can be proud. This concept can easily be applied to academics. Specifically, it is important to generate your own ideas and information rather than using the internet to do all of the thinking for you. This is the problem with modern students: rather than actually going to the library to do some traditional research using books (the publication of which requires heavy scrutiny), the average student prefers to â€Å"Google† the information (the publication of which requires nothing more than internet access). Thus, students often find themselves in a position where their academic integrity is called into question; it is far too easy to copy and paste information when one feels a great deal of stress to complete an assignment. When it comes to academics, modern students should strive to have more integrity. See more: Unemployment problems and solutions essay More often than not, the average student seeks an immediate answer by going into Google and asking it a question. This passes for â€Å"research† today. The trouble with this method is that, once an obstacle is encountered, the average student declares, â€Å"I could not find any research on my subject.† Beyond the fact that the research skills are poor, the next issue is the fact that, once the student finds research, he or she does not know what to do with the information. That is, there appears to be no attempt at explaining the significance of the research, or asking substantial questions in response to it. Rather, students will copy the information into their own assignments as if to say, â€Å"There! I’ve written a research paper because I did research and I inserted it into my paper.† This is where academic integrity comes in. Having academic integrity means that one does research properly. It means that one actively seeks out answers to questions, and goes beyond the surface of what one found. One does not simply collect information and ideas like a child collects rocks for display; one makes an honest attempt to â€Å"get to the bottom† of an issue, so to speak. Furthermore, academic integrity means that, when submitting one’s work, one always ensures that proper credit is given for all ideas and information that were not generated by the writer himself or herself. I implore you to consider the academic value of the research you are doing. Are you doing it to better yourself and demonstrate your learning? Are you being â€Å"faithful to that which exists within yourself† as Gide asks? Or are you simply taking a shortcut and shortchanging yourself?

A history of Common Law

A history of Common Law Common Law In order to be influential, the law is to be professed as both certain and predictable, and also flexible and fair.   Specifically, it needs clear rules on the one hand, but flexibility on the other to produce exceptions to cases that lead to apparently incongruous or unjust conclusions if the rules are applied rigidly.   Equity is an essence of principles, doctrines, and rules advanced initially by the Court of Chancery in positive competition with the rules, doctrines and principles of the Common Law Courts.  The obliteration of the old Court of Chancery and the Common Law Courts, has led to the proposition that the distinction between law and equity is now outdated; that the two approaches are now ‘fused.’   On the contrary, the better analysis, is that the common law and equity remain distinct but mutually dependent features of law: ‘they are working in different ways towards the same ends, and it is therefore as wrong to assert the independence of one from the other as it is to assert that there is no difference between them.’ For a long time, the two structures of common law and equity ran uncomfortably side by side.   Until 1615 it was by no means established which one was to prevail in the event of a dispute.   Yet, even after that year the inconsistency between the two systems continued for a very long time.   After the restructuring of the English court system in 1865, it was decided that in the event of a conflict between the common law and equitable principles, equity must prevail.   The Judicature Acts 1873-1975 created one system of courts by amalgamating the common law courts and the courts of equity to form the Supreme Court of Judicature which would administer common law and equity.   Accordingly the court ‘is now not a Court of Law or a Court of Equity, it is a Court of Complete Jurisdiction.’ The area of law recognized as Equity developed in England and Wales in the Middle Ages in situations where the ordinary common law had failed to afford suitable redress.   Many legal actions, for example, originated by the issue of a writ but the slightest inaccuracy on the writ would invalidate the entire action.   Another inadequacy in the ordinary common law involved the fact that the only remedy was damages; that is, compensation, therefore, the court orders did not exist to require people to do something or to desist from some conduct, for example, sell as piece of land according to an agreement made or stop using a particular title.   Dissatisfied litigants frequently preferred to petition the King for him to mediate in a specific case, the courts were, in any case, the King’s courts.   These petitions’ for justice were dealt with by the King’s Chancellor who determined each case according to his own discretion.   Over the years, the decisions mad e by Lord Chancellor became known as the rules of equity, derived from the Latin meaning levelling.   These new-found rules came to be applied in a special court, the Chancellor’s Court, which became identified as the Court of Chancery.   Equity began to appear as an apparent set of principles, rather than a personal jurisdiction of the Chancellor, during the Chancellorship of Lord Nottingham in 1673.   By the end of Lord Eldon’s Chancellorship in 1827 equity was recognized as a precise jurisdiction. Nevertheless the development of a parallel but distinct system of dispute resolution was certainly bound to generate a conflict.   An individual wronged by a failure of the common law to remedy a gross injustice would apply to the court of equity.   The Chancellor, if the case accepted it, would approve of a remedy preventing the common law court from imposing its order.   The catharsis transpired in the Earl ofOxford’s Case, where the court of common law ordered the payment of a debt.   The debt had previously been paid, but the deed giving affect to the requirement had not been cancelled.   The court of equity was prepared to grant an order preventing this and resolving the deed.   The collision was in due course resolved in favour of equity; where there is an inconsistency, equity prevails.   This rule is now preserved in the Supreme Court Act 1981, s 49. The history of equity is regarded by its constant ebb and flow between compatibility and competition with the common law.   More recent developments in equity include, for example, the recognition of restrictive covenants, the expansion of remedies, the development of doctrines such as proprietary estoppel, the enhanced status of contractual licences, and the new model constructive trust.   There is an effort, then again, to validate these new developments, which are all illustrations of judicial inspiration, by precedent.   As Bagnall J said in Cowcher vCowcher: ‘this does not mean that equity is past childbearing; simply that its progeny must be legitimate- by precedent out of principle.   It is well that this should be so; otherwise no lawyer could safely advise on his client’s title and every quarrel would lead to a law-suit.’ In all probability the single most significant feature of equity is the trust.   If title to any property is vested in a person as trustee for another, equity not only restrains the trustee from denying his trust and setting himself up as absolute owner, but impresses on the trustee positive duties of good faith towards the other person.   Although one of the original development of equity, the protection granted to equitable owners behind a trust has developed considerably over the last 50 years. Remedies represent some interesting illustrations of the difference between law and equity; a difference which arose as; ‘an accident of history,’ according to Lord Nicholls in A-G v Blake. Ordinarily legal rights and remedies remain separate from equitable ones.   Some similarities do, nevertheless, occur.   For illustration, an injunction, an equitable remedy, can be sought for an anticipatory breach of contract, or to stop a nuisance, both common law claims.   In A-G v Blake, the House of Lords authorized the equitable remedy of account of profits for an assertion for violation of contract where the common law remedy of damages would have been insufficient. The equitable remedy of account of profits is usually accessible where there is a fiduciary relationship but the House of Lords endorsed its request otherwise in exceptional cases where it was the operative way to remedy a wrong.   By distinction, in Seager v Copydex, proceedings were brought for breach of confidence in regard for confidential information exposed by the defendants about a carpet grip.   Such a claim is equitable and normally the equitable remedies of injunction and account are obtainable.   On the other hand, an injunction would have been unsuccessful and he judges awarded damages.   It would appear, consequently that a common law remedy is available for an equitable claim for breach of confidence. The new model constructive trust resulted in the main due to the resourceful activity of Lord Denning MR.   In Hussey v Palmer, Lord Denning explained the constructive trust as one ‘imposed by the law wherever justice and good conscience require it.’   Cases such as Eves v Eves, where the woman was awarded an equitable interest in the property signifying her involvement in terms of heavy work, and Cooke v Head, a comparable case, regard this progress further.   On the other hand, it might be that this progression has come to a standstill since the retirement of Lord Denning.   A number of modern cases, including Lloyds Bank v Rosset, have re-established former ideology in this sphere relating to the survival of a common intention that an equitable interest should occur, and the existence of a direct financial contribution.   These ethics are more analogous to those relating to the formation of a resulting trust.The new model constructive trust has been for the most part thriving in the field of licences.   At common law, a contractual licence was controlled by the doctrine of privity of contract, and failed to present protection against a third party.   Equitable remedies have been made accessible to avoid a licensor violating a contractual licence and to permit a licence to bind third parties. It has been acknowledged that certain licences may produce an equitable proprietary interest by means of a constructive trust or proprietary estoppel.   In Binions v Evans, it was decided by Lord Denning that purchasers were compelled by a contractual licence between the former owners and Mrs Evans, an occupant. A constructive trust was imposed in her preference as the purchasers had bought specifically subject to Mrs Evans’ interest and had, for those grounds, paid a reduced price.   Also in RE Sharpe, a constructive trust was imposed on a trustee in bankruptcy regarding an interest obtained by an aunt who lent money to her nephew for a house purchase on the arrangement that she could live there for the rest of her life.The volatility of these progressing fields is once more shown in recent case law which seems to hold back from an advancement which may have pushed the boundaries too far.   Obiter dicta from the Court of Appeal in Ashburn Anstalt v W JArnold Co, accept ed in Habermann v Koehler, propose that a licence will only give effect to a constructive trust where the conscience of a third party is influenced:   it will be imposed where their behaviour so deserves.   Judicial resourcefulness in equitable disciplines is therefore made subject to refinements by judges in later cases. Proprietary estoppel is an additional illustration of an equitable doctrine which has seen momentous progression in the interest in justice ever since its formation in the leading case of Dillwyn v Llewelyn.   The dogma is established on encouragement and acquiescence whereby equity was equipped to arbitrate and adjust the rights of the parties.   Its relevance has been further improved by the Court of Appeal in Gillet vHolt, where a wider line of attack to the doctrine was taken that depended, eventually, on the unconscionability of the act.   Once more, it is an advancement which is outside of the organization of property rights and their registration recognized by Parliament. Cases such as Jennings v Rice show that the principle of proprietary estoppel and the protection of licences by estoppel continue to be a successful means used by the judges for the protection of licences and equitable rights.   The extent to which the right welcomes protection is adaptable owing to the conditions of the particular case.   For example, in Matharu v Matharu, the licence did not bestow a beneficial interest but presented to the respondent a right to live in the house for the rest of her life. A different prevailing progression in equity has resulted from the decision of the House of Lords in Barclays Bank plc v O’Brien.   The case has proclaimed the re-emergence in a broad sense of the equitable doctrine of notice.   They present that, where there is undue influence over a co-mortgagor or surety, this may provide augmentation to a right to prevent the transaction.   This right to avoid the transaction amounts to an equity of which the mortgagee may be considered to have constructive notice.   This revivification of the equitable doctrine of notice in a contemporary situation reveals evidently the flexibility of equity.   A number of cases pursued this pronouncement.   In Royal Bank of Scotland v Etridge, the House of Lords laid down common procedures for the application of the doctrine of notice in this situation. In summary equity fulfils the common law, although it does not endeavour to displace it with a moral code.   There have been setbacks and refinements, over the last 50 years, in the progress of new doctrines relating to the trust, above all when later judges seek to rationalise and consolidate new ideology.   Nonetheless it is apparent that equity remains its traditions, and prevails over the common law in the event of conflict.

The New Deal Essay examples -- U.S. History

Do you know what it’s like to live in a cardboard home, starve, and raise a family in poverty? Unfortunately, most Americans in the 1930s went through this on a day-to-day basis. In 1929 the stock market crashed. Many people lost their life savings; they invested everything they owned in a failing stock market. The country was falling, everyone needed strong leadership and help from the government. Devastation and desperation started on Thursday, October 24, 1929. There was a strong sense of panic in the air at the Stock Exchange. The stocks were dropping, alarmingly fast; the worried American tried desperately to keep their savings. Markets began to steady again on Friday and Saturday only to sweep back down the following Monday. By Tuesday the twenty-ninth all doubt was erased, many Americans lost everything they had on Black Tuesday (Andrist and Stillman 190). President Herbert Hoover made a decision and refused to provide emergency relief. Hoover believed that it was â€Å"strictly a state and local responsibility.† Most local organizations were far too small to handle this big of a situation (Andrist and Stillman 193). America needed a change, a change that would come at the next election time. Immediately following Herbert Hoover in the presidency line, Mr. Franklin Delano Roosevelt (FDR) became America’s 32nd president. This democrat, inaugurated on March 4, 1933, won the 1932 election against Hoover by a landslide. The new president made a promise to his citizens, â€Å"I pledge you, I pledge myself, a new deal for the American people.† He reassured Americans that he would change their lives. He promised to get people back to work and back in their homes (â€Å"New Deal Timeline 1). For the hundreds of thousands of unemployed work... ... still be living in a time very similar to the Great Depression. However, the New Deal did help to solve America’s problems, it did not end the depression, unemployment, or poverty; it did provide a sense of security to American citizens, and insure hope in their country (â€Å"New Deal† 3). Works Cited Andrist, Ralph K., and Edmund O. Stillman. The American Heritage History of the 1920s & 1930s. New York: American Heritage/Bonanza, 1987. Print. "Franklin D. Roosevelt - American Heritage Center, Inc." FDR Heritage. Web. McElvaine, Robert S. The Depression and New Deal: A History in Documents. New York: Oxford UP, 2000. Print. "New Deal." The Reader's Companion to U.S. Women's History. Ed. Wilma Mankiller, Gwendolyn Mink, Marysa Navarro, Barbara Smith, and Gloria Steinem. n.p. Web. 6 Mar. 2012. "New Deal Timeline." Xroads.virginia.edu. Web. 9 Mar. 2012.

Social Security Essays -- essays research papers

Title of Paper : Social Security Social security, created in 1935, is the most costly item in the federal budget. The program provides old age, survivors’ and disability insurance to a healthy portion of Americans. Workers and their employers fund the system by each paying payroll taxes. The Internal Revenue Service collects the taxes and deposits the money in government-administrated accounts known as the Old Age and Survivors and Disability Insurance Trust Funds(OASDI). The payroll tax revenues are used to pay benefits to those people currently collecting Social Security pensions. Social Security taxes also pay for Medicare, the national health program for the elderly. The huge problem with the current situation facing Social Security is the increasing deduction of workers in the work force paying for workers retired. â€Å"Due to the large number of aging baby boomers, American 65 and older are the fastest-growing segment of the population. The population growth of Americans age 65 and older is 112% in the years between 1995 and 2040. The population growth in age 20-64 is 24%. The population growth in ages under 20, is 5%.   Ã‚  Ã‚  Ã‚  Ã‚  What these numbers essentially represent is a cause problem with age differences in the future. Soon, less workers will be in the job force trying to supply more retirees with Social Security. Currently, many ideas have been juggled around trying to find a sound and reasonable way to resolve this problem. Granted, the problem will not happen overnight, but rather over a long arduous duration of time.   Ã‚  Ã‚  Ã‚  Ã‚  The question first arises, â€Å"Can the existing system survive without major reforms?† The early designers of Social Security and many Democrats are baffled at the recent proposals to change Social Security. Most believe that Social Security is still able to provide a safety net for retirees and their survivors if minor adjustments are made. â€Å"Occasionally raising payroll taxes or recalculating the way benefits are paid out.† Some Democrats look at major reform as a way of pitting war between generations. They stand on common beliefs that Social Security has worked for over 60 years by providing a steady stream of monthly payments that beneficiaries can rely on. Also, it has helped lift millions of seniors out of poverty. Democrats also criticize the Grand Old Party for â€Å"playing†... ...vatization of personal savings would be advantageous to the nation’s economy, delivering bigger pensions to workers and helping the economy grow faster. Some believe the emphasis on personal savings would give the added feature of encouraging more individual responsibility at a time when the nation prepares for a surge in its elderly population. Privatization would differ from Social Security in two important ways. First, the amount a worker receives at retirement depends solely on how much one contributes to savings and how well the investments perform. In simplified notation, those who set aside more and invest wisely enjoy more comfortable retirements. Secondly, pensions are paid out of an individual’s accumulated savings instead of financed by taxes on active workers. For example, Chile for a little less than two decades has replaced it’s system which was much like Social Security with a system incorporated around the idea of privately invested accounts. The results are astounding. The plan is relatively elementary because it focuses on workers placing 10 percent of their monthly income into a savings account. With this, government leaders boosted the national savings rate Social Security Essays -- essays research papers Title of Paper : Social Security Social security, created in 1935, is the most costly item in the federal budget. The program provides old age, survivors’ and disability insurance to a healthy portion of Americans. Workers and their employers fund the system by each paying payroll taxes. The Internal Revenue Service collects the taxes and deposits the money in government-administrated accounts known as the Old Age and Survivors and Disability Insurance Trust Funds(OASDI). The payroll tax revenues are used to pay benefits to those people currently collecting Social Security pensions. Social Security taxes also pay for Medicare, the national health program for the elderly. The huge problem with the current situation facing Social Security is the increasing deduction of workers in the work force paying for workers retired. â€Å"Due to the large number of aging baby boomers, American 65 and older are the fastest-growing segment of the population. The population growth of Americans age 65 and older is 112% in the years between 1995 and 2040. The population growth in age 20-64 is 24%. The population growth in ages under 20, is 5%.   Ã‚  Ã‚  Ã‚  Ã‚  What these numbers essentially represent is a cause problem with age differences in the future. Soon, less workers will be in the job force trying to supply more retirees with Social Security. Currently, many ideas have been juggled around trying to find a sound and reasonable way to resolve this problem. Granted, the problem will not happen overnight, but rather over a long arduous duration of time.   Ã‚  Ã‚  Ã‚  Ã‚  The question first arises, â€Å"Can the existing system survive without major reforms?† The early designers of Social Security and many Democrats are baffled at the recent proposals to change Social Security. Most believe that Social Security is still able to provide a safety net for retirees and their survivors if minor adjustments are made. â€Å"Occasionally raising payroll taxes or recalculating the way benefits are paid out.† Some Democrats look at major reform as a way of pitting war between generations. They stand on common beliefs that Social Security has worked for over 60 years by providing a steady stream of monthly payments that beneficiaries can rely on. Also, it has helped lift millions of seniors out of poverty. Democrats also criticize the Grand Old Party for â€Å"playing†... ...vatization of personal savings would be advantageous to the nation’s economy, delivering bigger pensions to workers and helping the economy grow faster. Some believe the emphasis on personal savings would give the added feature of encouraging more individual responsibility at a time when the nation prepares for a surge in its elderly population. Privatization would differ from Social Security in two important ways. First, the amount a worker receives at retirement depends solely on how much one contributes to savings and how well the investments perform. In simplified notation, those who set aside more and invest wisely enjoy more comfortable retirements. Secondly, pensions are paid out of an individual’s accumulated savings instead of financed by taxes on active workers. For example, Chile for a little less than two decades has replaced it’s system which was much like Social Security with a system incorporated around the idea of privately invested accounts. The results are astounding. The plan is relatively elementary because it focuses on workers placing 10 percent of their monthly income into a savings account. With this, government leaders boosted the national savings rate

Escape by W.S. Maugham

â€Å"ESCAPE† By William Somerset Maugham The text under interpretation is â€Å"Escape† by William Somerset Maugham. W. S. Maugham was a well-known English playwright, novelist and short story writer. He was the son of a British diplomat. He was educated at King`s school in Canterbury, studied painting in Paris, went to Heidelberg University in Germany and studied to be a doctor at St. Thomas Hospital in England. So, he put his hand in different activities and that`s why he is versatile and experienced person. S.Maugham was critical of the morals, the narrow-mindedness and hypocrisy of bourgeois society. Such novels as â€Å"Of Human Bondage†, â€Å"The Moon and the Sixpence†, â€Å"The Theatre† and others came under his pen. He was also the master of the short story. Among them are: â€Å"Colonel’s Lady†, â€Å"Friend in Need†, â€Å"Lion’s Skin†, etc. S. Maugham was among the most popular writers of his era, and reputedly, the highest paid author during the 1930s. Maugham’s style of writing is clear and precise. He doesn`t impose his views on the reader. He puts a question and leaves it to the reader to answer.I also like his revealing the weak sides and vices of human nature skilfully. His books are chatty and easy to read. This is clearly viewed from the given extract. â€Å"Escape† is a story about common people in common situation, and Maugham manages to tell it with the sense of humour and in a very interesting way. The essence of â€Å"The Escape†, to my mind, is that Roger and Ruth have diverse approaches towards the relations. Of course, the men and the women like the first step: flowers, attentiveness, passion. But then their paths diverge.The romance disappears, the man looks for the way out, he craves for new emotions, but the woman deems that the relations should develop into the marriage. And â€Å"The Escape† is the example of such a mismatch. The story can be logically divided into four main parts: the exposition, passages about Ruth’s and Roger’s love, Roger falls out of love and the break-up. The story has a straight line narrative structure with author’s digressions at the beginning. I think that the beginning of the story serves as its subject matter, where the author recounts his point of view on marriage.He convinces us that if a woman once made her mind to marry a man nothing but instant flight could save him. As an example he told a case, which happened with one of his friends, who seeing the inevitable marriage menacing before him, took ship and spent a year traveling round the world. He hoped the woman would forget him, but was mistaken. When he got back thinking himself safe, the woman, from whom he had fled, was waiting for him on the quay. This funny thing supports the idea that the inevitable loom of the marriage frightens some men and they try to avoid it.It should be mentioned, that he de scribes that awkward situation very skilfully and in a very ironical way. It could be confirmed by some cases of irony, used by the narrator – â€Å"instant flight† and â€Å"inevitable loom menacing before him†, â€Å"escaped with only a toothbrush for all his luggage†, which show us fear and trembling of men before the difficulties of the marriage. Maugham establishes realistic setting to his piece of writing. As the author uses the first-person narrative structure we can guess that the narrator is the secondary character of the story.The main ones here are Roger Charing and Ruth Barlow. To describe them, Maugham uses the direct characterization. For example, he gives it when speaks about of Ruth’s eyes using the epithets (â€Å"splendid†, â€Å"moving†, â€Å"big and lovely†), a detached epithet (â€Å"poor dear†) – all in the ironic way. Further on the narrator says that he knows only one man who escaped succe ssfully. Once upon a time his friend, Roger Charing told him he was going to marry. Roger was tall and handsome, rich, experienced middle-aged man. Of course, many women wanted to marry him.But he was happy to live the life of an unmarried man: the epithets â€Å"sufficient experience†, â€Å"careful† give the direct description of his lifestyle. But then he met Ruth Barlow. He fell in love with her. He immediately wanted to look after her and make her happy. Ruth was twice a widow, she was younger than Roger. She was quite good-looking and she had big, beautiful, dark eyes and she had the gift of pathos. When a man saw those big, sad eyes, he wanted to help Ruth. The epithet â€Å"defenceless† expose the power of her look.It was Ruth’s mode to get what she wanted because she had no other means (money for instance). This â€Å"gift† helped Ruth to reach her goals. The metaphor â€Å"the gift of pathos†, the epithets â€Å"splendid dark eyes †, â€Å"the most moving eyes†, â€Å"big and lovely eyes† and the repetition of the word â€Å"eyes† make us pay our attention to this peculiarity. And Ruth made her mind to marry Roger: he was rich, considerate, and tactful and was glad to take care of her, so he was the best variant for her. He didn’t let down and made a proposal of marriage to her and they were going to marry as soon as ossible. While reading we came across a lot of pure literary words (gift, splendid, wonderful, hazards, sadness, lovely) and some cliches (â€Å"the world was too much for her†, â€Å"stand between the hazards of life and this helpless little thing†, â€Å"how wonderful it would be to take the sadness out of those big and lovely eyes†) which are peculiar to the description of ordinary situations concerning love affairs, so we see what kind of story â€Å"The Escape† is. The narrator provokes us to perceive it ironically.Through Rogerâ €™s vision, Ruth was very unlucky. Indeed, she seemed to be very miserable, everything was wrong with her. If she married a husband he beat her; if she employed a broker he cheated her; if she engaged a cook she drank. She never had a little lamb but it was sure to die. We can observe hopelessness of Ruth’s life through the epithets â€Å"helpless little thing†, â€Å"rotten time†, â€Å"unfortunate†, â€Å"poor dear†, the metaphor â€Å"a little lamb†, parallel constructions â€Å"if she married†¦Ã¢â‚¬  and pure literary words such as â€Å"sufferings†, â€Å"hazards†, â€Å"sadness†.Roger took an interest in her destiny and was ready to relieve it: the repetition of the pronouns â€Å"she† and â€Å"her† in Roger’s speech, the epithet â€Å"dreadfully sorry† prove my assumption. The epithets â€Å"very happy† and â€Å"pleased† make us believe that it wasn’t a nuisance for him. But according to the narrator’s opinion, Ruth was two-faced woman of few ideas: he called her stupid and scheming. This epithets, the simile â€Å"as hard as nails† add some points to her description, so it again proves that the method of character-drawing here is direct.We see two people, Roger and Ruth, as the future family, so this is the idea of this extract of the text. The author describes the first part of their relations which were rather standard. As thousands of men and women, they met, fell in love and decided to be together. But then, on a sudden, Roger fell out of love. This was the second part of their relations. There was no evident reason. Perhaps, his heart-strings were no longer touched by Ruth’s pathetic look. Roger became acutely conscious that Ruth had a mind to marry him. He gave a solemn oath that nothing would induce him to marry Ruth.But he was in a quandary. He was aware that Ruth would assess her feelings at an immod erately high figure if he asked her to release him. Besides, he didn’t want people to say that he jilted a woman. The epithets â€Å"acutely conscious†, â€Å"a solemn oath† and â€Å"an immoderately high figure† stress the importance, significance of his decision; as to the epithet â€Å"pathetic look† and the metaphor â€Å"heart-strings† (at the same time it is a cliche), they produce the humorous effect. Falling out of love is the most terrible thing I can imagine.Recently it was an acute pleasure for Roger to do everything for Ruth. He was charmed, but, as I suppose, it wasn’t a serious and profound feeling – Roger lost it too easily. It is obvious Ruth was a narrow-minded woman and she didn’t really love Roger. But there are some arguments to be said in her defence, she lonely and wanted to be protected. Probably she would be a good wife. The repetition of the expression â€Å"to have a mind to† reveals the conflict of Roger’s and Ruth’s interests. Ruth desired to have relations of long duration – she cried for the moon.On the contrary, Roger wanted to escape with no loss. And again we are the witnesses of the usual continuation of the love story. It’s rather banal. Roger kept his own counsel; he remained attentive to all her wishes. It was decided that they would be married as soon as they found a suitable house. Roger applied to the agents and visited with Ruth house after house. It was very hard to find a satisfactory one. Sometimes houses were too large, sometimes they were too small, sometimes they were too expensive and sometimes they were too stuffy, sometimes they were too airy.The idea is that only such dishonest, shabby act as the flat-chase tactics seemed to be appropriate for Roger. I think, it was like a committing a crime. Roger’s behaviour wasn’t fair, it was even disgraceful, but unfortunately such conduct is not uncommon, the m en trick the women very often, because their attitude towards the relations differs. Parallel constructions â€Å"sometimes they were too large, sometimes they were too small, sometimes they were too expensive and sometimes they were too stuffy†, the metaphor â€Å"house-hunting†, the epithet â€Å"innumerable kitchens† describe Roger’s scheme of the trouble-free parting.Firstly I took Roger’s side, because I consider that each person should have a right for free choice, but then I was sorry for Ruth, Roger tired her out, she didn’t understand what was happening. The epithet â€Å"exhausted† demonstrates her state brightly. At last Ruth revolted. She asked Roger if he wanted to marry her. There was an unaccustomed hardness in her voice, but it didn’t affect the gentleness of his reply. Roger persuaded her that they would be married the very moment they found a suitable house. Ruth took to her bed. She didn’t want to see Roger, but he was as ever assiduous and gallant.Every day he sent her flowers, wrote that he had some more houses to look at. The epithets â€Å"assiduous†, â€Å"gallant† display his dissimulation. A week passed and he received the letter: Ruth let him know that she was going to get married and claimed that Roger didn’t love her. He answered that her news shattered him, but her happiness had to be his first consideration. He sent Ruth seven orders to view. He was quite sure she would find among them a house that would exactly suit her. So, we can see that Roger appeared to be very smart and sly person.He appeared quite cute to predict Ruth’s following actions. When he got the hang of Ruth, he pretended he was still in love very gallantly, until she got the hang of him, and I should say it was a more civilized way of jilting a woman than just to leave her. So, I think the message of the story is that a woman can be sly and scheming, but a man can make it his way also. This story carried me with its eternal intrigue – the war between male and female. We may be in earnest about it or may try to ignore it, but it really takes place and this problem will exist until the end of human history.

Marxism as an Alternative theory

The contrasting social divide of 19th century Europe was one of the principle-instigating factor that inspired Karl Marx and Frederick Engels to come with Communist Manifesto in 1848. It called upon the working classes to declare war upon the bourgeoisie. In the opinion of Marx, capitalism with its inherent tendency to favor property accumulation, market system and wage labor system had always worked in promoting the clout and wealth of aristocracy while working to weaken the peasants class and sending them to the levels of subservience and just subsistence (Freedman, 1990, 1).The philosophy was a major intellectual achievement of Marxism as it described the ills and problems affecting the society not in terms of faulty ideology and philosophy but in the   terms of economic forces of capitalist development (Aune, 1994, 17). As Freedman (1990, 2) states, Marx viewed the major conflicts and events of world not as consequences of ethnic, lingual or religious factors but purely through economic perspectives. He argued that capitalism and its resultant class system have been the main instrumental factors in creating the present structure of human society and behavior.  Marxism attempts to correlate the entire progress and evolution of human civilization with Marx’s staunch view that economic factors have determined the history of humanity. It attempts to understand the origin, functioning and structure of all the social institutions on economic models and assumes that once this knowledge is gained, it can be employed to recreate the social order that is beneficial for every member of society, while eliminating the ills of poverty, inequality and class distinctions (ibid).Marxism also views state (government) as an instrument of the ruling class that works to protect the interests of the economically prosperous segments at the cost of the working population (Freedman, 1990, 2). The premises of this argument lies in the fact that typically every state is in fluenced heavily by the rich and wealthy section of society and as such its policies are inherently oriented towards safeguarding these affluent sections. The working-lower class is just treated as a tool to further the riches of this affluent section, while providing them with bare facilities that are hardly sufficient to maintain their existence.School and churches are also viewed as extending arms of the same system that continuously works to maintain, and in fact, promote the social divide. Thus nation and state are essentially nothing but exploiters of working population. As a consequence, terms like patriotism and nationalism hold no meaning to the oppressed working society, which is made to work not the for the benefit of the nation but for the few and selected elite group of people that in their limited numbers represent an entire nation.A careful study of Marxism reveals following three major elements that define the structure of the world of Marx (Heilbroner, 1980, 21).Mat erialist approach to History: The historical analysis of activities of people’s activities that creates conditions of subsequent class emergence and struggle of present times.General view of capitalism: Capitalism, and the economic forces that are the root of entire social divideCommitment to socialism: It envisions a future where every man is able to create a just world through his own efforts and commitment.Marxism, in its zealous criticism of the capitalist system, pronounced the immanent end through of capitalistic society through t its own contradictions and an eventual sweep over of the world by socialist forces. However capitalism has survived and contrary to Marx’s vision, it has become mainstay of democratic and developed world, whereas Marxism holds it appeal for the poor and oppressed classes in underdeveloped countries (Freedman, 1990, 2)Mainstream Political theoriesThe mainstream political theories have evolved from Machiavellian concepts to one that is fo cused on a welfare state that is founded around the concepts of participative democracy and social justice (Young, 1998, 479). As listed by Young (ibid) the mainstream political theories, developed consciously over last 25 years, although with inputs spanning over past hundred and fifty years, areSocial justice and welfare rights theory: Unlike Marxist theory of handing over the reins of government to workers, the social justice and welfare rights theory attempts to strike a cord of balance among different economic classes with their commitment to social equality and economic justice. One of major themes running through this theory is egalitarian distribution of resources to people who have been deprived of them, it doesn’t attempts forced equality among all classes of society.  Democratic theory: Also labeled as participative democratic theory, it lays emphasis on a concept of democracy that proceeds through age long ideals of democracy that proceed through active discussi on, participation and decision making by citizen, against the emerging plebiscite and inter-group pluralist concepts of the democratic mode (Pateman, 1970). The theory aims to achieve the goal of social equality through democratic participation that both helps as well as promotes social equality. The thrust of the theory is that a democracy that only provides voting rights to people for representatives who rule them remotely lacks the element of a real democracy. Instead the democratic set up should be made to incorporate citizen’s participation at every stage of the governance and decision making process. This in turns demands providing all the citizens with sufficient levels of education and economic and social uplifting whereby they are able to appreciate and exercise their democratic rights.Feminist political theory: It is a major emergent trend in the mainstream political theories, and one that brings in the question of female participation, as a separate entity, in the working of democracy. It helps in to integrate the elements of family relations, sexual biases, and gendered related discrimination in the political question.Marxism as an alternative theoryAs noted above, the essential philosophy Marxism lies in defining all the historical and social events in terms of manipulation of resources by capitalist forces that worked in depriving a majority of population from basic means of living. Marxist approach viewed social structure in terms of non-owning workers and non-working owners that was the root cause of every social and political evil. Marx defined all the events in form of ‘class struggle’ and placed supreme faith in human will (Freedman, 1990, 6).Marxism views human beings capable of molding their own destinies, creating their own world, and change the entire structure of a oppressive society to one where every one holds same dignity and right to a provisioned life. However its more than hundred years to Marx’s momento us work Das Capital that predicted downfall of bourgeois and capitalist system, an event which completely failed to materialize (Wolfe, 1985, 317). It points out to some considerable short sighting or inappropriate reading by Marx of the nature of interaction of social and economic forces.Marx, in predicting the immanent downfall of the existing capitalist system through popular revolution and protests by bourgeoisie, had given a sweeping and generalizing theory that was supposed to take into every possible factor and consequence of historical, social and human events. The theories of Ricardo, Hegel and Smith that Marx used to develop his own general explanation of all events were relatively semi –developed and in the transitory phase (Freedman, 1990, 126) and as could provide a very weak base to the daring presumptions and foresights that Marxism professed boldly.The theory failed to take into account the results of people’s will to act outside the boundaries that it imposed. It was, in a sense then, technically incapable to address issues emanating from this scenario, a flaw that later on emerged as a major shortcoming of the entire Marxist model.Marxism always stands in direct contrast to critical theory that was developed by Max Horkheimer in 1937 (Therborn, 1996). It was mean to be a critique of the theory of political economy and provide replacement of materialism embedded in the Marxist approach (ibid). Critical theory rejected the principles of division of labor and believes in social advances through meaningful and coordinated interaction among various classes, as against the Marxist approach of inherent and inevitable class struggle that has shaped up historyHistorical MaterialismIn the Marxist philosophical approach, history is a study in the development and evolution of the capitalist system. In the opinion of Marx the consciousness of a man is the product of his social being which defines the legal and political superstructures (Heil broner, 1980, 62). The materialism of Marxism differed sharply from idealism contained in the other approaches that saw history as product of different beliefs and approaches. Marx clearly stated that history is the product of labor, efforts and determination of countless men and women who worked to improve their material conditions in a material environment.Primarily what it signifies is that entire history of world is composed of forces of economics and compulsions of existence through limited resources. The thought processes and ideas that have been assumed to shape history, in Marxist ideology, were themselves product of the materialistic conditions (Heilbroner, 1980, 63). Marxism further takes the concept of materialism and intertwines it with class structure to lay the foundation of theory of class struggle that is presented as a direct consequence of material forces in operation.Although the historical materialistic view point of Marxist philosophy had been validated in defin ing some of the major events of history, however its broad generalization of economic activities has brought it under criticism from many theorists. Whereas Marxist ideology attempts to focus not primarily but only on economic factors, it has been perceived that even economic factors themselves are affected by social, political and religious factors (Heilbroner, 1980, 64).Marxism in context of USAAs a political and social theory Marxism has traditionally failed materialize in the USA. This is because the socialist theory of Marxism conflicts with the principles and ideals of democracy. Although it is true that true socialism as envisioned by Marx was never practiced anywhere, but the fact remains that within the scope of political models of Marxism there are ample opportunities for a political system to become authoritarian, culminating in kind of dictatorship that was hallmark of socialist USSR government (Geras, 1994). This is to say, the socialist structure proposed by Marxism is seriously vulnerable to deformation by individuals with such designs.However, within the framework of classical Marxism also democratic ideas have not found much support. Essentially Marxism advocates liberation and rule of workers, which has to occur independent of any form of government (ibid). Therefore it is indeed successful in outlining the process of social and political change but falters on the final form of governance that opens the doors for ambiguity, deformation and misinterpretation. This severely limits the democratic angle of Marxism.Further, with its sole emphasis on workers right and class struggle between proletariat and the bourgeois, Marxist ideology aims to create a society that lacks economic incentives to evolve and move ahead. In its aim to bring marginalized sections of society in the center, the model threatens to create a new section of marginalized. These inherent ideological differences with free, democratic and progressive ideals that USA has cherishe d since its independence define the incongruity of Marxism in the USA’s political, social and economic atmosphere.ReferenceAune JA ,1994,   Rhetoric and Marxis, Westview Press, Boulder, COFreedman, R, 1990, The Marxist System: Economic, Political, and Social Perspectives.Chatham House Publishers, Chatham, NJ.Heilbroner, RL, 1980,   Marxism, for and Against,W. W. Norton. New York. Young, IM,   1998, A New Handbook of Political Science. Edit, Robert E. Goodin – editor, Hans-Dieter Klingeman, Oxford University Press. Oxford.Geras, N. 1994. Democracy and the Ends of Marxism. New Left Review Volume: a. Issue: 203.PATEMAN, C. 1970. Participation and Democratic Theory. Cambridge: Cambridge University PressWolfe, BD,1985,   Marxism, One Hundred Years in the Life of a Doctrine. Westview Boulder, CO.Therborn, G, Dialectics of Modernity, 1996, On Critical Theory and the Legacy of Twentieth-Century Marxism, New Left Review. Volume: a. Issue: 215.

Airline Industry: Pricing Structure and Strategies Essay

ABSTRACT The profitability of an airline industry depends on filling seats, and on the company’s ability successfully to anticipate the cost and price structures of their competitors. However, many airline carriers have a hard time accomplishing this because the average airline passenger just needs to travel from one destination to another in the most convenient and shortest amount of time at a reasonable price. Therefore, customers in this market are not as loyal to one specific airline (brand) in the industries. The reason for this is that airline carriers provide the same services at similar prices. In addition, the passenger will only incur high switching costs if they choose to take another mode of less desirable transportation. Airline carriers have overcome these problems by using the strategy of â€Å"Price discrimination.† That is a strategy that allows them adequately to segment their potential passengers, and to offer different pricing structures that match passengers’ sensitivity to price and value differences in cost to serve, and their different competitive positions (Stern, 1989). While it also allows passengers to maximize their â€Å"expected utility† when flying with the airline carrier that meets their needs. The 1978 deregulation of the airline industry has resulted in airline carriers being unable to make a profit by filling seats, and successfully to anticipate the cost and price structures of their competitors (Bailey, David, Graham, Kaplan 1985). According to statistic, the airline industries’ profits declined in 2001 through 2003 by $23.2 billion (Smith Jr. & Cox). During this time the average airline passenger just needed to travel from one destination to another in the most convenient and shortest amount of time at a reasonable price. However, because all airline carriers provide the same services at similar prices, the passengers in this market are not as loyal to one specific airline (brand). For, example, any passengers not able to purchase a flight plan that they value, will not necessary buy the next best plan offered. Instead, these price-sensitive passengers will gravitate toward a lower-cost competitor  airline (Smith Jr. & Cox). This is especially true in this particular industry because a passenger will only incur high switching costs if they chose to take another mode of less desirable transportation. Therefore, many airline carriers had a hard time making a profit or breaking even (Brady, & Cunningham, 2001). In addition, this same deregulation of the industry provided new companies the opportunity to enter an already competitive market (Bailey, David, Graham, Kaplan. 1985). This stressed the market because pricing strategies that airlines used in the past did not adequately different between price sensitive passengers and price insensitive in this market (Sterns, 1989). Therefore, many airline carriers could not â€Å"capitalize on opportunities that [would] influence customer and [their] competitor responses (Stern, 1989). Because of this lost of profit, many airline carriers were force to file bankruptcy (Brady, & Cunningham, 2001). Therefore, as a reaction to these, external pressures many of the remaining companies (American, United, Continental, Northwest, US Air, and Delta) developed complex pricing strategies that would help them to outmaneuver their rivals (Smith Jr. & Cox). Different pricing structures were developed that allow them to match passengers’ sensitivity to pr ice and value differences in cost to serve, and their different competitive positions (Stern, 1989). In addition, sense airline carriers offer a product that is homogenous; to be successful they had to offer a product that potential passengers would view as different from their competitors’ product (Westermann, 2005). One strategy that airline carriers’ use is â€Å"differentiated pricing, which is a form of â€Å"price discrimination.† That is a strategy, which many companies’ uses because it allows them to charge different prices to different customer. However, airline carriers use this strategy by offering fare discounts.[1] This strategy allows the airline carriers to get as much consumer surplus as possible from each group of passengers, given his or her utility functions and income. Once they have determine their potential passengers expected utility from flying and income â€Å"Pricing ladders† are then used to charged for seats on a flight by segmenting travelers by their identity, destination, number of days between the day of reservation, the day of travel, the day, and time of departure, the day and time of return (Currie,  & Simpson, 2009). Many airline carriers and other companies are able legally to accomplish price discrimination and use pricing ladders because not all passengers have the ability or willingness to pay the higher or lower prices when they are offered (p.331 ). Identifying price discrimination Placing restrictions on purchase and use â€Å"Price discrimination† is a way to increase prices to improve profit margins by offering substantial discounts on bundles (McAfee, 2008). Price discriminate is accomplished by airline carriers’ when they offer potential passenger that satisfy certain demographics considerations a range of packages, or combinations of fares and restrictions attached to the purchase of their tickets (Stavins, 1996 & Anderson, & Renault, 2008). This pricing discrimination strategy â€Å"†¦ is known as second-degree or self-selection price discrimination (Stavins, 1996). Under this strategy, the airline is able perfectly to segment potentials passengers into groups according to their willingness to pay (Currie, & Simpson, 2009). Airline carriers are then able to offer them the highest fare in the ladder that they are happy to pay (Currie, & Simpson, 2009). While at the same time allowing passengers â€Å"†¦to choose [other] preferred versions of a product based on their willingness to pay for specific attributes of the good (e.g., time, convenience, flexibility)† (Stavins, 1996) [The citation for a direct quote needs the page number] . The pricing strategies is successful because it allow airline carriers to match â€Å"†¦the passengers relative ‘utility’ across competing products (where multiple factors are considered, including price, departure times, elapsed times, etc† (Ratiiff & Vinod). Therefore, companies were able to charge passengers on the same airline flight different prices for the same service and product. Nevertheless, several practices that involve selling services and or products for different prices can be viewed discriminatory (Anderson, & Renault, 2008). Airline carriers however justified this price discrimination by their cost differences and their demand-base (Anderson, & Renault, 2008). That includes â€Å"†¦the service quality/price sensitivity of various air travelers and offer differential fare/service quality packages  designed for each† (Smith Jr. & Cox). The second type of price discriminations that airline carriers use is the rationing and limiting of the supply of the cheaper goods (Stavins, 1996). One way airlines accomplish this is by adding various restrictions to cheaper or discounted tickets (Stavins, 1996). The discounted ticket is offered to passengers willing to stay at their destination a specific amount of time (Saturday-night stay over) or willing to purchasing their ticket in advance (Stavins, 1996). They also offer their potential passenger a discount or cheaper rate for their bundle roundtrips tickets. These are strategies that allows airline carriers to further separate â€Å"†¦price-sensitive passenger [that have a low disutility] from travel restrictions from price-inelastic [passengers that have a] high disutility from ticket restrictions† goods (Stavins, 1996). However, not all passengers value these types of discounts, especially business travelers. This is because even though this segment of passengers is less price sensitive, they are also less flexible concerning their flight arrangement (Stavins, 1996). Therefore, airline carriers can charge this segment of travelers premium seat fees because they prefer the flexibility that their one-way tickets offer. They also offer them frequent flier plans to help induce them to favor their particular carriers, even when ticket prices and restrictions are higher than their competitor (Stavins, 1996). â€Å"yield management† systems have also enabled airline carriers effectively to determine how many last-minute business travelers will show up willing to pay whatever it takes to get on a given flight (MCCARTNEY, 1997). Whereas, they charge this segment of passengers for their seats, leisure travelers on the same flight are offered a discount price, which is not necessarily based on the price of their ticket, but instead on the flight itinerary (Stern, 1989). These discounts and cheaper tickets are an economic value that this segment of passengers will obliviously value. This is because these potential passengers are more concern about price than the flight schedule (McAfee, 2008 Stavins, 1996). It is a pricing policy that allows airline carriers to provide a wider range of choices, which allow  potential passengers to determine the products and services that best meet their needs. Thereby, passenger satisfaction and loyalty is increased, and the airline carrier is also able to optimize their revenues by up charging different prices for the same seat on their airline (Stern, 1989). However, it is important to note that in today airline hyperturbluent environment airlines ticket prices change frequently in response to supply and demand and to changes in the prices of competitors’ fares (http://www.airlines.org/products/AirlineHandbookCh3.htm). This has resulted in many airline carriers unbundling services that traditionally came with the purchase of a seat, such as baggage checking, seat reservations and even the ability to pay by credit card. The benefits of these strategic practices have increased the revenue of airlines. It has also resulted in some passengers paying only for what the use. While for others that need to check a bag, and do not pay with cash, the cost of the seat will be more. Nevertheless, no company can price discriminate successfully, if they do not have some market power to charge prices above marginal cost (Stavins, 1996). In addition, they must have a diverse population of potential passengers, which they can adequately segment (Stavins, 1996). The â€Å"†¦product resale must be impossible or costly, to prevent arbitrage† (Stavins, 1996) [Needs page number] . The airline carriers’ industries however can accomplish price discrimination because of their hub-and-spoke systems (Stavins, 1996). These system allow different airline carriers to differentiate among themselves by â€Å"†¦occupying different slots in flight schedules, and by offering different route networks† (Stavins, 1996) [Needs page number] . These differentiation in flight routes, flight frequency, and airport dominance has allow many airline carriers obtain â€Å"†¦market power even on relatively competitive routes† (Stavins, 1996) [Needs page number] . Therefore, airline carriers may have market power in some market segments, but in others they do not, which results in higher price discrimination on their more competitive routes (Stavins, 1996). Conclusion Price discrimination is usually thought of as a way to extract as much consumer surplus as possible from each group of consumers, given his or her  utility functions and income. It is a strategy therefore associated with raising prices for less elastic consumers. But in the case of airline carriers, price discrimination is exhibited [Passive voice] through fare discounts. Consumers maximize their expected utility from flying. They choose between various price restriction packages, such as between low price-high inconvenience and high price-no restrictions combinations. The choice depends on the consumer’s elasticity of demand with respect to convenience, time, or money REFERENCES Anderson, Simon P., & Renault, Rà ©gis. August 2008. Price Discrimination. Retrieved 20 April 2010 from http://www.virginia.edu/economics/ Bailey, Elizabeth E., David R. Graham, and Daniel P. Kaplan. 1985. Deregulating the Airline. Cambridge, Mass.: MIT Press. Brady, Stephan, Cunningham, William. Predatory Pricing in the Airline Industry. :Transportation Journal; Fall2001, Vol. 41 Issue 1, p5, 11p Currie, Christine S.M., and Daniel Simpson. â€Å"Optimal pricing ladders for the sale of airline tickets.† Journal of Revenue & Pricing Management 8.1 (2009): 96+. Academic One File. Web. 20 Apr. 2010. Graham, David R., Daniel P. Kaplan, and David S. Sibley. 1983. â€Å"Efficiency and Competition in the Airline Industry.† Bell Journal of Economics, vol. 14 (Spring), pp. 118-38. McAfee , R. , Preston , PRICE DISCRIMINATION, 1 ISSUES IN COMPETITION LAW AND POLICY 465 (ABA Section of Antitrust Law 2008) McAfee , R. , Preston, & Vera te Velde. Dynamic Pricing in the Airline Industry. http://www.mcafee.cc/Papers/PDF/DynamicPriceDiscrimination.pdf MCCARTNEY, SCOTT Airlines Rely on Technology To Manipulate Fare Structure The Wall Street Journal Interactive Edition November 3, 1997. http://www.nd.edu/~mgrecon/datafiles/articles/airlinefarestructure.html Ratiiff, Richard& Vinod, Ben. FUTURE OF REVENUE MANAGEMENT Airline pricing and revenue management: A future outlook Stavins, Joanna. Price Discrimination in the Airline Market: The Effect of Market Concentration. November 25, 1996 Stavins, J. (2001) â€Å"Price Discrimination in the Airline Market : The Effect of Market Concentration†, The Review of Economics and Statistics, 83, 1, 200-202. Stern Andrew, A. Pricing and Differentiation Strategies. Planning Review. Sep/Oct 1989, 17, 5. Retrieved 20 April 21, 2010, from ABI/INFORM Westermann, Dieter, (Realtime) dynamic pricing in an integrated revenue management and pricing environment: An approach to handling undifferentiated fare structures in low-fare markets: Journal of Revenue & Pricing Management; Jan2006, Vol. 4 Issue 4, p389-405, 17p, 4 http://www.airlines.org/products/AirlineHandbookCh3.htm