Kinds of System

Is a system that captures, enters stores, retrieves and processes the relevant details of business events, and generates the information/document necessary for running he organization and interfacing with external entities, such as customers. Transaction – Is the process of dlvldlng a body of data Into blocks and spreading the data blocks across several partitions on several hard disks. Features of Transaction Processing Systems 1. Rapid response – fast performance with rapid results 2.Reliability- well designed backup and recovery with a low failure rate 3. Inflexibility – treat every transaction equally. It may be used many times each day which means it has to be precise and inflexible 4. Controlled processing – maintain speclflc requirements for the roles and responsibilities of different employees. Types of -rps Batch processing Is where the Information Is collected as a batch and then processed later on. An example of batch processing is paying by che que.Batch processing is useful for enterprises that need to process large amounts of data using limited resources Batch Processing system Real Time Processing is where all details of the transaction are recorded and changed at the time as It occurs. Examples of real time processing are ATM's. The importance of data In transaction processing: Data security Is Important as data Is often confidential or has a commercial value, herefore, it needs to be protected from unauthorized access.Data accuracy means that the data is correct and that the data is up to date (current) Data integrity describes the reliability of data. This will include statements of data currency, correct entry of data and accuracy of the data. TPS serve two purposes. 1 . To support day-to-day, routine operations by being made accessible to those parts of the organization (as well as to external entities) where they are needed. 2. To feed 1 OFA effectiveness and efficiency of the operations. The computer system media ting between the humans and physical reality in an nventory application.Updates brought about by a transaction are of three types: Adding a new record, such as when a new customer signs up Changing an existing record, such as changes in credit available for a customer when that customer makes new purchases or returns already purchased products Deleting a record, such as when a product is discontinued TPSs are characterized by Large amounts of input/output Large number of users Huge storage requirements Low computational complexity Fast input/output as well as processing capabilities A high degree of concern for potential security related problems A high degree of oncern for reliability and fault tolerance.Five Stages of Transaction Processing Data Entry Processing Database Maintenance Document And Report Generation Inquiry Processing Management Information Systems Provide information in the form of reports and displays to managers and many business professionals to support business decision making. A management information system is an information system that uses the data collected by the managers can use it to make routine business decisions in response to problems. Some of the reports that this information systems creates are summary, exception and ad hoc reports.All this is done to increase the efficiency of managerial activity. Most management information systems specialize in particular commercial and industrial sectors, aspects of the enterprise, or management substructure. Management information systems (MIS), produce fixed, regularly scheduled reports based on data extracted and summarized from the firm's underlying transaction processing systems[5] to middle and operational level managers to identify and inform structured and semi-structured decision problems.Decision Support Systems (DSS) are computer program applications used by middle management to ompile information from a wide range of sources to support problem solving and decision making. Exec utive Information Systems (EIS) is a reporting tool that provides quick access to summarized reports coming from all company levels and departments such as accounting, human resources and operations. Marketing Information Systems (MIS) are Management Information Systems designed specifically for managing the marketing aspects of the business.Office Automation Systems (OAS) support communication and productivity in the enterprise by automating work flow and eliminating bottlenecks. OAS may be implemented at any nd all levels of management. School Information Management Systems (SIMS) covers school administration, and often including teaching and learning materials. Enterprise Resource Planning (ERP) facilitates the flow of information between all business functions inside the boundaries of the organization and manages the connections to outside stakeholders.Advantages The following are some of the benefits that can be attained for different types of management information systems. Co mpanies are able to highlight their strengths and weaknesses due to the presence of revenue reports, employees' performance record etc. The identification of these aspects can help the company improve their business processes and operations. Giving an overall picture of the company and acting as a communication and planning tool. The availability of the customer data and feedback can help the company to align their business processes according to the needs of the customers.The effective management of customer data can help the company to perform direct marketing and promotion activities. Some disadvantages can exist when using a management information system in a company. Expensive Installing a management information system can be expensive for a company. Information technology†while cheaper today than previous years†can represent a significant expense, especially for larger organizations. These systems may also require ongoing support or upgrade fees, which can represen t future fixed cash outflows.Companies must create a budget to pay for these items to ensure the information system stays current with business technology. Attempting to integrate these systems with technology currently in use can also increase expenses. Companies may need to hire maintenance individuals to help keep an electronic information system running smoothly. These individuals often need experience in omputer science functions and other business topics. Not only does this increase labor costs, but it also requires additional training and ongoing education for these individuals.Business technology can change frequently, creating an environment where companies must have trained individuals who can properly maintain computers, websites, servers and other equipment in use by the management information system. Ineffective Management information systems have the potential to become ineffective in a company's operations. As with all computer systems, the management information syst em is only as good as the programmer. Gathering unimportant or non-essential information can delay business decisions because managers must request additional input.Spending too much time reprogramming or correcting issues can also increase the time spent in the decision-making process. Business owners and managers may also need extensive training on new systems, creating a learning curve that will hopefully diminish over time. Unemployment While information, Information Security Selection Software Evaluation Reports, they secure Information Exchange in an Insecure World, Lack of Job security, Dominant culture , there is no privacy, expensive, maintenance and ineffective.

Diversification and Firm Performance

DIVERSIFICATION AND FIRM PERFORMANCE: AN EMPIRICAL EVALUATION Anil M. Pandya and Narendar V. Rao Abstract Diversification is a strategic option that many managers use to improve their firms’ performance. This interdisciplinary research attempts to verify whether firm level diversification has any impact on performance. The study finds that on average, diversified firms show better performance compared to undiversified firms on both risk and return dimensions. It also tests the robustness of these results by classifying firms by performance class.The results show that among the best performing class of firms, undiversified firms have higher returns, but these returns are accompanied by high variance. Whereas, highly diversified firms show lower returns, and much lower variance. Results further show that diversified firms perform better than undiversified firms on risk and return dimensions, in the low and average performance classes. The paper concludes that a dominant undivers ified firm may perform better than a highly diversified firm in terms of return but its riskiness will be much greater.If managers of such firms opt for diversification, their returns will decrease, but their riskiness will reduce proportionately more than the reduction in their returns. In such firms, there will be a tradeoff between risk and return. INTRODUCTION Two seemingly irreconcilable facts motivate this study: one, diversification continues to be an important strategy for corporate growth; and two, while Management and Marketing disciplines favor related diversification, Finance makes a strong case against corporate diversification.With the help of a large sample, this interdisciplinary study tries to address this contradiction in the associative relationship between diversification and firm performance. Diversification is a means by which a firm expands from its core business into other product markets (Aaker 1980, Andrews 1980, Berry 1975, Chandler 1962, Gluck 1985). Rese arch shows corporate management to be actively engaged in diversifying activities.Rumelt (1986) found that by 1974 only 14 percent of the Fortune 500 firms operated as single businesses and 86 percent operated as diversified businesses. Many researchers note a rise in diversified firms (Datta, Rajagopalan and Rasheed 1991, Hoskisson and Hitt 1990). European corporate managers according to a survey, not only favor it but actively pursue diversification (Kerin, Mahajan and Varadarajan 1990). Firms spend considerable sums acquiring other firms or bet heavily on internal R&D to diversify away from their core product/markets.Of late U. S. firms are beginning to moderate their zeal for diversification and are consolidating around their core businesses. But this trend has not affected large Asian corporations which continue to remain highly diversified. As in any economic activity there are costs and benefits associated with diversification, and ultimately, a firm's performance must depend on how managers achieve a balance between costs and benefits in each concrete case. Moreover, these benefits and costs may not fall equally on managers and investors.Management researchers argue that diversification prolongs the life of a firm. Researchers in finance argue diversification benefits managers because it buys them insurance, and shareholders usually bear all the costs of such insurance. Diversification can improve debt capacity, reduce the chances of bankruptcy by going into new product/ markets (Higgins and Schall 1975, Lewellen 1971), and improve asset deployment and profitability (Teece 1982, Williamson 1975).Skills developed in one business transferred to other businesses, can increase labor and capital productivity. A diversified firm can transfer funds from a cash surplus unit to a cash deficit unit without taxes or transaction costs (Bhide 1993). Diversified firms pool unsystematic risk and reduce the variability of operating cash flow and enjoy comparative adva ntage in hiring because key employees may have a greater sense of job security (Bhide 1993).These are some of the major benefits of diversification strategy. Diversification, firm size, and executive compensations are highly correlated, which may suggest that diversification provides benefits to managers that are unavailable to investors (Hoskisson and Hitt 1990), creating what economists call the agency problem (Fama 1980) and managers stand to lose if they become unemployed, either through poor firm performance or bankruptcy (Bhide 1993, Dutta, Rajagopalan and Rasheed 1991, Hoskisson and Hitt 1990).Diversification can also lead to the problem of moral hazard, the chance that people will alter behavior after entering into a contract-as in a conflict of interest by providing insurance for managers who have invested in firm specific skills, and have an interest in diversifying away a certain amount of firm specific risk and may look upon diversification as a form of compensation (Ami hud and Lev 1981, Bhide 1993).Although it may be necessary for a firm to reduce firm specific risk to build relations with suppliers and employees, only top managers can decide what is the right amount of diversification as insurance (Bhide 1993). Diversification can be expensive (Jones and Hill 1988, Porter 1985) and place considerable stress on top management (McDougall and Round 1984). These are the costs of diversification.In the final analysis, this situational argument regarding balancing costs and benefits can only explain the performance of individual firms but it cannot address the theoretical question about the veracity of diversification as a valid corporate strategy. Consequently, following the benefit-cost agreement, whether in general, diversification enhances firm performance becomes an empirical question. Further, recent reviews of the rather extensive literature do not find agreement about the direction of association between firm diversification and firm performanc e.This lack of a clear answer in the literature motivates the present study. The paper is organized in four sections. The first section briefly reviews the empirical literature and presents the research hypotheses. Section two describes the research methodology and operationalizes the dependent and independent variables. Section three presents the results of the study. The concluding section discusses the results and summarizes the findings. REVIEW OF EMPIRICAL LITERATURE AND HYPOTHESIS The impact of diversification on firm performance is mixed.Three recent reviewers (Datta, Rajagopalan and Rasheed 1991, Hoskisson and Hitt 1990, Kerin, Mahajan and Varadarajan 1990), broadly conclude: (a) the empirical evidence is inconclusive; (b) models, perspectives and results differ based on the disciplinary perspective chosen by the researcher; and  © the relationship between diversification and performance is complex and is affected by intervening and contingent variables such as related ver sus unrelated diversification, type of relatedness, the capability of top managers, industry structure, and the mode of diversification.Some studies claim diversifying into related product-markets produces higher returns than diversifying into unrelated product-markets and less diversified firms perform better than highly diversified firms (Christensen and Montgomery 1981, Keats 1990, Michel and Shaked 1984, Rumelt 1974, 1982, 1986). Some claim that the economies in integrating operations and core skills obtained in related diversification outweigh the costs of internal capital markets and the smaller variances in sales revenues generated by unrelated diversification (see Datta, Rajagopalan ; Rasheed 1991).While agreeing that related strategy is better than unrelated, Prahalad and Bettis (1986), clarify that it is the insight and the vision of the top managers in choosing the right strategy (how much and what kind of relatedness), rather than diversification per se, which is the key to successful diversification. Accordingly, it is not product-market diversity but the strategic logic that managers use that links firm diversification to performance; which implies that diversified firms without such logic may not perform as well.Markides and Williamson (1994) show that strategic relatedness is superior to market relatedness in predicting when diversifiers related outperform unrelated ones. Others however argue, it is not management conduct so much, but industry structure that governs firm performance (Christensen and Montgomery 1981, Montgomery 1985). Besides diversification types and industry structure, researchers have also looked at the ways firms diversify. Simmonds (1990) examined the combined effects of breadth (related vs. nrelated) and mode (internal R ; D versus Mergers ; Acquisitions) and found that relatedly diversified firms are better performers than unrelatedly diversified firms, and R ; D based product development is better than mergers and acquis ition- led diversification (Simmonds 1990, Lamont and Anderson 1985). Among studies of acquisitions the results are mixed. Some report that related acquisitions are better performers than unrelated ones (Kusewitt 1985), or there is no real difference among them (Montgomery and Singh 1984).Some studies on breadth and performance find relatedly diversified firms perform better than firms that are unrelatedly diversified (Rumelt 1974, 1982, 1986). Others show confounding effects in firm performance because of diversification category and industry (Christiansen and Montgomery 1981, Montgomery 1985). Recent studies suggest service firms should not diversify (Normann 1984), whereas, Nayyar (1993), shows that in the service industry diversification ased on information asymmetry is positively associated with performance, whereas diversification based on economies of scope is negatively associated with performance. A contradiction of Johnson and Thomas' (1987) confirmation of Rumelt's findin g that the appropriateness of product diversity is judged by a balance between economies of scope and diseconomies of scale. It also appears there is a limit on how much a firm can diversify; if a firm goes beyond this point its market value suffers and reduction in diversification by refocusing is associated with value creation (Markides 1992).Apart from the empirical evidence, the efficient market hypothesis (EMH) holds that competition among investors for information ensures that current prices of widely traded securities are the unbiased predictors of their future value, and that current prices represent the net present value of its future cash flow. Evidence supports the existence of weak, semi- and near-strong forms of market efficiency (Fama 1970). If this view of the market is true, then investors have the information necessary to construct portfolios of stocks to maximize their risk/return strategies for a given amount of resource.Consequently, a firm's management cannot do better for the investor by diversifying into different product markets and create a portfolio that will improve returns or better manage risk than investor’s stock portfolio. Stockholders also do not pay a premium for diversified firms (Brealey and Myers 1996); the market does not value risk/return trade-off positively for unrelated diversification (Lubatkin and O'Neil 1987), and acquiring firms only earn normal returns (Lehn and Mitchell 1993), and not economic rents.Finally, corporate takeovers discipline managers who waste shareholder resources and bust-ups promote economic efficiency by reallocating assets to higher valued uses or more efficient uses (Jensen and Ruback 1983, Lehn and Mitchell 1993). The review of empirical literature from Management/Marketing disciplines and the theoretical and empirical literature from Finance show that the relationship between diversification and performance is complex and is affected by intervening and contingent variables. Taken toge ther, the evidence and arguments presented above seems to suggest that diversified firms (i. . highly unrelatedly diversified firms) as a class, should perform less well than an optimal securities portfolio, and thus for our study we propose the following null hypothesis. Our null hypothesis (H0) is that: Highly diversified firms should perform less well than moderately diversified and single product firms. There are numerous arguments and findings against the null hypothesis proposed above. In certain markets, an investor may face assets constraint in constructing a portfolio, restricting diversification opportunities (Levy 1978).Farrelly, and Reichenstein (1984) show that total risk rather than systematic risk alone, better explains the expertly assessed risk of stocks. Jahera, Lloyd and Page (1987), find well-diversified firms have higher returns regardless of size. DeBondt and Thaler (1985, 1987), argue that the market as a whole overreacts to major events. Prices shoot up on go od economic news and decline sharply on bad news. According to Brown and Harlow (1988, 1993), investors hedge their bets and over react or under react to important news by pricing securities below their expected values.As uncertainties decrease, stock prices adjust upwards, regardless of the direction of the impact of the initial event. The post-event adjustment in prices tends to be greater in the case of bad news than in the case of good news. Haugen (1995) also casts doubts on the validity of the EMH. Finally, Fama and French (1992), changing their earlier stance, argue that the capital asset pricing model (CAPM) is incapable of describing the last fifty years of stock returns, and the beta is not an appropriate measure of risk.This implies that a stockholder may not be better positioned to diversify his portfolio of stocks as compared to a corporate manager as implied by the null hypothesis. On the basis of this discussion, we could argue that market inefficiency may not allow i nvestors to optimally allocate their resources. It can put managers, especially good ones, in a more advantageous position to diversify their product market portfolios and thereby improve firm performance. Thus, our alternate hypothesis (H1) is: that diversified firms perform better in terms of return and risk measures compared to less diversified firms.Thus, on average, diversified firms as a class should perform better than moderately diversified or single-product firms. STUDY DESIGN The availability of the Compustat database has made it possible to study a larger sample of firms over several years and approach the problem of diversification from a more macro perspective. The approach used in this study is akin to that of military historians who examine past battles and in the context of operational tactics conclude that combatants with greater orce (material and manpower) tend to win more often. Those with insufficient force need the advantage of mobility and surprise to neutrali ze superior force in order to win. These insights, based on outcomes of many battles, allow historians to disengage from contingencies and specificities of stewardship and terrain. This does not imply that situational specifics should be ignored in planning military campaigns. The finding only points out the general truth of certain tactics.Similarly, in the context of the conduct of business strategy, we could also first examine the performance of diversified firms without regard to specifics of strategy, like type, breadth, modality and industry, and figure out if in general, the average performance of diversified firms is better than that of undiversified firms. The diversification literature is unable to demonstrate that diversification type, breadth, modality, and industry have consistent and predictable impact on performance. We therefore treat these as situational contingencies and do not take them into account.Earlier studies of diversification use cross sectional data, smal l samples and single measures of performance. We on the other hand, examine a large sample of firms with data over a seven year period. We use about two thousand firms, and multiple performance measures. The starting point of our main study is 1984, the earliest data point for segment information available on the Compustat database. Specialization Ratio (revenue from a firm's largest segment divided by its total revenue) as the dependent variable measures the extent of diversification.Accounting and market returns, their variability, coefficient of variation, and the Sharpe Index are the independent performance variables. The study also tests the robustness of classification of firms based on SR ratios. For this part of the study, the data is available from 1981. It also tests the robustness of results based on the extent of performance and the degree of diversification. MEASUREMENT OF CONCEPTS Diversification is treated as the independent variable in this study. As a policy variabl e, managers can control the extent of diversification desired, and performance is the dependent variable.This section defines and operationalizes these concepts. Diversification This study uses Specialization Ratio (SR) to classify firms into three classes of diversification. Its logic reflects the importance of the firm's core product market to that of the rest of the firm (Rumelt, 1974, 1982; Shaikh ; Varadarajan, 1984). After we started this work some researchers have argued that the entropy measure of diversification is probably a better one. We leave it to future research to test the robustness of SR versus other measures of diversification.Operationally, SR is a ratio of the firm's annual revenues from its largest discrete, product-market activity to its total revenues. In the diversification literature, SR has been one of the methods of choice for measuring diversification. It is easy to understand and calculate. TABLE 1 Values of Specialization Ratios in Rumelt's and Our Cla ssification Schemes SR Values in Rumelt’s Scheme SR Values in Our Scheme Undiversified, Single Product Firms SR ? . 95 SR ? 0. 95 Moderately Diversified Firms 0. 95 ; SR ? 0. 7 0. 95 ; SR ? 0. 5 Highly Diversified Firms SR ; 0. 7 SR ; 0. 5 Performance Management researchers prefer accounting variables as performance measures such as return on equity (ROE), return on investment (ROI), and return on assets (ROA), along with their variability as measures of risk.Earlier studies typically measure accounting rates of return. These include: (ROI), return on capital (ROC), return on assets (ROA) and return on sales (ROS). The idea behind these measures is perhaps to evaluate managerial performance-how well is a firm's management using the assets (as measured in dollars) to generate accounting returns per dollar of investment, assets or sales. The problems with these measures are well known. Accounting returns include depreciation and inventory costs and affect the accurate reporting of earnings.Asset values are also recorded historically. Since accounting conventions make these variables unreliable, financial economists prefer market returns or discounted cash flows as measures of performance. For the sake of consistency, we use two accounting measures: ROE and ROA; along with market return to measure performance. Return on equity (ROE) is a frequently used variable in judging top management performance, and for making executive compensation decisions.We use ROE as a measure to judge performance and calculate the average return on equity (AROE) across all sampled firms and time periods, its standard deviation and also the coefficient of variation for each of the three diversification groups. ROE is defined as net income (income available to common stockholders) divided by stockholders equity. The coefficient of variation (CV) gives us the risk per unit of average return. ROA is the most frequently used performance measure in previous studies. It is defined as net income (income available to common stockholders), divided by the book value of total assets.We also calculate the average return on assets (AROA) across all sampled firms and time periods calculate its standard deviation and also the coefficient of variation for each of the three diversification groups. Market return (MKTRET), is the third dependent variable we use. MKTRET is computed for a calendar year by taking the difference between the current year's ending stock price, and the previous year's ending price, adding to it the dividends paid out for the year, and then dividing the result by the previous year's ending price.This study includes companies for which complete data to calculate the variances used is available on Compustat PC- Plus for the period 1984 through 1990. In addition, we calculate the average market return (AMKTRET) for each of the three groups, the standard deviation of AMKTRET, and the Sharpe Index (Sharpe, 1966), a commonly used risk-adjusted performance measure. It measures the risk premium earned per unit of risk exposure. RESULTS AND DISCUSSION As mentioned earlier, Table 1 presents comparison of breaks between Rumelt’s classification and the modified version.Using the Compustat database we then classified 2637 firms using Rumelt’s classification scheme for the years 1981-1990. Table 2 presents the AROE and its standard deviation using Rumelt’s classification. While we intended to calculate AROA and MKTRT for this data set we were unsuccessful because of the problem of missing data. The 1984 – 90 data set proved to be better and was used for the alternate classification scheme for all the three performance variables. Using the same Compustat database, we classified 2188 firms in three groups: Single Product Firms (SR ; 0. 5), Moderately Diversified Firms (0. 5 ? SR ? 0. 95), and Highly Diversified Firms (SR ; 0. 5), for each of the seven years, from 1984 to 1990, for which complete segmental data was available. We kept only those firms in the sample that remained in the same SR category for the entire seven year period, and had all the data for computing the variables. After classification, we calculated each of the three performance variables: return on equity (ROE), return on assets (ROA), and market return (MKTRET), for each firm in each of the three groups, for each year from 1984 to 1990.We also calculated the average ROE (AROE), average ROA (AROA), and average MKTRET (AMKTRET), first by averaging across the seven years for each firm, and then by averaging across firms by pooling across the years, along with their standard deviation, and coefficient of variation. Tables 3, 4 and 5 present the results. The number of firms in each performance group varies slightly because we had to ensure that the data was available for all variables, for all the seven years. Statistical ProcedureThe test of the null hypothesis requires a test of equality of means of each classification group , and for each performance variable. While the study may indicate one way analysis of variance (ANOVA), it is not a robust test. The application of ANOVA requires that the data set meet three critical assumptions: first, the test is extremely sensitive to departures from normality; second, the assumption of homogeneity of variance is necessary; and third, the errors should be independent of group mean.While for our study the first and the third assumptions checked out, the second assumption regarding the homogeneity of variance failed. We carried out Hartley's test of equality of variance for each performance variable. This test confirmed that variance of the three groups is unequal for each performance variable. We faced the Beherens-Fisher problem or checking for equality of means when variances of the underlying population are unequal. Such situations indicate Cochran's approximation test for hypotheses testing (Berenson and Levine 1992).This test requires us to test the null hyp othesis of equality of means, taken two at a time, and according to the test we must reject the null if the t (observed) exceeds t (critical) at chosen levels of significance. (Statistical information available from authors by request) TABLE 2 Performance Based on Rumelt's SR Classification Scheme: ROE-1981-1990 N AROE SD CV Undiversified Firms (SR ? 0. 95) 1663 3. 8 277. 73. 13 Moderately Diversified (. 95 < SR ? .7) 371 2. 3 181. 2 78. 78 Highly Diversified (SR < . 7) 603 9. 9 100. 9 10. 25 Results Classification Methods: Comparison and a Test of Robustness Table 1 compares the breaks in SR values. Table 2 reports the results using Rumelt's scheme with 1981-1990 data, and Table 3 reports the results using our scheme with 1984-1990 data.The first column in Table 2 shows the three categories of diversification based on SR values; N stands for the number of firms that remained in the same group for the period 1981-1990, and had performance data for the entire period under study; ARO E stands for the average of the ROE calculated over N firms; SD stands for the standard deviation of AROA; and CV represents the coefficient of variation, given by the ratio of SD divided by the AROE, representing the risk per unit average return. Tables 3 through 5 follow the same layout for ROE, TABLE 3 Performance As: Return On Equity (AROE)-1984-1990N AROE SD CV Undiversified 1844 -1. 6 323. 3 NA Moderately Diversified 315 32. 7 409. 4 12. 52 Highly Diversified 23 14. 6 9. 8 0. 67 N= Sample Size, AROE= Average Return on Equity, SD= Standard Deviation, CV= Coefficient of VariationROA and MKTRET. The highly diversified group in Table 2 has AROE of 9. , SD equal to 100. 9 and CV of 10. 25; the moderate group has AROE of 2. 3, SD equals 181. 2 and CV equals 78. 8. The Undiversified group AROE is 3. 8, SD 277. 9 and CV 73. 1. The highly diversified group has the highest AROE, the lowest Standard Deviation and the lowest Coefficient of variation. The results are in the expected direct ion. The results follow the expected path with the exception that AROE of the moderate group is less than that of the undiversified group but the mean values are not far apart and the difference is statistically insignificant.The result for the undiversified and the highly diversified groups are as expected. The SD values are also in the expected direction. Compare these results with results obtained in Table 3. Table 3 shows the relationship between the degree of diversification and group-wise performance measured by ROE. The sample consists of 1844 single product firms with SR greater or equal to 0. 95. The average ROE of these firms over the seven year period is -1. 6 percent, with a SD of 323. 3. The moderately diversified group with SR between 0. 95 and 0. , has 315 firms. The AROE of the group equals32. 7 percent and the SD equals 409. 4. While the AROE of this group is clearly superior to that of single productfirms, the group shows high ROE variability. Thus, the moderately diversified group shows an slightly improvedrisk-return profile. The third group with SR values of less than 0. 5, is the smallest, and includes only 23 firms. The average ROE of the group equals 14. 6 or about half that of the second group, with SD of 9. 8, which is much lower than the first and the second group.The CV is the lowest at 0. 67, which is about 1/20 of the moderate group. Table 3 shows that while highly diversified firms have lower risk than moderately diversified firms; moderately diversified firms have higher average ROE compared to highly diversified firms. It also shows that single product firms have lower risk than moderately diversified firms, but moderately diversified firms have much higher returns. When we combine the return and risk measures as given by the coefficient of variation CV, we do see consistent results, i. e. that highly diversified firms have better risk-return profile than moderately diversified firms; and moderately diversified firms perform be tter in risk-return terms when compared to single product firms. We find that the Tables 2 and 3 show results in expected direction. The highly diversified groups have higher AROE and lower SD compared to the other two groups. This comparison of the two classification schemes shows sufficient consistency especially in the two extreme groups to strongly suggest that performance tends to be invariant to classification breaks.The comparison also demonstrates the validity of using the more pronounced classification scheme used in this study. Performance as Return on Assets and its Variability Table 4 shows the relationship between the degree of diversification and group-wise performance based on ROA. The sample consists of 1848 single product firms with SR greater or equal to 0. 95. The AROA of these firms over the seven year period is – 1. 9 percent, with a SD of 38. 2. TABLE 4 Performance As: Return On Assets (AROA)-1984-1990 N AROA SD CV Undiversified 1848 -1. 38. 2 NA Moderat ely Diversified 316 4. 0 5. 0 1. 25 Highly Diversified 24 5. 8 2. 7 0. 47 N= Sample Size, AROA= Average Return on Assets, SD= Standard Deviation, CV= Coefficient of Variation The moderately diversified group with SR between 0. 95 and 0. 5 has 316 firms. Its AROA equals 4 percent with a5 percent SD. In absolute terms, the AROA of this group is higher than that of undiversified firms and has lower SDof 5. 0 percent, as compared to 38. percent of the first group. The CV is positive at 1. 25, which shows a much improved risk-return profile. The third group of the highly diversified firms includes 24 firms, with AROA of 5. 8 and SD of 2. 7. These values are lower than the first and the second group. The CV of this group is high at 0. 47, being 38 percent of the moderate group. Statistical results in Table 2 show that as we move from undiversified group of firms to the highly diversified group of firms, the average return on assets increases, and the variability of ROA as given by SD decr eases, and CV or the risk per unit return decreases.Statistically, according to Table 4, the above results are significant at the 1% level. Based on these findings reject the null hypothesis. Performance as Market Return Table 5 reports group-wise markets return performance. The sample consists of 1195 firms in the single product category, and 280 and 23 firms in the moderately and highly diversified groups. The sample for each group is smaller than it was for AROA and AROE because we eliminated firms that did not have complete information for the period under study.The average market return AMKTRET of the undiversified group over the study period is 8. 2 percent. The SD is 21. 1, the risk per unit of return as measured by the CV is 2. 57 and the Sharpe Index is 0. 0421. The moderately diversified group with SR between 0. 95 and 0. 5 has 280 firms. Their AMKTRET equals 13. 2 percent and the SD equals 40. 8 percent. Whereas, the average market return of this group is clearly superior to that of the single product firms, the group shows higher variability as compared to the first one. The CV, i. e. , the risk per unit return also is higher at 3. 8. The Sharpe Index of the moderate group is 0. 1443, about three times higher than the first group, and is in the expected direction. The third group includes 23 firms. Its AMKTRET equals 16. 3, with SD of 10. 1, which is much lower than the first and the second group. The CV is 0. 67, about a fourth of the first group. The Sharpe Index at 0. 89 is about six times higher than that of moderately diversified firms. Table 5 shows that the average market return for the highly diversified group is higher than the moderately diversified group, followed by the single product group.The variability of market returns of the highly diversified group is lower than firms in the single product group. Moderately diversified firms on average have a higher market return, but higher risk than single product firms. The Sharpe Index, the i nverse of which gives us risk per unit return, and is a better risk-return measure, shows that the performance of highly diversified firms is much better than the moderately diversified ones, and performance of moderately diversified firms is better than single product firms. TABLE 5 Performance As: Market Return (AMKTRET)-1984-1990N AMKTRET SD CV SI Undiversified 1195 8. 2 21. 1 2. 57 0. 0421 Moderately Diversified 280 13. 2 40. 8 3. 08 0. 1443 Highly Diversified 23 16. 3 10. 1 0. 67 0. 8900 N= Sample Size, AMKRET= Average Market Return, SD= Standard Deviation, CV= Coefficient of Variation, SI= Sharp’s Index Analysis of ResultsStatistical analysis of the results in Tables 3, 4 and 5 are reported in Table 6. These results look strong. They `show that performance of firms as measured by all the variables in the undiversified group is markedly below that of the firms in the highly diversified group and that these results are statistically significant. The results also show that the performance of firms in the moderately diversified group is better than that of the firms in the undiversified group. These results are also statistically significant.The performance difference between the moderate and highly diversified group however, is not always that clear. When measured on AROA, Sharpe Index and CV, the results are in the expected direction and significant, but when performance is measured by AROE and its SD, and AMKTRET and its SD, the results are not as clear. TABLE 6 Statistical Analysis of Performance Variables STATISTIC AROA AROE AMKTRET n 729. 33 727. 33 499. 3 F max (3,n) 20. 17* 1747. 78* 16. 32* F12 58. 37* 0. 67*+ 0. 27+ F23 3. 43* 1747. 78* 16. 32* F13 200. 17* 1088. 33* 4. 45* t’12 6. 29* 1. 41**** 1. 9** t’23 2. 91* 1. 86*** 0. 96*+ t’13 7. 38* 2. 08*** 3. 07* *Significant at 0. 01 or less; **Significant at 0. 025; ***Significant at 0. 05; ****Significant at 0. 1; *+Significant at 0. 25; +Not significant. The results sugge st that we can reject the null and accept the alternate hypothesis: that higher the degree of diversification, greater is the average performance, measured in risk-return terms.The following paragraphs analyze the results for each performance variable in greater detail. Analysis of Results by Performance Class We further massage our data by subdividing each diversification category: undiversified, moderately diversified, and highly diversified, into three performance classes by adding and subtracting one standard deviation from the average ROE. Thus, each category is divided into three performance subclasses: Average ROE + 1 Std. Dev. ; Average ROE; and Average ROE – 1 Std. Dev†¦ This gives rise to a total of nine performance classes, three for each level of diversification.If the hypothesis that the higher the degree of diversification, the higher the performance is robust, then we should expect it to hold when we compare performance across the performance sub-classes. That is; the high, average and below average ROE performance of highly diversified firms should be higher than the respective performance of the three moderately diversified groups, and each of the three moderate performance groups should have higher average ROE as compared to each of the three undiversified groups.If this relation holds then we can say with greater degree of confidence that diversification of firms leads to higher performance for all classes of firms. We, therefore, hypothesize that the best, the average and the medium performing groups demonstrate a consistent pattern of performance across the three diversification groups on both risk and return dimensions. Table 7 shows classification of firms based on degree of diversification and by performance class. These results are both in expected and unexpected directions.The performance for the low and average performing firms, both in terms of risk and return diversification is in expected directions. But the results fo r the high performance group is found to be in the expected direction only for risk, while for the return measure the performance is in the opposite direction. In the worst performance sub-class, the AROE of undiversified firms is -59. 53, and the SD is 103. 16. As we go toward increasing level of diversification, AROE performance increases to -5. 78 and SD drops down to 5. 58 for the moderate group. For the highly diversified group, AROE becomes +2 and SD falls to 0. 2. In the average performance sub-class, the AROE for the undiversified group is 2. 46, and SD is 6. 87. For the moderately diversified group, ROE increases to 4. 21 and SD falls to 2. 91. For the highly diversified group, AROE increases to 5. 27 and SD falls 1. 60. The results for these two performance sub-classes are consistent with the results obtained for the entire group as shown in Table 3. The results for the best performance sub-class show interesting results. The AROE for the undiversified group is 35. 28 and the SD is 36. 44. AROE for the moderately diversified group decreases to 12. 9. SD also decreases to 3. 3. For the highly diversified group, AROE drops to 9. 52, nearly a fourth of the undiversified group, and the SD decreases to 0. 87, one thirty sixth of the undiversified group. Clearly the results for the best performance class are contrary to earlier findings as far as ROE is concerned, but they are in expected direction as far as standard deviation is concerned. We are, however, able to reject the null hypothesis if we look at CV (Risk per unit return). The value of CV decreases as we move from undiversified to highly diversified group.These results suggest that dominant firms operating with core competencies and operating in less competitive environments are better off concentrating on one business segment. Our results show that such firms have superior returns but are unable to diversify away market risks. These firms may waste investor resources by diversifying into other bu sinesses. On the other hand, firms operating in markets where they face considerable competition and have fewer core competencies, or are unable to dominate their markets, they are likely to be better off diversifying, as it would reduce risk for such firms and increase average returns.SUMMARY AND CONCLUSIONS The study began with questions regarding discrepancies in empirical and theoretical investigations into the relationship between firm diversification and performance. Our results suggest that the average performance of diversified firms (especially highly diversified ones) perform well on a risk-return basis on accounting measures as well as market-based measures, when compared with group of firms that are not as highly diversified. Managers tend to judge performance using accounting measures such as ROE and ROA where as financial markets use market-based measures such as MKTRET.Our results show that on both types of performance measures, the group of diversified firms on avera ge tends to perform better. The data show that with an increasing degree of diversification, the average return on assets, average return on equity and average market return, increase and the average risk per average unit return decreases. The results are clearer when comparisons are made between the highly diversified and the undiversified group, and the moderate and undiversified groups. The results are not as sharp when we compare results between the moderately diversified and the highly diversified group.The implication of the finding is that in general diversification is helpful but it does not tell us how much of it is helpful. Additional research on economies of scope for these groups of firms may throw some light on this issue. The marginal ambiguity between the moderate and the highly diversified groups may also be the result of eliminating the contingent variables like type, modality and extent of diversification. Controlling these variables may provide greater insight and clarify the differences between the moderate and the highly diversified groups of firms and lend support to theory building.The most surprising finding of our study was about the class of â€Å"best performing† firms. The study found that AROE of undiversified firms was four times better than the highly diversified firms, but such firms had 36 times the volatility of the highly diversified firms. This result implies that the best performing firms, if they diversify, will reduce their earnings, but dampen the volatility of their returns. Managers of such firms therefore will be tempted to dampen the volatility of returns by diversification.Such actions, according to this study will lead to a reduction in returns, but the reduction in volatility of returns will be much greater. This is clearly beneficial to managers and employees of the firm, but a benefit of such insurance for the shareholders is not as clear. The implications for investors are that, if they risk such high pe rformance, they ought to stay in for the long haul, and have high tolerance for volatility. But even for this class of firms based on coefficient of variation, we feel that the average performance of highly diversified firms tends to be better than that of the undiversified firms.One must judge Jack Welch, the CEO of General Electric (GE) in this context. GE's top management group insists that each of their divisions must be either number one or number two in their specific product markets. Thus GE, a high performing conglomerate is trying to emulate characteristics of a dominant undiversified firm at the product market level in order to earn very high returns and concomitantly it practices the art of being an aggressive and active conglomerate at the corporate level to reduce the risk engendered by dominant firms.But not all high performing firms are as careful, well managed or lucky. The study echoes the belief of senior corporate executives who think diversification enhances firm value because it contributes to improvement of the firm's risk-return profile. The results also speak to the concerns of investors. Diversification, especially for the truly high performing firms reduces risk but at the cost of returns. There is undoubtedly a trade-off here between risk and return when managers of such single firms diversify from their core business.Thus diversification does buy insurance for the managers which may help managers and employees more than investors. But in the case of the average and the low performing single firms (most likely the non dominant firms), gain from diversification in return and risk terms, seem significant. The moderate and highly diversified groups also benefit from diversification on risk and return dimensions but their performance is not stellar by any stretch of the imagination. One can argue that diversification tends to reduce the already severe competitive threat faced by the majority of firms in these groups.The implications for investors follow suit. They are better off picking stocks of well-diversified firms as these deliver better returns over time as compared to moderately diversified or undiversified firms. The finding that on average, highly diversified firms, including conglomerates, show better performance than single product firms or moderately diversified firms, supports the belief of corporate executives but is contrary to the viewpoint of research in finance. A classification scheme by definition remains arbitrary, no matter how well we justify the scheme.The only safeguard against such arbitrariness is to demonstrate that the results of the study are invariant to changes in arbitrarily set classification boundaries. We were somewhat successful in showing that changing classification boundaries did not change the thrust of our results. Both methods showed that AROE of highly diversified group of firms was greater than that of the undiversified group. But this still is a fruitful direction for f uture research. We were able to examine ROE alone because of data limitations.The 1981-1990 data set was not consistent for all the variables and segments of businesses. Other variables need to be tested. Researchers may also want to know if, at what point, the results are no longer invariant to SR classification values. Our study has several other limitations. The research period (1984-1990) of this study does not match the time periods reported in earlier studies. If diversification matters as a strategy, then it ought to do so no matter what the time period. This study has examined pooled time series data and finds the results consistent with expectations.Subject to the availability of data, replication over different time periods will adequately address this issue. Economic arguments require that we measure performance in terms of cash flows. We do need to look at the net present value of cash flows to make strong statements about the usefulness of a diversification strategy in the capital budgeting sense. Market return may be a reasonable substitute but the examination of the net present value of cash flow may be necessary from the point of view of the stock market. This is left to future research.Although SR is an acceptable measure of diversification, the entropy measure (Hoskisson, et. al. , 1993) has become an important and probably a better measure of diversification. This study was extensive enough. Perhaps multiple measures of diversification in a future study will alleviate methodological concerns about the appropriateness of diversification measures. The research design of this study differs somewhat from similar earlier studies, and as stated at the outset, it does not address the question whether investor portfolios outperform diversified firms.Therefore, while addressing several possible objections, we urge caution in accepting these results, and suggest future research to verify the findings reported here. Finally, this study examines the ass ociation between corporate diversification and performance per se. It does not address the differences in performance caused by types of diversification, like related, or unrelated; nor does it use modifying variables like firm size and other firm-level factors, or modalities of diversification such as internal product development or mergers and acquisitions.The results of this study are interesting enough to warrant the inclusion of variables that control for industry structure and contingency variables such as interest rates or the state of the economy; or underlying managerial motivation like risk reduction, agency problem, or moral hazard. Such controls will provide greater insight into the diversification strategy, as a practice and as a phenomenon.

Consumerism Driven By Capitalistic Greed Essay - 1235 Words

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Essay on Crime Typologies - 3922 Words

| | | ABSTRACT The objective of this paper is to recognize the different types of Crime Typologies such as violent crime, property crime, enterprise crime, and public order crime. It examines each crime by giving the definitive analysis of the crimes as well as the many examples that fall under the specific crimes. This paper aims to answer some of the questions most criminologists face as well as our society as a whole. Questions such as, how often are these crimes committed? What possesses individuals to commit these crimes? How does society actually view these crimes? Have these crimes become so imbedded in our society that we are starting to consider this part of the normal way of life? Included in this†¦show more content†¦Although most of violence in the media focuses on violence by strangers, it is reported that most violent crimes are perpetrated on family members or acquaintances (Gale, 2001). 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Sustainability Of The Triple Bottom Line - 1817 Words

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Autoethnography Essay Example For Students

Autoethnography Essay In Arts of the Contact Zone, Mary Louise Pratt introduces a term very unfamiliar to many people. This term, Autoethnography Essay, means the way in which subordinate peoples present themselves in ways that their dominants have represented them. Therefore, autoethnography is not self-representation, but a collaboration of mixed ideas and values form both the dominant and subordinate cultures. They are meant to address the speakers own community as well as the conquerors. Pratt provides many examples of autoethnography throughout her piece, including two texts by Guaman Poma and her son, Manuel. Although very different in setting, ideas, and time periods, they accomplish the difficult goal of cross-cultural communication. Guaman Poma, an Andean who claimed noble Inca descent, wrote a twelve hundred page long letter in 1613 to King Philip III of Spain. This manuscript was particularly unique because it was written in two languages, Spanish and Quechua, the native language of the Andeans. Quechua was not thought of as a written language . . . ., nor Andean culture as a literate culture (584). This letter proved the theory wrong. Somehow, Poma interacted with the Spanish in a contact zone, which is a social space where cultures meet, clash, and grapple with each other (584). This communication forced him to learn the Spanish culture and use it to his advantage. With his new found knowledge, he presented to the world a piece of work that incorporated Andean customs and values with European manners and ideas, exemplifying the idea of cross-cultural communication. The only flaw in his piece was that it never reached its intended recipient and therefore, did not get recognized until it was three hundred fifty years too late. Poma combines his Andean knowledge with his Spanish knowledge. He constructs his text by appropriating and adapting pieces of the representational repertoire of the invaders (589). At one point, he makes the Spaniards seem foolish and greedy. The Spanish, . . . ., brought nothing of value to share with the Andeans, nothing but armor and guns with the lust for gold, silver, gold and silver. . . . (587). It is obvious from this quote that Poma intentionally exaggerates the Spaniards to be an avaricious people. He believes that they have brought nothing useful to the Andeans but ways of greed and a hunger for power. By writing in their own language, Poma shows his oppositional representation of the Spaniards. His transcultural character is not only seen in the written text, but also in the visual content of some four hundred pages. The drawings show the subordinate-dominant plane of the Spanish conquest. They depict the Inca way of life, as well as the greedy nature of the Spanish. The drawings themselves are European in style, but deploy specifically Andean systems of spatial symbolism that express Andean values and aspirations (589). In Andean symbolism, the height at which a person or people are drawn indicate their power and authority in society. Poma mocks the Spanish in one of his drawings by showing the Andean and the Spaniard at the same level, knowing that the Spanish believed that they were the dominant culture. His drawings, along with their own individual autoethnographic captions, help to emphasize the transcultural symbolism and nature of his manuscript. Together, they accentuate the ideas of autoethnography. Pomas letter is not Pratts only way of exhibiting an autoethnographic text. She also uses her son, Manuels, experiences in grammar school to further emphasize her point of cross-cultural communication. The teacher-pupil relationship is just one of many examples of a dominant-subordinate relationship. The teacher gives out a task and the student is expected to obey the command. In this particular situation, Manuels teacher asks them to write a paragraph using single-sentence responses to a few questions. Manuel, unwilling to be the subordinate, tries to resist the assignment in a clever way, since he is expected to identify with the interests of those in power over him-parents, teachers, doctors, public authorities (592). .ue3de3df60b864c1730a3fbb8eaeb2728 , .ue3de3df60b864c1730a3fbb8eaeb2728 .postImageUrl , .ue3de3df60b864c1730a3fbb8eaeb2728 .centered-text-area { min-height: 80px; position: relative; } .ue3de3df60b864c1730a3fbb8eaeb2728 , .ue3de3df60b864c1730a3fbb8eaeb2728:hover , .ue3de3df60b864c1730a3fbb8eaeb2728:visited , .ue3de3df60b864c1730a3fbb8eaeb2728:active { border:0!important; } .ue3de3df60b864c1730a3fbb8eaeb2728 .clearfix:after { content: ""; display: table; clear: both; } .ue3de3df60b864c1730a3fbb8eaeb2728 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .ue3de3df60b864c1730a3fbb8eaeb2728:active , .ue3de3df60b864c1730a3fbb8eaeb2728:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .ue3de3df60b864c1730a3fbb8eaeb2728 .centered-text-area { width: 100%; position: relative ; } .ue3de3df60b864c1730a3fbb8eaeb2728 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .ue3de3df60b864c1730a3fbb8eaeb2728 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .ue3de3df60b864c1730a3fbb8eaeb2728 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .ue3de3df60b864c1730a3fbb8eaeb2728:hover .ctaButton { background-color: #34495E!important; } .ue3de3df60b864c1730a3fbb8eaeb2728 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .ue3de3df60b864c1730a3fbb8eaeb2728 .ue3de3df60b864c1730a3fbb8eaeb2728-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .ue3de3df60b864c1730a3fbb8eaeb2728:after { content: ""; display: block; clear: both; } READ: Divorce A Life Changing Experience Essay His mockery of the task is seen right from the title of his paragraph, A Grate Adventchin. The words of the title are not misspelled because Manuel is not a good speller, but are purposely misspelled because of his intent to defy the authority figure, .

Outdoor-lifestyle retailer Essay Essay Example

Outdoor-lifestyle retailer Essay Essay Executive Summary BBQfun will be the taking outdoor-lifestyle retail merchant. catering to the turning demand for supplying new and renovated homes in the greater Brisbane country. The mixture offer of BBQs. out-of-door furniture and BBQ accoutrements will place BBQfun as best inclass for outdoor-lifestyle retailing. BBQfun will reinvent the manner people shop for outdoor-lifestyle merchandises. BBQfun will construct its repute on offering the fullest mixture of merchandises possible in our chosen Fieldss. integrating both local and imported goods with merchandises sold on easy to pull off long-run payment programs. Our after gross revenues service and 3 twelvemonth warrants will happen grip with a market dominated by low-quality. Situation Analysis BBQfun is close to come ining its 5th twelvemonth of operation. We will write a custom essay sample on Outdoor-lifestyle retailer Essay specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Outdoor-lifestyle retailer Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Outdoor-lifestyle retailer Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Te initial rollout of shops has been good received. and selling is now critical to its continued success and future profitableness. The shop offers wide-ranging outdoor-lifestyle points on easy to pull off payment footings and supplies a three twelvemonth warrant on every point sold. The basic market demand is for quality. stylish and alone outdoor-lifestyle points that caters to the house-proud demands of our market. Market Summary BBQfun possess good information about the market and knows a great trade about the common properties of our most prized and loyal clients. BBQfun will leverage this information to better understand who is served. their specific demands. and how BBQfun can break communicate with them. Market Demographics †¢ Accessibility. The frequenter can derive easy entree to the shop with minimum delay. †¢ Customer service. The frequenter will be impressed with the after gross revenues service and Guarantees. †¢ Competitive pricing. All products/services will be competitively priced comparative to comparable high-end outdoor-lifestyle lines. Above all. BBQfun believes that easy to entree shops with extended picks in our chosen Fieldss. that are sold on an easy to pull off payment program with a three twelvemonth warrant are the keys to our customer’s demands and wants. Market Tendencies The market tendency for outdoor-lifestyle shops is headed toward a more sophisticated and informed client. The outdoor-lifestyles frequenter today relative to yesterday is more sophisticated in a figure of different ways. †¢ Item quality. The penchant for high-quality points is increasing as clients are larning to appreciate the qualitative differences. †¢ Unique. Our frequenters appreciate the chance to include outdoor-lifestyles in their place that stand out from the mass produced and sold low quality points. †¢ Selection. Peoples are demanding a larger choice of picks. they are no longer accepting a limited offer in outdoor-lifestyles. The ground for this tendency is that within the last twosome of old ages at that place has been an detonation of media in the signifier of Television shows and magazines that have promoted alien and different outdoor-lifestyles. Our frequenters no longer necessitate to accept a limited figure of options. With more picks. frequenters have become more sophisticated. This tendency is intuitive as you can detect a more sophisticated frequenter in larger metropolis markets such as Sydney or Melbourne where there has been more picks available. BBQfun strongly believes that clients are more interested in scope of merchandises. after gross revenues service and easy to pull off payments than any other issues. These are the grounds that they will shop with us and go loyal frequenters. Technological developments with the broadband rollout across greater Brisbane and Australia is opening up important chances for cyberspace shopping and for supplying information for our clients about our merchandise scope. Market Growth In 2008. the National outdoor-lifestyle market reached $ 300 million dollars. Outdoor lifestyle gross revenues are estimated to turn by at least 6 % for the following few old ages. This growing can be attributed to several different factors. The greater disposable household income from the two income households. the greater handiness of low-cost and interesting quality imports with the high value of the Australian dollar and the selling by popular Television shows like ‘Homes Beautiful’ and ‘Better Outdoor-lifestyles’ . Economy Based on economic prognosiss. BBQfun assumes that involvement rates are remaining steady and so will hold no affect on disposable income. The same premise is made about employment degrees. where BBQfun assumes that unemployment degrees remain the same at 4. 7 % . Political From research carried out. BBQfun identified that the Government focal point and accent in future legislative way will be about ‘growing the economy’ and ‘population base which BBQfun sees as a positive for their concern theoretical account. There is besides a strong push for environmentally sound concern patterns in the legislative model. BBQfun. as concern runing in Australia. will stay by the jurisprudence in all its traffics and comply with all statute law that impacts on its concern activities. SWOT Analysis The undermentioned SWOT analysis captures the cardinal strengths and failings within the company. and describes the chances and menaces confronting BBQfun. Strengths †¢ Excellent staff who are extremely skilled and knowing about outdoor-lifestyles. †¢ Great retail infinite that is bright. functional and efficient for a commercial urban territory.†¢ High client trueness among repetition clients.†¢ Assortment offerings that exceed rivals offerings in quality. scope and handiness. Failings †¢ A limited selling budget to develop trade name consciousness due to the deficiency of critical mass and shop screen.†¢ The battle to continually fund the turning long term refund programs taken out by our clients. Opportunities †¢ A turning market in a high growing country with a important per centum of the mark market still non cognizant of BBQfun’s offer.†¢ Increasing gross revenues chances outside of our mark country – greater Brisbane. Menaces †¢ Competition from local mugwumps that can cut down monetary values as proprietor operators lower than our staff tally shops.†¢ Competition from National ironss traveling into the Brisbane market.†¢ A slack in the economic system cut downing customer’s disposable income spent on outdoor-lifestyles. Competition National Competition †¢ The Yard: has a limited choice but important deepness. All Australian made. No important selling or publicity. The monetary value point is high. but the quality of merchandises are rather good. Not in Brisbane. Largely in Sydney and Melbourne. †¢ BBQ’s R us: Broad scope of outdoor-lifestyle merchandises including bangles and trappingss. Tonss of inexpensive imports. Concentrating on established markets. Strong in the replacings section. Not in Brisbane. Largely in Melbourne and Adelaide. †¢ Outdoorz: Large operations of merely a few shops per metropolis. Mass markets out-of-door life styles at good value monetary values. No imported goods. Extensive advertisement. Low to medium quality. Not in Brisbane. Strong in the replacing section instead than new and refurbished homes. Strong in other capital metropoliss. Local Competition †¢ All mugwumps. These shops are owned by single proprietor operators. Ranges vary harmonizing to proprietor penchants. Very small imports. Largely retailing Australian manufactured goods. Jointly their mean item sale monetary value is $ 250. hold a market portion of 48 % . and are turning at approximately 8 % per twelvemonth. BBQfun do non see the rivals altering their selling scheme or merchandise offer in the foreseeable hereafter. Growth and Share Analysis New homes – growing in possible clients 10 % . Estimated Brisbane client Numberss in 2010 is 95. 000. Renovations – growing in possible clients 7 % . Estimated Brisbane client Numberss in 2010 is 35. 000. Replacement – growing in possible clients 5 % . Estimated Brisbane client Numberss in 2010 is 120. 000. Service Offer BBQfun has created a outdoor-lifestyles scope of retail merchandises that are differentiated and superior to rivals. Customers can see the quality of the merchandise as it is displayed in the shops. The following are features of the merchandise: 1. BBQfun’s recognition offer is backed by a top grade bank.2. Imported merchandises make up 33 % of the mixture.3. The 3 twelvemonth warrant is alone in the market topographic point.4. Broadest possible scope in chosen Fieldss. BBQfun’s prides itself on supplying service that is on par if non better than any of the local independent shops and far in surplus of the national ironss. BBQfun will guarantee that all facets that are involved in the bringing of satisfaction to the client will work utilizing an incorporate attack. At a Glance–The Prototype BBQfun Shop: †¢ Location: a commercial. suburban vicinity. or urban retail territory.†¢ Design: bright and functional.†¢ Size: 1. 000 to 1. 500 M2.†¢ Employees: 15 to 20 full clip plus casuals†¢ Types of minutess: 60 % hard currency. 40 % on long term refund program. Keies to SuccessLocation.BBQfun’s site choice standards are critical to success. Scott Bremmer. former spouse of an international concatenation. helped us place the undermentioned site choice standards: †¢ New brooding populations.†¢ Shopping patterns necessitating easy entree.†¢ Customer auto parking counts. Critical Issues BBQfun is still in the bad phase as a possible franchise construct or joint venture. Its critical issues are: †¢ Committed to gross revenues growing which allows for greater options in import mixtures and in decreased monetary value with volume bargains. This will advance our singularity and contribute to improved net income borders. †¢ Continue to finance the easy manage long term refund program for clients. †¢ Locate in easy entree sites near to the turning markets in new home development. Marketing Strategy BBQfun’s advertisement budget is set at $ 250. 000 for the twelvemonth. The advertisement plan will aim local letter-box beads. wireless and magazines. BBQfun’s will make direct mail and local advertisement. with voucher inserts in the BrisNews magazine probably to be the most successful of the runs. BBQfun will seek to acquire articles about BBQfun into the BrisNews magazine. Previous characteristics in the BrisNews magazine has seen a dramatic addition of gross revenues instantly after the article was published. Mission BBQfun’s mission is to supply clients with the most extended mixture of quality outdoor-lifestyle merchandises available in the market. Our after gross revenues service is 2nd to none supported by our easy to pull off long term refund programs which make unique. imported and high quality outdoor-lifestyle low-cost to all. BBQfun exist to pull and keep outdoor-lifestyle clients wishing to buy merchandises that give our clients pride in their places. Our services will transcend the outlooks of our clients. Marketing Aims 1. Increase gross revenues from $ 15million per twelvemonth to $ 20million per twelvemonth in the following three old ages 2. Increase our trueness clients list from 10. 000 to 16. 000. 3. Establish trade name acknowledgment in Brisbane so that at least 2 in 3 people recognise our trade name in a random study taken in 18 months clip. 3. 3 Fiscal Aims 1. A double-digit growing rate for each future twelvemonth.2. Reduce the overhead per shop through disciplined direction of disbursals.3. Continue increase our gross net income borders.Target SellingThe market can be segmented into three mark populations: †¢ New homes – by and large want to buy full suites. Typically shopped as twosomes. Price sensitive to a point but co-ordination is the highest precedence. †¢ Renovations – demand for high quality and different points. Unique and alien over rides monetary value concerns. †¢ Replacement – basic functional merchandises that replace and interrupt or have on point. Single shopper. Cheap monetary value required. The BBQfun clients are largely aged between 20 and 50. doing up 50 % of the new and renovated brooding market. Outdoor-lifestyle shops have been really successful in base entirely. extended auto park entree. shut to new lodging estates being established. These countries have households who have household disposable incomes of over $ 40. 000 per twelvemonth. Combining several cardinal demographic factors. BBQfun arrives at a profile of the primary client as follows: †¢ Sophisticated people who are house proud. †¢ Shoppers who will drive to an easy to entree shop.†¢ A clients who requires payment programs to distribute their committedness over an drawn-out period. †¢ Renovators and new place builders†¢ 20-50 twelvemonth oldsPositioning BBQfun will place itself as a wide mixture. quality. alone outdoor-lifestyle retail merchant. Brisbane consumers who appreciate high-quality and singularity will acknowledge the value and alone offerings of BBQfun. Patrons will be individual every bit good as households. ages 20-50. BBQfun’s placement will leverage their competitory border: †¢ Product. The merchandise will be broad runing. quality and unique. It offers the house proud client a different option from the inexpensive mass produced offer prevalent in the market †¢ Service. BBQfun offer the lone 3 old ages warrant in the market. Our easy play payment strategy is merely what our mortgage refunding clients welcome. Our experient staff can help with merchandise cognition 2nd to none in the industry. By offering a superior service in scope and singularity. BBQfun will stand out comparative to the competition and accomplish our aims. Scheme Pyramids The individual aim is to place BBQfun as the premier outdoor-lifestyles shop in the greater Brisbane country. commanding a bulk of the market portion within five old ages. The selling scheme will seek to first make client awareness sing their services offered. develop that client base. and work toward constructing client trueness and referrals. The message that BBQfun will seek to pass on is that BBQfun offers the widest. most alien. easy entree outdoor-lifestyle merchandises in Brisbane. This message will be communicated through a assortment of methods. The first will be direct mail. The direct mail run will be a manner to pass on straight with the consumer. BBQfun will besides utilize ads and inserts in Brizzy magazine. The last method for pass oning BBQfun’s message is through a grassroots PR run. This run will ask for people from Brizzy for tiffin to acquire articles written about BBQfun into the intelligence. Because of this degree of effectivity and low/zero cost. BBQfun will work hard to acquire imperativeness in the Brizzy. BBQfun besides believe that the local frequenters far prefer to have information from the shop via circulars in the letterbox. Marketing Mix BBQfun’s selling mix is comprised of these following attacks to pricing. distribution. advertisement and publicity. and client service. †¢ Pricing. While BBQfun will monetary value at comparable monetary values for comparable quality. it will non be inexpensive. We push value over inexpensive and back this up with a 3 twelvemonth warrant. †¢ Distribution. BBQfun merchandises will be distributed through a concatenation of retail shops which clients can entree easy via the big auto parking agreements. †¢ Ad and Promotion. The most successful advertisement will be ads and inserts in the Brizzy every bit good as a PR run of informational articles and reappraisals besides within the Brizzy. Promotions will take the signifier of in shop amusement and competitions with awards to alien abroad finishs. †¢ Customer Service. BBQfun’s doctrine is that whatever needs to be done to do the client happy must happen. this investing will pay off with a ferociously loy al client base who is highly vocal to their friends with referrals. Merchandise development It is envisaged that new merchandises will be developed on a regular footing in line with alterations in client gustatory sensation which is targeted at every 12 months. The program for merchandise testing is to prosecute market research houses. By acquiring feedback from these houses. alterations can be made or merchandises ‘canned’ so that merely tested and proved merchandises make it onto the shop assortment list. Marketing Research During the initial stages of the selling program development. several focal point groups were held to derive insight into a assortment of frequenters of outdoor-lifestyle shops. These focal point groups provided utile penetration into the determinations. and determination devising procedures. of consumers. An extra beginning of market research that is dynamic is a feedback mechanism based on a suggestion card system in shop. The last beginning of market research is competitory analysis/appreciation. BBQfun direction will continually see local outdoor-lifestyle shops for two grounds. The first is for competitory analysis. supplying BBQfun with timely information sing other store’s service offering. The 2nd ground is that local concern proprietors. are frequently portion of an informal fraternal organisation where they support each other’s concern. Financials. Budgets. and Forecasts This subdivision will offer a fiscal overview of BBQfun as it relates to the selling activities. BBQfun will turn to Break-even Analysis. gross revenues prognosiss. expense prognosiss. and how those link to the selling scheme. Break-even Analysis The Break-even Analysis indicates that $ 1. 1 million in gross revenues per twelvemonth will be needed to make the break-even point. Fixed costs are estimated at $ 150. 000. Variable costs are 40 % of gross revenues. therefore gross revenues of $ 1. 0 million will be sufficient to pay for the fixed and variable cost. Gross saless Forecast The first twelvemonth of the program will be used to acquire the coffeehouse up and running. By twelvemonth two things will acquire busier. Gross saless will bit by bit increase with profitableness being reached by the beginning of twelvemonth two. Gross net income is anticipated at 50 % . Ongoing gross revenues prediction will be to utilize the services of Cannon’s Consultants who will rede on all facets of the selling map that BBQfun will be engaged with. Cannons will besides be given entree to the selling cost informations so that they can sporadically analyze and formalize selling costs in line with industry benchmarks. They have ever been the preferable advisers because they are locally based unlike the national group of advisers. Brown A ; Holingsworth. based in Melbourne.