Cost Calculations – Managerial Accounting

Problem 1 Page 40 a- Cost of goods manufactured = Direct cost + Indirect cost = [Direct Cost of Material + Direct Cost of Labor] + [Indirect Cost of Material + Indirect Cost of Labor + Utilities Overhead] = Total Cost of Material + Total Cost of Labor + Utilities Overhead = 120,000 + 90,000 + 40,000 = $ 250,000 b- Total Cost of Operation = Cost of goods manufactured + Selling, General admin. and expenses. = 250,000 + 60,000 = $ 310,000 c- Prime Cost =Direct Material Cost + Direct Labor Cost 80,000 + 65,000 = $ 145,000 d- Conversion Cost = Direct Labor + Factory Overhead = Direct labor + [Indirect Material + Indirect Labor + Utilities Overhead] = 65,000 + 40,000 +25,000 + 40,000 = $ 170,000 e- Product Cost = Cost of goods manufactured = $ 250,000 f- Period Cost = Selling, general admin. and expenses = $ 60,000 g- Unit Cost = Total Cost of goods manufactured/Number of unit product = $ 250,000/10,000 = $ 25 per unit Problem 2 Page 40 a- Cost of goods manufactured Total Cost of goods put into production + [Difference between Beginning & Ending work-in-process] = [Total Direct Cost + Factory Overhead Cost] + [25,000-10,000] = [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost] + 15,000 = [95,000+110,000+70,000]+15,000 = $ 290,000 b- Cost of goods sold = Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory] = 290,000 + [(30,000)] = $ 260,000 c- Net Income or Loss = Sales – Cost of goods manufactured – Selling , general admin. and expenses = 300,000 – 260,000 – 75,000 = ($ 35,000) ; Net LossExercise # 1 Page 43 Direct Material Cost = $ 8,000 Indirect Material Cost = $ 2,000 Direct Labor Cost = $ 3,500 Indirect Labor Cost = $ 1,500 Factory Overhead = $ 5,000 Selling Expenses = $ 7,500 General admin. Expenses = $ 8,500 a- Cost of goods manufactured = Total Direct Cost + Total Factory Overhead = Total Direct Cost + [Total Indirect Cost + Factory Overhead for heat, light and power] = 8,000 + 3,500 + 2,000 + 1,500 + 5,000 = $ 20,000 b- Total Cost of Operation = Cost of goods manufactured + Selling, general and admin. expenses = 20,000 + 7,500 + 8,500 = $ 36,000Exercise # 2 Page 43 Direct Material Cost = $ 25,000 Indirect Material Cost = $ 5,000 Direct Labor Cost = $ 30,000 Indirect Labor Cost = $ 4,500 Overhead [excluding indirect material & labor Costs] = $ 15,000 a- Prime Cost = Direct Cost = Direct Material Cost + Direct Labor Cost = 25,000 + 30,000 = $ 55,000 b- Conversion Cost = Direct Labor Cost + Total Overhead Cost = Direct Labor Cost + Indirect Material Cost + indirect Labor Cost + Overhead Cost [excluding indirect material & labor Costs] = 30,000 + 5,000 + 4,500 + 15,000 = $ 54,500 c- Product Cost = Cost of goods manufactured Total Direct Cost + Total Indirect Cost + Overhead Cost[excluding indirect material & labor Costs] = 55,000 + 9,500 + 15,000 = $ 79,500 Exercise # 5 Page 44 75,000 unit/year Beginning work –in- process = 0 Ending work –in- process = 0 Total Cost of goods manufactured = $ 300,000 Number of sold units = 59,000 Number of non sold units = 14,000 Number of loss = 2,000 Beginning finished goods inventory = 0 a- Expenses was for the year; Cost of each unit = $ 300,000/75,000= $ 4 per unit Expenses (Not sold units) = 14,000 * 4 = $ 56,000 b- Loss was incurred for the year; = 2,000 * 4 = $ 8,000 – Assets to be recorded as finished goods inventory was for the year; = 59,000 * 4 = $ 236,000 Problem # 2 Page 47 Beginning work-in-process $ 5,000 Ending work-in-process $ 6,200 Direct material cost $ 8,900 Direct Labor cost $ 10,000 Factory overhead $ 15,000 Beginning finished goods inventory $ 12,000 Ending finished goods inventory $ 22,000 Sales $ 37,500 Selling and general expenses $ 17,000 a- Cost of goods manufactured = Cost of production + [Difference between Beginning & Ending work-in-process] = [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost]+ [(1,200)] = 8,900 + 10,000 + 15,000 + [( 1,200)] $ 22,700 b- Cost of goods sold = Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory] = 22,700 + 10,000 = $ 32,700 Problem # 4 Page 48 Sales $ 945,000 Beginning work-in-process $ 75,000 Ending work-in-process $ 60,000 Beginning finished goods inventory $ 35,000 Ending finished goods inventory $ 54,000 Direct material cost $ 176,000 Direct Labor cost $ 250,000 Factory overhead $ 237,500 Selling Expenses $ 55,000 General and admin. expenses $ 117,000 a- Cost of goods manufactured Cost of production + [Difference between Beginning & Ending work-in-process] = [Direct Material Cost + Direct Labor Cost + Factory Overhead Cost]+ [15,000] = 176,000 + 250,000 + 237,500 + [15,000] = $ 678,500 b- Cost of goods sold = Cost of goods manufactured + [Difference between Beginning & Ending finished goods inventory] = 678,500 + [(19,000)] = $ 659,500 c- Net Income or Loss = Sales – Cost of goods sold – Selling expenses – General an d admin. expenses = 945,000 – 659,500 – 55,000 – 117,000 = $ 113,500 Net Income

Coping Mechanism Against Defence Mechanisms

Not all situations are this functional. Most families have some degree of dysfunction and In response the children develop some defense mechanisms to counter realities that feel uncomfortable or threatening. If we grew up with any dysfunction, (I. e. An emotionally shaming mother, or a workaholic father) we found ways to help us cope. The situation becomes even more serious when the family-of-origin Is severely dysfunctional, I. e. By being neglectful, or physically, emotionally or sexually abusive.The defense mechanisms that are then employed become a matter of emotional (and sometimes physical) survival. As children we were dependent and defenseless, so hen hurtful things happened, our anxiety became overwhelming. In response we created techniques to help us emotionally avoid our childhood reality, I. e. By allowing us to disassociate from reality, or by believing we had some control. The more unpredictable or hurtful things were, the more we employed these defenses to help us deal with what was unacceptable and frightening.The degree to which we developed these skills determined how emotionally or physically safe we felt. (l encourage you to read a powerful and incredibly well-written memoir, The Glass Castle: a Memoir by Jennet Walls, which illustrates some great examples of holding defenses. ) A child Is totally dependent on their parents for survival, but clearly this is not true once we leave home and become independent adults. However, our childhood experiences still leave an impact on our personality and the choices we make.As an example, if a child is being physically abused by their father, a very helpful defense Is to disassociate – that Is to emotionally â€Å"leave† and pretend to be somewhere else. However If that individual continues to use the same defense mechanism when they are an adult, it will inhibit their ability to function at the highest possible level. For example the child who was physically abused by their father might, in adulthood, continue using this same defense with a male authority figure and In turn hinder the current relationship.Reacting to our adult reality with old child-like patterns of behavior assumes that we feel as vulnerable as a child. We would be seeing the world through the eyes of our â€Å"inner child†. In addition, when we pro-active, mature way. (Except as I teasingly say to some of my clients, that this is a great skill to have when we are sitting in a dentist chair having a cavity filled, and can consciously choose to disassociate. ) 2 As adults it is helpful to convert our childhood defense mechanisms, into mature coping skills.Dysfunctional defense mechanisms allow us to avoid reality, while functional coping skills help us deal with reality. The purpose of this article is to discuss some of the defense mechanisms I encounter most frequently in adults, and then to describe what constitutes healthy, mature coping skills, as well as how to develop them. There are m any â€Å"defense mechanisms† considered basic in human psychology. Depending on which text book is being consulted, there are about twenty-five. A few of these, along with the definition and an example of each are:Denial: A thought, feeling or reality is being totally rejected; for example, â€Å"l am not eating too many sweets†. Projection: Subconscious thoughts or feelings about ourselves that we assign to another; for example, â€Å"l don't like him because he is too materialistic. † Rationalization or intellectualized: Explanations are created to Justify the situation; as in, â€Å"l know he hurt my feelings, but that is only because he is sick. † Regression: Old behaviors as resorted to; for example, â€Å"When I go back home, I never argue with my mother's opinion. Isolation of affect: A feeling is talked about, but either felt, nor seen on the person's face; for example, a woman smiles as she says, â€Å"My husband is always late for dinner, but I don't mind†, even though she is angry. Minimizing: Writing off the feelings as not being important; for example, â€Å"l failed my exam, but it's no big deal. † Perfectionism: Making sure everything is done as perfectly as possible in the eyes of the other; for example, â€Å"l became a straight A student to get on my father's good side, so he wouldn't abuse me like he does my sister. There are some that are not listed in many text books: Control: Trying to maintain authority over n issue, in order to feel safe; as in, â€Å"l do all of the financial planning for our family because I don't trust my wife to adhere to the budget I set. † Co-dependence: Stuffing feelings, thoughts, and needs in order to keep the peace and avoid conflict; as in, â€Å"My husband watches TV every night while I clean the kitchen and get the kids ready for bed, but I don't discuss it with him because he will get angry. † 3 When I work with clients who come from dysfunctional families, they often experience a lot of shame, and fear.In response to these feelings they maintain their old defense mechanisms. I have created this diagram to illustrate what happens when we protect ourselves with dysfunctional defenses: The center circle represents the â€Å"core self† – who we are at birth, our true nature, our essence. When we entered this world we were like pure uncut gems, diamonds in the rough. Then life – our parents, living conditions, culture, emotional/physical traumas, diagram represent the negative influences. As hurtful things happened we formed an emotional barrier protecting us from the onslaught of pain.This protective shield, indicated in the diagram by the black shape, is representative of the â€Å"defense semantics† we built around ourselves, like a sheet of armor. The more dysfunctional, frightening or unsafe our environment, the thicker this barrier became. Eventually our defense mechanisms, I. e. Perfectionism an d control, became a strong part of our personality, and in turn they became a part of our identity. We experience them as a part of our true self. The reality is that these defenses are a part of our â€Å"false self†.For example if we feel defective, and not deserving compared to those around us, we will be vigilant and watch for proof of this belief. We will have been conditioned to look for shaming messages. This protective â€Å"false self† is represented in my illustration by the stripped circles emanating from the core. When our old defenses (and the behaviors associated with them) no longer work for us, we realize that we are projecting a false self. This is scary, because when we become aware that the â€Å"us† we are presenting to the world is 4 not who we really are, we will (deep down inside) feel like a fraud.What if someone finds out who we really are? For example, if we appear to have everything under control and thrive on perfectionism in order to cover over our shame, we will be terrified that we will be found out. At first we may try to shore up our faded by being even more perfect and thus feel more in control. The problem is that eventually we can't keep up the facade. Things begin to collapse. The good new is that when this false self becomes uncomfortable enough, we may decide to change. Let's look at the case of Sandra, who was the youngest child, with an older brother.As a young girl she watched her brother being physically abused by her father and also witnessed her mother vacillate between ignoring and shaming the brother. Sandra was very smart and learned to stay under the radar screen by being the â€Å"good girl†. She achieved excellent grades and was mother's little helper. She never disobeyed nor questioned her parents. As Sandra grew up, she became the â€Å"teacher's pet and always helped her friends as a way to get attention and feel connected. If they needed her she felt safe in the relationship. S he rarely asked for anything for herself.So even if someone hurt her feelings, she kept quiet. Referring to the earlier list of defense mechanisms, she employed denial, minimization, and isolation of affect, perfectionism, control and co-dependence. Sandra married after she obtained her undergraduate degree. She was hired as an elementary school teacher, where she became very successful and held up as an example for other teachers in her department. Sandra was also an excellent wife, effectively employing her ability to look perfect. However she was very co-dependent. Unfortunately her husband also came from a severely dysfunctional family.His primary coping mechanisms were control and narcissism, which he demonstrated by criticizing, shaming and ordering Sandra around. This triggered her subconscious fear that she was defective – not as perfect as she pretended to be. Because of her co-dependence she neither www. Vivaciousness. Com, by Dry. Richard Grossman who writes about becoming voiceless as a defense mechanism. ) As time went on, Sander's professional pressure increased and her emotional stability became shaky. Her faded of perfectionism, and â€Å"having it all together† crumbled.She became exhausted because she couldn't keep up the perfect pace – she couldn't run any faster. Feeling like a fraud, she became very depressed. She was terrified that if she weren't seen as perfect, and didn't do what others wanted, they wouldn't like her. Then they would leave, and she would be alone. An underlying link in the perpetuation of all defense mechanisms is the fear of being emotionally and/or physically abandoned. During therapy Sandra realized that she had been using several defense mechanisms from her childhood that were no longer serving her. They were in 5 fact getting in her way.Her core self had been buried underneath her need to please. These defensive attributes became so familiar that she thought of them as a part of her true self. In fact they were only a mask that she hid behind. Once her mask no longer worked, she saw that the way she had constructed her life was at sis. Sandra needed to develop new coping skills to help her not only survive, but to thrive. Discovering and developing our true Self, requires that we develop new coping skills. Fortunately this is a process that is never complete because as we grow older everything keeps changing.I say fortunately because I think challenge and change make life interesting. We are never bored when we continue the emotional growth process. Yet, Just because we become aware of our old defense mechanisms, it is impossible to instantaneously strip them away and substitute them with new and more functional skills. To do so would make us feel too vulnerable. Sander's task in therapy was to gently and slowly substitute her old behaviors with new ones. She needed to discover new and healthy ways to cope with an unpredictable world.In doing so Sandra also wanted to disc over who she really was at the core of her being – her feelings, needs, interests, truths, and her mission in life. In short, she wanted to uncover the true Self behind that old mask. Remember that while defense mechanisms helped us cope as children, they become dysfunctional when we are adults, because they obscure our inner and outer awareness of reality, and thus impede the development of our true Selves. For example how could we possibly develop an intimate relationship if we use denial, projection and co-dependence as ways to cope? It won't work.Going back to Sandra, her next mission was to develop stronger, more authentic ways of being. She first needed to learn what her truth was – what gave her pleasure, what she needed, believed in, valued, felt, etc. – and then to â€Å"speak her truth† as a way to honor and validate her core self. As it turned out, Sandra was tired of being voiceless and a â€Å"people pleaser†. Over time, she ended up r evamping her entire life. There are many stories illustrating defense mechanisms. For example Neal, who was so spoiled by his quilt-ridden mother that his defense was to become egocentric and felt â€Å"entitled† to anything he wanted.What he wanted was total control. The world was there to serve him. His fantasy of control evaporated blamed the doctors for not â€Å"fixing† him. Over time he mellowed, and learned to be gentler with both others and himself. Another example would be the case of Elizabeth who turned to drugs and disappeared from her family for a number of years. She coped by being in denial about her fearful/angry feelings, â€Å"hiding out† by sing drugs and alcohol, and running from one place to another (a â€Å"geographic cure†). Eventually she became 6 tired of running, admitted herself into an excellent rehab program, and found a Job so she could support herself.Then there was Tim, the latch-key child. Both of his successful profession al parents worked long hours. This left Tim to his own devices after school, but he learned to accumulate friends and be the center of attention by being the â€Å"class clown†. He made everything into a Joke, and as he grew up his Jokes took the form of sarcastic humor. He had no idea how to relate on an adult level. This histrionically behavior kept him from finding a woman who would take him seriously, or who would trust him. Tim eventually craved more and after going though counseling was able to start dating. Many people have no idea who they really are.People who have not learned healthy coping skills can often act honestly for a brief period of time, but they can't hold onto it. Look what happens to people who have affairs. They can â€Å"act as if† they are perfect and hold together a faded because they are not living intimately with the other. Once they do move in together, the dark side of their old defense mechanisms often comes out. For a great read about t he â€Å"shadow side†, I highly recommend The Dark Side of the Light Chasers, by Debbie Ford. ) HEALTHY COPING SKILLS As mature individuals we need coping skills that face reality head-on.So, how do we develop these mature coping skills, especially when life continually slings arrows at us – whether in the form of illness, accidents, betrayals, traumas, or Just the influence of a toxic environment? The older we become, the more we will experience these â€Å"arrows of misfortune†. The good news is that now as independent beings, we have many more options. There are many national ways to cope with the on-slot of hurtful arrows coming at us from all angles, so it is to our benefit to develop as many of these positive coping skills as we can.Just think how freeing it would be to no longer hide behind a mask, but to act in response to our unique truths. There are many positive and empowering coping skills to choose from, which include: developing and trusting our in tuition, employing our creativity, learning to be light on our feet, increasing our ability to surrender, thinking positively, experiencing gratitude, being proactive not reactive, and speaking our truth with compassion. It also helps us to cope when we have defined the meaning and purpose of our lives, and are making conscious choices reflecting this purpose. L have written about some of these in previous â€Å"Pathways† articles. These include: â€Å"Developing Intuition† September 1997, â€Å"Living as a Creative Visionary I & II† â€Å"Surrender! † December 2002, and â€Å"The Control Fantasy' 7 September 2001 . ) There are many functional coping skills that allow us to be our authentic selves, by cutting and shaping that raw, uncut gem of the core self, into the beautiful rare, unique gem of the true Self. However in my mind there is one important coping skill that stands out above others and that is the ability to be self- aware.If we do not have s elfsameness, and thus are unaware of our old, dysfunctional defense mechanisms, then how can we possibly convert them into something new and positive? We cannot and will not. So, how do we develop self- awareness? There are helpful techniques we can use, including meditation (both through the forms of stillness and movement), dream analysis, watching for synchronicity signs, talking with trusted family members and friends, individual and/ r group therapy, or by engaging in spontaneous creative acts of writing, painting, music, and dance.Personally, I love to watch for synchronicity signs, and feel energize when something synchronicity (a simultaneous occurrence with meaning) occurs while I am writing about a particular subject. On this occasion, I was psychoanalytically sent a powerful essay illustrating the use of healthy coping mechanisms. This essay was written by 16 year old Sarah Dubos, about Mackenzie, a 10 year old who has a rare disease that doesn't allow her to keep any foo d down and so she must obtain sustenance through a feeding tube.Sarah, the author who has the same illness, shows us that we do not have to be of any particular age to understand and employ the benefits of positive coping skills. Sarah's insightful essay is printed here, in full, with her permission. Finding Beauty I have found it. What we are eternally searching for, grasping for, in life. I discovered what it means to be truly beautiful. Change your clothes, hair, or make up if you wish, but beauty is not measured by what you see on the surface. Shopping at the best stores with the most expensive clothing does not result in becoming beautiful.Your popularity and your amount of friends reveal only how well you fit into a mold. Beauty does not lie within these things. When afflicted with a severe stomach disease, I met a little girl named Mackenzie in the hospital. With long blonde hair and sharp emerald green eyes her features were small but her personality was so big. In the early stages of my disease, I saw this diminutive spit-fire blonde in the hallway, I was getting yet another test done and she was in the hospital for more extensive work. Two weeks later I was surprised to find her again two doors down from me when we both became inpatients.I found her in the game room, playing connect four with her mom and laughing. I came in and sat down next to her, our 8 matching IV poles side by side. As the minutes passed by we chatted about everything from our stomachs to shopping, I began to like this audacious little girl more and more. Before the hospital discharged us, we exchanged email addresses and the bright blues and pinks on the card she gave me were a welcome contrast from the stark hospital walls. Throughout the next year as our symptoms worsened from the disease we shared, our bond strengthened and I was continually amazed at he strength ands courage of this small girl.Although going through hell, she'd always manage to laugh at the terrible things g oing on and held such maturity and perspective about her illness that was completely unexpected for a girl her age. She entertained me with funny anecdotes about feeding tubes and hospital stays and we gave each other the strength needed to get through our rough times. Every triumph of Genie's became my triumph too, and every setback Just another reason to talk more often. One day I received an email; it was a picture of Junkie, her feeding tube routing from her nose, holding up the furry brown bear I sent her with a huge smile on her face.At that moment it became clear to me what beauty is. The sadness behind her eyes told her story but the smile on her face showed her bravery. My realization was immediate. Beauty is not the color of your skin, nor the outfit you choose to wear. Your beauty can't be determined from a number on the scale, or the color of your hair. It's the smile on your face and the story behind your eyes. The scars of your past and your dreams for the future. To f all into step with a friend as you walk hand in hand, to pretend promises are never broken.Beauty is to find the great in the terrible, it's the tears from our sadness and the laughter from our Joy. In the most unexpected way I discovered a lesson I hadn't intended on learning. No magazine or book could teach me this lesson. But a little 10 year old girl showed me what it meant to be truly beautiful. Sarah and Mackenzie both illustrate – as young and yet very wise individuals – the power of employing healthy coping mechanisms. Their demonstration of self-awareness, coupled with humor, creativity, courage, friendship, honesty and a positive attitude, illustrates the potent effects of healthy popping mechanisms.I believe John Donahue, an Irish priest, poet, and philosopher, who passed away this January, would have appreciated Sarah's essay. Donahue wrote several inspiring books, and among them is Beauty. On his website (which I encourage you to check out) is the essay, à ¢â‚¬Å"Reflection from Contrary†. In it he wrote, â€Å"It takes us so long to see where we are. It takes us even longer to see who 9 we are. This is why the greatest gift you could ever dream is a gift that you can only receive from one person. And that person is yourself. † Life will continue to present read challenges for all of us.

Fire Incident Happen In World Trade Center Environmental Sciences Essay

1.0 IntroductionHigh-rise edifice has become big portion of people and assets exposed, particularly for the big figure of high-rise edifices presently building in Asia and Middle East. Harmonizing to Hall.J.R. , ( 2005 ) reference about tower block edifice has lower hazard of fire per unit floor country. So this thought has brought and changed human perceptual experience advanced about building engineering. Mention to US NFPA 101 Life Safety Code, the edifices which have height more than 23m defined as tower block edifice. When constructing construct higher and higher, fire safety demand to be concern because it will impact the deliverance mission and fire combat operation. Evacuation procedure is of import assist people escape from edifice.2.0 Issue StatementIn recent old ages, fire onslaught in high rise edifice has become the common issue which cause many civilian deceases and injured. Civilians who stayed in high rise edifice were unable to get away because they located at high d egree from the land. On behalf the fire incident happen, fright besides has caused the job which makes them unable to get away. Although fire exigency issue are provided, it is excessively slow for civilian staying in the top floors of the edifice to get away. The opportunity of them to get away is low. Another job is trouble for fire combatants to make the upper floors. For illustration, the highest fire truck ladder can merely extends to the eight floors. In order to snuff out fire above that point, fire combatants must mount up many of stepss along with fire hosieries and other heavy equipment. High-rise edifices are designed to be safe. When come to many civilian stay at tall edifice, exigency response is become more hard to evacuate civilians out of the edifice. What tallness is considered tower block? Refer to paragraph 3.3.28.7 of the Life Safety CodeA ® , 2006 edition, defines a high-rise edifice as a edifice more than 75 pess ( 23 metres ) in tallness which measured from the lowest degree land floor entree to the floor of the highest of the edifice. Earlier to 1999, the National Fire Incident Reporting System ( NFIRS ) coded edifice tallness in scopes which considered as tower block such as 7-12 narratives, 13-24 narratives, 25-49 narratives, and 50 narratives or more. Get downing in 1999, NFIRS Version 5.0 permits the exact tallness to be recorded. It is besides possible to separate between height above land and entire tallness. In maintaining with the Life Safety Code definition, a tallness above land of seven or more narratives is used to specify tower block from 1999 on. There are many instances related to fire incident. For illustration, the incident go on on Twin Towers of the World Trade Center in New York City wholly collapsed merely over one hr after fires raged in them upon the clang of two aeroplanes into them on 11 September 2001. This entire incident caused 2795 dead. Harmonizing to Craven.J. , ( 2001 ) The causes of edifices prostration was due to terrible weakening of the supporting strength of the towers ‘ steel-based supporting construction under impact from terrorist planes and utmost heat. Besides, the high-rise flat fire in Shanghai on15 November 2010 has become attending for people around the universe. This incident has taken 53 people life and injured 70 casualties. This incident was caused by the flicker during welding work. ( YeinJee ‘s Asiatic Journal, 2010 ) Furthermore, there is another fire incident happen in Busan on October 2010. Based on the study, there are no casualties were reported as most occupants were dis persed after the fire broke out. Fire combatants rescued 31 occupants, four of casualties were sent to the infirmary for intervention. Based on the probe, people suspect the cause happen from the fire started at the refuse room on the 4th floor which is extremely flammable wall stuff and strong air currents seemingly fuelled the fire. Based on incidents highlighted, the fire safety design needs to be considered more critically for all the high rise edifice. ( Koreabridge, 2010 )3.0 Research HypothesisThis research survey focused on two key countries which are the demand of fire safety shelter design needed in high rise edifice and to measure the consciousness of residents about fire safe shelter. Fire safe shelter is designed as safety floor which can let residents to remain for emptying. Harmonizing to Snyder.L. , ( 2009 ) mentioned about the shelter in topographic point is designed to let residents to withdraw to a safe country which can protect against heat and fume. That country can be used to help the orderly mercantile establishment of residents, hold residents until first respondents can deliver them, or keep residents until the menace is eliminated. Ever more, refuge countries provided bipartisan communicating systems to reach with first respondents. Recently, there are several Asiatic states such as China and Singapore has developed as many sky scrapers. During the designing procedure, tall edifices must be provided with refuge floors every 20 to 25 floors. These are normally mechanical floors ( no usually occupied infinite ) with at least 50 % of the floor country configured as an country of safety ( 2-hr separations to equipment infinites, no fuel burden, infinite to keep all residents of the floors between refuge floors at 0.3 M2 or 3 ft2per individual ) . They are required to be unfastened on two opposite sides so that fume will non roll up. Refuge floors provide a protected infinite for residents to rest or to expect aid, or to traverse between staircases. ( Code of Practice for the Provision of Means of Escape in Case of Fire, Part II, Section 21 Refuge Floors, Hong Kong Building Authority, 1996 ) Refer to Meacham.B. , ( 2006 ) mentioned about demands for refuge floors are comparatively new and are presently found in merely a few edifices. No existent emptyings have occurred but there is some experience from drills that indicates there may be a job when people reach a refuge floor and make up one's mind to wait at that place instead than go oning the emptying. Indeed, the consciousness of residents who stayed at high rise edifice should be considered. Each resident who stays in tower block should responsible to cognize where the safety topographic point is. Owner of the edifice should supply fire safety program and information which can steer residents to get away during fire incident. Fires Safety Drill should be organize by the fire section which can assist people more understand on what state of affairs and to protect themselves. During the drill procedure, occupants gather on the refuge floor such that extra geting residents can non come in. This is a drill procedure where the residents know they are non in danger and that they will be returning to their floor after the drill. Presently, the World Financial Center building in Shanghai incorporates refuge floors and besides uses two observation lifts running on the exterior of the ace columns on diagonal corners of the edifice. These lifts were originally designed to supply express serv ice merely to the observation deck on the top floor. These observation lifts were modified to halt at each of the safety floors to be used for occupant emersion in fires. Alternatively of people need to go from 25 floors to land floor, the better manner is utilizing the closest safety floor even if it was above your place.4.0 AimThe purpose of this research is to entree the demand for fire safety means in high rise edifices.5.0 Aims1 ) To detect how best to better fire safety by utilizing fire safe shelter. 2 ) To suggest solution on how to incorporate the fire safety design in high rise edifice.6.0 ScopeThis research discussed the design of shelters to protect against fire onslaught. The design of such shelters requires attending to jobs such as the figure of residents remaining or working in such edifice and besides the weight of the edifice which affected the design of shelter. The used of this fire safety system can take to better protection in order to cut down hazard of danger from residents. Besides, the counter measured for high rise edifice fire besides needs to be considered to cover with big hazard as follows, 1. Fire safe shelter design in tower block edifice 2. Emptying7.0 MethodologyIn order to accomplish the aims that have been stated, the research was carried out in measure by stairss. First of all, place the aims and range needed for this research. Secondly is followed by carry oning literature reappraisal about issue on fire incident happen in high rise edifice and the map of fire safety shelter presently use in the tower block edifice. This procedure helped in better apprehension on the research subject and integrated the cognition to the proposed topic. Besides, professional interviews with the designer and applied scientist besides conducted related to the fire safety shelter in safety design.8.0 Literature Review8.1 Issues ( Case Study ) Fire incident happen in World Trade Center in New York City Fire incident happen in high-rise flat in Shanghai Degree centigrades: UsersAcerDownloadsworld-trade-center-2nd-attack2-9-11-01.jpg Degree centigrades: UsersAcerDownloads11 ( 1 ) .jpg Beginning from Energy Matters ( 2012 ) Beginning from China stillness ( 2010 ) Figure 1 Figure 2 Harmonizing to figure 1, this fire incident was happened on 11 September 2001 in New York City. The United States has faced the cruelest terrorist onslaught in history. Thousands of citizens have been killed and many more injured. This incident has shocked and overwhelmed by the monolithic loss in lives and belongings. Everyone of the citizen in there feels driven to make something to react to the calamity happened. This twin tower of WTC has approximately 417 and 415 metres height. Along with the 110 floors Twin Towers were destroyed or severely damaged, including WTC edifices 3 through 7 and St. Nicholas Greek Orthodox Church. The North Tower, South Tower, the Marriott Hotel ( 3 WTC ) and 7 WTC were wholly destroyed. The U.S. Customs House ( 6 World Trade Center ) , 4 World Trade Center, 5 World Trade Center, and both prosaic Bridgess linking edifices were badly damaged. The Deutsche Bank Building on 130 Liberty Street was partly damaged and demolished subsequently. The two edifices of the World Financial Center besides suffered harm. The incident happened due to the impact of plane clang. A high monolithic detonation created highly high temperature which has weakened the strength of steel beads and increased warp. Mention to Craven.J. , ( 2001 ) has mentioned about the twin towers had redundant design which means if one edifice fail, another edifice carries burden. This twin towers had entire 244 columns each around the cardinal nucleus. Although there are some column damaged, but others could stay support. Due to the go oning fire combustion, the fire spread from one portion to another portion which has weakened floors and began to fall in. The crashed floor increased the impulse which has caused the edifice could non prolong the weight and collapsed wholly. Although the deliverance mission was conducted, but the accomplishments and engineering during current twelvemonth was stilled non in advanced, so the emptying mission was failed and many citizens were killed due to enable to get away. Figure 2 has showed another fire incident happened in Shanghai. This incident happened on 15 November 2010 at Jing An territory under redevelopment. This calamity has taken 49 people life. Harmonizing to Shanghai News ( 2010 ) has discussed about the fire happened was caused by unaccredited welders improperly runing their equipment and enkindled fire to the staging and light plastic webs which is extremely flammable. The fire started firing at the roof and continued spread the fire to plastic webs around the edifice. Based on the issues have been discussed, fire safety is critical of import to guarantee residents who stayed in tower block edifice are protected. In order to minimise the hazard, fire safe shelter is strongly recommended to plan in tower block edifice. This design may alter to better state of affairs when fire happen.8.2 Refuge floor ( Fire safe shelter )Refuge floor is a particular design recommended to put in in tower block edifice to protect residents for temporarily gather and delay for evacuate in instance of fire. Based on research inquiry, refugee floor is explained in general. Refuge floors should be installed in all edifices which exceed 25 floors in tallness. Mention to Hong Kong fire section, all refuge floors should follow with the demands as specified in the â€Å" Provision of Means of Escape in Case of Fire 1996 † published by the Building Department. In order to put in refuge floor, demands should purely follow. First is no occupied adjustment or nearby mechanical works room, except fire service H2O armored combat vehicles and affiliated fire service installing works room, at the same degree as the safety floor. Second, the country for safety should non be less than 50 % of the entire gross floor country of the safety floor and height non less than 2300mm. Third, the minimal dimension of the country for safety should be at least 50 % greater than the breadth of the widest stairway go throughing through the refuge floor. Fourth, the country for safety should be separated from the balance of the edifice in conformity with the demands in the Code of Practice for Fire Resisting Construction published by the Buildings Department. Continue by, the country for safety should be open-sided above safe parapet tallness on at least two opposite sides to supply equal cross airing: the unfastened sides should follow with the demands in the Cod e of Practice for Fire Resisting Construction. Next, any stairway passing through a refuge floor should be discontinued at such degree so that the issue path is diverted to go through over portion of the refuge country before it is continued to go out downwards. Furthermore, every portion of the country for safety should be provided with unreal illuming supplying a horizontal luminosity at floor degree of non less than 30 lx and backed up by an exigency illuming system supplying a horizontal luminosity at floor degree of non less than 2 lx. The design of the exigency illuming system should follow with the Code of Practice for Minimum Fire Service Installations and Equipment. Furthermore, a refuge floor should be provided with such fire service installing and equipment as may be required by the Director of Fire Services. Other than that, a safety floor ( other than a roof ) should be served by a fireman ‘s lift. The lift doors should non open onto the refuge floor in normal ope ration and should be locked at all times until automatically released on propulsion of the fireman ‘s switch and eventually is the notices and directional marks should be provided at each floor. ( Fire Services Department, 2012 )8.3 EmptyingPresently, the fire and life safety systems installed in high-rise edifices including automatic fire sprinkler protection, are designed to command a fire and hence lessen the demand to evacuate all residents. In a typical scenario, the residents of the fire floor and the floors instantly above and below it should instantly utilize the issue stairs to fall to a floor degree that is at least several floors below the fire floor, and await farther direction from safety functionaries. Harmonizing to National Safety Council reference about successful and efficient emptying depends on complete preplanning, organisation, and supervising. Planing should carry on based on basic rule. First is constructing emptying organisation. Second is emptying pol icy and programs. Third is sensing and coverage based on fire or jeopardy. Follow by emptying plan coordination is about motion and emptying. Next is communicate to direct motion and emptying and last is review and rating.9.0 DiscussionAfter the literature reappraisal has been conducted, fire safety is strongly recommended to better in order to cut down hazard of decease and hurt. Height has caused the job when the tower block edifice caught fire due to natural catastrophe or human carelessness. Fire safe shelter has been introduced to guarantee the residents can remain from fire onslaught and the possibility to get away from the incident in the shortest clip. Based on this circumstance, the developer should see on the fire safety system in a high rise edifice. Due to the tallness of a high rise edifice, it causes the residents unable to get away straight from the edifice which means they will necessitate the aid from the fire brigade for emptying. Before they can get away from the incident, the design of fire safety shelter known as refuge floor can supply a safe country to the residents. Emptying program should work with refuge floor in order to evacuate the residents out of edifice in a shortest clip. Beside, the consciousness on the fire safety system should earnestly concentrate to all the residents of high rise edifice to guarantee they gain the cognition which can protect them in instance of fire.10.0 DecisionFrom this research, tallness is the issue which need to concentrate and see on the developing a tower block edifice. When fire incident happen, first thing the residents need to make is make n't panic. They should follow direction move to the safety floor and delay for evacuate mission. Therefore, an effectual fire safety system is of import to do certain an equal and effectual communicate system to all the floors. Residents may hold better protection to cut down the hazard to zero.

647 W2D "Three main reason projects fail" Essay

647 W2D "Three main reason projects fail" - Essay Example I believe that Newton MessagePad was an impossible project since it could not withstand the stiff competition in the market. Besides, it turned to be too expensive, too big and much difficult to use than earlier expected. So, it had to fail and bring such a bid loss to the company. On the other hand, Webvan’s online grocery supply project failed because of mismanagement. Although the project was launched at the beginning of the Dot-Com Bubble, it had to fail. Having keenly followed the events at this company, I concluded that the internet grocery supply project failed because it was poorly managed. This was evidenced in 1999 when the company hired George Shaheen as its new head. After his appointment, Shaheen did not help in developing the company. Instead, he came up with expansionist policies of building branches in 26 cities without considering market and strengthening the already existing outlets. At the same time, he did not establish an effective communication between the executive management, project managers and team members (Gomez-Mejia et al., 2008). As a result, the project tremendously failed in 2001 only after managing to reach up to 10 cities. Last, but not least, IBM’s IBM 7030 (Stretch) Project failed in 1964 after it was launched in 1961 because it was over constrained. Although the management of IBM had planned to invent the world’s fastest supercomputer, it could not manage to achieve this goal because the project was seriously challenged. Its experts could not make such a computer because they lacked the required resources and skills. This explains why they were able to build a computer with a speed of only 40 times faster, not 100 times as anticipated. Hence, the project failed after selling only 9 computers. Had it not been over constrained, the company would have accomplished its goal (Flyvbjerg,

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Schools and society 601.4.4-10 Essay Example | Topics and Well Written Essays - 500 words

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Creative Writing Whangamata Beach Essay As I gaze over my photo album I pause on a particular photo. Its dark but I can just make out the shadowy figures posing in the background, the murky night enclosing itself around them. Brightly coloured flames shoot up from the wood in front of them; I can still feel that warmth of the fire. I search my mind trying to place the exact details of that night only they blur and condense until there are only specs of a memory. That photo always brings me back to one place, Whangamata. Looking up to the sky, glimmering with brightly illuminated stars I breathe in only to have my lungs become coated with the thick sea salt that travels up the sandy banks of the beach every time a wave begins to crash down on the shore. I reach for my camera which has been swallowed up by the surrounding sand. Brushing it off I focus it on everyones shadowy faces. They all gather around, they huddle to try fit into the screen of the camera. Taking the photo I hear the shutter click, lying back I close my eyes. The heat of the blazing fire penetrates my skin as I sink into the sand. I think about all the complications Ill have when I get back to Auckland. As I sigh, I position my head on a piece of drift wood. Aiming my stare towards my friends I see them singing and dancing around the fire. Lazily I smile at them when they begin to call my name. Youre no fun! Erin shouts as I stick my tongue out at her in mock response. After a while more people begin to join me beside the fire, their bodies tired from the erratic movement of tonights adventures. Rose begins to hush everyone and as it quietens a clearer noise is audible. Laughter and shouting from the distance booms and echoes around us. Everyone turns to give each other puzzled looks. This is our spot, how could anyone find us here? I squint trying to make out who they are but the blackness of midnight is too dark and hazy. Hidden from my eyesight for a while, shadowy silhouettes eventually emerge from the dimness behind the fire. A group of people were making their way towards us, shouting. One by one our group stood up, I was the last to stand but the first to approach them. Erin ran to catch up with me, linking her arm through mine when she reaches me. Her icy skin gives me goose bumps; I rub my arms to stay warm. Thunder rumbles in the distance as the cool offshore breeze begins to whip my hair lightly backwards and forwards. When we reach the intruders I speak, Im Kayleigh, this is Erin and theyre our friends I motioned towards everybody standing around the fire. The group standing before me smiled. Can we sit with you for a while; weve been walking for hours the boy closest to me asks huskily. I nod in reply. Instead of

EasyGroup Business Model Analysis

EasyGroup Business Model Analysis The easyGroup is the owner of the easy brand and licenses it to all of the easy branded businesses, including easyJet plc, the airline Stelios started in 1995 and in which he remains the largest single shareholder. Easy Group brands include easy Car, easy Cinema, easy Hotel, easy Internet cafà ©, easy Pizza, and easy Value. Airline easyJet is now publicly traded, but easyGroup holds a stake in the company. The easy formula requires consumer-oriented businesses that display significant price elasticity, require a high fixed-cost base and low marginal-cost to service additional customers. Industries with strong but complacent incumbents are particularly well-suited for the easyGroup approach. Easy Group is contemplating its entry into the cinema exhibition business in the UK through the launch of a no-frills cinema. The company believes that it can redeploy the capabilities, such as yield management, that led to the success of easyJet, its low cost airline business, into this new venture. The case examines the market for cinema in the UK, as well as the evolution of Easy Groups portfolio of companies, with a view to assessing the attractiveness of the companys planned launch of easy Cinema. How would you characterise the easyGroup business model? A  business model  describes the  rationale  of how an  organization  creates, delivers, and captures value  and it captures economic and social factors. The process of business model design is part of business strategy. In theory and practice the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a  business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. (A. Osterwalder, Yves Pigneur, Alan Smith, 2010) The  easy business model  has a  key feature: clear value proposition the easy concept is to  bring cheap and efficient services to most customers. As a solution a Web-based booking and administration system was built on Microsoft Windows Server 2003 that can be quickly adapted for numerous online ventures. This benefited the company with fast time to market of new business ventures, low-cost of ownership, easily replicated for many new ventures and highly secure and reliable. Easy Group has become an important incubator for new businesses which, while sharing the easy brand, will each be stand-alone companies. Rather than building a conglomerate, Stelios is turning easyGroup into a network of organisations linked by brand and image rather than strategic intent or purpose. The creation of easyGroup in 1998 was a signal that Stelios intended to try out this concept. The name easy itself explains much of easyGroups approach to new ventures, which one executive describes as taking a complicated business and making it simple. Technology solutions play a major role in this, but central to the easy philosophy is yield management. The group looks for businesses where there is high price elasticity, high fixed cost bases and low marginal costs and, especially, where incumbent firms have grown complacent and are not prepared for the arrival of dynamic new entrants. By launching and growing new businesses quickly, easyGroup aims to win market share from these incumbents through a combination of low cost and easy-to-access services. The Easy model provides to the customer functional services at the lowest possible price, on the basis of the real value of the basics of the provided service, avoiding any superfluous frills. The Easy group breaks up a standard service, only keeps items that are absolutely required by the consumer and provide it to him at the lowest price taking into account the time they buy it. The time is one of the most present valuable item in nowadays services. As Stelios Hajiloannou, Easy group CEO, said Easy is a functional brand. In any industry where consumers are being ripped off, if Stelios can find a way to give them real value, he states he will do it. On Easy group side, the model creates a huge turnover as it seduces a lot of consumers, due to the specificity of the model and the advertising of the brand. Direct margin are low as the model provides low prices but this is compensated by the optimization of the running fixed costs thank to the Yield management lever. The model is comprised of variations of turnover by proposing attractive prices on openings where competitors use to be underperforming. As Stelios H. focuses on highly leveraged industries, the additional turnover generated on those unusual slots is almost a net benefit that compensates the lower margins on other sales. Our business model, based on low-cost and convenience, has shown its flexibility. EasyGroups brand means low-cost products, no frills services, cost- and time-sensitive structures that offer value in exchange for some inconvenience. Thats the irony. The easyGroup brand is not necessarily an easy one to deal with. In short, the brand simply offers to make everyday things less expensive by varying the business models-not glamorous or innovative, but honest. Easy Group model obviously reduces the operational complexity and maintenance cost, which allows them to undercut their competition. All of the easy group companies offer the same class of services using standardized components, whether it is one type of plane or one type of car model. Due to the advanced technology used that helped the easyGroup to lead to innovation, it helped advance the business models and the practices which had a real impact on the peoples life. In my opinion without the web solution, the easy model wouldnt be as successful as it is, and would completely lose its essential basis of functioning. Internet makes this business model a dynamic one, with a young and accessible image. The easy model is a based on a self-serving system, which is almost entirely provided by the web solution. The web system allows fix costs to be avoided by managing the scheduling, pricing, booking, payment and various other aspects of the business and outsourcing to the customer. It is the only way the company is able to apply its concept for more people. Internet makes the offer available to almost everyone everywhere, in any moment. True to its low-cost, no-frills business model, easyCinema does not sell popcorn and drinks to movie-goers. For those who wish to treat themselves in such pleasures, they have to bring their own food along. Trailers and ads are cut back to lower the costs of operating the cinema. How would you characterise easyGroups growth strategies in terms of the Ansoff matrix? According to the Ansoffs Matrix there are four growth strategies that a company could expand. These growth strategies are Market penetration, Product development, market development and Diversification. Looking at easyGroup case it shows that the company was following a diversification strategy but that it uses the other growth strategies as well and this will be discussed further below. ANSOFF MATRIX Existing Products New Products Existing Markets Market penetration Product Development New Markets Market Development Diversification (Johnson et al page 258) The Ansoff Matrix is used to focus on the easyGroup present status, products and markets (customers). Market Penetration:  Easy group continues to achieve growth with its existing products i.e providing services at rock bottom prices. By following this business strategy the market share continues to grow. Market Development:  Easy group is seeking growth by targeting its existing products to new market segments. (Mintzberg H, Quinn J.B, Ghoshal S, 1998) For example Easyjet is targeting business travellers with its low cost airfares and frequent flights to popular destinations. The best way to achieve this is by gaining competitors customers. Other ways include attracting non-users of your product or convincing current clients to use more of your product/service, with advertising or other promotions. Market penetration is the least risky way for a company to grow. Product Development:  Easy group, particularly Easyjet has grown by introducing new flight routes thereby further developing its product range. Diversification:  Easy group is bringing forward new business ideas for its existing market segment such as easy Internetcafe, and the latest venture easy money. The Ansoff  Product-Market Growth Matrix  is a marketing tool created by  Igor Ansoff  and first published in his article Strategies for Diversification in the Harvard Business Review (1957). The matrix allows marketers to consider ways to grow the business via existing and/or new products, in existing and/or new markets there are four possible product/market combinations. This matrix helps companies decide what course of action should be taken given current performance. The matrix illustrates, in particular, that the element of risk increases the further the strategy moves away from known quantities the existing product and the existing market. The Easy Group started off with the core activity of providing low-cost flights to Europe. This is therefore its core business, and with over 18 million passengers a year flying easyJet, the Easy Group needed to establish ways for the business to grow and expand. The Easy Group had continued to penetrate the existing air transport market at low-costs flights; it also developed the market potential to include a greater accessibility of easyJet flights by increasing the number of airports handling the passengers. While the flights are the core business in Easy Group, a complementary diversification programme was entered in order for a travel solution package is made available to meet the whole range of customers needs and expectations of both frequent and holiday travellers. This is aimed at both the corporate and the customer sectors in the business. By taking the key strengths and opportunities available to the Easy Group has established a further growth strategy which includes market penetration, market development and diversification into new compatible areas of business. Market penetration their strategy of offering lower costs to the customers enable them to get access to most of the market share. Market development included the growth strategy to increase the number of handing airports by branching out into new markets and a wider customer base. Lastly with diversification Easy Groups strategy of hiring cars, the internet cafe and hotels is a way for the Easy Group to find ways and different markets that can be developed to provide the best prices for the customers. (Karen Beamish, Ruth Ashford, 2008) Therefore product development and market extension typically involve a greater risk than market penetration (existing product and existing market); and diversification (new product and new market). Ansoff stressed that the diversification strategy stood apart from the other three. While the latter are usually followed with the same technical, financial, and merchandising resources which are used for the original product line, diversification usually requires new skills, new techniques, and new facilities. As a result it almost invariably leads to physical and organizational changes in the structure of the business which represent a distinct break with past business experience. (Karen Beamish et al 2008) Most of the Easy Groups growth strategies involve three of the Ansoff matrix namely market penetration, diversification and market development. Ansoff pointed out that a diversification strategy stands apart from the other three strategies. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, therefore diversification usually requires a company to acquire new skills, new techniques and new facilities, just like Easy Group did. The notion of diversification depends on the subjective interpretation of new market and new product, which should reflect the perceptions of customers rather than managers. To what extent is easyGroup a conglomerate? A  conglomerate  is a combination of two or more  corporations  engaged in entirely different businesses together into one corporate structure, usually involving a  parent company  and several (or many)  subsidiaries. (Dearbail Jordan and Robin Pagnamenta, September 25, 2007) Often, a conglomerate is a  multi-industry company. Conglomerates are often large and  multinational. (Dearbail Jordan et al, 2007) In the case of the easyGroup they are conglomerate and the extent of it will be discussed below. Fortune has an article on  Stelios  Haji-Ioannou and his various Easy companies that form the  EasyGroup  conglomerate. Stelio has started a number of companies that range from rental cars, airlines, to internet cafes, based on the idea of eliminating middlemen using technology. Apparently, his companies are all doing very well, including EasyJet which is a public company that generated $765M in revenue last year. (Wendy Walker, 2003) I noticed that EasyGroup has a similar business model to companies like Fresh Direct and Dell. All of these companies are using technology to eliminate the middleman to deliver lower cost and higher value to customers. These companies are not internet companies as such, but they are examples of how internet technology and general information technology can become a competitive advantage, if applied correctly to support a rational business model. All of these companies offer the same class of service, but with self-motivated pricing, using standardized components, whether its one type of plane or one type of car model. This model obviously reduces operational complexity and maintenance costs, which allows them to undercut their competition. It also reminded me of Dell in some ways because Dell is obsessed with maximizing their margins by minimizing their cost of inventory with  just-in-time assembly  of PCs. These are all sensible business principles and practices that more companies should really adopt to stay competitive. The interesting thought for me is that companies such as EasyGroup, FreshDirect, Dell, and even EBay could not exist and thrive to the same extent if there was no such thing as the Internet. However, the real focus shouldnt be on the innovation in technology that enables such companies to exist and thrive. It really should be on how advances in technology lead to innovation in business models and practices that have real impact in peoples lives. The company stands tall when it comes to achieving higher standards of excellence. (Wendy Walker, 2003) Over the years brands have been synonymous with quality innovation in their respective domains. Easy Groups passion to excel has made us grow faster than most of our competitors. Easy Group strongly believes that success is a continuous phenomenon by benchmarking ourselves with the best Business practice followed globally; we look forward to a bright future, brought to life by growing possibilities. The easyGroup is rated as one of the fastest growing business conglomerates of India. The easy group has been a front-runner in delivering innovative and customized solutions. By offering contemporary products, superior quality and assured availability. The group has gained an exceptional stronghold with an array of winning brands to its credit. Easy Solar Industries is constantly innovating to give you more value for the money. His high quality products are backed by excellent nationwide sales and service support. Easy Group continues grow in terms of products benefits, market share and customer retention. Today Easy Group is Conglomerate consisting of diverse products such as Solar Thermal, Solar Photovoltaic Power Products. Our products attained market reputation in very short span of time. Most of Easy Groups customers are mainly government and semi government organizations continuously supported us in span of last six years only because of our regular efforts in maintaining quality and adopting latest research and development. Many of the companies follow the easy format of taking away the frills in something to make it cheaper overall, plus using the  yield management system of supply and demand. In the last few years the company has started to franchise the businesses to expand, and cut down costs. Some EasyGroup subsidiaries have been more successful than others, the most successful division being  EasyJet. The extent of Easy group been conglomerate is large as they are operating with a number of different large businesses that fall under the main Easy Group corporation. There are up to fourteen businesses namely EasyJet, Easy Internet cafà ©,   EasyCar.com,   Easy Money,   Easy Cinema,   Easy Cinema DVD Rental,   Easy Bus,   Easy4Men, Easy Pizza, Easy Music,   Easy Cruise, Easy Mobile/Shimmer Bright,   Easy Hotel, Other businesses. (Wendy Walker, 2003) Should easyGroup entre the cinema industry? According to the Case, three factors made easyCinema an attractive expansion area. First, the yield management capabilities that were used for the airline business and did well running could be applied to easyCinema. For example, easyJet prices are linked to demand and advance purchase. Likewise, they would charge more for peak-time movie tickets. Stelios always wondered why cinemas charged so much money when they are so empty. He then realised that by maximizing both capacity and the extent to which it was utilized, easyGroup could grow the cinema admissions well above current rates. Second, easyGroup can use the technology to automate the process of serving customers, thereby reducing labour costs. All bookings would be made through the Internet or kiosks in the foyer of the cinema. (Jackson Mahr, 2003) Third, the no-frills concept will be applied and this could be an advantage. The cinema would now show any advertising or support promotional campaigns associated with films (activities that require significant time and organization). (Jackson Mahr, 2003)They would allow the audience to bring in their own food and drink, eliminating the traditional allowance stand. Therefore the customers will be interested in going to watch a movie knowing they do not have to spend more money on the food and drink than the actual movie they want to see. EasyCinema is just one of many new ideas in the easyGroup pipeline. (Jackson Mahr, 2003)The criteria for a new business can be summed up in one word, simple. The easy formula requires consumer-oriented businesses that display significant price elasticity, require a high fixed-cost base and low marginal-cost to service additional customers. Also, industries with strong but complacent incumbents are particularly well-suited for the easyGroup approach. Although the above mentioned aspects are positive I would recommend that it should not enter the UK cinema business, the reasons are discussed below. The main question is how well do cinemas fit in with the easy formula? I would think that Cinemas do not fit well with their formula. Firstly the success of the actual cinema will depend on success of the movie which is considered to be very low. Therefore by going through with the cinema idea it is considered to be high risk business and there is a lot of instability in the cinema industry. Secondly this product is considered to be giving entertainment to the consumer. Therefore having a low frill may not be enough to ensure the cinemas success. Moreover the Cinema industry is not that attractive according to the case. The business environment is extremely competitive. Other factors to consider are the bargaining power of buyers. Here the consumers have the choice of movie but the success of the operator depends on the success of the movie. Therefore the bargaining power of consumer is very high. With the Bargaining power of suppliers distribution of the movie is controlled by the big movie houses of Hollywood. Therefore they do have certain influence over the UK industry. They may not accept the yield management model of the Easy group. With regards to the entry barriers, it requires high capital investment. Another problem that might affect the success of the cinema is substitutes. (Jackson Mahr, 2003)There are substitutes in form of video rentals, video sales and DVD rentals which is increasing everyday and could affect the success of easyCinema. This case study gives a fair idea about the industry in which a company operates in and the various external forces that influence it. However, it any industry is not static in nature. Going forward, we foresee increasing competition in the industry and these competitors will large players and it may be possible that some kind of oligopoly come into play. If oligopoly had to be the result it would result in the industry moving towards consolidation. The barriers to entry will increase going forward; therefore according to my opinion the industry is unattractive. As discussed above the entry barriers are high capital investment, high brand loyalty, high competition, risky nature of business. They can enter by acquiring an existing cinema operator. This will help in gaining markets share in timely manner. Moreover here the strategy can be concentrating on online DVD sales and broadcasting instead of Cinema. CONCLUSION: The easyGroup profits by either selling shares in the businesses or by licensing or franchising the brand to reputable partners. The easy brand currently operates in more than a dozen industries mainly in travel, leisure, serviced office accommodation and other consumer facing sectors. Currently, only EasyJet plc, out of the easy group of companies is listed in the Stock exchange. EasyJet has shown substantial organic growth since the day it came into being in 1995. Although easy groups businesses are based on the low price model, they still face competition from established players, who emphasis on quality. Throughout the years, the  easy  Group  strategy  kept a clear readability built around some corner-stones principles: a low-cost approach, an identifiable and recognizable simple communication  strategy  mainly focused on price and entertainment, constant expansion, development of new strategic business units in close to the customers market, with a core focus on travellers. In terms of management, the  easy  Group also adopted a consistent and durable stance in minimizing its operating administrative fees and in applying for the newly created Strategic Business Units the management framework that brought success to the previously settled business. All in all, the strategic consistency is to be found in a clear managerial desire to expand as far as possible the no-frills concept to every profitable market. Harvard Referencing: A. Osterwalder, Yves Pigneur, Alan Smith, Business Model Generation,, self published, 2010 Alan Clarke, Wei Chen, International hospitality management: concepts and cases, 2003, page 232 Jackson Mahr, easyGroup June 13, 2005 Jardine, Cassandra (2006-11-29).  Theyd laugh if I called myself Sirà ¢Ã¢â€š ¬Ã‚ ¦.  The Telegraph  (London). Retrieved 2007-09-07. Karen Beamish, Ruth Ashford, Marketing Planning 2007-2008, page 44-45 Mike W. Peng, Global Strategy 2009, page 279 Mintzberg H, Quinn J.B, Ghoshal S, (1998) The strategy Process. Revised European  edition.PrenticeHall Yves Doz and Mikko Kosonen,  Harvard Business Review, Vol. 85, Issue 6, pp 98-104, June 2007. Wendy Walker, Easy Jet Press Pack, February 21, 2003

Pestle Analysis Of The Beer Industry Economics Essay

Pestle Analysis Of The Beer Industry Economics Essay This report examines two organizations operating in the same industry, and their responses to the environment during the period 2007 to 2009. Heineken N.V (Heineken or the company) operates internationally through a global network of distributors and breweries. The company is one of the leading brewers that owns and manages a portfolio of more than 200 varieties of international premiums, regional, local and specialty beers. It owns or joint ventures 125 breweries and distributors in over 70 countries in five geographic segments: Europe, the Americas, Africa, the Middle East and Asia Pacific. It is headquartered in Amsterdam, the Netherlands and employs about 55,301 people. SABMiller is similarly engaged in the production and distribution of beer, malts and carbonated soft drinks. Its brands include international premium beers and the company primarily operates in the Americas, South Africa and Europe. It is headquartered in London, the United Kingdom (UK) and employs about 68,635 people. The companys markets its products in both the developed economies in Europe and North America to emerging markets such as China and India. SABMiller is also one of the largest bottlers of Coca-Cola products in the world. SABMillers operations segmented across beer manufacturing and soft drinks business and also has brewing interests or distribution agreements across six continents. This report critically analyzes Heinekens financial performance compared with one of its many competitors, SABMiller and examines the market conditions and economic statistics during the period 2007 to 2009. 2. ECONOMIC OVERVIEW In the report entitled Emerging or Developed Markets which will lead global economic recovery? by SABMiller Globalization Debates, it was concluded that Western developed economies will be the hardest hit by the current economic slump. The report confirmed that major nations and regions would emerge from this slump by the first or second half of 2010. The Middle East was expected to be the first to recover, followed by China and India. Canada is the highest place of the developed nations, in fourth. The United Kingdom (UK) and Italy were expected to be last to emerge into recovery. Heineken N.V. Heineken N.V. in its first trading update in 2009 made the following statement, The global economic downturn, bad weather and smoking bans caused global beer sales volumes to drop 6.3 percent in the first three months of 2009. However, better selling prices largely compensated for lost volumes, yielding a revenue decline of only one percent. In the first quarter of 2009, revenue increased 24 percent compared with the first quarter of 2008 owing to first-time consolidations and better pricing. This was partly offset by the financial impact of lower volume and unfavourable exchange rate fluctuations. Organically, revenue decreased one percent. Beer sales volumes declined across West European markets, while in Africa and the Middle East volumes grew. Organic volume was adversely impacted by a combination of factors, including the global economic downturn, unfavourable weather, the continued effect of smoking bans, distributor destocking, excise duty increases and selling price increases, Heineken said. Given this scenario, the company focused in 2009 on initiatives to reduce debt and costs, and improve the performance of newly acquired companies. In February 2009, Heineken announced a 74 percent drop in 2008 net profit but said it remained optimistic, as beer consumption was relatively resilient in hard economic times. The exceptional economic circumstances required Heineken to reduce the value of goodwill in Russia, their investment in India and the pub portfolios in the United Kingdom (UK). In Malaysia, consumer confidence reached an all-time low and with that Malaysians became the worlds third greatest savers, with more than half choosing to cope with rising costs by cutting down on their spending. Heineken in recognizing its challenges recommitted to utilizing its global marketing excellence to build its key brands across all markets and to maintaining, or where possible improving, its price positioning. SABMiller SABMiller, its competitor also reported, in a trading update, a dip in global beer volumes for  its fourth quarter of 2009, reflecting the impact of the economic downturn in its markets across Eastern Europe, Latin America and Asia. Compared to a similar basis, beer sales by volume  were flat for the 12 months to the end of March 2009 and fell by 1% in the final quarter of the year. Beer volumes on a non-comparable basis rose by 2% for the year of 2009. Beer sales suffered in the fourth quarter of 2009 due to the effects of the global economic downturn on consumer spending, the UK-listed brewer said. It added, however, that full-year sales revenue rose by high single digits, due to beer price rises, and that trading for the year of 2009 was in-line with the companys expectations. In 2009, Eastern Europe proved particularly difficult for SABMiller. Like-for-like beer volume sales in Russia fell by 7%, due to wholesalers running down their stocks amid weakening consumer confidence, although volumes were flat in the fourth quarter. SABs volumes also fell by 4% in Czech Republic for the year. Volumes rose by 18% in Romania, but slowed significantly in the second half, the brewer said. In other markets, China reported a 4% rise in beer volume sales for the year, despite a weakening economy and the earthquake in 2008 in Sichuan province, one of SABs strongholds in the country. China saw double-digit growth in the fourth quarter. SABMillers ability to contribute its business profitability was largely due to the impact of its business in Latin America and in the United States where it performed reasonably well. 3. THE BEER INDUSTRY 1The saturation of traditionally thriving beer markets such as North America and Europe has driven the consolidation of the industry. Major brewers have sought growth through strategic mergers and acquisitions, which has reorganized the industry and strengthened the market positions of the industrys largest brewers. Expansion into key emerging markets has become a strategic priority for leading firms, who are now competing for market share in several important regions of the world (Hutter, pg. 1). China In 2003 China eclipsed the US as the worlds largest beer market. Although China has low unemployment levels and growing urban centres, it is seen as the worlds next big consumer market. The local beer industry is firmly established and contains approximately 300 brewers (Slocum, et al. p. 35), à ¢Ã¢â€š ¬Ã‚ ¨primarily supplying the urban coastal areas. Many multinational firms have invested heavily in the Chinese beer market and although there is a threat of overà ¢Ã¢â€š ¬Ã‚ saturation, relatively low perà ¢Ã¢â€š ¬Ã‚ Ãƒ ¢Ã¢â€š ¬Ã‚ ¨capita consumption levels indicate that this market has room to grow. India 1India is one of the worlds fastest growing consumer markets. A rapidly growing population, an emerging middle class with rising perà ¢Ã¢â€š ¬Ã‚ capita incomes and blossoming urban centers make India a powerful emerging market. India has an established local beer industry and although perà ¢Ã¢â€š ¬Ã‚ capita consumption is low, as the country becomes more westernized younger generations have the potential to be highà ¢Ã¢â€š ¬Ã‚ volume consumers. However, regionalism, political unrest and the potential for growing pains temper this markets attraction. South Africa South Africa is one of the fastest growing beer markets in the world. This region has an active domestic brewing industry and a population of high perà ¢Ã¢â€š ¬Ã‚ capita beer consumers. Favorable agricultural conditions exist for harvesting beer ingredients and consumer tastes are shifting from sorghumà ¢Ã¢â€š ¬Ã‚ based beer toward Westernà ¢Ã¢â€š ¬Ã‚ style products creating growth opportunities for light beer and specialty brewers. However, SABMiller, one of the largest brewers in the world has roots in South Africa and has a strong market position there. Opportunity still exists in this market for brewers keen on pursuing a market thirsty for western imports. South Africas beer market provides an attractive investment opportunity for a multinational firm looking to capitalize on this regions high perà ¢Ã¢â€š ¬Ã‚ capita consumption and changing, westernized, tastes. Russia Latin America 1The early 2000s saw booming beer consumption rates in Russia, which spurred a flurry of foreign investment, but a subsequent slowdown and strict government regulations have driven this markets costs up. Russias longà ¢Ã¢â€š ¬Ã‚ standing preferences for spirits have waned and beer is now more ingrained in the culture, but brewers must now find opportunity in the higherà ¢Ã¢â€š ¬Ã‚ Ãƒ ¢Ã¢â€š ¬Ã‚ ¨margin specialty markets. Latin America is an active beer market with high growth potential, largely driven by growth in key demographics, a favorable farming climate, Brazils developing economy and Mexicos high levels of beer consumption. Supporting Data Figure 1.1 shows that China surpassed the US as the worlds larges beer market in 2003. However, as Figure 1.2 demonstrates, the country has relatively low perà ¢Ã¢â€š ¬Ã‚ capita consumption rates suggesting that Chinas growth has been driven by its massive population. Whether this unique dynamic limits growth or represents significant room for growth will be a key factor in Chinas future strength as a beer market. Figure 1.3 demonstrates recent general population growth trends for the key growth demographic of 15à ¢Ã¢â€š ¬Ã‚ 34 yearà ¢Ã¢â€š ¬Ã‚ olds. Asia and Latin America have shown significant growth while the US and Western Europe haveà ¢Ã¢â€š ¬Ã‚ ¨ demonstrated flat or negative growth rates. This is further evidence that the key growth opportunities in theà ¢Ã¢â€š ¬Ã‚ ¨ brewing industry are primarily in emerging markets, rather than traditional established markets. 3.1 PESTLE ANALYSIS ON THE INDUSTRY PESTLE is the Political, Economic, Sociological, Technological, Legal, and Environmental factors that describes the macro-environmental factors used in the environmental scanning component of strategic management. The following factors demonstrates: Political (includes Legal) The beer brewing industry is one that faces a large amount of government regulation. A cause for the large amount of regulation is due to the fact that in some areas brewers can be regulated by the federal government, state governments, and localities. The federal government has seven different areas of regulation relating to the beer industry. The area relating to breweries and beer production is the one that affects the beer brewing industry. The government agency that is responsible for regulating this industry is the Bureau of Alcohol, Tobacco, and Firearms. The bureau has issued regulations regarding brewing of beer that include restrictions on the location, use, construction, and equipment of breweries, as well as laws pertaining to the qualification of breweries and their issuance of bonds and consents of surety. Beer breweries also face brewing process regulations include mandatory approval of the formula and process for domestic flavored beers, such as lambics, and requirements for the measurement of beer. In addition, federal law imposes a special occupational tax (SOT) on all brewers. Breweries also face state regulations that vary according to each individual state in which they are located. The government regulations that breweries face help to prevent barriers to entry for potential firms considering entry into this industry. This is a benefit to the firms currently in the industry as it promotes an environment that is conducive to sustainable profits. Economic The Scope of competitive rivalry is one the best ways to identify the economic characteristics of any industry; with the beer industry the scope entails the global geographic area over which most of the leading brewing leaders compete. Penetration in the foreign market arena is becoming a key success indicator for most of the competitors in the beer industry. The market size of the beer industry is incredible. As you can see, this is a very large industry, which provides many jobs, and the market consists of many competitors, some being very large and some operating on a very small scale. The competitive rivalry is broken up into three segments, National, Regional, and Microbrewers. National competitors have wide market coverage and generally a large company. Regional competitors are smaller than National in the fact that they only distribute in certain regions. Microbrewers are the smallest of the three because their size and capacity limit them to only distribute to small geographic areas. The market growth rate of the beer industry is perplexing. Economies of scale are defined by Porter as the declines in unit costs of a product as the absolute volume per period increase (Porter 7). Therefore the greater quantity of a product that is produced the lower the cost of each will be to the producer. This creates an advantage for a high volume producer like those seen in the brewing industry. Economies of scale in the brewing industry also exist in areas other than in production and these include purchasing, distribution, and advertising. For example, national brewers achieve economies of scale in advertising through bulk media purchases and umbrella brand marketing. Local-craft brewers spend more than twice that spent by large brewers on marketing and advertising per barrel. Social Cultural Issues Throughout history there has consistently been opposition to the sale and use of alcohol. This opposition to the use of alcohol traditionally stemmed from a moral or religious opposition to the consumption of alcohol. Today however, increasingly it isnt a moral or religious reason that prompts this opposition; its the negative medical effects that abuse of alcohol has been shown to have on the human body. Society is also feeling the effects of alcohol abuse; it is because of this that Sin Taxes have been levied on alcohol, as an attempt for government to find a ways and means to profit from the sale and consumption of alcohol. Technological New harvesting and production technologies must be identified to increase process efficiency and ensure continued growth. Environmental The beverage industry is extremely competitive, with private labels greatly influencing the environment. In developing markets, the consumption of beer has fluctuated due to changing beverage preferences and relatively slow population growth among key demographics. Brewers must seek growth in developing countries such as India, China, South Africa and others, where global middle class is rapidly emerging. Therefore, players in the beer industry should look for ways to reinvent themselves in attracting the younger generations by responding to varying tastes and a wide range of products. à ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨Ãƒ ¢Ã¢â€š ¬Ã‚ ¨ 4. FINANCIAL ANALYSIS The years selected for review were 2007, 2008 and 2009. The outlook of these three years provides a perspective on general developments in the international beer industry, their effects on Heineken and SABMillers position, its profit forecast and its capital investment. It examines some key financial ratios, analyzing its profitability and liquidity making a comparison between Heineken and its competitor, SABMiller. The factors, which were used by the company, are contained in the report to shareholders by the Chairman and the Chief executive Officer and it is this report that provides the basis for our review. The analysis of operating ratios is seen in Appendix I and II. 4.1 The Chairman Chief Executive Officer Overview for 2007 2009 4.1.1 Heineken N.V. 2007 According to the review, 2007 was an outstanding year because of the following: The company achieved cost reductions New profit grew by 22.6% Beer volumes increased by 6.5% Premium segment increased by 10% Strategic acquisition Building leadership and; There was focus on selective opportunities For 2007, Heineken continued to benefit from their ability to extract value from their mature markets. In May of 2007, Heineken renewed the sales and marketing agreement in the USA for a further ten years which would significantly impact the growth segment in the US markets and secondly, they regained control of the Amstel brand in South Africa and decided to construct a brewery there. Performance for their Central and Eastern European (CEE), African and Asian markets were considered outstanding given the state of the market and showed signs of growth in profit and volumes. Consolidated volumes grew by 9 percent and earnings before interest and tax (EBIT) (beia) rose by 22 percent. With an 18 percent volume growth and 41 percent EBIT increase, Africa and Middle East region was again consistent in rowing both its consolidated volumes and EBIT (beia) and their Asia Pacific region continued its positive growth in volumes, revenue and profitability. Heinekens strategy continued to focus on ensuring that environmental and social sustainability remained high on their agenda. They strengthened their existing commitment to responsible consumption activities in partnership with their employees, the industry and third parties in order to play an active role in addressing alcohol misuse. They continued to maintain their focus on meeting the environmental and safety targets that they have set for themselves an invested in their people and business resources. 2008 2008 was considered a unique year, there was large-scale industry consolidation, a global slowdown in category growth, significant increase in input cost and cost pressures and above all, an unprecedented economic crisis. Heineken managed to maintain in this environment a strong organic growth in net profit of 11 percent, revenue growth of more than 27 percent and 16 percent increase in group volume. However, goodwill in Russia had to be reduced due to the economic circumstances as well as their investments in India and the pub portfolios in the United Kingdom. Heineken entered 11 new markets and completed the largest acquisition in their history in 2008. They attained leading positions in 59 of their 66 markets, none of which accounts EBIT (beia) for more than 10 percent. The economic downturn impacted significantly on the performance in UK and a combination of other factors such as smoking bans, excise duty increased and adverse exchange rates. In this regard, Heineken reduced costs significantly, restructured parts of their business and improved pricing in order to increased the efficiency and profitability of the UK business. Heineken continued to focus on increasing their value share in all markets by increasing the efficiency and effectiveness of their marketing investments. They also focused on reducing their debt levels and introduced a company wide program aimed at restoring their cash conversion rates to more than 100 percent by 2011. 2009 In 2009, the company focused on a creating a more globally competitive business as a number of beers showed a reduction in sales in 2008 because of the economic slowdown. Transformation occurred and focus moved to growing their brands and value share in critical markets, leveraging their leadership position and developing specific action plans to grow and strengthen their business and the category. Heineken also looked at ways to accelerate their investment in consumer focused innovation. 4.1.2 Results of 2007 2009 ACTIONS In summary, an overview of the period 2007 to 2009, will indicate that Heineken was one in which the company found its market place affected by a number of very challenging events and it responded through various interventions. At the end of the period the company was transformed and able to survive. The operating profit margin declined over the years, 2007 to 2009. Although there was a decline in operating profit, Heineken is still effective in controlling its cost and expenses associated with its business operations. After reviewing its financial statements net profit continues to grow well ahead of their forecast as beer volumes continue to grow. From 2007 to 2009, cash flow from operating activities continue to improve mainly due to: Cash flow from operations before changes in working capital and provisions increased Decrease in working capital; resulting in a positive contribution to cash flow Decrease in cash flow used in operational investing activities as a result of reduced CAPEX. Heinekens net profit has grown over the years with an increase of 11 percent between 2007 and 2008 and a further increase of 18 percent from 2008 to 2009. Despite the economic downturn, Heineken experienced the highest number and value of new acquisitions ever, however, the economic situation impacted the value of certain assets and investments, it affected foreign translation reserve, hedging reserve in equity and also impacted other net financing expenses significantly. Revenues increased over the years showing a 27.3 percent between 2007 and 2008 and a 2.7 percent between 2008 and 2009. However there was a fall in beer volumes in 2009 due to the economic environment and excise duty increases. This is reflected in the decrease in the operating profit margin. The return on equity ratio had a significant decline between 2007 and 2008. This impact came about as a result of the investments made in that year when Heineken entered 11 new markets and completed their largest acquisition in history when they acquired the Scottish and Newcastle businesses in the UK, Portugal, Finland, Belgium, Ireland, India and the USA. In addition, they acquired breweries across Europe and Africa and they began construction of a brewery in South Africa. These investments would also have impacted on the returns received in that year. Heineken continued to outperform the sector with EBIT growth over the years. In 2007, the performance from the Central and Eastern European, African and Asian markets was outstanding and began to deliver on their potential for both profit and volume growth. As in 2007, the Africa and Middle East continued to grow in volume and profits hence increasing EBIT figures while Asia Pacific region continued its solid growth record. In 2009, Heineken continues to benefit from developing markets with a further increase in EBIT. In analyzing the current ratios, the companys shows that it is unable to pay off its obligations when they become due. However it does not necessarily mean that the company will go bankrupt as there maybe ways to access financing but it shows that the company may not be in good financial health. In concluding, Heineken has a high gearing ratio and based on the beer industry this can be considered risky. This is so as shareholders are concerned at the very high level of debt relative to equity and borrowers might doubt the companys potential to service the interest in new borrowings. High gearing ratios simply indicate that a company has placed a greater reliance upon borrowing than equity to finance its operations. The higher the ratio the more highly geared or levered the company is said to be. Although it should provide a higher return to its shareholders when the economy is experiencing boom conditions, during period of increased interest rates, economic recession or simply loss of customers the opposite will apply. A company which has high gearing is particularly vulnerable and might find that it cannot continue to finance its borrowings. 4.1.3 SABMiller Analysis 2007 2007 was a successful year for the group when developing and developed market operations generated 10 percent organic growth in larger volumes and 12 percent growth in earnings before interest and tax and amortization (EBITA). SABMillers total volumes in lager, soft drinks and other beverages increased and their net cash was 22 percent above the prior year reflecting the overall strength of the trading performance and strong cash characteristics. That year, SABMiller shaped and expanded its international portfolio business. Acquisitions and joint ventures in China, Vietnam, Australia and Angola have been further steps in creating an attractive, international spread of businesses with good exposure to fast growing, developing markets. 2007 was a year of good growth with strong performance in the fourth quarter. However there were challenges in increased commodities, cost pressures and the need to rebuild share of premium segment in South Africa. Despite those challenges, progress was expected. 2008 In 2008, economies in general and the brewing sector were faced with challenges such as the economic melt down and the food price inflation. However, SABMiller beverage volumes continue to grow and the net cash generated an increase from 2007. 2008 was a year of strong growth with results continuing the trend of several strong years. 2009 SABMillers growth over the previous two years had been almost double their normal expectations, despite with the growing economic pressures on consumers. In 2009, commodity prices and the cost of brewing materials increased. However, SABMiller delivered yet another year of creditable results as beverage volumes continues to grow. The market capitalization also grew and SABMIller continued to invest in the business, with capital expenditure during the year totaling some US$2,100 million and acquisitions a further US$300 million. Despite this very significant investment, net debt at the year-end was lower than the prior year and the group remains financially strong. SABMiller continued to develop their international portfolios with joint ventures in the United States. 4.1.4 Results of 2007 2009 ACTIONS In summary and overview of the period 2007 2009 for SABMiller also found its external environment changed by circumstances and responded by a number of changes to its business model. At the end of the period, it has grown through market growth. SABMiller reported EBITA profit measures give shareholders additional information on trends and make it easier to compare different segments. Segmental performance is reported after the specific apportionment of attributable head office service costs. There has been a continued growth in EBITA margins as it grew 12% in 2007, 9% in 2008 on an organic, constant currency basis. In 2007, reported EBITA, which includes the impact of currency movements and acquisitions, grew by 22% and in 2008, SABMiller managed to maintain an EBITA of 17.4% and growth in EBITA reflects the benefits of volume and revenue increases as well as productivity. Between 2007 and 2008, net cash inflow from operating activities before working capital movements, Earnings before interest, tax, depreciation and amortization (EBITDA) rose 12% and continues to grow in the following years. The groups cash flow generation was again strong as demonstrated by the ratio of EBITDA to revenue (both metrics excluding results of associates) at 21% (2007: 22%). Total assets continue to increase over the years. Goodwill increased in 2007 and 2008 as a result of foreign exchange on goodwill denominated in currencies other than the US dollar and on the acquisition of the Fosters India business and the various minority interest acquired. However, Goodwill decreased in 2009, primarily as a result of the contribution of goodwill relating to the Miller business into the MillerCoors joint venture and the impact of foreign exchange rate changes on goodwill denominated in currencies other than the US dollar. In addition, goodwill was reduced by impairments in Europe, partially offset by goodwill arising on acquisitions in Europe and Africa and Asia. During the period there was also a marginal increase in equity earnings attributable to minorities less balances acquired as part of minority interest acquisitions. The group has a good record of generating cash, and increases in cash generation reflect growth in profitability before interest and tax payments and investment activities. 5. ANALYSIS Heineken N.V. vs. SABMiller Some Observations A SWOT analysis was conducted to compare the positioning of both companies as it relates to the industry. The following was taken from Data Monitor report (published on August 12th 2010) and these were the findings of the analysis: Heineken N.V. Strengths Strong and diverse brand portfolio. Large scale of brewery and distribution network for efficient global supply chain management Brand innovation to adjust with the changes in consumer tastes and preferences Strategic planning and cost containment measure to improve cash flow and profit margins Opportunities Rising disposal income and cultural shift towards alcoholic beverages in Asia Association with sports events enhances the companys visibility and popularity Partnerships and strategic acquisitions Weaknesses Higher debt poses liquidity problems Weak presence in the top beer consuming countries Threats Declining beer market in Europe Stringent advertising regulations for alcoholic drinks SABMiller Strengths Globally spread operations Wide portfolio of international and local brands Opportunities Partnering with big retailers Booming beer industry in China Strategic alliance Weaknesses Sluggish financial performance Weak employee productivity Weak liquidity position Threats Rising raw material prices Sluggish growth in the US and Europe Increasing labour costs The global economic environment will continue to lead to lower beer consumption and down-trading in a number of regions in the foreseeable future. Heineken N.V. However Heineken plans to continue utilizing its global marketing excellence to build its key brands across all markets and to maintaining, or where possible improving, its price positioning. Price increases will be at levels well below of those of 2009. Heineken aims to continue passing on excise duty increases through its higher sales prices. Heineken has significant market leadership in Europe and there are plans to capitalize on this opportunity despite the intense competition. However, that task would not be easy given the economic, market, consumer and regulatory dynamics across many markets. The company will leverage their leadership positions and develop specific action plans to grown and strengthen the business and the category. Heineken will accelerate their investment in consumer-focused innovation especially on the Heineken brand. SABMiller SABMiller has a record of improving its productivity over time, notwithstanding increases in capital investment and in sales and marketing expenses. In summary, the group delivered resilient underlying results over the period 2007 to 2009 despite the strong h