Classify the business according to its ownership - McDonalds Essay Example for Free

Classify the business according to its ownership McDonalds Essay The business I have decided to choose for this assignment is McDonalds. McDonalds ownership is a franchise. McDonald is a large business with more than 30,000 restaurants in over 100 countries, serving more than 38 million people each day. * Overseas comparisons indicate that franchising is the fastest growing form of retailing and McDonald has grown quickly by granting franchises. The term franchising has been used to describe many different forms of business relationships. This form of business ownership was first introduced in the U. K. It is a form of business organisation that is becoming increasingly popular in the United Kingdom. * A franchise is an agreement between two parties. An entrepreneur (franchisor) and franchisee. The franchise agreement grants to the franchisee the right and authorisation to operate a specific McDonalds restaurant, at a single address. The franchise term is usually for a period of 20 years. These franchise rights include the use of McDonalds trademarks, restaurant dà ¯Ã‚ ¿Ã‚ ½cor designs, signage and equipment layout, the formula and specifications for menu items, use of McDonalds method of operation, inventory control, book-keeping, accounting and marketing. * A separate franchise lease covers the right to occupy the restaurant premises. In returns, the franchisee agrees to operate the business in accordance with McDonalds standards of quality service, cleanliness food safety and restaurant safety. The franchisee is expected to take a hands on role in operating the business, and to be involved in local civic and charitable activities. * Throughout the franchise term, the franchisees sole business interest should be McDonalds. Franchising is really the hiring out or licensing of the use of good ideas to other companies. A franchise grants permission to sell a product and trade under a certain name in a particular area. For example if I have a good idea, I can sell you a licence to trade and carry out a business using my idea in your area. McDonalds is a big example of brand franchising. McDonalds has grown its business in the United Kingdom through franchising outlets. Explain the benefits and constraints of the type of ownership. In order to succeed it is necessary to consider the benefits and constraints involvement in franchise. There are clear benefits to this: * You dont have to come up with a new idea. Someone else had it and tested too! * Large, well-established franchise operations will often have national advertising campaigns and a reputable, well established trading name. * Good franchisors (BFA) will offer comprehensive training programmes in sales and indeed all business skills. * Good franchisor can also help secure funding for your investment as well as e.g. discounted bulk-buy supplies for outlets when you are in operation. * If you are aware that you are running a franchise customers will also understand that you will be offering the possible value for money and service although you run your own show as a part of a much larger organisation. Benefits for franchisor: * Low capital expenditure franchising is an excellent method of expanding your business with a limited amount of ready capital. Franchisor takes a share of profit without taking risk. Low risk route to expansion. * Personal commitment and motivation from franchisees is greater than from employees, the reason being that they have more accountability and responsibility than an ordinary employee. * Reduced daily involvement it is a method of obtaining conscientious and dedicated personal who work hard to a safeguard their investment. Benefits for franchisee: Some of the advantages of franchising to the franchisee are that it gives them the opportunity of sharing some of the benefits of a large business such as: * An established reputation * A known brand name and image * Skilled management * Large scale advertising programmes which are usually paid for by an advertising levy * Economies of scale, producing on a large scale is termed economies of scale. McDonalds does this by trying to keep low cost through economies of scale. They try to select suppliers, which will give the company value for money. * Franchising also offer much of the independence of a sole proprietor In this way a small business benefits from the economies of scale That comes from being part of a large company organisation. Constraints of franchising * Limits on product price they cant change their product price up to wherever they want. They have limits for price. * Limits on variety of product they cant have variety of products. Customers get confused if theyll keep variety of product they have to keep certain products. * Limits on freedom- they cant do whatever they want. They have to follow owners instructions to run their business. Franchisees have not much freedom. * Limits on the title of their business- they cant even change the colour of their title. As you can see they have same colour and title style wherever their branches are. Task 2: A Clear description and explanation of the objectives of the business. The objectives of businesses can vary enormously. Companies may have a number of objectives. In general, the objectives pursued by a business tend to vary according to its size, ownership and legal structure. Small businesses are more likely to focus on survival as an objective as they tend to lack the financial resources to cope with adverse trading conditions. Larger businesses may aim to maximise profits. As being one of the larger businesses McDonald has the following objectives: * Profit maximisation * Survival * Market share * Growth * Providing exceptional customers care * Remaining an efficient and quality producer offering high value to customers (according to companys policy) Profit maximisation: Profit maximisation is likely to be an important objective for most companies which shareholder including McDonalds owns. Profit refers to the extent to which revenues exceed costs, so profit maximisation occurs when the difference between sales revenue and total costs is greatest. Companies such as McDonalds seek to maximise profit to cover up their costs and to provide high returns for their shareholders. McDonalds does this by trying to keep cost low through economies of scale. They try to select suppliers which will give the company value for money. In order to maximise sales they have various sales promotion throughout the year. The basis for their profit is low cost rather than high price. Survival: Survival is an important objective for many businesses. According to the business writer Peter Drucker: It is the first duty of a business to survive. The guiding principle of business economics, in the other words, is not the maximisation of profits; it is the avoidance of loss. Business enterprise must produce the premium to cover the risk inevitably involved in its operation. And there is only one source for this risk premium: profits. Most recently established businesses like McDonalds have survival as objectives. This is because often they have intense competition in the market so they have to spend heavily on their advertising to attract customers. They have to ensure that they remain the Market leader in their industry. Growth: Growth occurs for the company when there is an ongoing increase in an economys production of goods and services. McDonalds pursues growth through selling more franchises all over the world in order to have a presence in most countries in the world. They can achieve this by increasing the overall size of the business by merging or joining other firms of buying them out through a take-over. McDonalds recently went into a joint venture with prà ¯Ã‚ ¿Ã‚ ½t a manager in order to enter another segment of the U.S market and gain a greater share of the market Increasing sale or market share: Growth occurs when there is an ongoing increase in an economys production of goods and services. Many businesses pursue growth strategies because their managers believe that this essential for survival. If the firm grows, it grows with more customers, earn higher profits and begin to establish itself in the market. Growth offers: * Increased returns for the owners of the business * Competitive salaries ( and more job security ) for employees of the business * A wider range of products for the business exists and potential customers it is increasingly common for mangers pay packages to successful managers can earn substantial incomes if that is reflected in the companys share price. Increasing market share is an important objective for McDonalds. It is likely to be a key objective any business operating in a market which is not growing. For example, the market for traditional beers in the U.K is not growing indeed there are signs that it may be declining. As the market is not increasing the size, brewers of traditional ales can only increase sales by taking market share from competitors. Market share is also important for McDonalds because that considerably from producing on a large scale. They use expensive equipment and the financial advantages of producing on a large scale are termed economies of scale. Where these economies exist, firm will attempt to take a greater share of the market. This allows them to sell their product at lower price, increasing their competitiveness. Task Three: Every organisation will need to acquire, use and change factors of production in order to produce goods and provide services. McDonalds has several functional areas that exist in the business to help the business meet its objectives and to provide goods and services as well. And each of which is supported by a particular administrative office. The administration of each function is based on its offices. There are many administrative offices each with a specialist responsibility and function. The functional areas McDonalds has are as follow: * Finance * Production * Human resources * Marketing * Research and development * 1) Finance Function: The finance director George Mackay is responsible for finance department. The main activities of finance function are: * To keep record of all business transactions, keeping of cost and revenues and setting target through budgeting. * To provide information about services. * To develop new product that satisfy customers expectations. * Quality assurance * Supply chain * Measure the financial performance of the business. * Increase market share so they can make profit and give money to their shareholders. * Control the finances and cash flow so the business stays solvent, i.e. does go bankrupt. * Take timely decisions by comparing the predicted performance with actual performance. This chart shows the structure of finance department. Finance Director Finance Information services New product development Quality assurance Supply chain According to McDonalds finance director accurate financial information allows them to achieve their most important goals to increase profits by expanding, sustained growth and charitable objectives. McDonalds not only invests much of its profit in extending its own business but also set aside millions of dollars each year to fund charitable activities. Not only this, McDonalds also provides different type of support to other organisations and schools. * McDonalds has invested considerable sums in restoring old buildings, often putting back architectural details that have been lost. * McDonalds supports the Groundwork Trust, an environmental urban regeneration programme. * McDonalds is a major sponsor of international football. * McDonalds donates million of pounds towards community, educational and charity programme. * McDonalds also provides salary and benefits to its employees and reviewed on regular basis. As for most of the time McDonalds made consistently high profits around $3,633 million and have grown successfully by making good profit and still planning to grow more further (according to the McDonalds book). 2) Production Function: The function of the production department is to change inputs into outputs, which means produce goods and services are to be brought by the customers. McDonalds is committed to maintaining and developing the best food products in the quick service restaurant market. And this is what production department is responsible for. In order to deliver on this, the company has made commitments: to food safety, food quality and to nutrition. Company systems and procedures must be continuously updated to ensure the highest standards of hygiene and safety. All staff receives proper training in food safety. McDonalds food is made from the basic commodities: red and white meat, fish, eggs, milk, grain and vegetables. All raw ingredients are produced to exacting specifications and the highest possible standards and quality and safety. McDonalds highly trained workers work with suppliers to maintain and develop product quality. McDonalds recognises the importance of a balanced diet, lifestyle and health therefore provides hot, less fat and fresh food to their customers. McDonalds invest a lot of money in new technology. Thus, improving the quality food preparation and helps achieving companys aim of growth in the fast food market. * Controlling production methods and planning the scale of production * Controlling costs and working efficiently * Meeting the specific needs of customers McDonalds is working hard to develop their products and provide their customers a variety of differentiated products, which helps to meet another important objective satisfying customer needs because increasingly customers expect to buy the product that meet their exact needs. Developing efficient methods of production to reduce cost is helps to make profit and growth because a fall in the cost of production resulting form an increase in the size of a business, which is called economy of scale in the language of business. When outputs rises, the cost of production per item-the unit cost-falls, and the business can reduce the price of its goods. With the lower price, it will get more customers and so benefit from the even lower unit costs. This will make it more competitive and can easily increase market share. McDonalds has raised standard through out the food processing industry. 3) Human resources: Human resources department deals with staff recruitment, training and development. Human resources is a very important function for the business because it selects the workforce (the right people for right job), provides training and development of staff, which improve their skills, performance and relates to the aim of McDonalds, which is the best service for its customers. Efficiency helps a business run more smoothly, effectively and profitability. Efficiency begins with developing ways of working that are easy to understand and do not waste time or energy. Division of labour, in which each workers carries out a specific job, increase speed and the more people you serve each day the more profit you make so it helps to maximize profit as well as expand the business. McDonalds have their employment policies. McDonalds employs some of the best, most ambitious people on the job market. Whether they join as hourly paid staff or management trainees through graduate or a high standard re cruitment, they have the opportunity to develop a career, which can take them to the very top. Above all, McDonalds values people with a positive attitude towards customers, themselves and other employees, and strive towards delivering the highest standards of quality, service and cleanliness. The ability to understand and adopt McDonalds customer-led culture is as worth as the more usual career entry requirements of GCSE and university degree. The company is an equal opportunity employer and 1992 set up an equal opportunities group to help foster a diverse workplace and highlight equal opportunities as an important part of the company s ethos. McDonalds commitment to equal opportunity extends beyond race, gender, ethnic origin, marital status, colour, nationality or disability, to compass people with very different backgrounds and experience. Whether university graduates and those without formal qualifications, first jobbers or those who have worked for decades, what binds employees is the knowledge that the opportunities are as great as an individuals ambition and ability allow. And if employees are happy with the opportunities they are getting form the company they work hard for the company and try to provide best service in the world. It is important to retain talented staff and staff who have become skilled through training. By recruiting quality staff who are committed to the business, thus reducing recruitment costs by not having to recruit too often. McDonalds also provide benefits with salary to its staff. Hourly paid staff benefits: * Free meal allowance * Paid holidays (4 weeks per annum) * Free life assurance (value dependent upon service) * Private health care (for employees aged 19+with 3 years service) * Sponsorship Programme * Stock purchase scheme * Employees discount card * Service awards (at 3, 5, 10, 15, 20 and 25 years service) * Stakeholder pension Apart from good rates of pay, McDonalds try to provide good working conditions and incentives. This also helps McDonalds to meets its objective of expanding and providing best service to the community. 4) Marketing: According to the research about McDonalds marketing is the whole process by which goods get from producers to buyers. More people work in Marketing than in production. Marketing involves marketing research, distribution, pricing and promotion. As last week McDonalds was offering 2 normal fries, hamburger, drink for only à ¯Ã‚ ¿Ã‚ ½2 and that offer was only for limited period. Marketing department deals with advertising, promotion and improving the image of the product and services to attract more customers. The fast food industry is in which many companies compete for customers. McDonalds provide a better product, give better value for money, provide a superior service, better at distributing and selling its good and services and making them known through advertising and publicity. There is no doubt that McDonalds do a lot of advertising and promotion activities. One of them is mentioned above. Recently McDonalds announced that Kay Napier, Procter Gamble marketing veteran, vice President/General manger, has been hired as a senior Vice President of marketing. McDonalds marketing director said, I am delighted to add this kind of marketing talent to our team at McDonalds. This is another step in elevating one of the worlds great brands to an even higher level of marketing strength and value. This will also help them to achieve their objective, which is growth. Customer can be attracted through good eye-catching advertisement, advertisement has this tremendous ability to shift demand curve to the right. As customer increase income rises which helps achieving companys aim of making profit so that they can cover their cost more easily. McDonalds also meets its objective which is satisfying customer need by knowing what customer want and how much they are willing to spend on their food. To achieve this objective marketing department employees special research team for the test products do surveys with customers to taste new product and answer questionnaire about them. According to McDonalds policy McDonalds will not work with any supplier who does not adhere to the standards required by UK and EU legislation regarding animal welfare, transportation, husbandry, inspection, and quality hygiene. This policy helps McDonalds to meet its objective of Providing best food, beat com petition and improve the company image. 5) Research and development: The purpose of R D is to enable business to compete successfully and achieve permanently sustainable competition over its competitors by becoming more efficient and/or profitable and giving customers added value. To achieve this McDonalds always and will continue to develop new products that satisfy customers expectations for great taste and great value. The companys new product and development team works with suppliers to expand the menu with new core and promotional food items. The team helps to ensure that all new food items meet McDonalds high quality and safety standards. As with the existing product range, McDonalds solicits and carefully listens to customers view on any new or promotional products. * McDonalds offer more and more choices for breakfast by developing new products as more and more customers eat breakfast out rather than at home. * Changing existing products McDonalds uses conventional food chemicals or additives that add flavour and colour that helps to maintain freshness and make changing in existing products by listening to customers views. * Collecting data from worldwide research McDonalds has special research team to find out what customers want and how much they can spend. McDonalds also has restaurant development policy: When McDonalds has local knowledge which is a key to choosing new locations, McDonalds on discussion with local managers who are closely involved at roots level with their local communities. By keeping customers convenience McDonalds develop new restaurants. Company is committed to responsible and works closely with local planning and community groups when developing new restaurants. Every bullet point and information is written there helps McDonalds to achieve its objective of providing good service to the community by attracting more customers and making profit. There are advantages and disadvantages with every functional areas but each functional area helps McDonalds in one way or another to meet its objectives. Task Four: There are three types of management style and they are: * Democratic * Autocratic * Consultative Management style will describe the different ways that the managers treat their employees and also the way the in charge of the employees. Democratic management style: This type of style involves empowerment. Individuals and team are given responsibility to make decisions, usually with a given frame. The team is then responsible for the decisions that it makes. A manager with this style will feel comfortable allowing others t make decisions. Autocratic management style: This style is where manager gives out instructions, telling people what to do rather than asking employees. The manager is the only person who contributes to decision making. Consultative management style: Consultative mangers are ones who seek to consult other to implement decisions. This type of style wants to draw on more sources of opinion than just her or himself. The purpose of management style is to remember where we started. Business exists to satisfy demand for particular goods and services and in order to do this they need resources; the factor of production. Being the fast food company McDonalds exists to provide catering service to the community. Management is concerned with planning, controlling and co-ordinating the acquisition and use of these resources. In large concerns like McDonalds, managers run the business by using people and information. The term managing comes from the Latin word for hand, as does the word manual. It originally meant handling things but did not originally apply to people. McDonalds Management is responsible for the preparation, integrity and fair presentation of the consolidated financial statements and financial comments. The financial statement has been audited by independent auditors, Ernst Young LLP, who was given unrestricted access to all financial records and related data. The audit report of Ernst Young LLP is presented herein. The Board of Directors, operating through its Audit Committee composed entirely of independent Directors, provides oversight to the financial reporting process. Ernst Young LLP has unrestricted access to the Audit Committee and regularly meets with the Committee to discuss accounting, auditing and financial reporting matters. McDonalds has an autocratic management style. A manger takes entire responsibility for decisions and, having set objectives and allocated tasks to employees, expect them to be carried out exactly as specified. Employees are told exactly what, how and when work must be started and finished. It is the kind of management style associated with a corporate culture centred almost exclusively on production. Power is focused at the top, and the centralised decision making is geared to getting the goods out of the company and to customers. The culture of a business can be widely affected by its attitudes, values and beliefs. There are different types of culture McDonalds is very close to customer driven culture by keeping this culture in its mind McDonalds works and as it is described before that McDonalds first priority is its customers. Attention is focused on improving all aspects of the production process down to the minutes detail for the customers benefits. Technological culture is focused as well. To improve its technology and develop new products they listen to its customers as well as to their staff. An autocratic style does have some advantages and advantages for McDonalds. Disadvantages are: * Workers may want some flexibility, freedom, little contact workers therefore little teamwork, can be demotivating. * Disadvantage of having a hierarchical structure is that messages can get distorted or lost from one manager to the next. * There is also poor communication between the different functions. Advantages are: * Need quick decisions, health and safety, clear and consistent approach helps employees * Advantages of the hierarchical structure are that every one knows whom they are responsible to and whom they are responsible for. * This can also shows where specialists are needed in their divisional groups The organisation structure McDonalds has is hierarchical structure, which you can see on next page. The benefits McDonalds gets are clear management structure, clear lines of responsibility and control and functions are clear and distinct. Of course where there are advantages there are disadvantages as well. The disadvantages McDonalds has are many layers of communication and many layers of authority and decision-making. The relationship between structure, management style and culture Structure Management style Culture Hierarchical, many levels Autocratic Based on routine procedures of management, e.g. in and job roles, decisions are large business like McDonalds centralised. Being a huge company McDonalds has an Operations Director (Peter Sullivan), Development Director (Peter Richards), Finance Director (George Director), Marketing Director (Matthew Howe), HR Training Director (Carmel Flatley) and chairman and chief executive (Andrew Taylor) are the most important people in the company. Together with the other directors, they oversee the work of the companys five vast departments: Operational, technical, real estate, financial and marketing. There are also regional manager senior supervisor and superior supervisor, restaurant manager and assistant manager. The board of directors have senior jobs in the company, overseeing different divisions. These are the executive directors. The board also includes non executive directors, who do not work for the company. They help the board make decisions and look after the interests of the shareholders. McDonalds also have training and careers or its employers. McDonalds employs local people in their own community. It is an equal opportunity employer, and women and people from ethnic minorities are represented at all levels. Young people accepted for a position on McDonalds career programme can quickly climb the promotional ladder. Trainee managers go through a series of training courses at centres set up in their own community. They receive even more important on-the-job training at a McDonalds restaurant. McDonalds has an open door policy, which allows staff access to managers from the chairman down. Everyone is welcome to make suggestions or complaints. McDonalds also holds a frequent meetings called rap sessions where staff can voice their complaints to someone from headquarters or air grievances to a member of management from another restaurant. McDonalds now has a bureaucracy; senior staff is not even treated with the awe they command in some companies. Even the chairman is approachable. The staff and the public have open access to him through the companys open door policy. There is a McDonalds management structure on next page. Task 5: A description of the use of ICT for internal and external communications of the business. Businesses need to communicate with a range of individuals and other organisations including their customers, their suppliers, as well as their own employees. Every organisation will need to be able to communicate effectively with staff at all levels for it to function smoothly and efficiently. These are the reason why communication is important for a business or an organisation whether it is internal or external. The business I have chosen for this assignment is McDonalds. McDonalds also has internal and external communication to run its business effectively. McDonalds has an IT strategy. Information technology is important where it enables a business to achieve its goals. However cost is always important and evidence seems to show that IT is more expensive than firms realise. According to Management Consultants, support cost can be five times the amount estimated. This includes help from other staff and time spent on security and back-up procedures. Other costs can include: * Staff training * Introducing health and safety measures * The need to maintain efficient security Two recent trends in keeping down IT costs are: Downsizing: when we look at human resources management then downsizing means is lying off employees. However in IT it simply means using smaller systems, such as a mini-computer instead of a mainframe, or a PC instead of a mini. This is possible because hardware is becoming more powerful. The other recent trend is outsourcing. Outsourcing: This again is a term used in human resources management Internal and external communications: Internal communication: Internal communication is communication that takes place within the organisation. The three main ways of communicating information inside McDonalds are intranet, McNews and MDUK and High levels. Methods of keeping In touch with staff: * Intranet Launched in the year 2000, McDonalds UK intranet provides a fast and up-to-the-minute source of information for McDonalds restaurant management and office staff. It is a single point of reference administrative requirements, news and marketing materials. * McNEWS AND MDUK McNews was the award-winning magazine published bi-monthly for all restaurant staff. In 2002, McNews was re-launched as MDUK a lively people-focused magazine, it covers news, activities and events from restaurants around the country. * High levels Published bi-monthly for all management and office staff it is a showcase for best practice, recognising individuals outstanding practices and achievements, as well as highlighting internal and external awards. * An email system operates in all offices and company-owned restaurants. * Regular staff communication sessions are held in the offices. * Employee satisfaction surveys for both office and restaurant staff are held annually. This is how McDonalds communicate with its staff. The purpose of internal communication is to communicate with its internal customers, which are employees to run business effectively and smoothly. Provide them information they need time to time. External communication: External communication takes place between the organisation and the outside world. McDonalds needs to communicate with a range of stakeholders including shareholders, customers, government, suppliers and the community. Communicating with suppliers and customers: * Telephone: The most frequently used form of external verbal communication is telephone. McDonalds uses this form of external communication to contact with their suppliers. Apart from this McDonalds has answering machines to keep in touch with customers. Phone answering machines tape callers messages, which can be played back from a distance by calling the number and typing in a code. * Business letter: McDonalds has its address available on its every website for their customers and also to obtain your copy of the pack you can contact them by sending a letter. * Website: Most companies have an internet website including McDonalds. McDonalds uses this for all external communications purposes and for public relations activities. I also used McDonalds website to do research for my assignment. * Fax: Fax is a form of external communication. Fax machine is used to transmit and receive suppliers to communicate. The purpose of external communication is to communicate with its customers, suppliers and community. Provide them information about the business they want. Benefits: The benefits of using internal communication are: * The benefit of using intranet to business is that it provides a fast and up-to-minute source of information for McDonalds restaurant management and staff. * McNews magazine covers news, activities and events from restaurant around the country. * E-mail system is faster and efficient. Information and reports are confidential. The same message can be sent immediately to many people. * Employee surveys helps to get employee views. The benefits of using external communication are: * Telephone is fast and its great benefit is that it allows people who would find it difficult to meet to converse. And a person who cant read or write can talk over the phone to get information. * The use of business letter saves time for the person whom you are writing to and you can explain in detail. Not everyone has access to internet so if somebody who needs information about the organisation can write a letter to them. * Fax does the same thing its transmitting speed is fast and saves time. Again if somebody need information about the organisation can contact them through fax if has no access to internet. * Website provides a lot of information about the organisation and in detail with pictures and graphs make easier for you to understand. It saves time of both who wants information and the one who is giving. For example if you asking the manager of McDonald about the company but he hasnt got enough time to give you information in detail so when you have time you can go on to McDonalds website and look for the information you need in detail. In order to achieve business objectives McDonalds has created communication channels which all allows the company to communicate effectively both internally and externally. Due to successful communication when looking at the McDonalds UK financial profile form 1998 to 2001. One can clearly see a substation increase in profit during this period. By using effective communication McDonalds meets a range of organisational objectives which are crucial for the business such ads being a market leader, no 1 fast food retailer in the world which is due to the excellent reputation built throughout the year by maintain strong relationships with customers, adapting to new environment investing in new technologies and continuously up-grading systems and improving staff training. All this reflected in McDonalds ability to maximise sales profit and revenues. ICT has an enormous impact on McDonalds business internally and externally. E-mails replaced the old fashioned methods of communication such as letters and phone calls. The company has a very sophisticated network database which replaced the traditional systems of filing, storing information. Computers are used every where in the business to replace a range of standard operations such as maintaining stock levels, organising deliveries, preparing invoices and recording payments etc. The use of the internet website enables McDonalds to reach any place in the world and is a very latest link with the global market for example every body can obtain the information from the website in a matter of minutes. The global net exchange enables McDonalds through electronic data interchange (EDI) system to arrange financials transfer dramatically reducing time, paper work and costs. Poor communication results in mistakes, anxiety, low morale, inadequate control and aggression. Not surprisingly there is concern to improve the quality of communications. First this means improving the communication skills of people within the organisation. Second, it means developing systems of communication. We can identify the skills required by individuals as: o Patience o Discretion o Understanding o Assertiveness where necessary. A clear explanation of how the production process and quality assurance / control system employed by the business help it to add value to its product or service. McDonalds production is a very important process in McDonalds business activities and it involves: o Processing o Manufacturing o Assembly o Craft-based production Processing: Most of the McDonalds products are created by processing which includes food and drinks. Processing involves treatment such as washing, cutting, salting, weighting, heating, grilling and frying etc. The raw materials such as meat, chicken, fish and vegetables etc are passed through a series of processes until the desire form product is produced for example chicken fillet is processed into chicken burgers, grilled and then assorted with salad cream. Manufacturing: Manufacturing involves making boxes, cups, sticks and different childrens toys which McDonalds has special facility to produce techniques include for example producing plastic toys from plastic granules called Polietilen which is put into a machine which is heated and under pressure different shapes are made for toys. The same thing applies for the plastic cups for hot and soft drinks. Assembly: A typical assembly operation for example putting together big Mac and French fries with a cup of soft drink in a paper bag to serve the so-called big meal for à ¯Ã‚ ¿Ã‚ ½4.99. Another example for an assembly is when staff is in the workshop assemble kids toys, which go together with the kids happy meal. Craft-based production: Craft based production involves making individual products by hand for example a birthday cake for McDonalds birthday parties where the parent can request a special shape and decoration for the childs birthday cake. So McDonalds takes individual offers for special cakes. Especially trained staff has the ability and skill to create imaginative and attractive design that suits the individual needs of customers. Craft production in McDonalds for example involves working with material such as icing, chocolate, cream, coco powder and baking powder. Quality assurance: McDonalds is committed to maintaining and developing the best food products in the quick service restaurant market. In order to deliver on this, the company has made a number of other commitments: to food safety, food quality and nutrition. McDonalds first is always the health and safety of customers. The company believes that the food safety standards required by law are only a minimum and the company continually seeks to go beyond this. Because of this belief, McDonalds has developed a food safety policy to help keep the focus of the companys absolute commitment to food safety and quality. All raw materials delivered to McDonalds restaurant must be consistently produced to the highest standards of hygiene and safety. Company systems and procedures must be continuously updated to ensure the highest standards of food hygiene for all customers at all time. All staff receives proper supervision and training in food and safety. The equipment used must be the appropriate for the needs of each restaurant, and must be carefully maintained and carefully calibrated. Following its launch in early 1998, McDonalds continues its programme of sponsoring research grants in food safety. The grants are particularly aimed at supporting the work of researchers in the early stage of their independent research careers, who are working in established UK-based departments and institutions. McDonalds is committed to serving hot, fresh, great tasting, great value food to all customers, every time that they visit a restaurant. McDonalds food has made from the basic commodities: red and white meat, fish, eggs, milk, grain and vegetables. All raw materials are produce to exacting specifications and the highest possible standards of quality and safety, The Company will not use any ingredients unless it is clear exactly where it has come from and that it compiles with all relevant regulations and McDonalds own high standards. Additives are only used to ensure that high quality standards are maintained. Additives are removed or replaced wherever possible, as long as this does not compromise food safety or quality. McDonalds has a highly trained team of quality assurance whose job includes verifying the companys supply chain through audits and site visit. These employees also work with suppliers to maintain and develop product quality and to ensure that restaurants consistently serve hot, fresh food. Independent food safety auditors re also used to assess their key suppliers partners. In 1984 McDonalds became the first UK restaurant company to publish detailed nutritional information on all core menu items. McDonalds highest priority is for the safety of its customers. The company will not any product or ingredient that does not meet their high standards of quality and safety, or has not received the necessary approval by the relevant UK authorities. McDonalds will not work with any supplier who does not adhere to the standard required by UK and EU legislation regarding animal welfare, transportation, husbandry, inspection, and quality hygiene. McDonalds always and will continue to develop new products that satisfy customers expectations for great taste and great value. Around the country, thousands of people form a network of dedicated suppliers involved in the day-to-day operation of McDonalds business. The responsibility of serving more than 2.5 million customers each day makes quality a consistent goal. McDonalds work with leading suppliers across the UK from potato farmers in Lincolnshire and Norfolk to dairies in the south and midlands-to bring the customers the tasty products they expect from McDonalds. It is McDonalds policy worldwide to purchase supplies from local producers wherever possible, providing that they can meet exacting product and hygiene regulations, operate responsibly and humanely and are competitive. McDonalds strives to ensure quality from crop to counter. To that end, McDonalds requires the highest standards and specifications, not just product ingredients every detail of production, transport, delivery, preparation and service is also exhaustively monitored. McDonalds also recognises the importance of a balanced diet and lifestyle and continues quality new products, which satisfy customers expectations for taste and value. A focus on quality permeates every aspect of the business. McDonalds standards lead the industry, and will continue to work with government and health officials to investigate improvements. Quality control: Quality control in McDonalds involves all kinds of inspection system for checking the raw materials, the food processing, customer service and management. The company carries out different types of testing the raw materials as well as the ready made meal and drinks for example the cooking oil in which the French fries are cooked is changed twice a day. Each restaurant manger and supervisor inspects daily the premises, the safety of the equipment and the expiry date on stored product such as milk, cream etc and general hygiene on the premises including McDonalds car park and the neighbouring areas. In the company mission statement different policies are allocated such as health and safety, food hygiene, manual handling, customer service, litter control, recycling and environmental policy for example McDonalds is a member of the environment council, the corporate responsibility group of Earth watch Europe, the industry council for packaging and the environment (INCPEN), and greeting the high street, a group of retailers who have come together to develop recycling in the high street. Another example is that McDonalds takes a sensitive approach to its built environment, working closely with planning and conservation officers to preserve buildings of architectural merit and to improve the townscape. In many towns, McDonalds has invested considerable sums in restoring old buildings, often putting back architectural details that have been lost. York, Chester and Stratford-upon-Avon are prime examples. McDonalds has supported the tidy Britain Groups annual National clean activities. Since 1988 and support its campaign just Bin it. In addition to corporate funding, restaurant throughout the UK organise and support activities to clean up their local environment in conjunction with local youth groups. o McDonalds is one of the countrys leading sponsors of council litterbins. o All packaging carries the Tidy Britain Groups Tidy Man symbol. o Many McDonalds restaurant organise litter-related competitions with local schools and youth groups. o McDonalds was a founding sponsor of Going of Green, a nationwide awareness campaign for sustainable growth. In 1997 at the TIDY Britain Groups Queen Mothers birthday Awards for environmental improvement, McDonalds received the top award, the Queen Mothers Birthday Trophy. o 100% recycled used for happy meal boxes, take away bags, take away trays, napkins, kitchen rolls and toilets. o All McDonalds tray liners are made from 100% fully recyclable and biodegradable materials. o All McDonalds suppliers have to use minimum recycled content of 50% in their corrugated containers. o All McDonalds offices recycle waste paper and also use recycled paper. o The majority of McDonalds restaurants recycle their cardboard and used cooking oil.

The Problems With The American Anti Intellectualism Movement Politics Essay

The Problems With The American Anti Intellectualism Movement Politics Essay The anti-intellectualism movement facing America today is a problem with far-reaching implications. There is currently a revival of this movement in American political life. Anti-intellectualism is defined as the opposition to or hostility towards intellectuals, or to an intellectual view or approach (Merriam Webster). The anti-intellectualism movement is characterized by the contempt for advanced education, the liberal arts, and science. Anti-intellectualism in the political sphere has founded itself on contempt for intellectuals, claiming that they are elites who are committed to ideological playfulness rather than practical application. However, it seems that toying with past and present ideas is necessary to engender the most effective political policies. Anti-intellectualism is a result of a failing education system, the integration of church into state, and the ease with which political pundits can drive the media. Currently, anti-intellectualism is spreading like a plague thro ugh the American political landscape. We as citizens can inoculate this disease through a complete overhaul of the US education system. An improvement to the educational system could occur with increased liberal arts integration into primary, secondary, and university education curriculums. In addition to the education system, the general American public needs to be edified about the basic American democratic tenant of separation of church and state. Furthermore, implementing more regulation on political pundits and demagogues in the media is necessary for the progression and success of politics in America. Anti-intellectualism seems to promote the attitude that knowledge which is not profitable has no value and is not worth learning knowledge for knowledges sake (DeFilippis, The Oklahoma Daily) is of little importance in anti-intellectualism. However, knowledge for knowledges sake (liberal arts education) could prove to be very beneficial in politics. Neither primary nor secondary schools consider the liberal arts a priority, and at the level of university education, students are expected to declare majors that funnel them into profitable jobs a very small percentage of university students are encouraged to engage in the liberal arts. Our current education system will eventually lead us to be alienated from one another because people will only be educated in their particular profession. Liberal arts education, because it educates the whole individual, gives citizens an understanding of why their particular profession contributes to the whole. Therefore, all people will be able to see why all jobs are important. Liberal arts education encourages knowledge of many subjects. It would seem that knowledge of many subjects would be most effective in impacting political ideas since politics incorporates so many facets of life. Liberal arts education infuses students with knowledge of the historical and philosophical underpinnings of the US. Having historical and philosophical knowledge of America is fundamental to making informed political choices that best reflect what was intended for this country- we would not want to collapse into what our founding fathers escaped from. Liberal arts education would create more informed and progressive voters and politicians because they would be acquainted with a broad scope of policies that have not worked in the past; this would allow us as an electorate body to spring into the future by creating new ideas and better political policies. Furthermore, people educated in the liberal arts who have developed ordered intellects seem n ecessary in politics since these people are more educated in a variety of issues that affect a variety of people. As a result, those educated in the liberal arts will have the ability to understand and undertake issues that apply to many persons (the entire American populous), and not just one group. Liberal arts education promotes the progression of the individual mind which in effect promotes the progression of the collective mind which then positively affects the electorate and the decisions they make in the face of new problems. Furthermore, with the emergence and further development of the globalized world, American citizens need to be educated on global issues now more than ever in order for America to be a respected nation and one that can pride itself on having substantial knowledge of nations we interact with the most. We are only a respected country insomuch as other countries respect us, but we are currently looked upon unfavorably in the world market. Americas main competitors and closest partners in the world are very committed to education with liberal arts based curriculums- if we expect to be a competitor in the world market, it would be in our best interest to implement a stronger liberal arts education system. Liberal arts education would give people the knowledge necessary to understand the foundation of America and our position as a nation relative to other countries. In addition, liberal arts education would give us a better understanding of the global political issues America faces because we would have knowledge of global problems and how these problems evolved. One of the main tenets the founding fathers implemented in America was the separation of church and state; the fact that religious values and principles are gaining importance in political rhetoric is inconsistent with this basic American democratic tenet. The anti-intellectualism movement caters to folksy type Americans who are generally committed to tradition and faith. This integration of religion into American politics is aided by the anti-rationalism component of anti-intellectualism which is characterized by relying on faith rather than rational ideas to formulate the best political infrastructure for society. This relegates us to the level of animals; our rational faculty is something that constitutes us as humans, so it seems odd that we would want to denounce such a faculty. America is a secular nation, and as a result, religion should not have a place in the political sphere nor in the realm of education. This anti-intellectualism movement favors faith; as a result, evoluti on theories are considered controversial, and creation theories find a place for themselves in the US education system. Schools are supplementing textbooks with creation theories as an alternative to evolution. This contradicts the basic tenet of the separation of church and state and the secularism of America. Creation theories should not have a place in our nations public schools, and implementing such values in education steers young minds away from the basic principles of America. In addition, the anti-intellectualism movement has managed to bring Barack Obamas religious affiliation to the forefront of our political discourse. This should be a non-issue- America is a secular nation and therefore, politicians religious affiliations should be of no consequence to our political forums. Liberal arts education would teach people about the basic tenets of America and it would reaffirm the history and philosophical reasons behind the separation of church and state and why it is so vita l to this country. As a result, commitments to faith would not enter the political realm because citizens would understand that they have no place in American politics. Lastly, there needs to be more regulation on political pundits and demagoguery in American politics. The ease with which political pundits can spew political rhetoric and gain a respectable following is an indication of the anti-intellectualism problem we are facing in America. Political pundits in mainstream media have no substantial ideas to propose- they are quick to complain about current presidents and politicians, yet they never really propose solutions; they merely champion principles. However, principles are not enough to carry a nation in the political arena- policies are necessary, and implementing policies requires intellectual people. In essence, politics are constituted by policies and policies are constituted by ideas; as a result, ideas are fundamental to politics. Ideas are things which we come to know through rational, intellectual thought- we have to toy with ideas from the past and ideas for the future in order to come up with creative, effective political policies . Having a broad scope of knowledge makes coming up with new, creative ideas easier. If people are educated in the liberal arts, they will have this broad scope of knowledge which will help them come up with new and improved political ideas. Anti-intellectualism seems to contradict what politics really are- one must engage in intellectual discourse in order to achieve effective political policies. The political pundits and politicians most involved in the anti-intellectualism movement often cite the founding fathers and the constitution in order to support their political rhetoric this has implicit contradictions. This is because America was founded by intellectuals- the leaders were the intellectuals (Hofstadter, 145). If the intention of the founding fathers at the inception of America was to place intellectuals at the helm, anti-intellectualism seems contrary to their intentions. Glenn Beck is a perfect example of a political pundit and a demagogue. He plays the side of the common people, yet he makes millions of dollars a year for his talk show- he is not a common person. The trend we are seeing in America is the attainment of good jobs via bachelors degrees and more recently the move towards advanced degrees for any hopes of advancement. Yet someone like Glenn Beck, who is not university educated, has a very powerful, high-paying job engaging in controversial political d iscourse citing religion and the founding fathers. People idolize Glenn Beck and obtain their political ideas from him, and while he is not university-educated and is making millions of dollars a year, those who champion him the most have to make it in this world via their merit. Furthermore, Glenn Beck is skewing what is fundamental to America- one of his hot topics, religion, is NOT fundamental to America- the separation of church and state is fundamental to America. The only thing we have as citizens to represent ourselves and our ideas is our vote; it should be the most informed, intellectual, reliable vote possible. It is critical that we feel confident in our own education and in our own intellectual capacities and not rely on someone else to tell us what is important. The demagoguery that people such as Glenn Beck participate in would be a non-issue if people were liberal arts educated. This is because the false fears that Glenn Beck incites in people would collapse if people had their own knowledge of current issues and the liberal arts backgrounds which would enable them to think for themselves. People fail to realize the absurdity behind his rhetoric because of their lack of education. Anti-intellectualism will eventually lead to the destruction of the American democratic state and the ideals to which democracy is committed. The anti-intellectualism movement needs to be destroyed, otherwise our weak political structure will continue to fail, and America will continue to endure the bad reputation it has gained in the world market. It is most likely no coincidence that the peak of the political anti-intellectualism movement is at a time in which we have an abundance of political policy crises. We will gain respect as a country and as a competitor in the world if we rid ourselves of this anti-intellectualism movement. Liberal arts education can cure our problem by giving citizens a broad scope of knowledge which would allow us to make informed and thoughtful political decisions rather than relying on the ill-advised rhetoric spouted by anti-intellectuals. Liberal arts education would also afford us the knowledge of what basic tenets shape the American political infras tructure.

Wheres the Honor in Honors Kids?(cheating habits of students) :: social issues

Where's the Honor in Honor's Kids?(cheating habits of students) Contrary to popular belief, honors students cheat just as much or more than students in regular classes do. Honors students are assumed to be hardworking, responsible, and honest. Yet these â€Å"above average† students are frequently taking part in the same dishonest conduct of the ordinary students, performing the task better and getting away with it more than the regular students. Explaining why honors students are better at cheating is difficult because every cheating student follows the same unwritten process to guide him to victory. The process is simple. First a cheater decides how he is going to cheat. He has many options including inscribing answers on various body parts (hand, thigh, etc.), creating pocket-sized notes, asking an earlier class for the answers, and plagiarizing. He can also place his hand upon his face (next to his eyes) angled away from the teacher while turning his head slightly in the opposite direction of the teacher and look at his neighbor’s paper. The following tactics are risky and are reserved for the more adventurous kids. They are snatching the teacher’s answer key, asking for assistance with a question while peeking at the answer key (at a teacher’s desk), hacking into a teacher’s computer for grade adjustments, and opening a textbook on the ground while taking a test. One of the most creative strat egies I’ve heard of is peeling the wrapping from a clear water bottle off to write the answers on the blank side; then taping the wrapping back onto the bottle exposing the answers when one looks through the clear bottle. Of course some regular students have been known to try these conniving techniques, they have been mastered by the honors students. The second step in the cheating process is when a student realistically imagines himself using the technique he chose in the first step. This is a planning stage that requires a student to pretend and prepare his developing plan of cheating. The better the student can imagine himself cheating, the more likely he is to succeed. After all, practice makes perfect. For example, if a student wanted to write answers on the inside of his band-aid, he needs to picture himself taking the test and slyly pulling off the band-aid when the teacher’s back is turned to reveal the answers. There is no wrong way to accomplish this step, but many prefer to ask themselves questions to prepare themselves.

Non-determinates Prices Of Sup :: essays research papers

Most people that are common shoppers have encountered a situation where the product that they were seeking to buy was not available. It is very easy to see that certain products do have an ample supply due to many reasons. Other than the price of that product, there are six major non-determinate factors of supply. These factors are: Number of Sellers, Technology, Resource Prices, Taxes and Subsides, Expectations of Producers, and Price of other goods the Firm could Produce. With these factors and the demand of the product, the supply of a product can be determined, and a price can be set.   Ã‚  Ã‚  Ã‚  Ã‚  The number of sellers can be one of the most determining factors of the supply of a product. The concept is very easy to understand. If there are more sellers, that is more stores and manufactures, there will be a larger amount of supply of a certain product. On the other hand, if there are a small number of sellers then there will be little supply of the product. When considering the price of a product, if there are more sellers then there will be more competition; therefore, the price will be at a low cost for the buyers. The sellers will not make a large profit. Moreover, when there is a small amount of sellers then the price can be higher for the buyers. This means the sellers will make a larger amount of profit. For example; there are more sellers for a Toyota Carmry, then there are for Dodge Vipers.   Ã‚  Ã‚  Ã‚  Ã‚  This world has experienced a huge technological advancement. Our knowledge in inventing new technologies has allowed us to become more efficient in the production of products. Also, we have been able to develop many new and better products for the buyers. Technology can do two things to the supply of a product. First, it can drive the price down due to more production of a certain product. With technology, production of a certain product has become cheaper and more efficient. The second thing that technology has done is decline the supply of certain product. With the production of new and better products, older products have become less used and not produced as much. A good example of how technology has effected this world is the invention and production of CD’s. In today’s world most Americans own a CD player and have gotten ride of the record player. Non-determinates Prices Of Sup :: essays research papers Most people that are common shoppers have encountered a situation where the product that they were seeking to buy was not available. It is very easy to see that certain products do have an ample supply due to many reasons. Other than the price of that product, there are six major non-determinate factors of supply. These factors are: Number of Sellers, Technology, Resource Prices, Taxes and Subsides, Expectations of Producers, and Price of other goods the Firm could Produce. With these factors and the demand of the product, the supply of a product can be determined, and a price can be set.   Ã‚  Ã‚  Ã‚  Ã‚  The number of sellers can be one of the most determining factors of the supply of a product. The concept is very easy to understand. If there are more sellers, that is more stores and manufactures, there will be a larger amount of supply of a certain product. On the other hand, if there are a small number of sellers then there will be little supply of the product. When considering the price of a product, if there are more sellers then there will be more competition; therefore, the price will be at a low cost for the buyers. The sellers will not make a large profit. Moreover, when there is a small amount of sellers then the price can be higher for the buyers. This means the sellers will make a larger amount of profit. For example; there are more sellers for a Toyota Carmry, then there are for Dodge Vipers.   Ã‚  Ã‚  Ã‚  Ã‚  This world has experienced a huge technological advancement. Our knowledge in inventing new technologies has allowed us to become more efficient in the production of products. Also, we have been able to develop many new and better products for the buyers. Technology can do two things to the supply of a product. First, it can drive the price down due to more production of a certain product. With technology, production of a certain product has become cheaper and more efficient. The second thing that technology has done is decline the supply of certain product. With the production of new and better products, older products have become less used and not produced as much. A good example of how technology has effected this world is the invention and production of CD’s. In today’s world most Americans own a CD player and have gotten ride of the record player.

Collective Goods Essay -- International Community, The Kyoto Protocol

The international community is made up of many state actors that contribute in some form or other to establish a world that can establish key public goods. When more than one nation is trying to come together to achieve their collective goods, the nation may be confronted with a number of issues. There are times when the countries may need to come together to make decisions in specific topics like global warming, ozone depletion, space exploration amongst many other issues that require group attention (Stiles p269). A collective good does not belong to one specific player, cannot be withheld from a player and can be used by all players. When referring to collective goods there must be an investment or expenses may be accrued in the good by the player(s). The decision that must be made is which player will be making the investment and this is agreed to by negotiation. One of the many influences of the creation of collective goods is the Kyoto Protocol. The Kyoto Protocol focuses on many issues that cross national boundaries and require the attention of more than one country at a time. This leads to an international affairs situation where various countries have to solve problems of a trans-boundary nature (Stiles p.268). In order for this to occur the countries must first acknowledge that there is a need for a collective good. The problem arises however when countries use their judgment to determine how and if they should contribute to the collective good. Some countries may suggest that the country that has caused the most damage should be responsible party and should contribute more money (Stiles p269). It is rarely the case when all the countries involved offer to contribute their share without any hesitation. It ... ...re fearful of the other powerful countries (United States and Russia). This changed during the end of the Cold War giving a new era of promise and an evolving international order (Grant p572). In 1994, the Global Conference on Sustainable Development of Small Island Developing States made it clear that national, regional and international levels need to work together for better outcomes (Grant p581). In this conference, Third World Countries that the United Nations should also place more focus on hard economic issues as well. The agenda for development was created to deal with sensitivity to development concerns and the influence of global development policy decisions that were aborted 15 years ago in the Cancun Summit (Grant p582). The global transformation will focus on advancing the interest of groups that have universal membership of the United Nations.

Financial Service and Industry

Asset Transformation Purchase primary securities by selling financial claims (secondary securities) to households Secondary securities are more marketable BECAUSE Less information asymmetry Less monitoring costs More liquid Less risky Without financial intermediaries, households will find direct investments in corporate securities unattractive due to information/monitoring costs, liquidity cost and price risk.Thus flow was funds are less, little monitoring and risk of investments would increase.Specializes of financial institutions General areas (LIP TM) Liquidity services Information services Price- risk reduction services Transaction cost services Maturity intermediation services Institution- specific (McCall) Money supply transmission Credit allocation Denomination intermediation Intergenerational transfers Payment services Information costs Agency costs 0 costs relating to the risk that firm owners and managers use savers' ends not in the best interest of the savers Financial ins titutions collect funds from households in order to avoid free- rider problem (incentive for information collection and monitoring), reduce costs of information collection and monitoring and to develop new secondary securities to more effectively monitor borrows.Liquidity and price risk Financial intermediaries provide secondary claims to household savers – high liquidity and low price risk and invest in these illiquid and risky sectors Advantage of financial institutions managing liquidity and price risk Diversification (due to size of funds) Development of better risk management techniques Disadvantage of delegated institutions Intermediary services are not free Agency issues Risk management Monitoring financial institutions Other special services Reduced Transaction Cost, I. E. Economies of scale Maturity Intermediation 0 Ability to bear the risk of mismatched maturities of assets and liabilities.Credit Allocation (Depository Flu) – Financial intermediaries are the major source of finance in particular sectors of an economy: residential real estate (US and UK), farming (Australia) . Intergenerational Wealth Transfer or Time Intermediation (life insurance, superannuation and pension funds) Payment Services – IFS provide efficient payment services to the society. Denomination Intermediation – Give individuals indirect access to large denomination markets (Money market managed funds, Debt-equity managed funds, Unit trusts) The Transmission of Monetary Policy (Banks) Financial intermediaries are widely used medium of exchange in the economy.Intermediaries' liabilities play significant role in the transmission of monetary policy Money supply in Australia (Don't need to know these term 0) MI : currency + bank rent deposits by private non-bank sector MM: currency + all bank deposits by private non-bank sector Broad money: MM + net borrowing of Non-bank IFS from private sector Specializes and Regulation Financial institutions receive spe cial regulatory attention Negative externalities caused by IFS is costly to households and firms using financial services Special services provided by IFS Institution- specific functions Example: money supply transmission, credit allocations, payment services Australian Regulation System The traditional industry- based regulation entailed separate regulators for individual industry sectors – banking, insurance and security firms. Asses 0 Australia's current financial regulatory framework originated from ‘Financial System Enquiry (Wallis Committee), Australia switched from industry-based regulation to function- based regulation. This introduced 3 regulatory agencies, each in charge of specific functional responsibilities. This reform was necessary as the distinction between the activities of different types of financial institutions was becoming more vague and also because of the overlap in regulation and grey areas.Reserve Bank of Australia (ARAB) 0 Responsible for the development and implementation of monetary policy and for overall financial system stability Australian Prudential Regulation Commission (PARA) 0 Responsible for the prudential regulation and supervision of the financial services industry Regulation of deposit- taking institutions Life and general insurance Superannuation Australian Securities and Investments Commission (ASIA) 0 Responsible for market integrity, consumer protection across the financial system and ensures equal and fair access to financial services. Protects against abuses (example: insider trading), lack of disclosure, malfeasance, breach of fiduciary responsibility.Major types of regulation(Scale) Safety and soundness regulation Consumer protection regulation Credit allocation regulation Investor protection regulation Monetary policy regulation Entry and chartering regulation 1. Risk reduction Encouragement for intermediaries to diversify assets Disclosure of large credit exposure 2. Minimum capital requirements 3. Safety valve Central banks' open market operations to provide exchange settlement fund 4. Monitoring and surveillance The ARAB directly controls outside money and the bulk of the money supply is inside money (deposits). Regulators commonly impose a minimum level of cash reserves to be held against deposits. Cash reserves add to intermediaries' net regulatory burden. There is no explicit liquidly requirement in Australia but Flu' liquidity management policy need to be approved by PARA.Supports lending to socially important sector Example: US' Qualified Thrift Lender test (QUIT) set a minimum amount of loans made to residential mortgages to quality as Thrift Entry Regulation Regulations define scope of permitted activities under a given charter Increasing/ Decreasing entry barriers affect profitability of existing competitors. High direct/ indirect entry costs result in larger profits for existing companies Future of Regulation Implications of SGF questioned – more regulations or more efficient regulations The major provisions include expanding and centralizing powers for Federal agencies, more restrictions and disclosures about risk taking activities by financial institutions and enhancing protection of investors and consumers. The changing dynamics of specializes Potential secular trend away from intermediation by investing directly in primary securities Decline in the relative cost of direct securities investment Growing sophistication of investorsFalling costs of information acquisition and transaction Credit Risk: Individual Loan Risk Types of loans 1. Commercial and industrial loans Short term (1 year) – financing the purchase of real assets, new venture start up costs Syndicated loans 0 financing provided by a group of lenders, usually to finance large commercial and industrial loans Secured/Unsecured loans Fixed/Floating rate Spot loan 0 borrower takes down the entire loan amount immediately Loan commitment 0 can taken down anytime any amo unt, as long as within a maximum loan amount and a maximum period of time predetermined Commercial paper 0 unsecured short- term debt instrument 2. Real estate loans 3. Individual (consumer) loans 4.Other loans, such as, government loans, farms loans Calculating the gross return on a loan Factors affecting the promise loan return Loan interest rate = Base/Prime lending rate (BRB) + Credit risk premium (m) Direct fees (f), such as loan origination fee Indirect feeds, such as, compensating balance requirement (b), reserve requirement Credit Risk and the Expected Return on a Loan 1 -p = probability of default 0MAYBE there is a negative relationship between k and p, however k and p are not independent. As return (k) increases, the probability (p) that the borrower pays the promised return may decrease. Simply increasing k does not lead to a higher return (r). As a result, IFS usually have to control for credit risk – price/promised return and the quantity or credit availability d imensions. Retails Loans Size = Small Higher cost associated with collection of borrower's personal credit information Control credit risk through credit rationing – limit the total exposure/amount loaned Wholesale Loans Different interest rates to compensate for different levels of risks Credit rationing to limit credit exposure Measuring credit risk 1.Qualitative credit risk models Borrower- specific factors Example: reputation, leverage, volatility of earnings, collateral Market- specific factors Example: business cycle, level of interest rate 2. Credit scoring models Calculate a score as a proxy of borrower's default probability Sort borrowers into efferent default classes The scoring model should establish factors the help explain default risk and evaluate the relative importance of these factors Major models 1. Linear probability model 1 if default, otherwise Weakness: the estimated default probability Z may lie outside of [0,1] Employing linear probability model is not often used as superior statistical 2.Logic model Overcomes weakness of the linear probability model using a transformation that restricts the probability to the [0,1] interval 3. Linear discriminate models Altar's Z score model for manufacturing firms Z 2. 9, highly quality loans, low default risk Z Term structure based methods Under market equilibrium, expected return of a risky loan = risk- free rate (after accounting for probability of default (1 -p)) Assuming a zero default recovery rate 0 p(l+k) = 1+1 p: probability of repayment k: return on the corporate debt I: expect return on the risk- free treasury security Example: What is the default probability for a one- year corporate bond? 10% expected return on the risk- free treasury bond k= 15. 8% expected return on the risky corporate debt p = 0. 95 Therefore the probability of default is 0. 05 Realistically, the Fl lender can expect to receive some partial repayment even if the borrower becomes bankrupt. Alton and Ban estimated that when firms defaulted on their bonds in 2002, the investor loses 74. % on average. = recovery rate when default occurs (1 – p) y (1 + k) = payoff to Fl when default occur p (1 + k) = payoff when no default Marginal default probability 0 probability that a bond will default in any given year t Conditional on the fact that the default has not occurred earlier = Marginal probability of default in individual periods Example: 2-period bond Default probability in period 1 Marginal default probability in period 2 Cumulative probability of default over 2 periods We can extract from these yield curves the market's expectations of the multi- period default rates for corporate borrowers Example: Yield Yield Year 1 Year 2 T- Bonds Corporate Bonds 15. 8% One year forward rate on risk- free T-bonds One- year forward rate on corporate bonds 0 The expect probability of default in year 2 0 4.Mortality rate models Marginal mortality rate (MR.) Forward- looking 0 extract expected default r ates from the current term structure of interest rates Backward looking 0 analyses the historic or past default risk experience, the mortality rates, of bonds and loans of a similar quality Non- default probability in year 1 the probability of the loan surviving in the 2nd year given that default has not occurred during the firs year, I. E. Prop(default in year 2 | survive yearly) Cumulative mortality rate (CM) Cumulative probability of default MR. is based on historic or backward-looking data, and it is highly sensitive to the period over which the Fl calculates the Mars. 5. RAZOR models It is based on market data.ROAR concept – balanced expected interest income against expected loan risk Loan approval 0 RAZOR > benchmark return on capital, example: return on equity One year net income on a loan 0 (spread + fees) * dollar value of loans outstanding Loan risk 0 duration or loan default rate Method 1: Use Duration to estimate loan risk The percentage change in the market value of an asset such as a loan is related to the duration of the loan and the size of the interest rate shock Capital at risk (Vary approach) 0 the potential loan Los under adverse credit scenarios 0 Increase in risk premium under adverse credit scenarios Example: Suppose we want to evaluate the credit risk off $1 million loan with duration of 2.

How To Build Suspense and Scare the Audience Essay

The film Jaws, directed by Steven Spielberg, was created approximately 30 years ago. It tells the story of a shark which attacks and kills numerous people off the north-east coast of the USA in a small holiday resort called Amity Island. The attacks took place around the 4th of July, which in America, is similar to the British bank holiday. During this time, many Americans and tourists from abroad visit resorts such as Amity Island for a summer vacation. The director of the film, Steven Spielberg builds up fear of the shark using many different techniques. One of these techniques is the use of music. Spielberg uses a non-diegetic piece of music which plays whenever the shark is about to attack, almost like the shark’s very own theme tune. A non-diegetic sound is one which can only be heard by the audience and not by any of the characters in the film. Spielberg uses this particular technique just before the shark attacks Alex, the young boy who is swimming on his lilo. This technique makes the audience fear the shark, as whenever it’s played we expect another gruesome attack which adds a lot of tension to the film. Another technique used to increase our fear of the shark is showing the tremendous damage that it can cause. For example, towards the end of the film, whilst Brody, Hooper and Quint are out at sea attempting to catch the shark, it attacks their boat, resulting in the boat eventually sinking. Spielberg uses this method to give the audience the impression of the shark’s power and to suggest to them that the shark is indestructible, and that it will continue to kill innocent victims. A third technique with which Spielberg builds fear of the shark is the way in which he uses camera angles to show the sheer horror on the characters faces as they witness the attacks unfolding. For example, when Alex, the young boy is attacked, Spielberg uses a zoom, showing a close up of Brody’s face which is overwhelmed by horror and huge panic. By using this technique, Spielberg really gets the point across, from the characters’ perspective, of how terrifying the whole situation really is, which builds even more fear and tension for the audience. The choice and use of the music in the film Jaws also adds to the overall fear and tension experienced by the audience. For example, the music which is played just before the attack was chosen by Spielberg as it can be linked with the shark itself: the music starts quietly with a slow tempo as the shark swims around peacefully. Then, as the shark identifies its prey, the music begins to get both faster and louder. Then it begins to swim faster and close in on its victim, and as this happens, the music is gradually getting faster and louder. Then the shark bites, and the music explodes. Spielberg’s choice of music adds massively to the overall fear and tension in the film, because as soon as the music begins playing, the audience knows that an attack is imminent, they just sit there waiting anxiously. Then, the music explodes, coinciding with the attack, giving the audience a shock. Another way in which Spielberg uses the soundtrack to build tension and fear in the film is thro ugh contrasts of emotion. For example, at the start of the film before any of the attacks, a piece of diegetic music is played. This music creates a relaxed atmosphere so when the audience witness the first attack, it seems to come from nowhere, catching them by surprise. Another example of this is after the first attack on Chrissie, there is silence, and all that the audience can hear is the quiet ripple of the waves as they reach the shore. This makes the audience feel that everything is peaceful and calm, when in fact; they’ve just witnessed a terrifying shark attack. Another technique to provoke contrasting emotions is that of the music used just after Alex is attacked and killed by the shark. As Alex is attacked, everyone on the beach panics and rushes to get out of the water. At the same time, a young toddler is happily playing in the sand and quietly singing to himself. Again, as after the first attack on Chrissie, the audience can’t believe how something so terrible is happening when the mood set by the little boy is so calm and untroubled. This use of music and contrasting emotions builds up tension and fear affecting the audience as it makes them feel confused, as they can’t understand how things can be so pleasant then suddenly so devastating. Spielberg also exploits various camera techniques to build up fear and suspense in the film Jaws. For example, during the second attack on Alex, a lot of different camera techniques and angles are being used. The start of the scene is a tracking shot, showing Alex coming out of the sea and sitting next to his mother on the beach. After some persuasion, his mother lets him have just 10 more minutes in the water. Then a further tracking shot is used, as we follow Alex up the beach as he goes and gets his lilo. The use of this camera angle, which focuses the audience’s attention on Alex, immediately makes them feel more attached to the character. The next part of the scene shows Alex running into the sea on his lilo. The camera technique used for this part is a mediu m shot from a reverse angle, showing him from behind. This camera angle builds up fear as all the audience can see is Alex on his lilo and the bearing sea in front of him with no-one else in sight. This immediately makes the audience realise that Alex is vulnerable and that if something was to go wrong, help was a long way away. The scene then switches to a point of view shot from Brody, the police chief’s perspective. During this scene, a member of the public is talking to Brody, obscuring his and the audience’s view of the water. As Brody desperately tries to keep his eye on the water, the audience notice a young woman relaxing in the water. Then suddenly, she begins to scream and struggle and the audience automatically assumes she is being attacked by the shark, although it turns out that it was just her boyfriend playing around. This camera technique builds up fear as the audience realise that Brody is unable to help if an attack does take place. The next part of the scene involves a group of boys running into the water. The camera technique used for this part is a medium shot from a reverse angle. This camera angle shows the boys all alone in the sea, making the audience realise that they are, like Alex, vulnerable. It also makes us fear for their safety as the audience have just witnessed a false alarm with the young woman, and the potential of a real attack happening is fresh in our minds. Suddenly the shot changes once more to a point of view from the shark’s perspective. This shot shows the boy’s legs dangling under the water as well as Alex’s lilo on the surface. Spielberg’s choice of camera technique for this particular part builds up a lot of tension as the audience knows that an attack is coming, and that it’s almost as if we are just waiting for which boy the shark wants as its prey. Also adding to the tension in this scene is the fact that although the audience know about an attack being imminent, the eventual victim Alex doesn’t. This keeps them o n the edge of their seats as they are left almost shouting at the television screen for Alex to get out of the water! The attack the audience suspect is then confirmed as the shark’s non-diegetic theme tune begins playing and as this happens, the audience see the shark close in on its chosen victim. Immediately, the camera changes to a long shot. In the distance, the audience see the shark grab hold of Alex and hurl him into the air. As this happens, blood begins to spray from his body as he struggles desperately. Spielberg’s choice of camera for this scene makes the audience scared, as they see the whole attack unfolding, as well as for the first time, getting a look at the shark itself and discovering how big and vicious it really is. Instantly, the camera changes again, this time to a technique called a close up. The shot shows Alex under the water, desperately trying to free himself from the shark’s jaws before suddenly; he disappears in a thick cloud of his own blood. This scares the audience purely because of how gruesome it is. Once again, the camera angle changes to a medium shot, showing Alex’s mangled lilo calmly wash up shore in the slightly bloody water. The way in which the camera shows the lilo gently drift up shore, makes the audience feel sor ry and upset for Alex, as they feel they have made a connection with him in earlier parts of the film. The audience also have contrasting emotions, as they wonder how something so gruesome and devastating could have just happened when seconds later; everything was so calm and peaceful. Spielberg also tries to scare the audience by creating a lot of tension in the overall plot and particularly in the ending of the film. For example, he tries to create fear and suspense in the film by showing the first two attacks on both Chrissie and Alex close together at the start of the film. By situating them at the beginning of the film, the audience quickly realise that the first attack wasn’t a one off, and that the shark is almost like a serial killer. Another example of this technique of building tension and fear affecting the audience is the way in which Spielberg decides to add the third attack mid-way through the film, on the 4th of July with police chief Brody’s son involved. By showing the third attack mid-way through the film, the audience feel as if they have got to know t he main character, police chief Brody. So when the audience see the shark closing in on his son Mikey, they care more for his safety as they feel as if they have a connection with the family. By situating the third attack on the 4th of July, the audience see thousands of people flocking the beach at Amity Island, after Brody had desperately attempted to stop them from visiting because of the potential danger in the water. So when the third attack happens the audience are scared and shocked, as they realise that if only the Mayor hadn’t been so greedy for money and had Brody got his way, a third attack wouldn’t have occurred and Brody’s own son wouldn’t have been in danger. The last section of the film is really when Spielberg creates a lot of fear and suspense affecting the audience. One example in which Spielberg creates fear and tension in the film is when the shark attacks the boat whilst the three men, Brody, Hooper and Quint are out at sea. The scene involves the camera using a zoom technique and showing a close up of the wooden hull of the ship. As the shark attacks the boat, it endlessly pounds its head into the side of the ship and the audience can hear the wood beginning to creak under the strain as they watch it flex and bend. This scene builds a lot of tension because the audience think that any second; the shark is going to force a gaping hole in the side of the boat causing it to sink, which as a result would endanger the lives of the three men, who over the course of the film, the audience have bonded to. Another area of the film ending which contained a lot of fear and suspense was when after the damage to the boat had been repaired, Hooper, the shark expert, went down in the cage in an attempt to tranquillise the shark. During this scene of Hooper in the cage, the shark comes into view from nowhere and repeatedly crashes into the cage before eventually getting into it. This part of the film is full of tension because after every time the shark crashes into the cage, the more the metal frame begins to crumble. Then the audience see the shark close up, which scares them as they can see for themselves how fierce it really is. Immediately after, the audience see a shot of Hooper as he comes face to face with the shark for the first time, and his expression is ridden with horror. This reaction of his reflects on the audience as they then realise what it would feel like if they were within touching distance of the man-eating beast. But in my opinion, one of the scenes at the end of film has far more tension and fear than any of the others. This is the scene where Brody is alone in the sea after Quint has been eaten by the shark, and Hooper is under the water trying to hide from it. Brody is leaning on the mast of the sinking ship with a rifle in his hand when we see the shark gradually closing in on him. Brody shoots at the shark, but it continues to head straight for him, so he fires the gun again. Nothing happens, and by now the shark is just 10 metres away and Brody is down to his last bullet. He aims and fires, directly hitting the oxygen cylinder in the shark’s mouth. The tank explodes, blowing the shark into pieces. This part of the film is full of tension in the way that the shark is relentless and keeps gradually getting ever closer to Brody, who by now the audience feel connected to, and they begin to fear for his life. Also, the way in which Brody kills the shark with his last bullet keeps the audience on the edge of their seats. This scene is scary because of how unbelievably gory the shark’s death is. The audience see the shark blown up into shredded chunks of flesh as blood spurts everywhere. My scariest moment in the film is the death of Quint, the shark catcher. I think it’s full of the most fear because of how gruesome, gory and full of tension it is. The scene is full of suspense when Quint loses his grip on Brody, and agonisingly slides down the deck of the boat, straight into the jaws of the shark. Then it gets gruesome, because as the shark plunges its teeth into Quint’s chest, blood begins spewing from his mouth. Then the shark begins violently tossing him from side to side as Quint screams desperately before the audience here a loud crack. Immediately his body stops struggling and the shark calmly drags it under the surface of the water. Overall, in my opinion Steven Spielberg has successfully created a film in which the audience experience a lot of fear and suspense. He has effectively used many different techniques to do so, and as a result, more than 30 years on, Jaws is still recognised as one of the best horror films ever made.