Costco Wholesale in 2012 Essay Example for Free

Costco Wholesale in 2012 Essay Analysis and Evaluation Since the inception of Costco in 1983, one of its drawbacks is, they have 4,000 selections of merchandise compared to their competitors. In addition, customers can only purchase merchandises in bulk. Consumers who shop at Costco do not have the choice to pick up one single item, for instance a can of soup. Although Costco prices are low and the consumers get more for their money, more consumers are wasting food because they no longer have the big families. Costco needs to look at the demographics and re-evaluate their business model, as this could be detrimental to the company. In today’s society, more families are getting divorce and are becoming single parents. The big families are almost none existent; therefore, most consumers do not need to purchase in bulk. Many consumers want to have choices when it comes to the amount of food they purchase. One may say there are other shopping establishments a consumer may visit to get exactly what they want; however, that is beside the point. Giving consumers the choice to purchase individual merchandise will not only bring in more business but also an increase in cash flow, which will also increase profits for Costco. On the other hand, Costco competitors such as Wal-Mart stocked up 40,000 to 150, 000 items for shoppers to choose from and Sam’s Club have over 16,000 items. Sam’s Club have the treasure-hunt items but tend to be less upscale and carry lower price tags than those of Costco. Both Wal-Mart and Sam’s Club give shoppers more choices than Costco even though Costco offers a cheaper price on their merchandise. Costco spends very little in advertisements and they totally rely on their name and word of mouth by their customers. Compared to Sam’s Club they spent about $50 million annually advertising and direct mail promotions. Furthermore, Costco does not have a Public Relation department, which is not good business practice, even though they have been around for years and they are doing well financially. However, there are many opportunities for one of its competitor to come in take away their market share. Costco does not attract people who are below the poverty line; they cater to the business consumer and urbanites that have an annual income of $100,000; therefore, people who are impoverish cannot afford the membership fees and bulk purchase. In addition, Costco membership fee is more expensive compared to Sam’s Club. Recommendation Costco needs to improve the variety of choices by giving the consumer more than 4,000 items to choose from while their competitors are actually giving customers what they want. Costco needs to take into consideration the economy; people have lost their jobs and the recession, as customers are looking for cheaper prices and ways to saving money. Furthermore, if Costco does not come up with new and innovative strategies to entice low income and single household family to their establishment they are giving their competitors the upper hand. Costco should also focus on the advertisement because number of its rivals is already doing intense advertisement. In today’s global and technological world, many businesses are being aggressive and are taking advantage of investing heavily on the marketing. Costco cannot continue to use the concept of sitting back and waiting for their customers to spread the word by mouth. Costco needs to move in the direction of the 21st century by being more proactive by utilizing technology and a PR department for marketing purposes. It is true that company like Costco are doing good in economic downturn but competitors like Sam’s club is outperforming Costco in pricing which could be biggest threats to the Costco even though Costco keeps relatively branded and qualitative product than that of Sam’s Club The Five Forces Model of Competition Substitutes Strong threat Good substitutes everywhere Price not significantly higher Comparable product features More variety of features Low switching cost Potential new entrants Low threat Small pool entry candidates High barriers to entry Expanding market Attractive profits Buyers Weak bargaining power Some switching cost Large membership base Costco has the best value Suppliers Weak bargaining power Many suppliers Low switching cost Many substitutes exist Large quantities are needed Competing sellers Fierce Competition Costco is on top Quality is slightly better Buyer demand is growing Buyers switching cost is low SWOT Strength| Weakness| Low product and services†¢ Strong brand†¢ Excellent merchandise†¢ Exceptional employees†¢ 54 million members†¢ Economics of scale†¢ Efficiency| James Sinegal is 79†¢ Maintain high wages†¢ 42% higher than Sam’s Club†¢ Comparatively less attractive store layout for luxury items†¢Ã‚  Declining or inconsistent profit margins†¢ Primary focus on business customers rather than individual customers| Opportunities| Threat| Recession- Easier to find bargain luxury-items- Increased popularity of Costco†¢ Expanding foreign markets- Europe- China India †¢ Positive image in terms of employees pay and social responsibility†¢ Increasing brand awareness| Fierce competition†¢Costco cannot attract people who are below poverty line due to its membership fees and bulk purchase†¢High competition from Sam’s Club and BJ†¢Political problems in other countries| References Thomspson, A. A., Peteraf, M. A., Gamble, J. E., Strickland III, A. (2012). Crafting Executing Strategy (19th ed.). New York, New York: McGraw-Hill/Irvin.

Impact of Discount rate Changes on Stock Market Return

Impact of Discount rate Changes on Stock Market Return CHAPTER 1 Stock market plays an important role in the economic development of a country. Stock exchange performance has attained significant role in global economics and financial markets, due to their impact on corporate finance and economic activity. For instance stock exchanges enable firms to acquire capital quickly, due to the ease with which securities are traded. Stock exchange activity, thus, plays an important role in helping to determine the effects of macroeconomic activities. Stock market returns are the returns that the investors generate out of the stock market; it can be in the form of dividends or profits, as a company gets its dividends and profits in the form of their share holders in the secondary market. Well there is a definite change in the market as with the behavior changes with the discount rate, changes can be technical or non-technical. Technical changes refers to the internal changes and non-technical as external changes which are mostly related to the behavior and response of the customers and consumers. Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements. Karachi Stock Exchange 100 Index  (KSE-100 Index) is a  stock index  acting as a standard to compare prices on the  Karachi Stock Exchange  (KSE) over a period of time. In formative representative companies to calculate the index on, companies with the maximum  market capitalization  are selected. On the other hand, to ensure maximum market representation, the company with the maximum market capitalization from each sector is also incorporated.. 1.2 Problem Statement To study the impact of discount rate changes on stock market return 1.3 Research Hypothesis: The expected discount rate change announcements have impact on stock market return. 1.4 Outline of the Study The aim of the study is to observe Impact of Discount rate Changes on Stock Market Return. This Study is observing on Karachi Stock Exchange (KSE). The  Karachi Stock Exchange  is a  stock exchange  situated in  Karachi,  Pakistan, established on 18 September, 1947 it started with 5 companies with a capital of Rs. 37 million. It is Pakistans biggest and oldest stock exchange, with a lot of Pakistani as well as overseas listings. Its present premises are placed on Stock Exchange Road, in the heart of Karachis Business District. KSE starts with a 50 shares index. As the market develops a representative index was needed. In poor political condition, social issues, financial and other problems, KSE played a very important role in the financial system of Pakistan. KSE 100-index showed a return of 40.19% and became the sixth best markets in the year 2007. It gets a biggest milestone by touching of KSE-100 Index level of 15,000 for the foremost time in the history of Karachi sto ck exchange on 20 April, 2008. On the other hand, the raise of 7.4 percent in 2008 build-up the best performer in all the emerging market. The KSE 100TM Index closed at 9645 points on 19 June, 2010. Although by 30th July total market capitalisation of the KSE reached Rs2.95 trillion, approximately around 35 billion dollars CHAPTER 2 LITERATURE REVIEW As it can be figured out by the models of stock market and about the interest rates, value of share in the stock market, maturity of the bonds with short run and long run and the value of the capital as well as the factor of production, All these things influence a great deal towards the changes as well as the demand and supply model. Equilibrium is also there, which is basically an intersection, the point where the quantity of supply equal to the quantity demands. Output and interest rates plays a bigger role in the discount changes, as from the different policies, laws and models have been mentioned in the previous studies. If prices are fixed country can never faced inflation because of the nominal and real rates. Output depends on the stock market and fiscal policy (Blume, 1994). The stock market is the ratio of steady-state profit to the steady-state interest rate. If the money increases in the market the steady-state effects are quite clear, Output and stock market are higher in the equilibrium. The higher money stock lowers the real interest rate and thus the cost of capital. This was all about a monetary expansion under fixed price. We find that in the pre-79 period, there was no securities market response to either technical or nontechnical changes, while in the post-79 period there was no response to technical changes (Hardouvelis and Gikas, 1987). Discount rate changes will affect market rate and equity returns if such changes brings information about either short- or long- run monetary policy objectives. So an in increase in the discount will definitely help to attract more and more people towards the policy, and there will be a huge amount of change in the customers and clients response towards it. As a result, current (spot) and expected short-term rates rise in reaction to reduced short-run money growth. Long-term rates and forward rates may also increase to reflect the higher expected short-term rates. It doesnt have much impact over the long-term rates as it has on short-term rates just because the monetary policy and consumers response (Maberly, 1992). Short term rates makes more people attractive and kind of working well for the secondary markets, so mostly they all rely on the short-term rates, as they prefer short-term rates than long-term rates. And short-term is the one which affect a great deal. The impact of discount rate changes on equity prices can operate through two possible channels. This is most readily seen by viewing the value of the firm as the present value of its future net cash flows. To some extent discount rate increases (decreases) result in increases (decreases) in interest rates. It has also based on the capital or investment as well, capital can fall or rise just because of the stock prices, stock prices has an ultimate effect on capital and economic activity can be disturbed too, that also can be altered due to this price change. If the capitalization rates and cash flow expectation are affected by discount rate changes, these effects will also work in the same direction. From previous studies we have an i dea that stock prices declines to be associated with discount rate increases (Ederington and Lee, 1993). Considering the New York stock exchange, the stock return data are the daily percentage return on the New York Stock Exchange value-weighted index and is denoted SP. The interest rate data are for constant maturity Treasury securities and include eight different maturities: 90-, 180-, and 360-day bills and three-, five-, seven-, ten-, and twenty-year bonds. These rates are obtained from DRI, who compile them from the Federal Reserve Board Statistical Release from DRI. These eight interests are used to calculate seven forward rates in addition to the 90-day bill rate. The stock price coefficient for the post-79 period suggests a 1 percent increase (decrease) in the discount rate will result in a decline (increase) of 1.06 percent in stock prices. A similar finding in reported for the interest rate data. Only one interest rate series evidences a significant market reaction in the pre-79 period, while six of the eight interest rates indicate a significant market response over the post-7 9 period (Gerety, and Mulherin, 1992). Although the early researches result indicates that the real issue is whether the observed announcement effect, regardless of the monetary policy regime, indicates market inefficiency. In classification of the discount rate changes from the previous discussion we have evaluated that to assess properly the announcement effects of discount rate changes, it is necessary to distinguish technical from nontechnical changes. There are several short comings with this approach that limit its usefulness in predicting discount rate changes and cast substantial doubt on the assumption of discount rate erogeneity (Lee and Bong, 1992). Researches rely on two different methods to classify discount rate changes. The best model, both in terms of in-sample fit and prediction of actual discount rate changes, related changes in the discount rate (measured in basis points) to the spread between the Fed Funds rate and the discount rate. Nonetheless, if the model incorporates the relevant information set, then by construction the forecast and optimal predictions based on available information and, therefore, rational. Through the study of different modules we came on to know in conclusion that the purpose of this has been to reconcile previous findings of both an endogenous discount rate and discount rate announcement effects with market efficiency (Harris, 1986). By classifying discount rate changes as either technical or non-technical, and recognizing that the latter are (at least) partially endogenous, it is argued that, within the framework of market efficiency, the discount rate can fail tests of statistical erogeneity and still exhibit announcement effects. The empirical evidence of this paper supports this view and suggests that previous studies were missing specified by not controlling for the purpose of discount rate change. The evidence also implies that the common assumption contained in virtually all theoretical and empirical macroeconomic models, that the discount rate is either purely endogenous or purely exogenous, is inappropriate. This also specifies market only react when there appears to be a shift in policy- in the discount rate. At least from this standpoint, one cannot rule out the discount rate as a useful tool of monetary policy. Eventually, our results support the existence of efficient markets based on the dual findin gs that only nontechnical changes are characterized by announcement effects and that virtually the entire market adjustments occurs by the end of the announcement day (Jones, 1994). From previous studies the issue of monetary neutrality has long been debated by financial economists. There was evidence been brought in to the market which says that increases in the growth rate of money raises stock returns? Monetary policy affects the real economy, and whether its effects are quantitatively important, remain open questions. These questions by examining the effects of monetary policy innovations on stock return data. Theory posits that stock prices equal the expected present value of future net cash flows. To examine the relationship between monetary policy and stock returns, a variety of empirical techniques are employed. The size portfolios are useful for investigating why monetary policy matters, if in fact it does. If monetary policy has real effects, one reason for this could be that it affects firms balance sheets. To investigate whether monetary policy affects size and industry portfolios, both impulse responses and innovation accounting methods are used. Al l the results in table one to four measures the effects of monetary policy shocks on nominal stock returns. In considering the question of monetary neutrality, we are interested in whether monetary policy affects real stock returns. Thus rather than complicate the analysis by considering the best way to measure expected inflation we focus on results using nominal returns. Through the different systems results reported are robust to minor changes in the specification. When total reserves are dropped, employment growth or unemployment is used instead of industrial production growth, the non stationary variables are first-differenced, and the number of lags is changed (Marshall and David, 1992). There was another approach to identifying monetary shocks is Data and Methodology which is been made to the use of Federal Reserve statements and other historical documents over the period to identify exogenous changes in monetary policy and the responses of real variables. This narrative approach has recently employed to assemble a much larger sample of monetary policy shocks. An alternative way is used to test whether monetary policy affects stock returns (Morse, 1981). A growing number of papers in both the economics and finance literature focus on the effect of economic news on asset returns. Nonetheless, there seems a wide gap between these two literatures. These elements of surprise in one particular type of news announcements of short-term interest rate decisions made by the Open Market Committee affect the volatility of the stock market in the short term. Relationship between monetary policy and daily stock market volatility from two vantage points: days around regularly scheduled meetings of the stock market committee, the main monetary policy making body and days of actual policy decisions involving the target level of the federal funds rate (Fama and Kenneth, 1995). Turning to the days of actual policy decisions regardless of whether they were announced on regularly scheduled meetings days. Some evidence was found that such decisions tend to boost volatility in the stock market. The effect of policy decisions is greatest that exclude those decisions that were fully anticipated by market. Besides identifying monetary policy announcements as an important source of short-run volatility in the stock market, this will also addresses broader issues in the finance literature. In particular, higher interest rates induce higher leverage ratios, which in turn increase the risk associated with holding stocks and the volatility of stock returns (Patell and Wolfson, 1984). In examining the relationship between the stock market and fiscal policy, all models combined two different approaches widely used in the monetary economics and finance literature. In particular, in analyzing the markets response to scheduled and unscheduled announcements, a potentially interesting issue is whether the corresponding impulse response functions for volatility are significantly different. Other issues that also merit further consideration include a closer look at the relationship between first- and second- moment responses to policy news and the explicit analysis of risk premiums around announcements days (Penman, 1987). From all these models and theories, have come to know that anything that happens in the secondary market, it does have an impact over the entire economy as we have gone through from the different examples across the world. Even if it is pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies and all this process makes things more complicated especially for the investors and then it effects the stock market. Monetary policy on the other hand takes things more attractive for the investors and share holders that they believe their money is in safe place so they would love to invest as long as they are sure about the monetary policy (Stoll and Whaley, 1990). Policies are always made for the betterment of the people who are your clients or customers as per organization requirements, it also refers to the trust that how much they trust on their policies that people could come and invest. Banks do the same thing; the only thing they sell is trust, because as many people trust on you as they will go on to be their customers. Many of the sources indicate that there is a connection between news and stock prices, finance literature highlights that too. The finance literature focus on economic announcements per se, without controlling for the element of surprise in such announcements, might help to explain why so many studies have failed to find a significant link between market volatility and economic news. Either by implicitly assuming that the conditional volatility of stock returns is time invariant or by simply leaving its time-varying nature unspecified, monetary economists have failed to consider a potentially significant effect of policy surprises on the short-run behavior of the market (Wood and McInish, 1985). Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements (Richard Roll and Stephen Ross, 1986). CHAPTER 3 RESEARCH METHOD This chapter explains the methodology used for the research study. The main research data set is used in this paper consist of KSE 100 index listed on Karachi Stock Exchange. It is the data for last ten years 2000 to 2010 for every monetary policy has been announced Data would be collected through the website and business recorder website. This chapter also discusses the methods to evaluate validity and reliability of research for the factors associated with the Impact of Discount rate Changes on Stock Market Return. 3.1 Method of data collection: The secondary data which was used in this research was available on the website of Karachi Stock Exchange from 2000 to 2010. 3.2 Sample size and Sampling Technique: In this research, data from the year 2000 to 2010 has been taken as a sample size. The data collected through Karachi Stock Market and State Bank of Pakistan 3.3 Instrument of Data Collection: This research was carried out through Secondary Data. 3.4 Statistical tool used: In order to measure the relationship between the variables stock market return and discount rate and impact of discount rate change on stock market return, Regression is used as a statistical tool in this research. SPSS software is used to evaluate the relationship between the two variables CHAPTER 4 RESULTS Hypothesis Testing Ho: The expected discount rate changes announcements have impact on stock market return. Table 4.1 From the above Durbin Watson value, it has been clarified that there was an existence of auto correlation in the data set. In order to resolve the issue we have generated the lag variables of the dependent variable up to the level 2. Table 4.2 Form the above table we can observe the value of the Adjusted R Square is .934 or 93.4%. It means that 1 unit change in the set of independent variables brings out the 93.4% change in the variation of dependent variable. With the inclusion of the lag variables in the data set, the problem auto correlation has been resolved. The Durbin Watson value mentioned in the above table is 1.964 closer to 2. Value closer to 2 means that there is no auto correlation exists in the data set. Table 4.3 From the above table we can observe that the significant value of the above ANOVAs test model 2 is less that 0.05. It means that the data is suitable for the application of regression model. Table 4.4 The above table shows the coefficient value of the analysis. As it can be observed that, the significant value of the discount rate is less than 0.05 it means that the change in discount rate has a significant impact on the stock therefore; the Null hypothesis is not rejected. At 95% confidence interval level the significant value of alpha/constant is 0.000 it means that the in the absence of all the variables the minimum return of the KSE is equal to the alpha value. The Beta value of lag 1 is 5376.550 it means that the today returns from the stock market is dependent on the stock market returns after the announcement of last monetary policy. For e.g. if the current stock return are equal to 1 the stock returns after the announcement of the next monetary policy is 5376.550 times of the current stock returns. The relationship of the lag 2 stock returns is vice versa of the lag 1 stock returns. It has a negative relationship with the current stock returns. Graph 4.1 The above diagram shows the trend of the KSE index and the change in discount rates for the last 10 years in the country. On a whole an upward trend has been observed in the KSE 100 index it is due to the increase in the FDI investments as well as the development in the financial sectors. The change in the discount rate shows overall a mix trend, we can observe a huge peaks and valleys in the graph. In our research, we have not found any significant relationship among the announcement of change in discount rate and stock returns. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect i s that, the change in the discount rate affects the profitability of the companies in the next coming quarters so, immediately the affect in the stock returns are not massive that are in the long run. 4.2 Hypotheses Assessment Summary The hypotheses of this research study are based on variables like stock market return and discount rate intraday. The significant value is less than 0.05 It means that the data is suitable for the application of regression model. S.NO. Hypotheses T SIG. RESULT H1 the expected discount rate changes announcement have impact on stock market return. 11.991 .000 Accepted CHAPTER 5 CONCLUSIONS, DISCUSSIONS, IMPLICATIONS AND FUTURE RESEARCH 5.1 Conclusion As anticipated, expected discount rate changes, representing existing public information, have no impact on the trading volume for the current period nor does for any other periods. Public information also induces trading only in the current period but not in the future periods. More trading has occurred during the decreasing discount rate periods than the increasing discount rate periods as evidenced by the significant parameter. 5.2 Discussion This research shows that the change in the discount rate shows overall a mix trend, it can be observed a huge peaks and valleys in the graph. In this research there was no significant relationship found among the announcement of change in discount rate and stock returns. The reason behind this is, other than monetary policy there are lots of other factors that are contributing towards the stock returns in Karachi stock market. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect is that, the change in the discount rate affects the profitability of the companies in the next coming qua rters so, immediately the affect in the stock returns are not massive that are in the long run. In this research it has been identified more accurately that if and when the stock market responds to the release of the discount rate change information. More importantly, studying the market volatility and trading volume sheds additional light on the information literature. Equity returns respond negatively and significantly to the unexpected announcements of discount rate changes, while the expected changes generally have no bearing on the equity returns. 5.3 Implementations For practical implementation, this research can be used to analyze the impact of Discount rate Changes on Stock Market Return as The effect of discount rate changes on stock market returns. Equity returns generally respond negatively and significantly to the unexpected announcements; however, the effect of expected changes on equity returns is insignificant. Abnormal trading volume occurs only in period. 5.4 Recommendations Pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies nd all this process makes things more complicated especially for the investors and then it effects the stock market. CHAPTER 6 REFERNCES Blume, L, 1994, Market statistics and technical analysis, the role of volume. Journal of Finance, 49, 153-181. Ederington, L.H and Lee, J.H, 1993, How markets process information, News releases and volatility, Journal of Finance, 48, 1161-1191. Fama and Kenneth, 1995, Size and book-to-market factors in earnings and returns, Journal of Finance, 50, 131-156. Gerety, M.S and Mulherin, H.J, 1992, Trading halts and market activity, An analysis of volume at the open and the close, Journal of Finance, 47, 1765-1784. Harris, L, 1986, A transaction data study of weekly and intradaily patterns in stock returns, Journal of Financial Economics, 16, 99-117. Hardouvelis, Gikas, 1987, Reserves announcements and interest rates, Does monetary policy matter? Journal of Finance, 42, 407-422. Lee, Bong-Soo, 1992, Causal relations among stock returns, interest rates, real activity, and inflation, Journal of Finance, 47, 1591-1603. Maberly, E.D, 1992, Odd-lot transactions around the turn of the year, Journal of Financial and Quantitative Analysis, 27, 591-604. Jones, 1994. Information, trading and volatility, Journal of Financial Economics, 36, 127-154. Morse, D, 1981, Price and trading volume reaction surrounding earnings announcements, A closer examination. Journal of Accounting Research 19, 374-383. Marshall and David, 1992, Inflation and asset returns in a monetary economy, Journal of Finance, 47, 1315-1342. Penman, S.H, 1987, The distribution of earnings news over time and seasonalities in aggregate stock returns, Journal of Financial Economics, 18, 199-228. Patell, J.M and Wolfson, M.A, 1984, The intraday speed of adjustment of stock prices to earnings and dividend announcements, Journal of Financial Economics 13, 223-252. Richard Roll, and Stephen Ross, 1986, Economic forces and the stock market, Journal of Business, 59, 383-403. Stoll and Whaley, 1990, The dynamics of stock index and stock index futures returns, Journal of Financial and Quantitative Analysis, 25, 441-468. Wood, and McInish, 1985, An investigation of transaction data for NYSE stocks, Journal of Finance 60, 723-739. Impact of Discount rate Changes on Stock Market Return Impact of Discount rate Changes on Stock Market Return CHAPTER 1 Stock market plays an important role in the economic development of a country. Stock exchange performance has attained significant role in global economics and financial markets, due to their impact on corporate finance and economic activity. For instance stock exchanges enable firms to acquire capital quickly, due to the ease with which securities are traded. Stock exchange activity, thus, plays an important role in helping to determine the effects of macroeconomic activities. Stock market returns are the returns that the investors generate out of the stock market; it can be in the form of dividends or profits, as a company gets its dividends and profits in the form of their share holders in the secondary market. Well there is a definite change in the market as with the behavior changes with the discount rate, changes can be technical or non-technical. Technical changes refers to the internal changes and non-technical as external changes which are mostly related to the behavior and response of the customers and consumers. Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements. Karachi Stock Exchange 100 Index  (KSE-100 Index) is a  stock index  acting as a standard to compare prices on the  Karachi Stock Exchange  (KSE) over a period of time. In formative representative companies to calculate the index on, companies with the maximum  market capitalization  are selected. On the other hand, to ensure maximum market representation, the company with the maximum market capitalization from each sector is also incorporated.. 1.2 Problem Statement To study the impact of discount rate changes on stock market return 1.3 Research Hypothesis: The expected discount rate change announcements have impact on stock market return. 1.4 Outline of the Study The aim of the study is to observe Impact of Discount rate Changes on Stock Market Return. This Study is observing on Karachi Stock Exchange (KSE). The  Karachi Stock Exchange  is a  stock exchange  situated in  Karachi,  Pakistan, established on 18 September, 1947 it started with 5 companies with a capital of Rs. 37 million. It is Pakistans biggest and oldest stock exchange, with a lot of Pakistani as well as overseas listings. Its present premises are placed on Stock Exchange Road, in the heart of Karachis Business District. KSE starts with a 50 shares index. As the market develops a representative index was needed. In poor political condition, social issues, financial and other problems, KSE played a very important role in the financial system of Pakistan. KSE 100-index showed a return of 40.19% and became the sixth best markets in the year 2007. It gets a biggest milestone by touching of KSE-100 Index level of 15,000 for the foremost time in the history of Karachi sto ck exchange on 20 April, 2008. On the other hand, the raise of 7.4 percent in 2008 build-up the best performer in all the emerging market. The KSE 100TM Index closed at 9645 points on 19 June, 2010. Although by 30th July total market capitalisation of the KSE reached Rs2.95 trillion, approximately around 35 billion dollars CHAPTER 2 LITERATURE REVIEW As it can be figured out by the models of stock market and about the interest rates, value of share in the stock market, maturity of the bonds with short run and long run and the value of the capital as well as the factor of production, All these things influence a great deal towards the changes as well as the demand and supply model. Equilibrium is also there, which is basically an intersection, the point where the quantity of supply equal to the quantity demands. Output and interest rates plays a bigger role in the discount changes, as from the different policies, laws and models have been mentioned in the previous studies. If prices are fixed country can never faced inflation because of the nominal and real rates. Output depends on the stock market and fiscal policy (Blume, 1994). The stock market is the ratio of steady-state profit to the steady-state interest rate. If the money increases in the market the steady-state effects are quite clear, Output and stock market are higher in the equilibrium. The higher money stock lowers the real interest rate and thus the cost of capital. This was all about a monetary expansion under fixed price. We find that in the pre-79 period, there was no securities market response to either technical or nontechnical changes, while in the post-79 period there was no response to technical changes (Hardouvelis and Gikas, 1987). Discount rate changes will affect market rate and equity returns if such changes brings information about either short- or long- run monetary policy objectives. So an in increase in the discount will definitely help to attract more and more people towards the policy, and there will be a huge amount of change in the customers and clients response towards it. As a result, current (spot) and expected short-term rates rise in reaction to reduced short-run money growth. Long-term rates and forward rates may also increase to reflect the higher expected short-term rates. It doesnt have much impact over the long-term rates as it has on short-term rates just because the monetary policy and consumers response (Maberly, 1992). Short term rates makes more people attractive and kind of working well for the secondary markets, so mostly they all rely on the short-term rates, as they prefer short-term rates than long-term rates. And short-term is the one which affect a great deal. The impact of discount rate changes on equity prices can operate through two possible channels. This is most readily seen by viewing the value of the firm as the present value of its future net cash flows. To some extent discount rate increases (decreases) result in increases (decreases) in interest rates. It has also based on the capital or investment as well, capital can fall or rise just because of the stock prices, stock prices has an ultimate effect on capital and economic activity can be disturbed too, that also can be altered due to this price change. If the capitalization rates and cash flow expectation are affected by discount rate changes, these effects will also work in the same direction. From previous studies we have an i dea that stock prices declines to be associated with discount rate increases (Ederington and Lee, 1993). Considering the New York stock exchange, the stock return data are the daily percentage return on the New York Stock Exchange value-weighted index and is denoted SP. The interest rate data are for constant maturity Treasury securities and include eight different maturities: 90-, 180-, and 360-day bills and three-, five-, seven-, ten-, and twenty-year bonds. These rates are obtained from DRI, who compile them from the Federal Reserve Board Statistical Release from DRI. These eight interests are used to calculate seven forward rates in addition to the 90-day bill rate. The stock price coefficient for the post-79 period suggests a 1 percent increase (decrease) in the discount rate will result in a decline (increase) of 1.06 percent in stock prices. A similar finding in reported for the interest rate data. Only one interest rate series evidences a significant market reaction in the pre-79 period, while six of the eight interest rates indicate a significant market response over the post-7 9 period (Gerety, and Mulherin, 1992). Although the early researches result indicates that the real issue is whether the observed announcement effect, regardless of the monetary policy regime, indicates market inefficiency. In classification of the discount rate changes from the previous discussion we have evaluated that to assess properly the announcement effects of discount rate changes, it is necessary to distinguish technical from nontechnical changes. There are several short comings with this approach that limit its usefulness in predicting discount rate changes and cast substantial doubt on the assumption of discount rate erogeneity (Lee and Bong, 1992). Researches rely on two different methods to classify discount rate changes. The best model, both in terms of in-sample fit and prediction of actual discount rate changes, related changes in the discount rate (measured in basis points) to the spread between the Fed Funds rate and the discount rate. Nonetheless, if the model incorporates the relevant information set, then by construction the forecast and optimal predictions based on available information and, therefore, rational. Through the study of different modules we came on to know in conclusion that the purpose of this has been to reconcile previous findings of both an endogenous discount rate and discount rate announcement effects with market efficiency (Harris, 1986). By classifying discount rate changes as either technical or non-technical, and recognizing that the latter are (at least) partially endogenous, it is argued that, within the framework of market efficiency, the discount rate can fail tests of statistical erogeneity and still exhibit announcement effects. The empirical evidence of this paper supports this view and suggests that previous studies were missing specified by not controlling for the purpose of discount rate change. The evidence also implies that the common assumption contained in virtually all theoretical and empirical macroeconomic models, that the discount rate is either purely endogenous or purely exogenous, is inappropriate. This also specifies market only react when there appears to be a shift in policy- in the discount rate. At least from this standpoint, one cannot rule out the discount rate as a useful tool of monetary policy. Eventually, our results support the existence of efficient markets based on the dual findin gs that only nontechnical changes are characterized by announcement effects and that virtually the entire market adjustments occurs by the end of the announcement day (Jones, 1994). From previous studies the issue of monetary neutrality has long been debated by financial economists. There was evidence been brought in to the market which says that increases in the growth rate of money raises stock returns? Monetary policy affects the real economy, and whether its effects are quantitatively important, remain open questions. These questions by examining the effects of monetary policy innovations on stock return data. Theory posits that stock prices equal the expected present value of future net cash flows. To examine the relationship between monetary policy and stock returns, a variety of empirical techniques are employed. The size portfolios are useful for investigating why monetary policy matters, if in fact it does. If monetary policy has real effects, one reason for this could be that it affects firms balance sheets. To investigate whether monetary policy affects size and industry portfolios, both impulse responses and innovation accounting methods are used. Al l the results in table one to four measures the effects of monetary policy shocks on nominal stock returns. In considering the question of monetary neutrality, we are interested in whether monetary policy affects real stock returns. Thus rather than complicate the analysis by considering the best way to measure expected inflation we focus on results using nominal returns. Through the different systems results reported are robust to minor changes in the specification. When total reserves are dropped, employment growth or unemployment is used instead of industrial production growth, the non stationary variables are first-differenced, and the number of lags is changed (Marshall and David, 1992). There was another approach to identifying monetary shocks is Data and Methodology which is been made to the use of Federal Reserve statements and other historical documents over the period to identify exogenous changes in monetary policy and the responses of real variables. This narrative approach has recently employed to assemble a much larger sample of monetary policy shocks. An alternative way is used to test whether monetary policy affects stock returns (Morse, 1981). A growing number of papers in both the economics and finance literature focus on the effect of economic news on asset returns. Nonetheless, there seems a wide gap between these two literatures. These elements of surprise in one particular type of news announcements of short-term interest rate decisions made by the Open Market Committee affect the volatility of the stock market in the short term. Relationship between monetary policy and daily stock market volatility from two vantage points: days around regularly scheduled meetings of the stock market committee, the main monetary policy making body and days of actual policy decisions involving the target level of the federal funds rate (Fama and Kenneth, 1995). Turning to the days of actual policy decisions regardless of whether they were announced on regularly scheduled meetings days. Some evidence was found that such decisions tend to boost volatility in the stock market. The effect of policy decisions is greatest that exclude those decisions that were fully anticipated by market. Besides identifying monetary policy announcements as an important source of short-run volatility in the stock market, this will also addresses broader issues in the finance literature. In particular, higher interest rates induce higher leverage ratios, which in turn increase the risk associated with holding stocks and the volatility of stock returns (Patell and Wolfson, 1984). In examining the relationship between the stock market and fiscal policy, all models combined two different approaches widely used in the monetary economics and finance literature. In particular, in analyzing the markets response to scheduled and unscheduled announcements, a potentially interesting issue is whether the corresponding impulse response functions for volatility are significantly different. Other issues that also merit further consideration include a closer look at the relationship between first- and second- moment responses to policy news and the explicit analysis of risk premiums around announcements days (Penman, 1987). From all these models and theories, have come to know that anything that happens in the secondary market, it does have an impact over the entire economy as we have gone through from the different examples across the world. Even if it is pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies and all this process makes things more complicated especially for the investors and then it effects the stock market. Monetary policy on the other hand takes things more attractive for the investors and share holders that they believe their money is in safe place so they would love to invest as long as they are sure about the monetary policy (Stoll and Whaley, 1990). Policies are always made for the betterment of the people who are your clients or customers as per organization requirements, it also refers to the trust that how much they trust on their policies that people could come and invest. Banks do the same thing; the only thing they sell is trust, because as many people trust on you as they will go on to be their customers. Many of the sources indicate that there is a connection between news and stock prices, finance literature highlights that too. The finance literature focus on economic announcements per se, without controlling for the element of surprise in such announcements, might help to explain why so many studies have failed to find a significant link between market volatility and economic news. Either by implicitly assuming that the conditional volatility of stock returns is time invariant or by simply leaving its time-varying nature unspecified, monetary economists have failed to consider a potentially significant effect of policy surprises on the short-run behavior of the market (Wood and McInish, 1985). Equity returns also measured by the industrial index respond rather rapidly to the unexpected announcements of discount rate changes. Not only affecting equity returns, the unexpected discount rate changes also contribute to higher market volatility. An unexpected discount rate change also induces trading which is more supportive of the contention that public information causes price changes with trading. Increased trading volume due to unexpected public information, however, occurs only in the current period. Whenever, the market is not efficient, stock prices adjust to new information slowly and it is possible to generate abnormal profits. Financial market volatility is important for investors confidence, for port-folio selection, and for the pricing of both primary and derivative securities. Market volatility is not related to existing public information such as expected discount rate change announcements (Richard Roll and Stephen Ross, 1986). CHAPTER 3 RESEARCH METHOD This chapter explains the methodology used for the research study. The main research data set is used in this paper consist of KSE 100 index listed on Karachi Stock Exchange. It is the data for last ten years 2000 to 2010 for every monetary policy has been announced Data would be collected through the website and business recorder website. This chapter also discusses the methods to evaluate validity and reliability of research for the factors associated with the Impact of Discount rate Changes on Stock Market Return. 3.1 Method of data collection: The secondary data which was used in this research was available on the website of Karachi Stock Exchange from 2000 to 2010. 3.2 Sample size and Sampling Technique: In this research, data from the year 2000 to 2010 has been taken as a sample size. The data collected through Karachi Stock Market and State Bank of Pakistan 3.3 Instrument of Data Collection: This research was carried out through Secondary Data. 3.4 Statistical tool used: In order to measure the relationship between the variables stock market return and discount rate and impact of discount rate change on stock market return, Regression is used as a statistical tool in this research. SPSS software is used to evaluate the relationship between the two variables CHAPTER 4 RESULTS Hypothesis Testing Ho: The expected discount rate changes announcements have impact on stock market return. Table 4.1 From the above Durbin Watson value, it has been clarified that there was an existence of auto correlation in the data set. In order to resolve the issue we have generated the lag variables of the dependent variable up to the level 2. Table 4.2 Form the above table we can observe the value of the Adjusted R Square is .934 or 93.4%. It means that 1 unit change in the set of independent variables brings out the 93.4% change in the variation of dependent variable. With the inclusion of the lag variables in the data set, the problem auto correlation has been resolved. The Durbin Watson value mentioned in the above table is 1.964 closer to 2. Value closer to 2 means that there is no auto correlation exists in the data set. Table 4.3 From the above table we can observe that the significant value of the above ANOVAs test model 2 is less that 0.05. It means that the data is suitable for the application of regression model. Table 4.4 The above table shows the coefficient value of the analysis. As it can be observed that, the significant value of the discount rate is less than 0.05 it means that the change in discount rate has a significant impact on the stock therefore; the Null hypothesis is not rejected. At 95% confidence interval level the significant value of alpha/constant is 0.000 it means that the in the absence of all the variables the minimum return of the KSE is equal to the alpha value. The Beta value of lag 1 is 5376.550 it means that the today returns from the stock market is dependent on the stock market returns after the announcement of last monetary policy. For e.g. if the current stock return are equal to 1 the stock returns after the announcement of the next monetary policy is 5376.550 times of the current stock returns. The relationship of the lag 2 stock returns is vice versa of the lag 1 stock returns. It has a negative relationship with the current stock returns. Graph 4.1 The above diagram shows the trend of the KSE index and the change in discount rates for the last 10 years in the country. On a whole an upward trend has been observed in the KSE 100 index it is due to the increase in the FDI investments as well as the development in the financial sectors. The change in the discount rate shows overall a mix trend, we can observe a huge peaks and valleys in the graph. In our research, we have not found any significant relationship among the announcement of change in discount rate and stock returns. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect i s that, the change in the discount rate affects the profitability of the companies in the next coming quarters so, immediately the affect in the stock returns are not massive that are in the long run. 4.2 Hypotheses Assessment Summary The hypotheses of this research study are based on variables like stock market return and discount rate intraday. The significant value is less than 0.05 It means that the data is suitable for the application of regression model. S.NO. Hypotheses T SIG. RESULT H1 the expected discount rate changes announcement have impact on stock market return. 11.991 .000 Accepted CHAPTER 5 CONCLUSIONS, DISCUSSIONS, IMPLICATIONS AND FUTURE RESEARCH 5.1 Conclusion As anticipated, expected discount rate changes, representing existing public information, have no impact on the trading volume for the current period nor does for any other periods. Public information also induces trading only in the current period but not in the future periods. More trading has occurred during the decreasing discount rate periods than the increasing discount rate periods as evidenced by the significant parameter. 5.2 Discussion This research shows that the change in the discount rate shows overall a mix trend, it can be observed a huge peaks and valleys in the graph. In this research there was no significant relationship found among the announcement of change in discount rate and stock returns. The reason behind this is, other than monetary policy there are lots of other factors that are contributing towards the stock returns in Karachi stock market. Some of these factors are political situation of the country, foreign direct investments, Law and order situation and most importantly exchange rate. Collectively, all these factors are contributing in the stock returns. However, change in the discount rate do impact the stock returns but, not in the short run, in the long run the chances are quite high that it does impact on the stock returns in Karachi Stock market. The reason behind the Long term affect is that, the change in the discount rate affects the profitability of the companies in the next coming qua rters so, immediately the affect in the stock returns are not massive that are in the long run. In this research it has been identified more accurately that if and when the stock market responds to the release of the discount rate change information. More importantly, studying the market volatility and trading volume sheds additional light on the information literature. Equity returns respond negatively and significantly to the unexpected announcements of discount rate changes, while the expected changes generally have no bearing on the equity returns. 5.3 Implementations For practical implementation, this research can be used to analyze the impact of Discount rate Changes on Stock Market Return as The effect of discount rate changes on stock market returns. Equity returns generally respond negatively and significantly to the unexpected announcements; however, the effect of expected changes on equity returns is insignificant. Abnormal trading volume occurs only in period. 5.4 Recommendations Pre-announcement, monetary policy or whatever, stock market does change its state according to the circumstances and events. Pre-announcements are also made as precautions that are for safety announcements for the share holders of the companies. Due to this they can easily draw their amount and will not have to see further more difficulties. Unpredictability or volatility is always there in the market, when the investors just to keep on guessing for the right time to invest and stock holders wait for the right time to buy shares of the companies nd all this process makes things more complicated especially for the investors and then it effects the stock market. CHAPTER 6 REFERNCES Blume, L, 1994, Market statistics and technical analysis, the role of volume. Journal of Finance, 49, 153-181. Ederington, L.H and Lee, J.H, 1993, How markets process information, News releases and volatility, Journal of Finance, 48, 1161-1191. Fama and Kenneth, 1995, Size and book-to-market factors in earnings and returns, Journal of Finance, 50, 131-156. Gerety, M.S and Mulherin, H.J, 1992, Trading halts and market activity, An analysis of volume at the open and the close, Journal of Finance, 47, 1765-1784. Harris, L, 1986, A transaction data study of weekly and intradaily patterns in stock returns, Journal of Financial Economics, 16, 99-117. Hardouvelis, Gikas, 1987, Reserves announcements and interest rates, Does monetary policy matter? Journal of Finance, 42, 407-422. Lee, Bong-Soo, 1992, Causal relations among stock returns, interest rates, real activity, and inflation, Journal of Finance, 47, 1591-1603. Maberly, E.D, 1992, Odd-lot transactions around the turn of the year, Journal of Financial and Quantitative Analysis, 27, 591-604. Jones, 1994. Information, trading and volatility, Journal of Financial Economics, 36, 127-154. Morse, D, 1981, Price and trading volume reaction surrounding earnings announcements, A closer examination. Journal of Accounting Research 19, 374-383. Marshall and David, 1992, Inflation and asset returns in a monetary economy, Journal of Finance, 47, 1315-1342. Penman, S.H, 1987, The distribution of earnings news over time and seasonalities in aggregate stock returns, Journal of Financial Economics, 18, 199-228. Patell, J.M and Wolfson, M.A, 1984, The intraday speed of adjustment of stock prices to earnings and dividend announcements, Journal of Financial Economics 13, 223-252. Richard Roll, and Stephen Ross, 1986, Economic forces and the stock market, Journal of Business, 59, 383-403. Stoll and Whaley, 1990, The dynamics of stock index and stock index futures returns, Journal of Financial and Quantitative Analysis, 25, 441-468. Wood, and McInish, 1985, An investigation of transaction data for NYSE stocks, Journal of Finance 60, 723-739.

Contracting Considerations Of A Tour Operator Tourism Essay

Contracting Considerations Of A Tour Operator Tourism Essay This report will consider the contracting considerations of a small to medium sized tour operator in relation to providing a report based holiday experience for a clientele from socio-economic bands A and B. The report will consider two key elements namely in the form of accommodation and other services in the resort and transportation of an appropriate type to and from the resort. In considering a possible solution to providing accommodation for the companys guests there are a number of options open to the small to medium sized tour operator. At the one end of the spectrum the tour operator could consider an option of direct investment. Such an option would see the tour operator investing in hotels and accommodation facilities which at the end of the investment the company would own the facilities which could be used for both its own guests and for the purpose of renting out accommodation to other tour operators which capacity allows for such an options (Holloway et al 2009). However, such an option in the circumstances is an unlikely option for the specific company in question. In the first instance the option is an expensive one, investment in hotel and accommodation facilities can cost millions in there initial investment or more, this may be an unsuitable or even unrealisable option for a small to medium enterprise. Secondly, the corporate objectives of the company are to minimise risks, direct investment however, may be seen as a considerably risky option for several reasons. In the first case once established, the company will have long term fixed costs to meet over a prolonged period of time, such a problem is not incurred where a contract based option is undertaken and thus the liability to meet expenses is limited to the agreed contract period which could be as short as a single season or less. Secondly, long term investment an overseas location also implies taking on the national risk which are associated with international trade including exposure to currency fluctuations, interest rates and changes in demand from the consumer perspective (Griffin and Pustay 2010). Again, where a contracting option is considered such exposures whilst still present are limited to a much shorter period of time and thus to a large extent offset. A more realistic option for the company in question may be to consider one of the many contracting options which are available, such contracting options are also wide and varied in nature and include both direct and indirect contracts with accommodation providers as well as a variety of options with regard to the length contracts undertaken (Holloway et al 2009). In the first instance, the company must select between contracting directly with accommodation providers or through the use of a third party agency (Cooper et al 2008). Negotiation directly may help the company to save money by excluding the fees of a third party however, the downside is that the company may have to deal with a large number of accommodation providers each with their own peculiarities and unique circumstances. On the other hand, the company could opt to use another intermediary who will undertake such sub-contracting on the behalf of the tour operator, for the tour operator this reduces complexity in the contracting process in that the tour operator now has only a single point of contact (Holloway et al 2009). However, on the downside the tour operator will now incur additional costs from the fees levied from a third party, in addition the tour operator will also lose a degree of control over the accommodation which is to be provided and arranged by the third party. T his may have an impact upon the tour operator whos clientele falls with the A and B social bands and so have very specific requirements in relation to their individual accommodation needs in comparison to other segments of the market. The next consideration from a contracting point of view is to consider the length and level of commitment in contracting options. Again the tour operator is presented with a wide range of options, at the lowest level of commitment end of the spectrum the tour operator can simply book rooms with accommodation provider in reference to specific levels of demand experienced, such an option means that costs are kept to a minimum and risks from contractual obligations are virtually eliminated (Cooper et al 2008). There is however, an additional risk incurring in that whilst the tour operators liabilities are minimised so are those of the accommodation providers, in short should the tour operator experience a surge in demand and the accommodation providers be unable to meet such a demand do to market forces, the tour operator may be left either having to disappoint customers or have to pay premium prices in order to satisfy the demand. At the other end of the spectrum the tour operator could contract to buy a set number of rooms or even entire hotels for a specific period of time (Holloway et al 2009). In such a case the advantage is that the tour operator has a guaranteed level of availability in a given hotel or resort and thus the risks of not being able to meet demand are off set given that the tour operator has a fixed capacity which it may use as it sees fit. The other major advantage is one of cost linked to economies of scale (Johnson et al 2008), by undertaking longer contracts that purchasing rooms at the spot rate, the tour operator stands to benefit from substantial bulk purchasing discounts as rooms and accommodations purchased over a long period come at a much reduced cost in comparison to shorter periods of hire. However, in such a circumstance the company also incurs some additional risks. Now that the company has entered into a contract for a fixed amount of accommodation the tour operator also has the obligation to pay for the rooms and so needs to be able to fill the accommodation to as close to full capacity as possible throughout the year (Holloway et al 2009). In reality this may mean offering significant discounts at certain part of the year so as to attract enough custom to fill the accommodation, alternatively the tour operator could forego full utilisation however, the contract would see the tour operator still having to pay for the accommodation which has been rented in advance. In addition to accommodation, there are other elements of the resort experience which the tour operator may wish to consider contracting out to third party providers. Key elements include the provision catering services, onsite entertainment and other forms of entertainment and added value services such as tours and excursions of sites of local interest to the clientele of the resort (Singh 2006). From a transportation perspective, the use of scheduled flights has become one of the most important ways travel operators have been able to take advantage of both the flexibility and speed of air travel as part of the holiday package (Holloway et al 2009). Unfortunately due to the constraints of the scenario the travel operator will have look at a number of alternative methods of getting guests to and from the proposed resort of which there are a wide number of options including alternative air transportation options as well as some more creative solutions making use of alternative modes of transport. The first and possibly most feasible option for a tour operator who can not take advantage of scheduled flights to a destination may be to consider using a charter service. Charter services offer to schedule an aircraft for the specific use of a client on a given route, charter options may include a single trip rental but more likely a charter provider will agree with a company such as a tour operator a regular schedule of flights for a season or more (Holloway et al 2009, Cooper et al 2008). There are several advantages for the tour operator if such an option is engaged in. From the passengers perspective, there is almost no difference to if the tour operator had made use of a scheduled flight, the guest will be transported to their destination on an aircraft which functions in all but the same way as one operating on a scheduled route. Secondly, a charter service operates with more flexibility than that of the scheduled flight, the tour operator can choose deviate from the time tab le which would not be an option which scheduled options and there is also flexibility of destination which may include local changes such as using an alternative airport or more radical changes changing the route of the aircraft altogether. There are however, still some drawback of the charter flight option, the main problem would be one of capacity. In the case the scheduled flight the responsibility for filling seats lies with the airline provider and the liability of the tour operator is limited to the number of seats for which they have purchased on any given flight. However, when an aircraft is chartered the cost of the charter becomes a fixed cost and the responsibility for filling seats then becomes the responsibility of the charterer, in this case the tour operator (Holloway et al 2009). The charter option has been a relatively successful option in recent years for tour operators, in some circumstances the model has become so successful that there has become a blur in the boundaries between scheduled and chartered flights. This has been exhibited in both operational elements in that some charter flights are so regular as to almost form a scheduled service including the sale of spare capacity to additional passengers. Secondly many travel operators have sought to consolidate their positions by buying charter aircraft providers and integrating these businesses into the main business unit (Monarch 2010). If the tour operator still wishes to investigate the scheduled flight option further, there is the consideration that a multi-modal transport operation may be considered. In such a case the tour operator may consider purchasing seats to the nearest airport served by a scheduled flight and then arrange onward transport via road rail or water. In many cases this may be an unattractive option, especially where distances are significant. Such an option may become and annoyance for guests and add unnecessary costs for the tour operator. There are however, times when the option may be an appropriate one especially for the upmarket segment. Such circumstances may exist where the tour operator can incorporate the onward transport into the holiday package, this may be possible where the route from airport to resort passes through an area of outstanding natural beauty or a luxury transport option can be added such as a river cruise which serves a duel function as transport and entertainment. Air transport however, is not the only option available to a tour operator one other major option to consider is transportation via water. Water transport has largely declined in recent decades due to the rise of faster and cheaper air transport which also allows access to a wider number of destinations than water based or land routes (Holloway et al 2009). Despite the decline of the standard ocean liner as a mode of transport which is now largely confined to summer transatlantic crossings the market for other water based forms of transport has both stabilised and began to grow again in recent years. The most important development has been a rebranding of the cruise, in past times the cruise as a form of holiday had declined as a function of both poor branding and the rise of alternatives. However, significant investment on the behalf of the industry has seen the holiday rising again in popularity amongst consumers. In selecting a transportation mode suitable for a market segment in socio economic groups A and B one option may be to consider providing a hybrid holiday which takes advantage of the rise in popularity of the cruise linked to the facilities present at the destination. From a pragmatic perspective the tour operator could in effect make use of a cruise ship to transport its guests too the resort making the transport via water an essential part of the holiday package as opposed to being a way of getting to the product in the form of the resort. Once at the destination, the tour operator would have the option of providing a return journey for guests either via the same method or via an alternative such as a charter flight. The major benefit of such an option is that the tour operator would be able to offer a high value added product in which all elements of the package including transportation are considered a part of the holiday. On the downside, the small to medium size of the tour op erator would necessitate the use of a third party to provide a suitable vessel for use. This in turn would add complexity to the operation and there would naturally be a greater limitation on destinations based upon the schedules and services of third party providers as well as the natural constraints imposed by limiting transport options to water based transport. There is also a rail option open to the travel operator, this has become an option with an increased level of feasibility from the UK since the opening on the channel tunnel back in the 1990s. Whilst, rail transport provides fast and efficient transport from the UK to the major cities in Europe, the real problem with this option is one of flexibility. To a large extent destinations will be limited to the major cities within Europe and it may be considered to access to more remote destinations and resorts becomes infeasible and impractical for users of the service. In addition, the large distances and nature of the rail network means that intercontinental options will be largely off limits to a tour operator if looking to use rail as a transportation option. Given the objectives of the company which are largely to reduce risk and the consideration of flexibility the recommendation of this report are that the travel operator opts to convey its guests the resort via a chartered air service model. Such a model would see that the company does not have to risks associated with investing in expensive capital items such as aircraft or ships which would increase the risk profile of the company significantly. In addition, by using an air service the company would also maintain the element of flexibility and speed opening up a wider number of destinations than would be available through land or water based forms of transport. These are both key benefits for the companys target client group in socio economic groups A and B. There are however, still some risks associated with the charter route, whilst the company would not own any specific assets associated with the transport of passengers, the company would still have a fixed capacity of seat for w hich it would need to fill on each flight so as to keep the cost per passenger for a minimum. The risk here is that during periods of low demand the company may have to offer significant discounts in order to fill flights, this may also create a conflict with the companys generic strategy of focusing on the premium end of the market (Porter 2004, Jobber 2007).

Harassment :: essays research papers

An issue that is particularly pertinent to students in the middle phase of schooling is that of harassment. Harassment has been ‘conceived narrowly as involving physical threatening behavior only. It is now generally seen as including verbal forms of aggression, as in the case of ridicule and name calling’.1 This essay will concentrate on the harassment as an issue within the middle phase of schools, years 5 to 10, and investigate what actions or responses are being taken by schools to address the needs of the learners. ‘The full extent of harassment is very hard to detect. It usually happens out of sight, away form teachers and other adults. The people most likely to know what is going on are other children. Children who are being bullied often do not tell anyone because they feel weak or ashamed.’1 This is the issue that needs to be addressed, students will not communicate with teachers/parents or seek help from teachers/parents if they are being bullied. This essay will address this need through how other schools have dealt with this problem. A school of approximately 450 students from middle to low income families reduced their harassment problem by introducing peer mediation. Firstly, changes were introduced within the student council, where a representative from each grade level was elected. Secondly, teachers were to demonstrate a positive role towards the new behaviour management system, and this in turn helped towards their ‘Working It Out’ process, with students getting involved in dealing with the harassment issue. Thirdly, a peer mediation team was setup that dealt with harassment that is more interpersonal. Mediation is now occurring on a regular basis and most issues brought to the mediators are resolved easily. The school intends to continue to expand on the mediation team-training students as others leave school.2 Another school of 750 students in a secondary, coeducational setup included a variety of cultural backgrounds throughout the school. This school recognized that a harassment problem was occurring in the school and a zero tolerance outcome was adapted for the school. There was a survey carried out for students from years 8 – 10 to gain a students perspective on the harassment situation in the school. The result of the survey helped teachers gain an understanding of what areas the harassment problems were prominent. A register was then setup to monitor those harassment and being bullied and workshops were setup for these students.

Essay example --

â€Å"National Socialism: A Menace† (1932) by Ewald Von Kleist-Schmenzin and â€Å"Hitler and Christianity† (1931) are accounts that argued how National Socialism as a new ideology was a threat to the German nation as well as people. These two excerpts are found in Neil Gregor’s Nazism, published by Oxford University Press in 2000. Both authors focus on the issue of race, religion, and political hostility to show how Nazism could become a political ideology that is threatening to anyone considered an enemy as well as peace in the German state and Europe. Ewald Von Kleist-Schmenzin’s â€Å"National Socialism: A Menace† is centered on the idea that National Socialism is a recipe for disaster for the people of Germany. We see this idea in the first paragraph where Schmenzin says, â€Å"the impact of National Socialism is assuming dimensions that threaten our future.† He bases this prediction on his view that National Socialism was turning regular people into violent fanatics. One example of this transformation is seen when Schmenzin described how National Socialism changed the minds of â€Å"workers, who were originally just rationalistically minded.† Another example would be how this new ideology turned the Nationalists and Social Democrats into fierce enemies creating an environment of extreme political polarity. Schmenzin also argues that one of the party’s main objectives is to obtain strict loyalty from the people. Schmenzin says, â€Å"the flow of followers to Hitler is largely a movement of fear and desperation†¦many of them put all their hopes in Hitler and do not want to see the shortcoming of National Socialism.† He also argued heavily of how the National Socialists were rejecting religion to be replaced with the concept of race. According to Schmen... ...e source by Alfons Wild is more compelling because his arguments are presented in the form of logic. He used the fact of how Christianity discourages war and then shows how Hitler believes in a strong military. Wild also shows how race plays a major role in the National Socialist movement because the Aryan race â€Å"has a higher right to life than other races,†v which Wild defines as hate. He combines both these ideas of violence and hatred to explain how National Socialism was not a Christian movement. Schmenzin and Wild’s excerpts contained in Gregor’s Nazism give an idea of what people who opposed National Socialism thought and how they argued the dangerous aspects of Nazism as well as Hitler. The fact that both Authors wrote these excerpts in the early 1930s shows how National Socialism looked unattractive to some even before it gained political power in Germany.

Death Among the Ibo Essay

Although the book Things Fall Apart and The Joys of Motherhood cover about seventy years, the difference between life in 1880s Nigeria and Nigeria in the 1950s is extreme. The Ibo people change from a clan and tribal people to a much less closely knit people much like Europeans or North Americans. The change should not necessarily be construed as an improvement in the life of the Ibo people. When Things Fall Apart begins the Ibo people are much the same as they have been for presumably centuries. They are an agrarian people living close to the land without lives that have isolated and sanitized from death. Death is a natural part of life and is common. They have rules and traditions that have taught them how to deal with death. Although many of their beliefs may seem strange to people in the twenty-first century North America the seem to work well for the Ibo until their traditions are interrupted by European Christian missionaries. The Ibo beliefs have a certain innocence and simplified world view that is remarkably refreshing when compared to today’s efforts to remove death away from society and to prolong death and aging as long as possible. There is a matter of fact character in the Ibo approach to death that makes death both real and normal. There are rules to be followed. When a man dies with a swollen abdomen and swollen limbs, he is not to be buried in the earth because his body would pollute the land (Achebe, 14-15). When an Umuofia girl is murdered, the leaders meet to decide what to do. After discussion they decide they should request compensation for the girl’s death. They elect Okonkwo a young leader who is a self-made man to visit the tribe of the man who has killed the girl and demand that a girl be sent to the Umuofia to replace the girl and another youth be given to the Umuofia as punishment for the murder. There is a balance here that lacks the vengeance of â€Å"an eye for an eye† of the Judeo-Christian culture. Instead it is more of a â€Å"tit for tat† response. Okonkwo visits the neighboring tribe and presents them with the demands of the Umuofia. Clearly there is the threat that war will result if their demand is not met, but it is not made in the â€Å"do it or else† manner common in the twentieth and twenty-first century western civilization. The tribe agrees to the demands of the Umuofia and gives a young girl who is given to the father of the murdered girl. A second youth, Ikemefuna sent to the Umuofia where he is given to the charge of Okonkwo with whom he lives for three years where he is treated like a son Three years later the leaders decide Ikemefuna should be killed to satisfy justice about the girl’s murder. Despite his having treated Ikemefuna as a son, Okonkwo participates in the slaying. He does this in spite of a warning of an elder not to participate because Ikemefuna calls Okonkwo â€Å"Father.† Okonkwo seems surprised about this warning. The decision has been made by the Umuofia leaders and therefore must be followed. There are several interesting attitudes about death and children. Certainly infant death is common among the Ibo. When a child survives infancy and it appears will live to become an adult, the child is said to be staying (Achebe, 42). Similar to this is a belief that some children are reluctant to be born into this world and retain a iyi-uwa that allows them to die so they can be reborn to their mother to torment them. To stop this cycle a medicine man will take the body of the deceased infant and mutilate it so that it will be unable to return, though some have been know to return with a missing finger or mark from the medicine man’s action. Okonkwo who is a renown and admired member of the Umuofia accidentally kills a youth, he and his family are banished. When this happens Okonkwo appears to accept his sentence stoically because it is the established rule. During his banishment European, Christian missionaries move into the area and begin to â€Å"civilize† the Ibo. Laws are made and enforced by hanging and imprisonment. Ibo who suffer such punishment lose their dignity and are no longer the man he had worked to be. When Okonkwo knows that he is going to be killed by the Europeans, he hangs himself rather than submit to the white man’s law. As one might expect from the title Emecheta’s book, The Joys of Motherhood ¸ is more concerned with childbirth and motherhood than with death. It is interesting that the perspective of this book is decidedly written from the female point of view and is concerned with life, instead of the masculine point of view expressed in Things Fall Apart where death is a more prominent concern. In this book death is treated much like it is today. The characters in this book no longer live in the tribal or clan community that Okonkwo lived in where death is considered a normal part of life. Instead they move to the city, Lagos, where they work for low wages doing the chores the more wealthy white people consider beneath them. Here death is not so common and not accepted so easily. When Nnu Ego’s son dies in infancy and she attempts to commit suicide, she is judged as insane until she is able to move on and continue her day to day life. Her dead son’s body is taken away soon to be replaced by the birth of additional children. Death is less acceptable and hidden from the people because the British people don’t want to think about it. Instead they sanitize it and move it away from day to day life. This happens to the Ibo as well as they move into the twentieth century British colonial lifestyle. Unlike the deaths occurring seventy years earlier where the clan is aware of each death and is able to accept it for the sake of the clan, Nnu Ego dies lying at the side of the road unrecognized. She is not missed by her clan or her people who are scattered throughout the country. The lack of concern about the rights of the individual regarding death in Achebe’s book is disturbing. Given today’s sensibilities where the individual is more important than the society the idea of   replacing one murdered girl with another girl to take her place and the idea of offering a hostage as a response to having committed a crime is troubling. People today   want to move on and get on with their lives after death, almost as if they were to acknowledge death, they will be stricken with some horrible contagious disease. Acceptance of death is still a societal problem today. American’s today seem unable to accept it. However, after reading these books, one if forced to wonder which of the approached to death, the 1880s Ibo, the 1950’s Ibo, or that of Americans in 2006 is best. In some ways the 1880s version with its innocent and almost nostalgic response to death seems to the best.

The Tyra Banks Show and Diversity in the Media

Among the most popular among current TV programs is the Tyra Banks Show which is taped live in front of a live audience in New York. The show, which lasts for an hour and is aired in syndication by Warner Bros., debuted in September 2005. Currently running in its third season, the Emmy Award-winning show has aired over 357 episodes and is set to run for at least two more seasons.(www.wikipedia.com) The Tyra Banks Show is a talk-show fashioned after Oprah Winfrey’s Oprah, which banks on its anchor/creator’s celebrity and fame to draw viewers. The show itself is named after the celebrity who lends credibility and ensures a captive audience from the ranks of millions of adoring fans. The show’s main target, however, are women or specifically, young African-American women who can easily identify with or who wish to emulate its host, Tyra Banks. As a talk-show, the Tyra Banks Show is packaged by its producers to provide an equal dose of information and entertainment to its audience, covering a wide variety of topics from beauty to women’s issues and concerns. Among the notable episodes, however, are the ones where the former supermodel goes on undercover missions to reveal to the viewers the experiences of women in vulnerable situations from Tyra’s own first hand accounts (e.g. women who suffer from weight discrimination, women in prison, and women working in strip clubs). The show also tackles the issue of racial discrimination.(www.tyrashow.com) Interestingly, the Tyra Banks’ success is resoundingly similar to Oprah Winfrey’s own success as a celebrity-host due to the fact that each episode of her TV show puts her in unique situations. For instance, Tyra is made to put on heaps of prosthetics to become a 350-pound woman so she can feel how it feels to be discriminated against because of her weight. She also spent a day in prison to better understand the reasons of women’s incarceration. Clearly, the Tyra Banks Show is an attempt at addressing the diversity in American culture and identity. It was created to provide women, especially African-American women, in response to the growth of the African American population which was seen by advertisers as a â€Å"profitable base for sustaining minority media.† (Dickson 2) Consequently, there has been an observable increase not only in the number of African-American actors, actresses, and TV hosts as the demand for African American-oriented television programs have risen. Undeniably, Tyra’s success in breaking through the male-dominated Hollywood talk show industry is a feat in itself and her being African-American at the same time makes it even more tempting to view her as the epitome of empowerment. Her success in The Tyra Banks Show parallels her success as a runway model at a time when White was the ultimate symbol of beauty and the public was reluctant to widen its standards. Tyra Banks is therefore the perfect representation of a woman who broke through stereotypes, which adds gravity to her capacity and credibility to discuss issues and problems that women and African-American populations confront. However, Tyra’s own identity as a media-invented stereotype of beauty for African-Americans (waif-thin, tall, flawless skin, perfect white teeth) has the ability to contradict the causes she supports.   Tyra’s background as a supermodel, coupled with segments in the show featuring beauty tips and â€Å"Tailored by Tyra makeovers† also negate her advocacy for a beauty ideal that goes beyond physical appearance. Nevertheless, the Tyra Banks show fosters a better understanding of diversity and multi-culturalism. Despite its limitations, its success is a revealing indication that African-American representation is slowly but surely gaining ground in the mainstream media. The show is also a reflection on the lives and culture of African-American communities, which makes it an important source of knowledge for understanding and appreciating the diversity in American society. Works Cited: Dickson, J. (2006). The representation of African-American women in television advertisements. McNair Scholars’ Journal, 1: 1-12. The Tyra Banks Show website accessed on 03/15/2008 from Wikipedia.com accessed on 03/15/2008 from