Customer care service program

â€Å"One satisfied customer will tell three other customers while one dissatisfied customer will go out of his/her way to tell 300 hundred other customers† this is a common saying in companies and businesses that deal with a lot of customers, the moral of the saying is that a company has a lot to lose by not ensuring that its customers are satisfied and happy at all times.Advertising We will write a custom report sample on Customer care service program specifically for you for only $16.05 $11/page Learn More The customer is king and a satisfied customer will come back begging for more therefore it is paramount that the quality of service delivered is precisely of high quality. This is therefore why companies whether big or small concentrate on satisfying customers and are coming up with innovative customer service/care techniques that leave their customers smiling and begging for more. When creating a customer care service program you should have one aim in your mind quality and satisfaction the role of staff in this process of service delivery is as important as the product itself, and in cases where the products are assumed to be of the same quality across the industry then the way staff treat and interact with customers determines who crosses the finish line in the first position (Kotler and Keller 2002). As much as all customers should be treated the same it is also vita to know it is only fair to you to ensure that the biggest accounts in your business are treated like royalty. Below are some key elements to be considered while developing a leading customer service system: 1. Identify which of your customers is the most valuable to your business then cluster or rank them according to the level of importance to your business. 2. Find out the level of service expected by the customer. This can be obtained through conversations and use of questionnaires, surveys or gathering commercial intelligence from competitors. 3. De velop a customer service standard and programme that aims to maximize customer satisfaction and build loyalty and do not forget to involve employees in this stage. Their involvement creates an obligation for them to perform their duties diligently, at the same time create a system of rewarding excellent customer service and punishing poor customer service delivery amongst employees.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More 4. Create a monitoring system that will be able to gather the opinions and felling of customers and rank them in order of importance according to the various types of services that you deliver as far as customer service is concerned. Which will assist you in making any corrections to the existing programme and standards if need arises. By understanding the concept of customer care and how customers analyze service delivery to conclude whether a service delivered i s either of good or bad quality can be very useful in your case. Below are some indicators of good customer care that you should strive to exhibit in your organization and urge your employees to ensure they adhere to: Friendliness/politeness, Responsiveness, constant communication and feedback mechanisms , acknowledging and taking notice of customers Keeping you promises by letting customers know what you can or cannot do, appreciating customers (Locker Kienzler 2010). â€Å"Customer service is the backbone of a company’s Customer Value Proposition† Paul (2007) customers have memories, they will remember you, whether you remember them or not and that a customer’s trust can be destroyed by one major service problem, or it can be undermined one day at a time with one thousand small demonstrations of incompetence. It is therefore necessary that all employees be adequately trained on how to handle customers and products. In day to day business it is a fact that the y will come across difficult customers some of whom are rude, angry, emotionally dependent, and unknowledgeable, stubborn and so on. They as employees have the duty to understand them and respond in the most appropriate way possible to bring about a win- win situation. According to Francis (2009) â€Å"great service is about attitude, and a better service leads a richer quality of life, not only commercial sector.† Therefore employees should be trained well to have enough product and people knowledge as this will also improve communication between a company and its customers. Having an open system of communication, that is inexpensive and highly responsive, such as a website or a social site, will go a long way to show that you care about your clients. â€Å"If you get everyone in the company involved in customer service, not only are they feeling the customer but they are also getting a feeling for what’s not working† Francis (2009).Advertising We will wri te a custom report sample on Customer care service program specifically for you for only $16.05 $11/page Learn More It is therefore by creating a written customer care charters that you as the entrepreneur and the workforce will be able to appreciate and dedicate all resources towards customer satisfaction. A customer care charter will create an attitude of top class service delivery and harness the participation of all organizational members which will in turn make sure that all customers fell satisfied and appreciated and employees will feel motivated to do better to meet goals creating a win- win situation. References Francis, B. (2009). Customer Relationship Management. New York, NY: Butterworth-Heinemann. Kotler, K. Keller L. (2006). Marketing Management 12 ed. New York, NY: Prentice Hall Locker, K. O. Kienzler, D. S. (2010). Business and administrative communication (9th ed.). New York, NY: McGraw-Hill/Irwin. Paul R. (2007). Customer Service: Career success Through Customer Loyalty (4th ed). New York, NY: Prentice Hall. This report on Customer care service program was written and submitted by user Lillie Quinn to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. 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Democracy and Dictatorship

Democracy and Dictatorship Democracy and dictatorship play a role in paths that lead to political development. While democracy in itself provides a variety of friendliness amongst the people, dictatorship, on the other hand, bestows all power of a community or a country upon a single individual.Advertising We will write a custom essay sample on Democracy and Dictatorship specifically for you for only $16.05 $11/page Learn More This creates a lot of tension and unfairness between the rulers and the ruled. As opposed to democracy, dictatorship results in an unstable economy of a country. The way Daron and James (2006) outline, there are different political paths that different political institutions take over a certain period. Amongst the paths, just a few of them result in democracy. Albert makes a clear observation that is of a lot of importance. He notices that a more established democracy results in an enormous distribution of coalitions. After these same coalitions have formed, eco nomic landscape is flooded with incompetent laws, regulation and other practices. Because of these practices, a country or a community ultimately excels little in terms of development or growth. In an attempt to understand democracy and dictatorship in length, Acemoglu and Robinson (2006) come out vividly to take us through these. According to them, determinants of democratization are substantially reduced to various levels that explain it better. The levels include economy structure and inequality that exists in a community or society. Additional levels that they discuss incorporate the degree of globalization and the kind of skills that elites bear as will be subsequently explained. Dictatorship and democracy trace their origins in the ancient of time. For instance, there are the already mentioned paths that led to their creation in different manners. Apparently, the paths make us familiarize ourselves with the difficulties in the universe owing to the fast changing real- world co mparisons, Daron and James (2006).Advertising Looking for essay on political sciences? Let's see if we can help you! Get your first paper with 15% OFF Learn More As a matter of fact, the paths above show some means that connect political and economic composition of a community to a political institution. Talking about the paths of political development, there exist four of them in number. They all result in different democracy through diverse means as is discussed below noticed that democracy is now never endangered. It simply tolerates all other forces that may hit it from side to side and consolidates to a stable state. This means that this first path that leads to democracy may take a little time to stabilize, but after that, it stands out effectively on its own. The second path is the one that leads to a democracy that is quickly created. It does not end at the creation but has its immediate other side that does away with the created democracy. In other w ords, the established democracy quickly crumples as Daron and James (2006) observes. Again, the collapsed democracy uses the forces that made it stand initially to stabilize. After this, once more the re-established democracy falls again and the cycle recurs. A third path of democracy is one in which a community or a country stays put in no democracy. In case democracy exists, then it is that which is totally delayed to appoint of not realizing their existence. This third path of may be divided into two nondemocratic paths. In the first place, democracy is never created because of community’s wealthy and prosperous status. This is an assurance of a stable status of the society’s political quo. It appears that this system is never challenged simply because individuals found in the society are well satisfied under the on hand political institutions, Daron and James (2006). Another situation arises still in the nondemocratic paths. As opposed to the above, this type entai ls a community that is unequal but very exploitative. The panorama of the existing democracy in this path is weak and posses a threat to elites.Advertising We will write a custom essay sample on Democracy and Dictatorship specifically for you for only $16.05 $11/page Learn More In response, the elites use any means possible to totally avoid it. For example, the elites resolve in using war and repression to put the impending threats at bay. A typical example of a country that used a similar path to this is South Africa before the fall of apartheid rule. As Jorge Heine argues, it is impractical in the absence of political participation to have political scientist. As a clear fact, political science develops with expansion of political participation. Huntington further explains this in his central proposition which identifies that political science is strong where democracy is strong, and the reverse is also true. According to him, surfacing of democracy promo tes establishment of political science. Furthermore, development of political science results in the creation and maintenance of democracy. Democracy and dictatorship have had a bit-by bit progress amongst different people of diverse classes. Dictatorship, which is also known as autocracy, is a government system in which there is an authority to control all the activities of a state or a community. This authority, however, is concentrated in the hands of one individual. Talking about progress of democracy in Britain, for example, there was a wide gap that separated the rich from the poor as Robinson and Acemoglu (2003) observed. Initially, only the rich elites were allowed to vote; whereas, the poor had many complications that hindered them from voting. For instance, illiteracy was a major bane to them that had them left out of the entire voting process as the rich in their own class took it upon themselves to vote. As was earlier mentioned, there was a path of democracy existed gra dually. This became a reality in Europe where democratic system emerged more progressively. Precisely, Britain issued I the first place uncertain reforms in 1832 that included the relatively wealthy middle class, Robinson and Acemoglu (2003).Advertising Looking for essay on political sciences? Let's see if we can help you! Get your first paper with 15% OFF Learn More As time progressed, rights to vote were broadened in 1867 and 1884, then again in 1919 when worldwide male suffrage was initiated. In addition to this, all women in Britain were finally allowed to vote in the year 1928. This is for sure a series of gradual extensions of franchise that a thee-class model analyses and the details are as below. When an alliance between the middle class and the poor pressurizes revolution disenfranchised, the rich devises a way to curb it all. The rich elites break the coalition through one sure way of lengthening permission to middle class. Presumably, this middle class is considerably richer than the poor individuals and so it is easier to persuade them against revolution, Robinson and Acemoglu (2003). Taking the Great Britain as an example, democracy traces its origins upon formation of ordinary parliaments. These were a forum for upper classes to agree about taxes while discussing policies with the king of the Great Britain as Daron and James (2006) explain. Voting became unopposed in the 18th century all though to the mid of 19th century in Britain. This means that governance by then ceased being dictatorial because efficient voting system was adapted. Future democracy of Britain was shaped through reforms that were made in the constitution after Civil War, which took place in 1642-1651. Alongside that, Glorious Revolution of 1668 resulted to a remarkable transformation in both economic and political institutions, Daron and James (2006). The changes have had significant insinuations for the future democracy of the Great Britain. Autocracy, on the other hand, also reveals it intensions. That a dictator comes to power, and lead a group of people in a society is a reality. However, when the autocrat has a short period horizon, it is always in their interest to seize the property of their subjects. It is also in their minds to abrogate any contracts that they might have signed with an intension of borrowing money from them. After getting money, they suit themselves while and neglecting the long-term economic consequences of their choices. According to Mancur (1993), dictatorship carried out within a short time horizon decreases assurance in enforcement of long-run contacts and investments. Owing to these facts, there is a remedy that should be advocated for and supported in totality. Individuals just need to secure a government that regards with respect the rights of individuals. These rights are objects of a unique set of the governmental body (Mancur, 1993). In conclusion, autocracies are appalling but successful because autocrats rely on major groups to stay in power. On the other hand, in political economy, there exists a long- standing theme which is making political leaders accountable as we make their office survival dependant on their policy performance, Masa (2007). In addition, success always follows autocrats who administer and exercise discipline for those who perform poorly. References Daron, A R James, A R 2006, Economic Origins of Dictatorship and Democracy, Cambridge University Press, USA. Daron, A R James, A R 2006, Political Origins of Dictatorship and Democracy: The Role of the Middle Class, Cambridge University Press, USA. Jorge, H 2002, Democracy, Dictatorship, and the Making of Modern Political Science: Huntington’s Thesis and Pinochet’s Chile. Web. Mancur, O 1993, Dictatorship, Democracy and Development, the American Political Science review, vol. 87, no. 3. Masa, K 2007, What Can We Learn From Successful Autocracies? Web.

Quality statistics paper Research Example | Topics and Well Written Essays - 2250 words

Quality statistics - Research Paper Example Here quality plays a significant role in ensuring the survival of companies in tough competitive businesses by inspecting the existing processes and discovering the new ones. In order to manufacture goods or offer products or services to the customers, companies employ different processes. A process is defined as a collection of interrelated and planned activities carried out to produce goods (products) and services (Oakland, 2008). There are different variations associated with each process due to number of sources and factors. Berger and Hart (1986) highllighted that variations can be inherent to the process due to its nature and are terms as common causes of variation. However, there are variations in process that result from external sources or special causes and are termed as special causes of variation. Since 1920s manufacturing has benefitted from the SPC techniques in its decision making processes (Morestream, 1920). Especially, this is true with the control charts that help to identify if a variation is really present and assist to determine if the actions need to be taken to bring the process back in statistical controls. The strength of the statistical process control techniques is its simplicity and ease in understanding equally at the management and worker level as appreciated by Thompson and Koronacki (2002). Statistical process controls allows objective investigation of the parts or whole of a process that may mask sources of variations that interfere with the level of product quality. If detected, SPC can help to numerically measure the significance of the variations and subject these to correction (Wheeler and Chamber, 2010). Consequently, the controlling of variations would reduce wastes and improve the product quality. It is crucial to understand that not all the SPC techniques are applicable to all scenarios and largely depend on type of the data and the type of the variation under investigation (Czitrom and Spagon, 1997). For example, in th is report we have analyzed the processes of providing the customer support services by an IT Call Center. In this aspect, the major quality issue was the call waiting time i.e., average waiting time during a service call. This is the time when the customer is holding on the phone line and waiting to be connected to any of the customer service representative. Introduction From the conception to design and further to manufacturing of a product, the variations introduced during initial processes become manifold towards the delivery of the product to the customer and severely impact the quality of the product. Oakland (2008) explains that there are two major types of variations in the process; common and special variations. The common variations are generally intrinsic to the process and cannot be eliminated without modifying and even eliminating the process or switching to an entirely new process. On the other hand, special causes are a result of some causes that are identifiable and a ssignable and usually appear in more periodic fashion, thus these can be identified and can be reduced/removed with eliminating the source of variation that does not involve process changes (ASQ, 1920). In an effort to identify the process variation and understand the process behavior, statistical techniques and probabilistic methods would be used for analysis. The analysis would be based on the actual

The New Product Marketing Strategy Essay Example | Topics and Well Written Essays - 3000 words

The New Product Marketing Strategy - Essay Example They are assembled from imported parts from various regions of the world. However, principal design works were done particularly at Sony’s research facilities in Japan. The brand name is not only used in Televisions but also on other products such mobile phones. Sony used Bravia as a brand name to emphasize the quality of their television products that were believed to have a high resolution in the market (Morrison & MacMillan 2007, p. 65). In 2014, the name Bravia evolved from being just a brand name of being a subsidiary of Sony. The mother company Sony Corporation is a Japanese multinational conglomerate corporation based in Japan (Tracy 2014, p. 49). The Corporation is a diversified business with a primary focus on the production of electronics (TV, gaming consoles, refrigerators). It is noted the Bravia has a wide range of television products and other such as accessories, mobile phones, Green TV Sony Bravia Internet T vans Video. Its television products have outstanding features which include: a full HD LED Display (1920 * 1080), X-Reality PRO Picture Engine, Motion flow XR 200, Smart TV with Built-in Wi-Fi, easy Wall mount solution as well as USB Recording and Playback (Morrison & MacMillan 2007, p. 87). The company recently launched a new Bravia TV, namely Android TV which has actually revolutionized the clients viewing experience. Android TV has enhanced pictures, beautiful design, and innovative control. This product has 4K Processor which enable it has stunning picture quality. It has inbuilt precision detail enhancer, precision mapping that let it brings out lifelike colors, as well as dynamic contrast enhancer. As in any business, the success of a particular business lies within the ability of the management to position itself strategically and so establish the products or services being offered (Cavinato & Flynn 2006, 78). Additionally, Arnold

Ethical Principles and Knowledge of Self Term Paper

Ethical Principles and Knowledge of Self - Term Paper Example The next part will be a discussion on values, qualities and behaviors in relation to management process, communication, team building, orientation of new staff and caring and ethics and empowerment of staff from a personal perspective. In the management process, values refer to the principles that the manager upholds and advocates. Qualities and behaviors refer to personal attributes that make a person an authentic leader in the organization. These values, behaviors and qualities in management process include being of integrity, promoting open communication, teamwork and managing organizational change of the overall group. Â  In communication, the values and principles needed include the ability to foster communication throughout the organization. In nursing management practice, individuals must demonstrate application of key values, behaviors and principles in caring and ethics and this entails being supportive, upholding the professional code of conduct and being of integrity. Â  The issue of orientation and values will be discussed. Orientation is based on the value to promote personal growth and to help the staff attain their desired levels in the professional. Other strategies of enhance the performance of nurses and empowering them is to delegate responsibilities, offer periodic retraining and carry out employee surveys. The other areas include be a person of integrity, promote individual growth and that of the overall group empowering the team and emotional and cultural intelligence.... In the management process, values refer to the principles that the manager upholds and advocates. Qualities and behaviors refer to personal attributes that make a person an authentic leader in the organization. These values, behaviors and qualities in management process include being of integrity, promoting open communication, teamwork and managing organizational change. In communication, the values and principles needed include the ability to foster communication throughout the organization. In nursing management practice, individuals must demonstrate application of key values, behaviors and principles in caring and ethics and this entails being supportive, upholding the professional code of conduct and being of integrity. The issue of orientation and values will be discussed. Orientation is based on the value to promote personal growth and to help the staff attain their desired levels in the professional. Other strategies of enhance the performance of nurses and empowering them is to delegate responsibilities, offer periodic retraining and carry out employee surveys. The paper will be concluded by a metaphor of what is the vision for best practice in nursing management. In this, ten salient areas that managers should uphold are presented and they include be a firm decision maker, fostering teamwork, ability to communicate well, ability to manage conflicts, stress and crisis. The other areas include be a person of integrity, promote individual growth and that of the overall group, empowering the team and emotional and cultural intelligence. Introduction Nurses operate in an environment having diverse workforce and patients from varying backgrounds. Effective management of the

Risk management and hedging

Risk management and hedging Risk Management And Hedging In Derivatives Market Risk management can be undertaken in several different manners, which often depends on the structure and initiatives for the specific firm. One commonly used approach is to hedge in the derivatives market, which consists of futures, forwards, swaps, CFDs, warrants, convertibles and options. Derivatives are financial instruments whose value and performance depends on the value of underlying assets, for example equities, stock market indices, exchange rates, commodities etc. The main argument for hedging is for companies to minimize risks that may arise from interest rates, exchange rates, and other market variables and volatilities. By engaging in derivatives companies manage their various risks by hedging a position, to be more certain what the outcome will be. For example, one can hedge a certain amount of currency at a future point in time, in order to know exactly how much that will be received/paid at the specific time thereby avoiding the risk of losing value because of the exchange rate risk. There are however also arguments against hedging in the derivatives market. Establishing hedging programs may be very costly, and if there are alternative and more cost efficient ways to reduce risks, such as operational and financial strategies, that could be preferable. Furthermore, sometimes hedging may lead to losses even though there is a gain on the underlying asset, which is a scenario that is difficult to explain to stakeholders. If losses appear too often, this could cause mistrust from the shareholders, and should then be avoided. One has to consider the overall trade-off between costs and savings when engaging in hedging to manage and reduce risks. It is therefore also necessary for management to undergo thorough risk assessments and to construct firm specific schedules, in order to identify the most significant risks and subsequently to establish risk preventing actions. Hedging is in addition mostly used by institutions that are extensively exposed to the various busines s and market risks, and who most of the time would benefit from undertaking such actions. However, derivatives may also be used by the private sector if necessary. The article Who Manages Risk? An Empirical Examination of Risk Management Practices in the Gold Mining Industry by Peter Tufanoexamines a new database that details corporate risk management activity in the North American gold mining industry. The article claims that academics know remarkably little about corporate risk management practice, even though almost three fourths of corporations have adopted at least some financial engineering techniques to control their exposures to intresest rates, foregin exchange rates, and commodity prices. There is little empirical support for the predictive power of theories that view risk management as a means to maximize shareholder value. The article furthermore describes risk management practices and tests their conformance with existing theory by analyzing an industry that seems almost tailor-made for academic investigation: the North American gold mining industry. These firms share a common and clear exposure in that their output is a globally traded, volatile commodity. Firms can manage this exposure using a rich set of instruments, including forward and futures contracts, gold swaps, gold or bullion loans, rolling forward commitments called spot deferred contracts, and options. Perhaps most importantly, firms in the gold mining industry disclose their risk management activities in great detail. The gold industry has embraced risk management: over 85 percent of the firms in the industry used at least some sort of gold price risk management in 1990-1993. Using industry-specific measures for firms exposures, cost structures, and investment programs, Tufano tests whether cross-sectional differences in risk management activity can be explained by academic theory. For example, theory predicts more extensive risk management by firms more likely to face financial distress, which in this industry can be measured by operating costs and leverage. Other theories posit that corporate risk management activities might be linked to risk aversion of corporate managers, and the form in which they hold a stake in the firm. These theories would predict that firms whose managers hold greater equity stakes as a fraction of their private wealth would be more inclined to manage gold price risk, but those whose managers hold options might be less inclined to manage gold price risk. This article tes ts the predictive (as compared with the prescriptive) power of the various theories, i.e., whether they help describe the choices made by firms. He finds that gold mining firms risk management decisions are consistent with some of the extant theory. Managerial risk aversion seems particularly relevant; the data bear out Smith and Stulzs (1985) prediction that firms whose managers own more stock options manage less gold price risk, and those whose managers have more wealth invested in common stock manage more gold price risk. These results seem robust under a variety of econometric specifications, and using a number of alternative proxy variables. In contrast, theories that explain risk management as a means to reduce the costs of financial distress, to break the firms dependence on external financing, or to reduce expected taxes are not supported strongly. He also finds that firm risk management levels appear to be higher for firms with smaller outside block holdings and lower cash balances, and whose senior financial managers have shorter job tenures. â€Å"Managing Foreign Exchange Risk with Derivatives†by Gregory W. Brown is a field study of HDG, a multinational manufacturing company of durable equipment with sales in more than 50 countries that actively encounters 24 different currency exchanges. Although multinational companies like HDG are always exposed to foreign exchange risk, this is one of very few studies that investigate the risk management operations for a non-financial corporation. Since multinational companies tend to be very complex, while using multiple strategies, a field study of this nature provides a deeper understanding of how the risk management process works. Dr. Brown attempts to answer to three main questions. First he wants to understandhowthe Forex risk management program is structured; second,whythe firm focuses on management of exchange risk; finallywhatHDG uses within their hedging derivative portfolio in order to minimize their foreign exchange risk. In order to get a comprehensive understanding Dr. Brown investigated HDG over 14 quarters starting from 1995 and ending in 1998. The structure of HDGs foreign exchange group consisted of 11 employees who were not considered â€Å"traders†, with an average experience of 4 years, whose focus was not only hedging foreign exchange risk. The program cost which included salaries and overhead was approximately $1.5M annually, and the overall transactional costs averaged around $2.3M annually. HDG had an actual foreign exchange risk policy which focused to reduce transactional, translational, and overall economic exposures. In order to meet this policy the group actively engaged in spot and forward contracts, currency put option, and currency call options. Traditional economic theories usually illustrate hedging Forex risk for benefits such as reducing taxable income, protecting against potential costs of financial distress, and reducing overall volatility of wealth. HDG however, focu sed its risk management program on smoothing out earnings impacts, providing the company with competitive pricing, and enabling improved internal control management. In some ways it seemed that HDG was attempting to use Forex risk hedging in a speculative attempt to increase potential income and thereby increase overall firm value. The procedure used in Forex risk hedging was quite simplistic. The department would not use live market feeds but rather sources such as Bloomberg to signify a â€Å"hedge rate† from current market rates and overall cost of derivatives. This information would then be passed onto the tax department and after review would be developed into a hedging strategy to forecast future hedging activity. Browns statistical studies of HDGs hedging activities concluded that the models R-squared value increased as the time horizon decreased. This indicated that the companies hedging activity was dramatically affected by its most recent hedging transactions. This may seem rather obvious but the strongest tests only indicated 55% in accuracy. In all Brown explains there is much more in the way of testing that needs to beconducted in order to better evaluate which additional factors significantly influence the Forex risk management of multinational non-financial companies. This study should be the start of a new investigation in understanding currency risk perspectives. In Risk Measurement and Hedging: With and Without Derivatives, Petersen and Thiagarajan (2000) explore the reasons for two gold mining companies to use opposite approaches in managing their risk, namely American Barrick, which aggressively hedges its gold price risk with derivatives, and Homestake Mining, which uses no derivatives. By studying two firms from the same industry, which hardly has any variation in product quality, the fundamental differences that lead to the different approaches in risk management can be examined. Homestake Mining is focused on developing its own properties and hence, spends more on exploration costs (capital and labour costs), which makes high gold prices profitable if they are not correlated with exploration costs. The greater need of investment capital Homestakes Mining has when gold prices are high makes reductions in the volatility of operating cash flow less valuable to it as a complete hedging would take cash flow away when gold prices are high, i.e. when Homestake Mining is in need of it. The different opportunities companies possess of also explain some reasons for different risk management strategies. Homestake Mining has for example lower costs of adjusting the mining output than American Barrick as the former can (over a short period) alter the quality of the ore that is mined. This mining strategy creates costs that vary positively with the price of gold and thus provides the firm with a natural hedge, which American Barrick does not possess of. As managers will act differently according to the risk they are personally bearing, compensation strategies is of upmost importance when it comes to risk management. Both the American Barrick and Homestake Mining use options to link the managerial wealth to the shareholder wealth, however, American Barrick does so more intensively. Also, its compensation is equity-focused where the bonuses are linked to the stock values, whereas Homestake Miningss bonuses are linked to the profitability, which explains why the latter adjusts its costs as gold prices change. The earnings are quite volatile, however through this can be reduced by different choices of accounting techniques, which is the reason for Homestake Mining to changes them in opposite direction to gold prices, where American Barrick rarely alters its accounting choices at all. From the above findings one may conclude that the choice of managing risks depends on various firms specific characteristics; their firm structure, management contracts and incentives. Specifically, it is a matter of the trade-off between costs and savings/benefits. Establishing and maintaining derivatives program is often quite costly, and therefore the alternative of using other methods to hedge risks may be preferable. In the article Hedging and Coordinated Risk Management: Evidence from Thrift Conversions, the writers argue that the firms risk management can be used to reallocate the firms total risk between different sources, rather than reduce it. So in this case hedging doesnt necessarily equal total risk reduction as often stated, but rather a technique of risk-reallocation or as an essential part of a firms profit-maximizing strategy. This becomes clearer if we separate risk in to two types, based on the activities where the firms have their comparative information advantages, namely: -Core business risk: Firms earn rents or economic profit for taking on activities bearing this risk. -Homogenous risk: Financial risk as interest rate changes, foreign currency exchange rates, or commodity prices. By contrast there is no compensation for bearing this kind of risk. (This doesnt necessarily apply if the firm has a comparative information advantage in the financial risk sector, then financial risk can then become core business risk. If we now consider a risky asset, it may be viewed as a portfolio of multiple claims from the owners. These claims are bundled together which basically means that the firm must take on all the projects if it wants any of them. A subset of these projects may be â€Å"core business projects† which have a positive NPV for the firm, and the remaining subset may be projects bearing homogenous risk with NPV = 0 (the firm hasnt any disadvantage/advantage compared to others in assessing the unsystematic risk). The total variability of a portfolios cash flow of course includes both risk types. An example of this could be a farmer expecting payment for breeding pigs. Then his superior equipment or animal feed preparation would be categorized as activities bearing core business risk, while the price of pork would be homogenous risk. When increase in total risk is costly, risk composition becomes more important as the firm value becomes a concave function of the expected cash flows. Therefore if the risky asset was separable (which it is not), we would only seek to invest in positive NPV projects with core business risk. However this is not the case and therefore we can instead make a trade off by decreasing homogenous risk while gaining additional exposure to core business risk and still maintain the target level of total risk. This substitution is called â€Å"coordinated risk management† and can be attained by the use of derivatives. They test for coordinated risk management in a sample of thrifts that convert from the mutual to stock form of ownership. These conversions have been used to recapitalize the thrift industry since 1982 where legal barriers were cleared. From 83 to 88, 571 conversions issuing stock totaling over $10 billion were completed, compared to only 130 mutual-to-stock conversions between 75 and 82. At the end of 82, stock saving and loans managed only 30% of the industrys assets, but by the end of 88, stock saving and loans controlled 74% of the industrys total assets, going from $686 billion to $1,4 trillion. These converting thrifts provided an interesting sample to test whether the use of hedging can be part of an overall strategy to increase total risk. They argued that converting thrifts will attempt to increase their overall level of firm risk following conversion due to changes that occur at the time of conversion. In other words, these institutions are a unique case relative to empirical studies of risk management that focuses on firms with incentives to decrease total risk. The reasons for converting institutions to increase total firm risk are likely because of these two major reasons: 1. A converting institutions ability to take risk increases at the time of conversion, even though the investment opportunities do not change. This is because conversion provides financial slack and access to capital markets. A conversion typically proceeds at least the book value of equity of the mutual thrift. Assuming that pre-conversion mutual equity meets regulatory capital requirements, doubling the capital ratio creates a larger borrowing capacity that can be used to double the asset size of the thrift. Increasing thrift size does not necessarily imply an increase of thrift risk. However, thrifts usually have incentives to grow by investing in riskier assets because of flat deposit insurance premiums that allow thrifts to shift risk to the government. 2. Converting institutions are predicted to increase the total firm risk following because of the change in their managers incentives for risk taking. Before the conversion, managers receive a fixed salary. But upon conversion, shareholders are able to include stock and stock options in a managers compensation contract, aligning the managers interest with the shareholders. In this situation, the manager will typically be more willing to take risks in order to maximize firm value. The Test Schrand and Unal has used sample data from conversions completed between January 1, 1984 and December 31, 1988. They have also made some selecting in the sample excluding the supervisory mergers and merger-conversions. Also they further exclude smaller companies by having a minimum limit of $100 million among the sample companys. As of the methodology Schrand and Unal have used a quantitative time-series study, where they have analyzed the changes in total risk, interest-rate risk and credit risk using an ordinary least squares method. The model is a form of a least squares method where they have added the term Time(t+k). The extra term is an indicator variable which is equal to one if quarter t is k quarters from the conversion quarters, and if not the term equals zero. As of the independent variables in the model, they can be seen as tests, indicating the differences between the risks of the average converting institution and the risks of the average institution in the control group. However the model doesnt indicate whether the interest risk and credit risk are coordinated. Therefore Schrand and Unal have used another model to analyze if there is an association between the interest risk and the credit risk. The model which is a pooled time-series cross-sectional regression is computed as follows: Here Schrand and Unal predict a positive slope between the interest risk (XSNET) and the credit risk (XSHIGH). The Empirical Results The study show that the converting institutions capital position increases with roughly 70 percent after the conversion. Also the study shows that the converting institutions significantly decrease their exposure to interest risk. However the Credit risk increases when converting, because of taking more risk in their loan portfolios. Further the study indicates that the investment patterns are related to the actual conversion rather than the time-trend within the industry. Also they conclude that the increased use of derivatives is a strategic decision and not a mechanical phenomenon. References Brown, G. W. (2001), â€Å"Managing foreign exchange risk with derivatives†, Journal of Financial Economics, Vol. 60, pp. 401-448. Naik, N. Y., and P. K. Yadav (2003), â€Å"Risk Management with Derivatives by Dealers and Market Quality in Government Bond Market†, The Journal of Finance, Vol. 58 (5), pp. 1873-1904. Schrand, C., and H. Unal (1998), â€Å"Hedging and Coordinated Risk Management: Evidence from Thrift Conversions†, The Journal of Finance, Vol. 53 (3), pp. 979-1013. Tufano, P. (1996), â€Å"Who Manages Risk? An Empirical Examination of Risk Management Practices in Gold Mining Industry†, The Journal of Finance, Vol. 51(4), pp. 1097-1137. Petersen, M. A., and S. R. Thiagarajan, (2000), Risk Management and Hedging: With and Without Derivatives, Financial Management, Vol. 29(4), pp. 5-30.

More Purchase Instead of Less Essay -- Human Rights

In recent years, people in Europe and America have been clearly aware that the general commodity price in their markets had dropped dramatically. A lovely Barbie doll which, In the old days, used to cost them more than ten dollars or eight euros, now, values costs less than half of the original price. But as we all know, there must be someone who would pay for such a good bargain. So what on earth is the trigger that lead to the remarkable decline? And what is the most influential factor that rewrote the numbers on hundreds of thousand of price tags? When our curiosities drive us to keep on questioning, and to trace the unusual economic phenomenon, some mysterious burgeoning factories emerge in our sights. These factories are prevalent in a world scope because of the incredibly cheap price, while, on the other hand, they are also infamous for their poor working conditions, unbelievably low salaries, threatening devices, and abusing of labors. For reasons above, those factories are c alled sweatshops. And most of the sweatshops are located in Asia, such as China, South Korea, Indonesia, Vietnam and so on. From the beginning, there were only a small group of people who paid attention to those sweatshops. But with more and more grievous news unveiled, a huge growing number of people start to keep a watchful eye on the livelihood of those workers in sweatshops. To their surprise, those poor workers were bearing that unequal contracts, that long working hours, and that potential risks of their lives everyday How could those Americans and Europeans who have been high-fed and spoiled in the last century, imagine a twelve-hour day, seven days per week, no paid holiday in the foreseeable future job with an skinny income which was only en... ...ss Studies Vol. 31, No. 3 (3rd Qtr., 2000), pp. 367-385, Palgrave Macmillan Journals. Jean-Paul Sajhau, ‘Business ethics in the textile, clothing and footwear (TCF) industries: Codes of Conduct’, ILO Bulletin, no. II-9, (June, 1997). Stephen Frenkel, ‘Globalization, athletic footwear commodity chains and employment relations in China’, Organization Studies, issue 4 (2001). Nicholas D. Kristof and Sheryl WuDunn. â€Å"Two Cheers for Sweatshops.† New York Times 24 September 2000. 5 May 2012. Doug Guthrie, Dragon in a Three-Piece Suit (Princeton, New Jersey: Princeton University Press, 1999). Pun Ngai. The China Journal No. 54 (Jul., 2005), pp. 101-113. The University of Chicago Press.