Asos Is A Global Online Fashion Destination - 1961 Words

Introduction ASOS is a global online fashion destination based in the U.K. The company has in recent years made a name for itself through its cutting-edge fast fashion, and this has been instrumental in making it a hub as far as the thriving fashion community is concerned. Through its variety of fashion-related content, the company sells over 75,000 own-brand and branded products through both web and localized experiences. The deliveries are done from the U.K to various destinations globally. ASOS has successfully tailored the mix of local, own-label and global brands which are traded through the company’s 9 local language websites (Beattie, 2013, 56). These are in the U.K, China, U.S, Russia, France, Australia, Germany, Italy and Spain.†¦show more content†¦This situation has dramatically been transformed by ASOS through its innovative technological advancements (Kohtamà ¤ki, 2016, 45). The company provides potential clients with comparative and detailed information about the di fferent models. Further, this facilitates a reverse market whereby buyers have the option of putting their purchase up for bid. This substantially accelerates and simplifies the buying process. It also greatly reduces the bargaining costs. A business model is instrumental in the operations of ASOS because it has the capacity to unlock hidden value through improving transactional efficiencies. This is because it enables reduced search costs, reduced inventory costs, as well as reduced distribution costs. Another way in which ASOS creates value is through complementarities. Organizations have always known the possibility of leveraging value creation when they bundle their products with other suppliers’ complementary products. Bundling complementary products over the internet has proven crucial for companies like ASOS. This is so because it has enabled the company to build online virtual communities through the numerous online platforms that the company has a presence in. for instance, ASOS enables its users to exchange ideas on the latest trends, and hen their desired products have reached the market. Given that the company largely targets youthful fashion lovers, itShow MoreRelatedAsos Is A Global Online Fashion Destination Based1632 Words   |  7 PagesStudy ASOS is a global online fashion destination based in the U.K. The company has in recent years made a name for itself through its cutting-edge fast fashion, and this has been instrumental in making it a hub as far as the thriving fashion community is concerned. Through its variety of fashion-related content, the company sells over 75,000 own-brand and branded products through both web and localized experiences. The deliveries are done from the U.K to various destinations globally. ASOS has successfullyRead MoreAsos Case Study1968 Words   |  8 Pages Executive Summary ASOS.com is a global online fashion and beauty retailer and offers over 50,000 branded and own label product lines across women’s wear, menswear, footwear, accessories, jewelry and beauty. It offers products that potential buyers see celebrities wearing and keeps up with the latest fashion trends. Compared to high street fashion, ASOS promises the best prices and free delivery. In the past years, there have been numerousRead MoreLogistics Integrated Marketing Communications Strategy1326 Words   |  6 PagesASOS Integrated Marketing Communications Strategy ASOS have become the destination for millions of customers not only due to their famous designer brands but their recommendations as well as content too. The company invests in both digital media as well as traditional media in the aim of reaching out to their target market. Many online stores produce transactions through the e-commerce alone or through their physical store, but being solely an e-business ASOS needs to exploit various advertisingRead MoreAsos Brand Audit Essay3775 Words   |  16 PagesASOS Brand Audit Report Authors: Executive Summary This report gives a detailed insight into Asos as a brand and a company it highlights how it maintains its aggressive growth strategy and continues to outperform its competitors. Additionally it tells the story of Asos from its inception in 2000 to the present day and gives a glimpse of where it could go in the future. Key Points: * History * Financials * Brand Image * SWOT Analysis * PEST Analysis Table of Contents Read MoreCase Study on Asos Essay3981 Words   |  16 PagesPremnath A Case Study On The Globalisation And Strategic Reign Of ASOS Subject: Retail Branding and identity Abstract This report analysis the strategic branding policies of the online retailer ASOS and comprehends its position in the global market. It evaluates the standardisation and adaptation techniques ASOS employed to become the no.1 online retailer in the world. The company vigilantly practices standardisation and adaptation in its brandRead MoreHow Asos Has Changed The Business Model3212 Words   |  13 PagesExecutive summary This report was commissioned to examine how ASOS has greatly uses their strategic business plan and integrated with the E-commerce to create sales miracle in the fashion industry. E-commerce has brought an enormous impact to the traditional business activities, it highlights the sign is to increase trade opportunities, reduce trade cost, simplify the trade process, improve the trade efficiency. E-commerce has significantly changed the business model. Lead to the transformation ofRead MoreLeading Online Fashion Retail Store1337 Words   |  6 Pagescom, which is the UK s leading online fashion retail store. Asos.com aims to be the number one online fashion destination for twenty- something who love fashion. ASOS offers 50,000 product lines under its own label and third party brands, covering women-swear, menswear, footwear, accessories, jewellery and beauty product distribute to customer in over 190 countries from its central distribution centre in the UK. Aimed at fashion forward twenty-somethings, ASOS attracts over 17.5 million uniqueRead MoreResearch Analysis of Development Opportunities for Asos.Com3714 Words   |  15 Pages(Theory practice Module Guide, p 22) EXECUTIVE SUMMARY: ASOS over ten years has become the market leader in the UK online fashion world with reported turnover of  £165 m in 2009. They have developed a very competitive edge in fashion retailing through innovation, various delivery options, excellent communication with its customers, well maintained website and expansion of their trade internationally. Until September 2008 ASOS as many other businesses benefited from economic boom and increasedRead MoreAn Analysis of the Current and Future Use of Internet Technologies of Boohoo.Com5657 Words   |  23 Pagesthe online fashion industry being one of the highest risk markets but on the other hand with high rewards. E-marketing is a large part of Boohoo’s marketing campaign, using an OPT database to collect customer information and analyse consumer spending patterns. This information is then used for viral marketing where Boohoo send out e-magazines to consumers providing recent fashion and product information. Boohoo also increases their brand awareness by advertising in popular women’s fashion magazinesRead MoreMarketing Plan For A Marketing Strategy Essay1923 Words   |  8 PagesLaunched as a fast-fashion women’s e-tailer in 2009, is now an empowering, bold and forward-thinking online fashion brand inspired by real-life. The brand aims to create an online fashion destination that encompasses and celebrates everything it means to be a girl in a digital immersed world today (Missguided.co.uk, 2016). This is through offering consumers affordable fashion that is informed by its consumers and global influencers in the likes of: celebrities, social media, YouTubers, bloggers

American Lives Free Essays

Family is defined as the group of people united by kinship and is the primary component of society. The family is assigned to reproduce a society; parents from their point of view are expected to rear their children socializing them, educating them, religious, economic and political roles. Biologically, parents play an important role in enculturation and the same thing also goes for America. We will write a custom essay sample on American Lives or any similar topic only for you Order Now The American concept of an ideal family, like many most country includes the family as the basis and pioneer for the development of the cultural aspect and perspective of an individual. It can also be said that their views regarding families have shifted from giving emphasis on rural agrarian life to emphasis on urban and industrialized way. Looking at a historical point of view, it can be said that this change or shifting in the family image and representation and the family structure itself had occurred during the time of American Revolution where the family is considered to be a productive unit and work space are included within a family house. Work and home had only been separated during the middle of the nineteenth century. By this time, the family had been viewed as a form of defense of an individual against the material world. The family is then said to protect its members especially the young ones against the disturbance brought by the material world. Also during this time, family values together with those causes and effects of the problems and crises that the family faced are being studied. The role and value of money and as well employment had also been a great influence in the features of family lives. Cultural and ethnic diversities in the family life together with the family’s classification whether upper, middle or lower classes are also being looked at. The relationships and effects of the family and its relation and relevance to today’s students are also examined. This is because the family is considered in the United States as an institution that is deeply rooted for its effects on an individual plays a very significant role in the formation of his or her personal identity, beliefs and personality. Every individual members of the family seeks to find and meet his or her personal needs inside the family that he or she belongs. Although the family is treasured and considered as a group and should remain as a group, the individuality of each member is not completely submerged in the family. An individual’s personality and characteristics are developed through their interplay among the members of the family. When an individual reaches the 7th grade, he or she experiences several changes that can be considered as a part of his or her growth that includes almost every aspect of his or her life such as his or her psychological, physical and as well as mental growth. By this time, the family answers several important questions of an individual especially when it comes to their personality and belongingness, although the family may not answer these questions directly. Students are able to understand better their personality, who they are as viewed by the community by looking at their own families. The role and position of the adolescents in the family also plays an important part in for all the members of the family. How the parents with their children are also an important factor for the students to be able to understand that conflicts within the family is a usual and normal situation. Conflicts can be considered as a natural part and instance that happens within family members. Through the used of several activities, students will be able to have a clear view about themselves and as well as their families. Through various activities, students are able to understand and see and realized the distinction and are able to decide for themselves what are facts and myths regarding American families. By this time, the students are also able to formulate a kind of life that they want to live and as well as the kind of family that they would like to have in their future. Family truly plays an important role in the development of an individual and their personality. Works Cited Richardson, L. â€Å"Images of the American Family†. 2007. 04 December 2007 http://www. yale. edu/ynhti/curriculum/units/1989/5/89. 05. 09. x. html How to cite American Lives, Papers

Starbucks Internal Environment free essay sample

This paper analyzes Starbucks, a leader in the coffee industry, by outlining its strengths and weaknesses. The author states that Starbucks grew from a small start-up to a multinational billion-dollar empire. It has become an immensely successful business not only because it has a backup from shareholders only but also because management pays close attention to the various segment of the business. Although there are some signs of weaknesses, the effects of these weaknesses will not be prominent until much later. Table of Contents Introduction Success Internal Environment Financial Resources Performance and Management Operations Requirements Human Resources Demands Marketing Capabilities and Concerns Conclusion Ironically, the company has spent less on advertising, only $20 million as compared to other companies of its magnitude. The company depends on word of mouth to promote its products. That is the reason why it focuses on brand equity and quality at all levels of its management, right from the management decision to coffee processing timing. We will write a custom essay sample on Starbucks Internal Environment or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page

The Empires of South India 7. The Sangam Literature Flashcard

The Empires of South India 7. The Sangam Literature

Romeo and Juliet Essay Essays

Romeo and Juliet Essay Essays Romeo and Juliet Essay Essay Romeo and Juliet Essay Essay Essay Topic: Romeo and Juliet The tragic and spellbinding play Romeo and Juliet is just as relevant now as it was when it was first written by the respected and admired writer William Shakespeare. Setting the scene in Verona, Italy, the play tells the story of two star-crossed lovers, caught up in a family feud. From start to finish the play is littered with dramatic qualities in order to engage and interest the rowdy Elizabethan audiences. Juxta-position is used in Act 3 scene 1, when marriage is used as a symbol of hope, reflecting the love between Romeo and Juliet. To make the beginning scene dramatic, Shakespeare started in a dramatic setting. Tensions run high throughout the start as even normally good friends, Mercutio and Benvolio are quarrelling. The day is hot, the Capulets abroad, And, if we meet we shall not escape a brawl Shakespeare purposely set the scene on a hot day as its know that everyone is bad tempered and easily angered in such scorching conditions. The entrance of Tybalt, an aggressive Capulet, increases the tension as he adds flame to the fire, seizing the opportunity to fight. What, drawn and talk of peace? I hate the word, As I hate all Montagues and thee. Sparking outrage hits Benvolio as his peaceful break-up is turned down. The audience would find this particularly exciting as a cloud of unknown drifts across their mind as they are unsure if a fight will be taking place. As the conflict takes place Mercutio steps up as Tybalts opponent. Mercutio taunts Tybalt, but Tybalt ignores his insults as hes seeking Romeo. Well, peace be with you, sir Here comes my man. Making Mercutio the opponent to Tybalt, proves an effective device as Tybalt and Mercutio are equally matched as aggressive individuals. Shakespeare is evidently setting up the audience, engaging them in this tense scene. Dramatic irony becomes evident when Romeo enters, as the audience are aware of his recent marriage to Juliet, therefore making him and Tybalt family. Tybalts insistence on Romeo being a villain and Romeos vile submission angers Mercutio. Mercutio, thou consortst with Romeo Tybalt questions, which in modern context is the correspondence of asking him if hes having a sexual relationship with Romeo. This helps build up anger in Mercutio, making him so wound up hes the equivalence of a ticking bomb. Assembling Shakespeare to add dramatic quality to the drama. As Romeo enters Tybalt and Mercutio constantly anger one an other before Tybalt draws his sword. Gentle Mercutio, put thy rapier up Again Shakespeare uses Juxta-position, making the enthralled audience believe that Romeos going to make peace. As in Franco Zeferrelis version, Romeos nature changed since his marriage to Juliet. However in Baz Luhrmans edition, not only were swords swapped by guns, to engage a modern audience, but Romeos nature was also softer as he allowed Tybalt to beat him severely as he sat there defencelessly. Angered that Romeo wasnt striking back, Mercutio stepped in. Equally matched as aggressive individuals, this battle was unpredictable, making it effective, captivating the audience. They have made worms meat of me As the mortally wounded Mercutio struggles, Shakespeare has effectively positioned puns throughout his speech. Ask for me tomorrow and youll find me a grave man Mercutio makes the audience believe that hes only got a minor injury, but he knows his wound is fatal. Shakespeare makes the audience aware of this. Go, villain fetch a surgeon Therefore making Mercutios death predicable. The excitement of the audience is increased throughout Mercutios death as Shakespeares direction causes Mercutios use of language to be effective. In the Baz Luhrman edition Mercutio joked and calmed the scene making everyone assume he was ok. A scratch, a scratch However as shown elements of his language notified us that he was mortally wounded. Foreshadowing is another effective device Shakespeare uses to keep the audience captivated as their not sure of where fate will lead Mercutio. The fight between Romeo and Tybalt is spellbinding, as we havent yet seen Romeo in conflict. The force of blind rage causes Romeo to battle with Tybalt. Fire eyed fury also makes Romeo determined to track Romeo down. This causes excitement to the audience as in Franco Zeferrelis version performs this scene using swords. The fight also varies its scene, moving through various streets and levels. Romeo is portrayed as the less experience swordsman between them, adding greater excitement and worry to the audience. Meaning the captivation of the audience was kept flowing throughout the fight. Giving Shakespeare the power to keep rowdy Elizabethan audiences engaged. At Tybalts death, the audience are kept in conflict, as they know Romeo will pay for it. However Romeo had retired to Friar Lawrence, making the audience unsure of whether he will be caught or not. Romeos line I am fortunes fool shows Shakespeares use of fate and the roll it plays throughout Romeo and Juliet. Romeo and Juliet would have been performed to an Elizabethan audience who believed very strongly in fate and fortune. Fate was destined to happen and no one could alter it. Throughout the tragedy of Romeo and Juliet, Shakespeare constantly utilises the motif of stars to convey and develop the prominent theme of fate. Even and early as the prologue, the words A pair of star-crossd lovers Reveal Shakespeares intent in conveying the association of fate with this motif. Like stars, fate exists in the heavens. It is Romeo and Juliets misfortune that leads to the sorrowful and tragic ending of the play. Conclusion Its fast-pace dramatic action also keeps the audience involved throughout this theatrical play as the increasing tension insures that the audience are kept engaged. Shakespeare had expertly placed this scene in the middle, as its the turning point of the play, as up until this point the audience believe that it may end happily. Evidence of this is in Capulet speech in the Capulets ball. Verona brags of Romeo to be a well-governed youth This leaves the audience believing that Romeo and Juliet could have been happily married with lord Capulets blessing. Elizabethan audiences would have been religious and so would have believed in fate. Shakespeare used this factor throughout Romeo and Juliet, to make the staging, and the scene effective and dramatic. He had an effective use of language and dramatic quality also played a large part in captivating boisterous Elizabethan audiences.

Analytic Hierarchy Process in Operations Management

The project deals with the issue statement where the content is included about the target market, poor management, and lack of supervision by the managers and the supervisors, the focus is given on the profits of the company and the sales of the Custom Gear Inc. The problem the Custom Gear is experiencing is being stated in the project, which includes lack of the order size, lack of the future growth, inventory and the production management and many others. The actions that have been taken by Mr. Rhodes are narrated in the project. Inappropriate production process, inappropriate target market, poor management, poor control system, suppliers are not efficiently delivering raw materials and the profit earned by the Custom Gear is not adequate. Lack of the policy of the order size: Eastern gear has accepted a huge lot of the order size which is been seen in the exhibit 2 of the case study. It can be seen that in the order size 1 the total number of orders are taken are 80. In size 2, the number of orders is 53. In size 3 the number of orders are 69 and so on. On the other hand, President of the Eastern Gear has also taken decision to accept the huge orders from the customers. Lack of planning for growth: It appears that the company does not have any plan to expand their business in the future. This may be the reason and the company can face problems with respect to the cash flows, problems of capacity and other problems that are associated with the growth of the company. Inventory and production control: The expediting seems to be the rule rather than the exception. Twenty percent of the total orders have the rush tags on it. The processing time of the production has increased from two to four weeks, and there does not seem the production and inventory system are not in place. There are certain orders are being handled on the rush basis and that may be disruptive with the smooth flow of the production. Objectives that are followed in the operations: It is not clear that the operations should be focusing on the cost of the product, delivery and quality of the product and the flexibility. The focus should be laid down on the objectives of the operations. The order entry system is been flawed: The time is lost between the design that is desired by the customer is flawed because the order is taken by the James and therefore, is reviewed by the engineer. The problems that are faced by Mr. Rhodes are been divided into four parts: 1. Production process, 2. Target market, 3. Management, 4. Suppliers. In case these problems are resolved, the impact of these will be seen in the goodwill of the company. The sluggish production process of the Custom gear has caused problems related to the delays in the production, late deliveries and the poor quality of the product. The main problem of the production process of the custom gears is the standard job shop layout. Every workflow has the set of the processes. Depending on the operations, the materials flow from one work centre to another. The cycle below shows the path that the typical order will follow is: Taking into consideration the floor layout of the Custom gear, it can be taken into account that the work centre’s are not arranged into the correct order of the workflow. They can be said to be unstructured. To get rid of this problem the layout of the shop should be arranged in the following manner: The main target of the Custom Gear’s is the engineering research and the development laboratories or the manufacturers. These result in the number of the small number of the gears. Custom gear is losing the market share as it is targeting small manufacturers who order very small amount of the gears from the company. This results in the low sales and revenue for the company. In order to increase the sales as well as the profits of the Custom Gear should try and target the large companies that are in need of the more of the custom gears. Doing this Custom Gear does not have to find more of the customers because the profits gained from one company would be huge. The management issues that the Custom Gear is facing are the past due raw materials in the shop. The manager and the supervisor must take note of the inventory that is lying on the shop. The materials that have expired are mostly because of the errors that have been caused by the supervisor or the manager. In order to get rid of this problem the supervisor should take extra care while placing the orders with the suppliers and avoid wastage of the resources. The company has also recorded many lost orders. Therefore, in order to get rid of the problem the management should ensure that all the orders are properly documented this ensures that the files should not be missing and there exists no complaints from the customer’s side about the lost orders. The operation strategy is related to the product, process, method, quality, cost and scheduling. Moreover, like any other organization the Custom gear has the definite relation with the operations strategy: The design of the product should have a match between the operations management, finance department and the supply chain management and should look at the customers need. The methods take into account the process of transforming raw material into the finished products. The process considers the conversion of inputs into outputs. Therefore, these two process in closely linked to the process design. The process selection and the facility layout takes into account the implications of the supply chain management. A cost is the variable factor that affects the pricing and the profits of the organization. Organizations that have high degree of productivity in comparison with their competitors have a comparative cost advantage. Custom Gear must plan the schedule orders deliberately. The rush orders and the large orders should be made carefully. Operating resources are necessary for the personnel and material which is generally necessary to carry out the project. The examples of the operating resources are materials, machines, labor, tools, fixtures and many others. Custom Gear must complete the process of the operating resources. The above-mentioned analysis that is been done on the Custom Gear Inc. the lack of proper and efficient operational controls will bring adverse changes in the organization. The sluggish production process, selection of suppliers and objectives of the sales target, the poor layout of the job shop also slowed down the production process and created confusion. The Custom Gear should target the large-scale manufacturing companies where they can get huge orders and earn the maximum revenues out of it. The production process should be changed the quality of the products should be given maximum attention. The resources that are getting wasted should be given utmost importance by the supervisor and the managers. Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2012).  Marketing: an introduction. Pearson Prentice-Hall, London. Becker, J., Kugeler, M., & Rosemann, M. (Eds.). (2013).  Process management: a guide for the design of business processes. Springer Science & Business Media. Chang, J. F. (2016).  Business process management systems: strategy and implementation. CRC Press. Davenport, T. H. (2013).  Process innovation: reengineering work through information technology. Harvard Business Press. Ferrell, O. C., & Hartline, M. (2012).  Marketing strategy, text and cases. Nelson Education. Fitzsimmons, J., & Fitzsimmons, M. (2013).  Service management: Operations, strategy, information technology. McGraw-Hill Higher Education. Jeston, J., & Nelis, J. (2014).  Business process management. Routledge. Khanna, R. B. (2015).  Production and operations management. PHI Learning Pvt. Ltd.. Krajewski, L. J., Ritzman, L. P., & Malhotra, M. K. (2013).  Operations management: processes and supply chains. New York: Pearson. Subramanian, N., & Ramanathan, R. (2012). A review of applications of Analytic Hierarchy Process in operations management.  International Journal of Production Economics,  138(2), 215-241.

Derivatives and financial crisis Assignment Example | Topics and Well Written Essays - 2000 words

Derivatives and financial crisis - Assignment Example Such types of derivatives are used based on the type of risk exposure i.e. liquidity, financial, exchange rate risks, etc (Chisholm, 2011). Derivatives were used primarily to hedge risk, but over time people used it to make gains out of the price movements of the underlying assets. The purpose of using derivatives is incumbent on the investment objective. The price volatility of the underlying influenced various investor community to use derivative as a lucrative investment option. Earlier the use of derivatives was not popular, owing to its complexities it was not considered to be a feasible investment option. Over time, it was adopted by various investors to insure the various risks facing them. With various risk outcomes, the fluctuations in the price of the underlying assets made it volatile. Such price volatility attracted speculators, who engaged in the use of derivatives to earn profits. Speculations are done on both the up trends and down trends of the asset price movements. The impact of speculations is felt across the investor community i.e. the hedgers. Speculators gamble on the direction of the asset price m ovement. When a speculator feels that the price of the underlying asset will fall, he will short sell the stock or buy an option. When the price of the asset falls, he exercises the option or buys the underlying asset to make profit. Speculators leverage the vulnerability of the price movements of the asset to make gains. Though all types of derivatives cannot be used to speculate, but futures, options and swaps are lucrative avenues for speculators (Poitras, 2002). From the inception, starting in 1970’s and continuing through the ‘80’s and ‘90’s, the financial market evolved and made it a riskier place for trading. The interest rate changes, bonds and stock markets witnessed phases of increased volatility. Owing to such evolution of risk, investors and managers of financial institutions became wary and resorted to

Business Game Report Essay Example | Topics and Well Written Essays - 1750 words

Business Game Report - Essay Example Something that also needs to be taken into account is the performance of the company. In my case I have taken consideration of the funky footwear company. The decisions made by the management have seen a lot of influence in the way it has fared as it is seen in the competitive intelligence report. My analysis of this report will bring to point some of this issue am mentioning. The reports present a critical look at some of the decisions made. These decisions have had an impact on the trends of performance of the company. I will do an analysis and an evaluation of these records to see what the companies have been up to for the period of ten years. Industry and company report In this section of my report I analyze the performance of this company over the period. The report analyses the performance of all the companies that are under the footwear industrial. The performance is ranked and valued contrary to the investor’s anticipations whereby the investors periodic set performanc e target that is mostly yearly. From the data and statistics collected, the scoreboard shows that the company’s performance is quite significant and even going behold the investors’ expectations. ... The 20th year proves it right according to majority of the company’s performance that very year comparing to the previous year. However, every investor is experiencing behold his expectation as far as the company performance is concerned. Companies B, E and F shows quite a positive performance and emerges to the only three companies to be ranked as the best performing according to the earning per share . On the same note, the same companies are the high scoring companies even behold the investors’ expectations on the EPS. Company B emerges to a greater performer with an average of 15 performance wise while the rest two rate at 2 and 3 respectively. On the other hand, company H records the lowest performance rate that is below the investors’ expectations while the rest of the companies perfume poorly but not as company H. these outcome are captured from the inventory price and the returns on shares. Therefore it will true to say that, there is an interconnection i n the three based on their performance on ROE and EPS records. Companies A, B and F all have an average of A in scoring and that shows a significant performance according to the credit rating something which is way behold the investors’ expectations. Nevertheless, the rest of the companies though not scoring too high are still within the performing the investors’ expectations. On the image rating, three companies emerges to be performing behold the investors’ expectations. We have records on how the company’s production has been trending on the market which is recorded on the fourth page of the report. The production rate is therefore compared against the consumption and the dropped items. There is a behavior of maintaining and even reducing the

The Church as Forgiving Community Essay Example for Free

The Church as Forgiving Community Essay Summary The topic covered by this article is about the power of forgiveness and the Church posing as the initial model of a forgiving community. Forgiveness interventions have shown to decrease anxiety, depression and anger while increasing self-esteem and hope. (Magnuson Enright, 2008) The article focuses on the process of forgiving as a learned action that must be practiced and performed in order to truly master it. The process is two-fold in both providing and receiving forgiveness. The article focuses on promoting the essential moral trait of forgiveness in children within their central communities and the establishment of these communities, referred to as â€Å"The Forgiving Communities†. These communities include three interdependent categories: the family, the school, and the Church. The article introduces two process models of forgiveness; Robert Enright’s process model which breaks down forgiveness into a four phase process that includes uncovering anger, deciding to forgive, working on forgiveness and the final outcome. Worthington’s REACH model breaks down the forgiveness process into recalling the offense, empathizing with the offender, gifting the offender with forgiveness, committing publicly to forgiveness and holding onto the forgiveness one has achieved. Both models agree that empathy for the offender is vital to the forgiveness process. These models were tested amongst select primary schools in Belfast, Northern Ireland, in which forgiveness interventions were held with children with notable success. The article proposes that the Church could be utilized as a similar model in which it serves as Forgiving Community in which all levels of leadership would cater to the community from infancy through adulthood with various types of programing and education. Personal Response I was interested in this article because I know how detrimental it can be to hold onto forgiveness. Throughout my 18 years of service in the U.S. Air Force, multiple deployments and several assignments in leadership, I have witnessed how holding onto past wrongs can eat away at you like a cancer and often time, it goes unnoticed until truly identified and examined by self-identification or through third party intervention. I have been involved with several situations in which members deploy into a combat zone and return different people. Many have been wronged by a common enemy and struggle to even examine the idea of forgiveness. Many soldiers carry around this pain and baggage for years without ever truly recognizing exactly what they are holding onto. The Church can be vital to this recognition and the recovery process. The article relayed how the Church can play such a vital role as a Forgiving Community reaching to all members of the family from child to adult. It was also interesting how among the various levels of leadership and roles in the Church, each one was able to offer their own gifts and talents providing to the community. It relays how a community must be all-encompassing feeling of safety and opens not only to give forgiveness, but to accept forgiveness as well. I would like to further investigate this topic by researching small group studies on forgiveness that are available through my own local Church community. I am part of a small group that meets regularly and would like to incorporate the topic into our lessons. In addition, I see that Robert Enright has done a vast amount of research on the topic and has produced many works as a result. One of the books that I would like to read is his Forgiveness is a Choice: A Step-by-Step Process for Resolving Anger and Restoring Hope (2001). I understand that it is something that we must decide to do. Until we make the first step to accept and be willing to forgive, or be forgiven for that matter, we will bear the ever increasing weight of the wrong and carry it with us throughout our journey through life darkening our  outlook and damaging our hope. Application The setting for the application of the information in this article would be the Aviano Center, a small non-denominational Church located just outside of the Aviano Air Force base in Pordenone Italy. The client who came in for our session was a 30 year old wife and stay-at- home mother of two toddlers whose husband was currently deployed to Afghanistan. They had lived in the area for about 4 months before he deployed and he is currently 5 months into an 8 month deployment. She states that she can no longer deal with the children. She has found herself trying to cope alone and often finds herself losing her patience and yelling at the children. She is afraid that she is going to end up just like her mother, who she resents because of the verbal and physical abuse that she had put her through when she was a child. She is ashamed and embarrassed about her situation. She approached me because I am one of the leaders at Aviano Center and she knows that I am in the military and also the â€Å"Life Group† facilitator who organizes the small groups for our Church. In addition, the group that I host is particularly for those families whose family member is about to deploy, is deployed or recently returned from a deployment. In the meeting with this member, I would attempt to get her to realize that she is potentially dealing with several issues, with forgiveness and resentment potentially playing a major role in them. She may be holding on to past wrongs committed by her mother and past and present wrongs that she has committed herself. I would walk her through the forgiveness process and highlight that it is a learned trait that must be practiced. I would explain that forgiveness involves both granting and receiving forgiveness. I would explain the forgiveness models, the details of those models and explain that the Church can be a model of a forgiveness community. Additionally, I would reiterate that she is not alone in feeling the way she does, in fact I would offer that there are many who feel similarly right within the Church making her aware of the current small group focused on the facilitation of the forgiveness process. I would encourage her that these groups are a caring  community that respects confidentiality. Regardless of where the conversation led, in closing, I would ask her if she would like to pray with me. I believe that God has enabled us with this ability to communicate to encourage, provide hope and comfort in situations just like this. While this may not be appropriate in all situations, depending on the client, I believe it is all too often overlooked, especially amongst believers. Reference Magnuson, C.M., Enright, R. D. (2008). The church as forgiving community: An initial model Journal of Psychology Theology 36(2), 114-123.

California Utility :: essays research papers

  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Chris Parker   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  482.004 Dr. Singer  Ã‚  Ã‚  Ã‚  Ã‚   In 1996 deregulation allowed California utility companies to sell power plants and collect over 19 billion dollars in ratepayer subsidies. The money was used to purchase plants in other countries, reward executives with huge pay raises and buy back stock. A handful of unregulated companies withheld power, causing shortages to boost wholesale prices.   Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Deregulation led many consumers to believe that open markets would bring in an array of choices and lower prices. Consumers will have to settle for a single power provider at higher prices. Rates are nearly 150 percent higher than last spring. Power companies are exploiting the market for their own advantage. Some companies have jacked rates up to 200 percent than offer a deal at a 50 percent hike.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Utility companies promised to modernize the electricity market and reduce business and residential bills. The California public utilities commission is caving in to pressure to make the investor owned utilities look good on Wall Street. Utilities are to use their markups to pay investors for stranded assets incurred during regulation. Utility companies lobbied to pass a law that suited their needs, and now the situation has changed it is trying it again. In 1998 big utility companies lobbied Proposition #9 buy paying a local consum er reporter 106,000 dollars to create a campaign. Proposition #9 would decrease electric bills and promote modernization of the industry. Also, many agency boards are stacked with officials with ties to energy companies, creating conflicts of interest. A member of Public Utilities Commission is being sued for an overseas investment. Taxpayers are paying for his legal bills. The investment was in a company his commission regulated.  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  A recent study has found incriminating information on the California utility industry. Plant operators would skip maintenance routines. These errors would cause machines to break down and force power cut back. The plants would have sudden shutdowns with no justifiable reason. Shutdowns were calculated to shrink the amount of power available driving up the price. They would hold back power until the state is desperate and vulnerable. They could sell power at super high rates. They sold power to other states. Selling to other states allowed for an increase in wholesale prices.   Ã‚  Ã‚  Ã‚  Ã‚  The California utility companies had planned to make a large amount of profit off of deregulation.

Socioeconomic Status

Research Paper Do to the circumstances of a person’s birth, their socioeconomic status of the family that they are born into can make them a victim of unfair treatment in life. Gender inequality is an innate characteristic of women. Women are the largest minority in America and they are of the female gender. Gender is the meaning of being a male or female in a society. Gender role refers to the attitude and behavior that is used when referring to male or females.Female gender has always been considered inferior to men. The attitude has always been that males were superior to females in their abilities, because they have strength, they are smarter and they have the ability to provide a better life. It is the belief that women take care of the home and children and the men go to work and earn the money. According to Sigmund Freud, he summed up in his famous idea the â€Å"anatomy is destiny†, which stated that females felt short changed because they do not have a penis.He concluded, that woman need to fulfill this envy by giving birth to a child. (pg. 190) Perpetuating gender inequality through values refers to jobs are automatically assumed to be gender specific. Fireman and Policeman are men only. Engineers, architects, project managers, doctors, etc. , are thought of as male orientated. However, women do very well in these areas. The value placed that men can do a better job is also considered a social attitude.The ideologies that have been set by society, even though it has been shown that male and female have equal capacity for learning and doing math and science, males have advanced in the workforce. After WW11, women stayed home and raised families. Men went to work and provided for the family. That has changed and since 2004 women make up 60. 5% of the workforce. However, they do not make the same money as men. pg 191) Race is a group of people distinguished from other groups by their origin in a particular part of the world. People are iden tified by the color of their skin, and the inequalities people experience follow directly from that identification. From this identification we have a social situation called racism. Racism is the belief that racial groups are inherently inferior to others.This situation has become a common experience for some and it justifies discrimination and inequality. Lauter (pg. 23) The race, ethnicity and quality of life for many people is a serious situation that needs to be addressed by society. We as a civilized society need to address the problems that so many people face. One of the very serious problems is wage disparity across gender, race and ethnicity. A study examines intergroup inequality and considering various channels through which gender, growth, and development interact it upholds the salience not only of equality in opportunities but also equality in outcomes. The matter of gender, race and ethnicity should not be a factor when people are trained and educated to do a job. Ro dgers & Seguino) A comprehensive profile of the ‘working poor' is presented using data from the 2003 Population Survey.The explanatory variables are the worker's occupation and the firm’s characteristics. The cost constraints comprising, on the one hand, the worker's family characteristics (notably family income), and, on the other, the costs to the worker of signals used by firms in making employment decisions. These include not only the cost of education but also what we call ‘discriminatory signals', e. g. gender, race, ethnicity and citizenship status. Gleicher & Stevans) The ideology that equal opportunity provides equal pay is false. There has been a glass ceiling for women, they do the same work as men but their pay and advancement is less. They experience discrimination with less training, promotions and hiring. (Lauter & Lauter) (pg 192) Each society has ideologies that justify stratification. It is up to our society and educators to teach people that eac h gender is capable of doing the same jobs if they are physically and mentally able plus have that desire. Due to this attitude women have not been advanced in the work place.They have been kept from monetary advancement and promotion. When businessmen speak eloquently about the â€Å"social responsibilities of business in a free-enterprise system†, they believe that they are defending free enterprise when they declaim that business is not concerned â€Å"merely† with profit but also with promoting desirable â€Å"social† ends; that business has a â€Å"social conscience† and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are preaching pure and unadulterated socialism concepts.Businessmen who talk this way are sometimes considered puppets of the intellectual forces that have been undermining the basis o f a free society these past decades. (Friedman) The examination of the cultural and linguistic production of gender and of gender relations in society has had a serious impact on the study of labor history over the past twenty years. Work on the role of gender has linked culture and ideas to politics and policies and has shown how ideas about masculinity and femininity shaped notions of the wage, skills, and work, as well as labor and employer practices, union strategies, and labor struggles.The working class has not disappeared, but its contours and composition have changed dramatically. It is no longer overwhelmingly white, male, and heterosexual; it is female, black, and brown: its members’ sexuality is not always already defined. It is by incorporating into our work the intersections of these differences that we can create more powerful analytical tools for understanding the past and perhaps also the present. (Frader) In 1963, President John F. Kennedy, signed â€Å"The Equal Pay Act†. This bill was aimed at abolishing the wage disparity based on gender.This law was written to stop sex discrimination, paying employees of the opposite sex more money for doing equally the same job for equal work that the performance requires equal skill, effort and responsibility and which are performed under similar working conditions. This bill was to give equal opportunity in the workplace. When signing this bill, John F. Kennedy said, â€Å"Adds to our laws another structure basic to democracy† and â€Å"affirms our determination that when women enter the labor force they will find equality in their pay envelope. â€Å"Through the years America displayed a terrible attitude towards people of all races, foreign cultures and nationalities. I have seen many actions in the work place that I can look back on and realize there was discrimination. I am happy to say that I have seen change. In my last three jobs, I witnessed the equal and civil treatment o f my fellow employees. At the Unitarian church everyone was treated very fairly, not just the consideration of their race and gender, but also for their religious beliefs. The Unitarian Church has a very interesting concept.Most people that are Unitarians are not born to the religion, they are people that convert from other formal religions. Because of this situation, people need to express their beliefs and the Unitarian Church allows its members to share and experience each event. Every holiday was celebrated with pride and true enjoyment. They extended their programs to have social events detailing each ethnic and religious background. We celebrated Christmas, Hahnack and Kwanza. We were given information explaining each religion, how it originated, the beliefs and the ceremony.We also were given samples of the different foods served for these religious holidays. It gave us a feeling of unity and understanding which broaden our knowledge, social graces and respect for others. The most important part of this work environment was everyone was treated equally. The positions held, from office managers, secretaries, ministers, maintenance and grounds were held both by men and women. You were not judged based on gender or race, if you met the job qualifications you were interviewed and if you had the qualifications you were hired.I left the Unitarian Church with a heavy heart. I knew I would never meet such a wonderful, caring group of workers and volunteers in any future workplace. This was a unique experience which taught me more than my work requirements, it taught me about people. When I moved to Colorado, I worked for Level (3). This was a true corporate atmosphere, everything was done through emails and written communications. We were divided into teams with a team captain and every employee was treated with respect and graded on their true ability. Here too, people were hired on their qualifications.Gender and race were not part of the hiring program. Ther e were male and female engineers, project managers, technical support and even cable layers. My position ended when the Dot. com crash caused a huge layoff. My last position was in a small office, my employer was very respectful of each of us and we were all treated with respect and gratitude. The atmosphere was very different in that when there are only a few people, you become more involved on a personal level. I found the small office to be an okay experience, however, I think I would enjoy the atmosphere where there are more employees.The smaller office does not offer the opportunity for advancement and each person has their job and you become stagnant. The job market has changed in many areas in the past 15 years. I see more women and more diversity in the ethnic background of the employees being hired. There will always be room for improvement and change. A major change has been that more women have college degrees and they have excelled in showing stamina and strength. The te rm â€Å"glass ceiling† refers to the imaginary career barrier that impede’s a women’s ability to rise to the top rank of her profession.Today there really isn’t a â€Å"glass ceiling† because women are well represented in all professions. They are doctors, lawyers, judges, TV anchor women, journalist and women appointed to political positions. It is evident that anyone can attain the position of their choosing. It takes education, perseverance and determination. I am sure that there is still a negative attitude by some towards women and different ethnic groups. I think it will take a long time to see a complete change, and probably there will never be a complete change.We have many people that are raised and indoctrinated, whether it is from their nationality, up- bringing or religious beliefs that women only belong in the home. Some parts of the world, like the middle east, there is a cultural and religious belief that dictates the life of women. These changes for these women might take a 100 years to change. Living here in the U. S we have a broader view of how everyone should be treated. Because some people will never change, as women we have to keep moving in the right direction, looking for the right opportunity and seize the moment.My own life is a testament to the belief that a women belongs in the home raising the children and keeping the house. After a marriage of 30 years and divorce, I found myself in a very difficult position. Financially I was not prepared to take care of myself and I was frightened beyond comprehension. I also had my mother living with me, she had Hydrocephalus (fluid on the brain). I realized that I had to take charge of my life and at 50, I made some serious decisions. Eventually I found a job with Level (3) and went back to school for my degree.With all my determination and perseverance I showed I was capable of taking responsibility and I was advanced within six months of hire. I believe th ere is opportunity and in today’s job world, women and people of different ethnic background can advance in life.

Critical Essay on Cadbury

Cadbury’s Coporate Social Responsibility Businesses these days are much different from how it was in previous generations. Nowadays, society impacts that corporation has is not only about economic power, instead it has also gone into corporate social responsibilities. Cadbury is an international company that is the second largest confectionary company in the world. (Factbox: British confectioner Cadbury 2010).Therefore, they have a bigger impact to affect both positively and negatively on the society as they have a bigger influence and power on the society due to their dominance in market share. In this essay, it will go in depth about the performance of Cadbury in relation to its corporate social responsibility. This essay will explain and argue a balanced argument about the negative and positive impact Cadbury has today on its society by analyzing their â€Å"Cadbury Community† programme and their association with child labour.Negative Social Responsibility of Cadbury According to a documentary called â€Å"Slavery† on the BBC, it documented cocoa beans production and how it is related to child labour, in the documentary, it focused on Cadbury, aiming at them about that negative social responsibility that they have. The reason for child labour in the cocoa production is because of the prices that are set on the cocoa beans is very low when it is sold. For example, farmers are only selling their cocoa beans for only a mere sum of money, therefore they would want to gain more profit.The only way to do that is to get cheaper labour so that their expenses are not so high which would result in higher revenue earned at the end of the day. Since child labour is one of the cheapest labour in the world, it is the top choice for labour to keep cost down would be child labour. In a brighter light, not everyone was affected by the low priced cocoa beans. For example, Cadbury was still able to employ many people around the world and still kept their p roduct prices down to continue attracting their customers.However, Cadbury was later seen as a supporter of child labour. Reason being, Cadbury were purchasing the cocoa beans from the farmers that were using child labour for their cocoa beans production. This in turn makes Cadbury a supporter of child labour as well as they are purchasing the beans from the farmers which encourages them to continue that they are doing. The consumers later came into conclusion that the low prices of Cadbury’s chocolate were not worth the children’s hard cheap labour in the developing countries. Read Critical Essay about Skurzynski’s NethergraveThe world’s largest cocoa producer, Cote d'Ivoire has given the possibility of Cadbury to demand the cocoa beans at a very low price. (World Cocoa Production. n. d. ) As they are the largest producers, they have more control of the cocoa prices around the world. To further exxagerate how much farmers of the cocoa production are getting paid, an example would be, for every kilogram of cocoa beans that a farmer harvest, they are getting paid almost the same amount of how much a bar of chocolate consumers pay for consumption. Which in most cases, would be a range of a dollar to two dollars. (Olivier. 2012. . This is not following their policies that Cadbury should be following under their code of conduct (Our Business Principles. 2008. ). In the document, it states that it is their responsibility, both corporate and social to make sure that there are proper and ethical practices to manage the business. Ethical issues such a s human rights, ethical trading and employment practices are considered when business is done in Cadbury. However, that is not much of the case when Cadbury is purchasing low and unfairly priced cocoa beans from the farmers. This is against their ethical values of ethical trading.Reason being, as mentioned above in this essay, by purchasing the beans at such a low cost, it is encouraging the farmers to hire more child labourers in order to keep their cost of production down and to gain more revenue earned. The stakeholders that are mostly affected would be the children that are forced to work at the farms to harvest the cocoa beans. Working at the farms does not only mean long working hours with very little pay, it also means that they might get beaten often due to carelessness at work or not meeting the expected weight of cocoa beans.It also means that they might not even get paid after working long hours with no food (Cocoa Campaign. n. d. ). By the year 2003, Cote d’Ivoire , which is the world’s largest cocoa producing nation, had about 109,000 child labourers (Country Reports on Human Rights and Practices. 2003). Out of the 109,000 children, more than half of them were said to be working on their own farms owned by their parents. The rest of the children, which consists of about 10,000 of them, are working as slaves or are being trafficked.By working on the farms, it means that the children are not given a chance to go to school to increase their knowledge or to further their education. This would therefore result in a vicious cycle of people depending solely on cocoa farming in order to earn enough money to meet their basic needs. For example, when a child is forced to work on the farms, he will not be able to attend school to gain knowledge to have a chance to get out of the country to work. Since he is stuck on the farm, he will grow up only with the knowledge on how to harvest cocoa beans.His main concern would be to maintain the farm and to earn more money for his family. In order to earn more money, it means that he has to harvest more cocoa beans. Therefore, he will need more help at the farm. Therefore, he will want to get as much help from his children to increase the cocoa beans production. This would continue in a cycle. Cadbury did try to solve the problem that they have made by sourcing their cocoa beans from Ghana, the second largest cocoa producer instead of from Cote d’lvoire. However, many people still are uncertain about their true motives to really solve the problem created.Reason being, back in 2001, the Chocolate Manufacturers Association (CMA) which consisted of large chocolate confectionary companies such as M, Cadbury and Mars Inc. decided to make a promise that their cocoa beans production would be free of child labourers by 2005, July. The commitment was made to the Cocoa Industry Protocol (CIP) (Protocol for Growing and Processing of Cocoa Beans and Their Derivative Products. 2001. ). Al though some large chocolate confectionary companies signed the CIP, none of them were able to meet the criteria of the commitment.Therefore, the dateline was extended and the percentage of their cocoa beans to come from childfree labourers was also reduced. Cadbury has recently self publicized that their products are now labeled as ‘Fair Trade Certified' (About Fairtrade n. d. ) which means that in general perception, a minimum price is to be directly paid to the cocoa producers which would hopefully reduce child labour. However, this is not the case reason being, when farmers are paid the minimum sum of money for their cocoa beans through the Fair Trade premiums, they will still have to minus off the a huge sum of their profit.So what exactly are reducing the farmer’s profit? They are the administrative expenses, operating costs, business reinvestments and other social costs (Fairtrade Certified: Frequently Asked Questions – Advanced n. d. ). Therefore, at the e nd of the day, cocoa farmers are still earning very little. This was just a spin doctoring made by Cadbury to change the public’s perception of Cadbury’s wrong doings. Positive Social Responsibility of Cadbury Cadbury does not only have negative corporate social responsibilities, instead, they are doing well in their work for the local communities around the world.Cadbury has donated some of their profits back to the community. Although this is just a mere 1% of their profit before tax, it is still something as some other companies are not even contributing back to the society at all (Working Together to Make a Difference in the Community n. d. ). Cadbury also has a community that helps in the society’s health, welfare, enterprise, education and environmental sustainability. For example, Cadbury’s â€Å"Miles for Smiles† event involves employees to walk between their two factories and raise funds for to raise funds for the less fortunate.Adding on, Cadbury has also donated to charities, sponsored to countries to help with their developments, developed programmes to help the less fortunate around the world. All these work was done voluntarily by Cadbury. Therefore, it displays the positive side of their company’s social responsibility to give back to the society. Conclusion Although Cadbury has done many negative impacts on the society, they had their fair share of making the world a better place by contributing back to the society as much as they can.Some of the public might still find that Cadbury has a lack of empathy towards ethical issues such as child labour. This might affect Cadbury’s reputation as this would be a hard point to erase form the consumer’s mind. Which means that no matter how much positive things that Cadbury does, at the back of the consumer’s mind, they will always remember the negative impact that Cadbury had caused that is now hard to resolve. And although Cadbury is trying hard to contribute back positively to the society, the public might see is as a way for Cadbury to advertise themselves more.Therefore, in order to keep up the good reputation and try to convert more of the public to view them positively, Cadbury has to keep up with their moral integrity and ethical guidelines, which is seen as a positive action by the public. Work Cited About Fairtrade. n. d. http://www. fairtrade. com. au/about (accessed August 31, 2010) Cocoa Campaign. n. d. http://www. laborrights. org/stop-child-labor/cocoa-campaign (accessed August 30, 2010) Country Reports on Human Rights and Practices. 2003. http://www. state. gov/g/drl/rls/hrrpt/2003/27723. htm (accessed August 30, 2010)Factbox: British confectioner Cadbury. 2010. http://uk. reuters. com/article/idINTRE60D1XX20100114? pageNumber=2=0=true (accessed August 30, 2010) Fairtrade Certified: Frequently Asked Questions – Advanced. n. d. http://www. transfairusa. org/content/resources/faq-advanced. php#indiv iduals (accessed August 31, 2010) Our Business Principles. 2008. http://collaboration. cadbury. com/SiteCollectionDocuments/English%20Booklet. pdf (accessed August 30, 2010) Olivier, M. 2012. Ivory Coast Cocoa Farmers to Put Pay Raise in Crop Output. http://www. bloomberg. om/news/2012-10-05/ivory-coast-cocoa-farmers-to-put-pay-raise-in-crop-production. html (accessed April 2, 2013). Protocol for Growing and Processing of Cocoa Beans and Their Derivative Products. 2001. http://www. cocoainitiative. org/images/stories/pdf/harkin%20engel%20protocol. pdf (accessed August 31, 2010) Working Together to Make a Difference in the Community. n. d. http://www. cadbury. com. au/Cadbury-Community. aspx (accessed August 31, 2010) World Cocoa Production. n. d. http://www. zchocolat. com/chocolate/chocolate/cocoa-production. asp (accessed April 2, 2013).

Ruth St. Denis

Ruth St. Denis Background Ruth St. Denis was born in 1879 in New Jersey to Ruth Emma Denis who was a physician by training. Saint Denis was very strong willed and highly educated. She died in 1968.Advertising We will write a custom essay sample on Ruth St. Denis specifically for you for only $16.05 $11/page Learn More Training St. Denis was encouraged to study dancing at the formative stages of her life. She learnt Delsarte technique in the early stages of her life. Her bullet lessons were conducted by an Italian ballerina Maria Bonfante. She also received training in social dance forms and skirt dancing. Her professional career began in New York in 1892. She worked as a skirt dancer in New York where she performed in dime museums and vaudeville houses. Dime museums traditionally hosted leg dancers who did brief dancing routines. In a day, Ruth did more than eleven brief dance routines. David Belasco spotted Ruth in 1898. By then David was a Broadway producer and a directo r of repute. David then hired Ruth to perform as a featured dancer in his large company. In fact while working with David, Ruth earned her stage name St. Denis which stark with her forever. She was later to be known as Ruth St. Denis. After the tour where ‘Zaza’ was being produced Ruth got to know many important European artists like Sado Tacco and Sarah Benhardt an English actress great of her time. These people positively impacted her life as evidenced by her desire for dance and drama of Eastern cultures. Her interaction with Bernhardt made her like her melodramatic acting style. This later influenced her acting career especially the tragic fate of her character (Sherman, 1983). The technique Ruth St. Denis brought to the fore At the onset of the 20th Century St. Denis began formulating her own theory of dance and drama. These were greatly influenced by the drama techniques she had a brush with early in her dancing training. The theory of dancing was also influenced with her readings on scientology, philosophy , and the history of ancient cultures. The works of Benhardt and Yacco also played a role in defining her theories. In 1904 when she was touring with David Belasco, she came a cross a poster of the goddess of Issis that advertised a cigarette for the Egyptian Deities. This poster overwhelmed her imagination and she later resorted to reading a lot about Egypt and India. St. Denis later quit David Belasco’s company to start her path to the career of a solo artist. It is during this time that she designed her exotic costume and created a story of a mortal maid who was loved by the god of Krishna, Radha. This dance style was premiered in New York’s Vaudeville House. She intended to translate her understanding of the Indian culture and mythology to the American dance stage through Radha.Advertising Looking for essay on art and design? Let's see if we can help you! Get your first paper with 15% OFF Learn More When plying her trade a solo artist Mrs. Orlando Rouland quickly discovered Ruth St. Denis. Ruth St. Denis began performing Radha in Broadway theatres when her wealthy patron started sponsoring her. Ruth had a conviction that Europe had more to offer than any other place would do. That is why in 1906, together with her mother she went to London. She managed to travel in many European cities where she performed a series of translations until 1909. She later returned to New York to give a series of well received concerts in New City when she was touring United States. Up to 1914 she still toured United States dong exotic dance. She was labeled as a classic dancer in the same category with Isadora Duncan despite the fact that they were two different dancers in the perspective of their approach to solo dance. In fact St. Denis sought the universe in the self whereas Isadora Duncan sought the self in the Universe. St. Denis interpreted exotic world through the vantage point of her bod y (Shelton, 1981). After 1911, solo dance on the professional stage faced a eventual death. St. Denis therefore gave lessons to such women like Gertrude Whitney. Her problems were later compounded by the death of her major patron Henry Harris who died on the titanic. Her financial woes forced her back to the studios where she initiated new exotic dance. The difference however was that the new exotic dance had Japanese theme. One of these exotic dance was O-MIKA which was more culturally authentic than her other translations. It was not successful though. This prompted St. Denis to include some other performers in her productions. Ted Shawn came on board in 1914. Ted was a stage dancer who had strong Dalsartean leanings. Hilda Beyer had ballroom preferences. St. Denis continued with her solo translations where as Shawn brought popular dance forms like ragtime and tango. Shawn and Denis later became lovers and dance partners. This partnership marked the end of her career as a career s olo artist (Shelton, 1981). Are they first or second generation pioneers? Ruth St. Denis, Isadora Duncan, and Loie Fuller are considered some of the pioneers of the modern dance. They were against formalism and superficiality of classical academic bullet. These dancers wanted to introduce their audiences to both inner and outer realities.Advertising We will write a custom essay sample on Ruth St. Denis specifically for you for only $16.05 $11/page Learn More Ruth in particular employed pictorial effects that featured in her ritualistic dance of Asian religion. She specifically used elaborate costumes and improvised movements that characterized Egyptian and Indian descent. In fact because of her versatility, she integrated Native American dances and dances from other ethnic groups (Shelton, 1981). Background on their company After her marriage to Shawn in 1914, they together formed Denishawn Company. The company was started in 1915 Los Angelus California. Th rough this company they managed to popularize modern dance throughout the United States and abroad. Through this company talents were nurtured and a second generation of modern dancers was conceived. The second generation dancers that passed through this company were Martha Graham, Doris Humphrey, and Charles Weidman. The Denishawn School of dancing prioritized bullet and experimental bullet dance. The school was first housed in a Spanish style mansion in Los Angelus with spaces for technique classes and Denishawn technique. Technique classes were taken in bare feet and students had to put on one piece black wool bathing piece. The classes ran for three hours each morning. Shawn took the students through stretches, limbering and ballet barre. Floor progressions and free form center combinations were also done by Shawn. St. Denis was in-charge of oriental and yoga techniques. Shawn’s classes were in fact laden with ballet terminology. The classes finally closed with the learni ng of another part of dance. Denishawn trainings were characterized by a theory that one learns to perform by performing and this made a part of concert repertory (Shelton, 1981). Reference List Shelton, S. (1981). Divine Dancer: A Biography of Ruth St. Denis. New York: Doubleday. Sherman, J. (1983). Denishawn: The Enduring Influence. 1. Boston, MA: Twayne Publishers.

Discussion Assignment Example | Topics and Well Written Essays - 250 words - 34

Discussion - Assignment Example This process has been happening naturally as man interacts with the environment. Darwin proves his theory through the size of the brain. Early man had a small brain size approximately 425 cm 3 compared to modern man. Through the fossil records and process of carbon dating, it is easy to follow up the origin of man. The DNA of apes shows a close relationship with that of humans indicating that human beings must have had their origin from apes. Darwin also uses evidence of evolved tools to prove his theory of evolution using fossil records. The early man used sharp stone tools and iron tools. This is evident from data collected by Darwin in caves where the early man lived. According to many anthropologists, man has just evolved recently during the last 50, 000 years providing fresh evidence on evolution. The change in technology, language, culture, and specialized lithic technology has changed gradually changed human

Tom's of Maine Toothpaste Branding Research Paper

Tom's of Maine Toothpaste Branding - Research Paper Example The paper outlines the benefits of Toms of Maine Toothpaste, how it relates to the target market and how the firm can use packaging and labeling to support its brand image. Toms of Maine toothpaste has many attributes and benefits. Specifically, the Toms of Maine botanically bright toothpaste bears distinct characteristics from the other toothpastes. It is a natural brand in the toothpaste market that whitens teeth and freshens breath. In addition, it can remove plague using ingredients derived from nature. Silica is one of its ingredients, and it contributes immensely in whitening the teeth. The brand incorporates exclusive blends or mixture of soothing botanicals that makes it a top quality product. Lastly, it lacks fluoride and paraben, and this makes it safer than the other toothpaste brands. The attributes and benefits of Toms of Maine toothpaste relate to the target market as it satisfies the demands of customers who dislike products containing artificial additives linked with the causation of cancer. These groups of individual have formed a market niche that Toms of Maine targets with its new brands that are free from artificial preservatives. For instance, Toms of Maine botanically bright toothpaste targets such upcoming market niches. In addition, There is a large market of customers suffering from the plague, bad breath, tarnishing teeth and other mouth conditions. The benefits and attributes outlined can give answers to these problems. Therefore, the attributes and benefits of Toms of Maine toothpaste serves to satisfy a large market that demands its sure impacts. Toms of Maine can use labeling and packaging to protect and promote the product as well as to provide additional value and aspects of differentiation. The three functionalities are instrumental in maintaining the image of the brand (Hirschman, 2010). The firms can ensure that it uses the right material for packaging its toothpastes. An excellent package protects the product

Roles and responsibilities Essay Example | Topics and Well Written Essays - 2000 words

Roles and responsibilities - Essay Example Coaching and physical instruction involves programming and planning process. It extensively involves the teaching style, the learning style, the leadership style, the coaching style and the communication skills. According to Cross (1999), physical fitness is categorized into two, first, is the general fitness which refers to the condition of an individual health and wealth being. Secondly, is the specific fitness which is mainly task-oriented. It is defined depending on an individual’s ability to carry out different aspects of sports. Physical fitness is gained through exercising, having the correct nutrition and adequate rest. All these are important in an individual’s life. According to Weinberg and Gould (2005), physical activity is an exercise through which the body is made to work extra hard than normal. It involves actives that go to the extreme level as compared to one’s routine of just sitting, standing and walking up the stairs. Increased Physical activi ty is beneficial to all. Sport is known to be a game that has its basis in physical athleticism, (Heyward, 2006). The roles and responsibilities of a coach are viewed at times as being complex and involving Cassidy, (2005). At the same time they are exciting and very rewarding to all individuals involved. ... This is based on the idea that reassurance and relieve is attained through sharing anxieties. Fourthly, a coach is a demonstrator; a coach has to clearly demonstrate the right skill which the athletes are supposed to perform. Fifth, he or she plays a role of a friend; a coach and an athlete develop personal relationship with time as they work together. Apart from provision of coaching advice sport coach become a close person who can also be involved problems discussion and sharing of success. A coach has to be careful and ensure that all personal information remains confidential. Through this, the coach will manage to maintain the existing friendship and respect. The sixth role is that of a facilitator, a coach is greatly involved in identifying the appropriate competitions which best suit the athletes. This will assist the competitors in attaining their yearly objectives. The seventh role is that of a fact finder, a coach plays a key role in collection of data of both national and i nternational results and provides updates with the latest training techniques. Eight, a coach is a fountain of knowledge; in some cases coaches are asked questions on different events on media, for example television, diet, sport injuries and other topics outside the field of sports. Ninth, a coach is also an instructor who is supposed to instruct athletes on different sport skills. Tenth, he or she is a motivator; a coach plays a key role in maintaining the motivation of athletes throughout the year. Twelfth, he or she is a role model, a coach remains to be a model on specific behavioural and social role for those under him or her to imitate. This is among the most important roles as coaches are required to be good examples to

Film responses 13 Movie Review Example | Topics and Well Written Essays - 500 words

Film responses 13 - Movie Review Example The jump cut shows Antoine in the bathroom. He wipes the mirror and there is a voice-over of the teacher saying: â€Å"I deface the classroom walls.† The voice-over is a distancing technique. It helps people to think about the kind of boy that Antoine is and the kind of life that he has than feel for him as a delinquent. When his father appears in the mirror to show his socks with many holes, it shows the theme of mixing genres, of including comedy in a dramatic moment. This is part of the auteur theory where Truffaut includes small things that matter to a leisure narrative development, especially the wit and charm of the characters. Try to make a point of not choosing opening scenes or scenes that are featured on You Tube.When you find a scene that clearly shows French New Wave technical & thematic elements--note those elements as you  describe each scene in vivid detail--using film terms whenever appropriate.  Remember--its always easiest to work your way chronologically through the scene--describing what you see as the narrative unfolds.   Important--Make sure you also extend your description into a discussion of the purpose and/or effect of various technical or elements of mise-en-scene choices. The assignment this week will help prepare you for next weeks

Credit Risk Dissertation

Credit Risk Dissertation CREDIT RISK EXECUTIVE SUMMARY The future of banking will undoubtedly rest on risk management dynamics. Only those banks that have efficient risk management system will survive in the market in the long run. The major cause of serious banking problems over the years continues to be directly related to lax credit standards for borrowers and counterparties, poor portfolio risk management, or a lack of attention to deterioration in the credit standing of a banks counterparties. Credit risk is the oldest and biggest risk that bank, by virtue of its very nature of business, inherits. This has however, acquired a greater significance in the recent past for various reasons. There have been many traditional approaches to measure credit risk like logit, linear probability model but with passage of time new approaches have been developed like the Credit+, KMV Model. Basel I Accord was introduced in 1988 to have a framework for regulatory capital for banks but the â€Å"one size fit all† approach led to a shift, to a new and comprehensive approach -Basel II which adopts a three pillar approach to risk management. Banks use a number of techniques to mitigate the credit risks to which they are exposed. RBI has prescribed adoption of comprehensive approach for the purpose of CRM which allows fuller offset of security of collateral against exposures by effectively reducing the exposure amount by the value ascribed to the collateral. In this study, a leading nationalized bank is taken to study the steps taken by the bank to implement the Basel- II Accord and the entire framework developed for credit risk management. The bank under the study uses the credit scoring method to evaluate the credit risk involved in various loans/advances. The bank has set up special software to evaluate each case under various parameters and a monitoring system to continuously track each assets performance in accordance with the evaluation parameters. CHAPTER 1 INTRODUCTION 1.1 Rationale Credit Risk Management in todays deregulated market is a big challenge. Increased market volatility has brought with it the need for smart analysis and specialized applications in managing credit risk. A well defined policy framework is needed to help the operating staff identify the risk-event, assign a probability to each, quantify the likely loss, assess the acceptability of the exposure, price the risk and monitor them right to the point where they are paid off. Generally, Banks in India evaluate a proposal through the traditional tools of project financing, computing maximum permissible limits, assessing management capabilities and prescribing a ceiling for an industry exposure. As banks move in to a new high powered world of financial operations and trading, with new risks, the need is felt for more sophisticated and versatile instruments for risk assessment, monitoring and controlling risk exposures. It is, therefore, time that banks managements equip them fully to grapple with the demands of creating tools and systems capable of assessing, monitoring and controlling risk exposures in a more scientific manner. According to an estimate, Credit Risk takes about 70% and 30% remaining is shared between the other two primary risks, namely Market risk (change in the market price and operational risk i.e., failure of internal controls, etc.). Quality borrowers (Tier-I borrowers) were able to access the capital market directly without going through the debt route. Hence, the credit route is now more open to lesser mortals (Tier-II borrowers). With margin levels going down, banks are unable to absorb the level of loan losses. Even in banks which regularly fine-tune credit policies and streamline credit processes, it is a real challenge for credit risk managers to correctly identify pockets of risk concentration, quantify extent of risk carried, identify opportunities for diversification and balance the risk-return trade-off in their credit portfolio. The management of banks should strive to embrace the notion of ‘uncertainty and risk in their balance sheet and instill the need for approaching credit administration from a ‘risk-perspective across the system by placing well drafted strategies in the hands of the operating staff with due material support for its successful implementation. There is a need for Strategic approach to Credit Risk Management (CRM) in Indian Commercial Banks, particularly in view of; (1) Higher NPAs level in comparison with global benchmark (2) RBI s stipulation about dividend distribution by the banks (3) Revised NPAs level and CAR norms (4) New Basel Capital Accord (Basel -II) revolution 1.2 OBJECTIVES To understand the conceptual framework for credit risk. To understand credit risk under the Basel II Accord. To analyze the credit risk management practices in a Leading Nationalised Bank 1.3 RESEARCH METHODOLOGY Research Design: In order to have more comprehensive definition of the problem and to become familiar with the problems, an extensive literature survey was done to collect secondary data for the location of the various variables, probably contemporary issues and the clarity of concepts. Data Collection Techniques: The data collection technique used is interviewing. Data has been collected from both primary and secondary sources. Primary Data: is collected by making personal visits to the bank. Secondary Data: The details have been collected from research papers, working papers, white papers published by various agencies like ICRA, FICCI, IBA etc; articles from the internet and various journals. 1.4 LITERATURE REVIEW * Merton (1974) has applied options pricing model as a technology to evaluate the credit risk of enterprise, it has been drawn a lot of attention from western academic and business circles.Mertons Model is the theoretical foundation of structural models. Mertons model is not only based on a strict and comprehensive theory but also used market information stock price as an important variance toevaluate the credit risk.This makes credit risk to be a real-time monitored at a much higher frequency.This advantage has made it widely applied by the academic and business circle for a long time. Other Structural Models try to refine the original Merton Framework by removing one or more of unrealistic assumptions. * Black and Cox (1976) postulate that defaults occur as soon as firms asset value falls below a certain threshold. In contrast to the Merton approach, default can occur at any time. The paper by Black and Cox (1976) is the first of the so-called First Passage Models (FPM). First passage models specify default as the first time the firms asset value hits a lower barrier, allowing default to take place at any time. When the default barrier is exogenously fixed, as in Black and Cox (1976) and Longstaff and Schwartz (1995), it acts as a safety covenant to protect bondholders. Black and Cox introduce the possibility of more complex capital structures, with subordinated debt. * Geske (1977) introduces interest-paying debt to the Merton model. * Vasicek (1984) introduces the distinction between short and long term liabilities which now represents a distinctive feature of the KMV model. Under these models, all the relevant credit risk elements, including default and recovery at default, are a function of the structural characteristics of the firm: asset levels, asset volatility (business risk) and leverage (financial risk). * Kim, Ramaswamy and Sundaresan (1993) have suggested an alternative approach which still adopts the original Merton framework as far as the default process is concerned but, at the same time, removes one of the unrealistic assumptions of the Merton model; namely, that default can occur only at maturity of the debt when the firms assets are no longer sufficient to cover debt obligations. Instead, it is assumed that default may occur anytime between the issuance and maturity of the debt and that default is triggered when the value of the firms assets reaches a lower threshold level. In this model, the RR in the event of default is exogenous and independent from the firms asset value. It is generally defined as a fixed ratio of the outstanding debt value and is therefore independent from the PD. The attempt to overcome the shortcomings of structural-form models gave rise to reduced-form models. Unlike structural-form models, reduced-form models do not condition default on the value of the firm, and parameters related to the firms value need not be estimated to implement them. * Jarrow and Turnbull (1995) assumed that, at default, a bond would have a market value equal to an exogenously specified fraction of an otherwise equivalent default-free bond. * Duffie and Singleton (1999) followed with a model that, when market value at default (i.e. RR) is exogenously specified, allows for closed-form solutions for the term-structure of credit spreads. * Zhou (2001) attempt to combine the advantages of structural-form models a clear economic mechanism behind the default process, and the ones of reduced- form models unpredictability of default. This model links RRs to the firm value at default so that the variation in RRs is endogenously generated and the correlation between RRs and credit ratings reported first in Altman (1989) and Gupton, Gates and Carty (2000) is justified. Lately portfolio view on credit losses has emerged by recognising that changes in credit quality tend to comove over the business cycle and that one can diversify part of the credit risk by a clever composition of the loan portfolio across regions, industries and countries. Thus in order to assess the credit risk of a loan portfolio, a bank must not only investigate the creditworthiness of its customers, but also identify the concentration risks and possible comovements of risk factors in the portfolio. * CreditMetrics by Gupton et al (1997) was publicized in 1997 by JP Morgan. Its methodology is based on probability of moving from one credit quality to another within a given time horizon (credit migration analysis). The estimation of the portfolio Value-at-Risk due to Credit (Credit-VaR) through CreditMetrics A rating system with probabilities of migrating from one credit quality to another over a given time horizon (transition matrix) is the key component of the credit-VaR proposed by JP Morgan. The specified credit risk horizon is usually one year. A rating system with probabilities of migrating from one credit quality to another over a given time horizon (transition matrix) is the key component of the credit-VaR proposed by JP Morgan. The specified credit risk horizon is usually one year. * (Sy, 2007), states that the primary cause of credit default is loan delinquency due to insufficient liquidity or cash flow to service debt obligations. In the case of unsecured loans, we assume delinquency is a necessary and sufficient condition. In the case of collateralized loans, delinquency is a necessary, but not sufficient condition, because the borrower may be able to refinance the loan from positive equity or net assets to prevent default. In general, for secured loans, both delinquency and insolvency are assumed necessary and sufficient for credit default. CHAPTER 2 THEORECTICAL FRAMEWORK 2.1 CREDIT RISK: Credit risk is risk due to uncertainty in a counterpartys (also called an obligors or credits) ability to meet its obligations. Because there are many types of counterparties—from individuals to sovereign governments—and many different types of obligations—from auto loans to derivatives transactions—credit risk takes many forms. Institutions manage it in different ways. Although credit losses naturally fluctuate over time and with economic conditions, there is (ceteris paribus) a statistically measured, long-run average loss level. The losses can be divided into two categories i.e. expected losses (EL) and unexpected losses (UL). EL is based on three parameters:  ·Ã¢â€š ¬Ã‚   The likelihood that default will take place over a specified time horizon (probability of default or PD)  · â‚ ¬Ã‚  The amount owned by the counterparty at the moment of default (exposure at default or EAD)  ·Ã¢â€š ¬Ã‚   The fraction of the exposure, net of any recoveries, which will be lost following a default event (loss given default or LGD). EL = PD x EAD x LGD EL can be aggregated at various different levels (e.g. individual loan or entire credit portfolio), although it is typically calculated at the transaction level; it is normally mentioned either as an absolute amount or as a percentage of transaction size. It is also both customer- and facility-specific, since two different loans to the same customer can have a very different EL due to differences in EAD and/or LGD. It is important to note that EL (or, for that matter, credit quality) does not by itself constitute risk; if losses always equaled their expected levels, then there would be no uncertainty. Instead, EL should be viewed as an anticipated â€Å"cost of doing business† and should therefore be incorporated in loan pricing and ex ante provisioning. Credit risk, in fact, arises from variations in the actual loss levels, which give rise to the so-called unexpected loss (UL). Statistically speaking, UL is simply the standard deviation of EL. UL= ÏÆ' (EL) = ÏÆ' (PD*EAD*LGD) Once the bank- level credit loss distribution is constructed, credit economic capital is simply determined by the banks tolerance for credit risk, i.e. the bank needs to decide how much capital it wants to hold in order to avoid insolvency because of unexpected credit losses over the next year. A safer bank must have sufficient capital to withstand losses that are larger and rarer, i.e. they extend further out in the loss distribution tail. In practice, therefore, the choice of confidence interval in the loss distribution corresponds to the banks target credit rating (and related default probability) for its own debt. As Figure below shows, economic capital is the difference between EL and the selected confidence interval at the tail of the loss distribution; it is equal to a multiple K (often referred to as the capital multiplier) of the standard deviation of EL (i.e. UL). The shape of the loss distribution can vary considerably depending on product type and borrower credit quality. For example, high quality (low PD) borrowers tend to have proportionally less EL per unit of capital charged, meaning that K is higher and the shape of their loss distribution is more skewed (and vice versa). Credit risk may be in the following forms: * In case of the direct lending * In case of the guarantees and the letter of the credit * In case of the treasury operations * In case of the securities trading businesses * In case of the cross border exposure 2.2 The need for Credit Risk Rating: The need for Credit Risk Rating has arisen due to the following: 1. With dismantling of State control, deregulation, globalisation and allowing things to shape on the basis of market conditions, Indian Industry and Indian Banking face new risks and challenges. Competition results in the survival of the fittest. It is therefore necessary to identify these risks, measure them, monitor and control them. 2. It provides a basis for Credit Risk Pricing i.e. fixation of rate of interest on lending to different borrowers based on their credit risk rating thereby balancing Risk Reward for the Bank. 3. The Basel Accord and consequent Reserve Bank of India guidelines requires that the level of capital required to be maintained by the Bank will be in proportion to the risk of the loan in Banks Books for measurement of which proper Credit Risk Rating system is necessary. 4. The credit risk rating can be a Risk Management tool for prospecting fresh borrowers in addition to monitoring the weaker parameters and taking remedial action. The types of Risks Captured in the Banks Credit Risk Rating Model The Credit Risk Rating Model provides a framework to evaluate the risk emanating from following main risk categorizes/risk areas: * Industry risk * Business risk * Financial risk * Management risk * Facility risk * Project risk 2.3 WHY CREDIT RISK MEASUREMENT? In recent years, a revolution is brewing in risk as it is both managed and measured. There are seven reasons as to why certain surge in interest: 1. Structural increase in bankruptcies: Although the most recent recession hit at different time in different countries, most statistics show a significant increase in bankruptcies, compared to prior recession. To the extent that there has been a permanent or structural increase in bankruptcies worldwide- due to increase in the global competition- accurate credit analysis become even more important today than in past. 2. Disintermediation: As capital markets have expanded and become accessible to small and mid sized firms, the firms or borrowers â€Å"left behind† to raise funds from banks and other traditional financial institutions (FIs) are likely to be smaller and to have weaker credit ratings. Capital market growth has produced â€Å"a winners† curse effect on the portfolios of traditional FIs. 3. More Competitive Margins: Almost paradoxically, despite the decline in the average quality of loans, interest margins or spreads, especially in wholesale loan markets have become very thin. In short, the risk-return trade off from lending has gotten worse. A number of reasons can be cited, but an important factor has been the enhanced competition for low quality borrowers especially from finance companies, much of whose lending activity has been concentrated at the higher risk/lower quality end of the market. 4. Declining and Volatile Values of Collateral: Concurrent with the recent Asian and Russian debt crisis in well developed countries such as Switzerland and Japan have shown that property and real assets value are very hard to predict, and to realize through liquidation. The weaker (and more uncertain) collateral values are, the riskier the lending is likely to be. Indeed the current concerns about deflation worldwide have been accentuated the concerns about the value of real assets such as property and other physical assets. 5. The Growth Of Off- Balance Sheet Derivatives: In many of the very large U.S. banks, the notional value of the off-balance-sheet exposure to instruments such as over-the-counter (OTC) swaps and forwards is more than 10 times the size of their loan books. Indeed the growth in credit risk off the balance sheet was one of the main reasons for the introduction, by the Bank for International Settlements (BIS), of risk based capital requirements in 1993. Under the BIS system, the banks have to hold a capital requirement based on the mark- to- market current values of each OTC Derivative contract plus an add on for potential future exposure. 6. Technology Advances in computer systems and related advances in information technology have given banks and FIs the opportunity to test high powered modeling techniques. A survey conducted by International Swaps and Derivatives Association and the Institute of International Finance in 2000 found that survey participants (consisting of 25 commercial banks from 10 countries, with varying size and specialties) used commercial and internal databases to assess the credit risk on rated and unrated commercial, retail and mortgage loans. 7. The BIS Risk-Based Capital Requirements Despite the importance of above six reasons, probably the greatest incentive for banks to develop new credit risk models has been dissatisfaction with the BIS and central banks post-1992 imposition of capital requirements on loans. The current BIS approach has been described as a ‘one size fits all policy, irrespective of the size of loan, its maturity, and most importantly, the credit quality of the borrowing party. Much of the current interest in fine tuning credit risk measurement models has been fueled by the proposed BIS New Capital Accord (or so Called BIS II) which would more closely link capital charges to the credit risk exposure to retail, commercial, sovereign and interbank credits. Chapter- 3 Credit Risk Approaches and Pricing 3.1 CREDIT RISK MEASUREMENT APPROACHES: 1. CREDIT SCORING MODELS Credit Scoring Models use data on observed borrower characteristics to calculate the probability of default or to sort borrowers into different default risk classes. By selecting and combining different economic and financial borrower characteristics, a bank manager may be able to numerically establish which factors are important in explaining default risk, evaluate the relative degree or importance of these factors, improve the pricing of default risk, be better able to screen out bad loan applicants and be in a better position to calculate any reserve needed to meet expected future loan losses. To employ credit scoring model in this manner, the manager must identify objective economic and financial measures of risk for any particular class of borrower. For consumer debt, the objective characteristics in a credit -scoring model might include income, assets, age occupation and location. For corporate debt, financial ratios such as debt-equity ratio are usually key factors. After data are identified, a statistical technique quantifies or scores the default risk probability or default risk classification. Credit scoring models include three broad types: (1) linear probability models, (2) logit model and (3) linear discriminant model. LINEAR PROBABILITY MODEL: The linear probability model uses past data, such as accounting ratios, as inputs into a model to explain repayment experience on old loans. The relative importance of the factors used in explaining the past repayment performance then forecasts repayment probabilities on new loans; that is can be used for assessing the probability of repayment. Briefly we divide old loans (i) into two observational groups; those that defaulted (Zi = 1) and those that did not default (Zi = 0). Then we relate these observations by linear regression to s set of j casual variables (Xij) that reflects quantative information about the ith borrower, such as leverage or earnings. We estimate the model by linear regression of: Zi = ÃŽ £ÃŽ ²jXij + error Where ÃŽ ²j is the estimated importance of the jth variable in explaining past repayment experience. If we then take these estimated ÃŽ ²js and multiply them by the observed Xij for a prospective borrower, we can derive an expected value of Zi for the probability of repayment on the loan. LOGIT MODEL: The objective of the typical credit or loan review model is to replicate judgments made by loan officers, credit managers or bank examiners. If an accurate model could be developed, then it could be used as a tool for reviewing and classifying future credit risks. Chesser (1974) developed a model to predict noncompliance with the customers original loan arrangement, where non-compliance is defined to include not only default but any workout that may have been arranged resulting in a settlement of the loan less favorable to the tender than the original agreement. Chessers model, which was based on a technique called logit analysis, consisted of the following six variables. X1 = (Cash + Marketable Securities)/Total Assets X2 = Net Sales/(Cash + Marketable Securities) X3 = EBIT/Total Assets X4 = Total Debt/Total Assets X5 = Total Assets/ Net Worth X6 = Working Capital/Net Sales The estimated coefficients, including an intercept term, are Y = -2.0434 -5.24X1 + 0.0053X2 6.6507X3 + 4.4009X4 0.0791X5 0.1020X6 Chessers classification rule for above equation is If P> 50, assign to the non compliance group and If P≠¤50, assign to the compliance group. LINEAR DISCRIMINANT MODEL: While linear probability and logit models project a value foe the expected probability of default if a loan is made, discriminant models divide borrowers into high or default risk classes contingent on their observed characteristic (X). Altmans Z-score model is an application of multivariate Discriminant analysis in credit risk modeling. Financial ratios measuring probability, liquidity and solvency appeared to have significant discriminating power to separate the firm that fails to service its debt from the firms that do not. These ratios are weighted to produce a measure (credit risk score) that can be used as a metric to differentiate the bad firms from the set of good ones. Discriminant analysis is a multivariate statistical technique that analyzes a set of variables in order to differentiate two or more groups by minimizing the within-group variance and maximizing the between group variance simultaneously. Variables taken were: X1::Working Capital/ Total Asset X2: Retained Earning/ Total Asset X3: Earning before interest and taxes/ Total Asset X4: Market value of equity/ Book value of total Liabilities X5: Sales/Total Asset The original Z-score model was revised and modified several times in order to find the scoring model more specific to a particular class of firm. These resulted in the private firms Z-score model, non manufacturers Z-score model and Emerging Market Scoring (EMS) model. 3.2 New Approaches TERM STRUCTURE DERIVATION OF CREDIT RISK: One market based method of assessing credit risk exposure and default probabilities is to analyze the risk premium inherent in the current structure of yields on corporate debt or loans to similar risk-rated borrowers. Rating agencies categorize corporate bond issuers into at least seven major classes according to perceived credit quality. The first four ratings AAA, AA, A and BBB indicate investment quality borrowers. MORTALITY RATE APPROACH: Rather than extracting expected default rates from the current term structure of interest rates, the FI manager may analyze the historic or past default experience the mortality rates, of bonds and loans of a similar quality. Here p1is the probability of a grade B bond surviving the first year of its issue; thus 1 p1 is the marginal mortality rate, or the probability of the bond or loan dying or defaulting in the first year while p2 is the probability of the loan surviving in the second year and that it has not defaulted in the first year, 1-p2 is the marginal mortality rate for the second year. Thus, for each grade of corporate buyer quality, a marginal mortality rate (MMR) curve can show the historical default rate in any specific quality class in each year after issue. RAROC MODELS: Based on a banks risk-bearing capacity and its risk strategy, it is thus necessary — bearing in mind the banks strategic orientation — to find a method for the efficient allocation of capital to the banks individual siness areas, i.e. to define indicators that are suitable for balancing risk and return in a sensible manner. Indicators fulfilling this requirement are often referred to as risk adjusted performance measures (RAPM). RARORAC (risk adjusted return on risk adjusted capital, usually abbreviated as the most commonly found forms are RORAC (return on risk adjusted capital), Net income is taken to mean income minus refinancing cost, operating cost, and expected losses. It should now be the banks goal to maximize a RAPM indicator for the bank as a whole, e.g. RORAC, taking into account the correlation between individual transactions. Certain constraints such as volume restrictions due to a potential lack of liquidity and the maintenance of solvency based on economic and regulatory capital have to be observed in reaching this goal. From an organizational point of view, value and risk management should therefore be linked as closely as possible at all organizational levels. OPTION MODELS OF DEFAULT RISK (kmv model): KMV Corporation has developed a credit risk model that uses information on the stock prices and the capital structure of the firm to estimate its default probability. The starting point of the model is the proposition that a firm will default only if its asset value falls below a certain level, which is function of its liability. It estimates the asset value of the firm and its asset volatility from the market value of equity and the debt structure in the option theoretic framework. The resultant probability is called Expected default Frequency (EDF). In summary, EDF is calculated in the following three steps: i) Estimation of asset value and volatility from the equity value and volatility of equity return. ii) Calculation of distance from default iii) Calculation of expected default frequency Credit METRICS: It provides a method for estimating the distribution of the value of the assets n a portfolio subject to change in the credit quality of individual borrower. A portfolio consists of different stand-alone assets, defined by a stream of future cash flows. Each asset has a distribution over the possible range of future rating class. Starting from its initial rating, an asset may end up in ay one of the possible rating categories. Each rating category has a different credit spread, which will be used to discount the future cash flows. Moreover, the assets are correlated among themselves depending on the industry they belong to. It is assumed that the asset returns are normally distributed and change in the asset returns causes the change in the rating category in future. Finally, the simulation technique is used to estimate the value distribution of the assets. A number of scenario are generated from a multivariate normal distribution, which is defined by the appropriate credit spread, t he future value of asset is estimated. CREDIT Risk+: CreditRisk+, introduced by Credit Suisse Financial Products (CSFP), is a model of default risk. Each asset has only two possible end-of-period states: default and non-default. In the event of default, the lender recovers a fixed proportion of the total expense. The default rate is considered as a continuous random variable. It does not try to estimate default correlation directly. Here, the default correlation is assumed to be determined by a set of risk factors. Conditional on these risk factors, default of each obligator follows a Bernoulli distribution. To get unconditional probability generating function for the number of defaults, it assumes that the risk factors are independently gamma distributed random variables. The final step in Creditrisk+ is to obtain the probability generating function for losses. Conditional on the number of default events, the losses are entirely determined by the exposure and recovery rate. Thus, the distribution of asset can be estimated from the fol lowing input data: i) Exposure of individual asset ii) Expected default rate iii) Default ate volatilities iv) Recovery rate given default 3.3 CREDIT PRICING Pricing of the credit is essential for the survival of enterprises relying on credit assets, because the benefits derived from extending credit should surpass the cost. With the introduction of capital adequacy norms, the credit risk is linked to the capital-minimum 8% capital adequacy. Consequently, higher capital is required to be deployed if more credit risks are underwritten. The decision (a) whether to maximize the returns on possible credit assets with the existing capital or (b) raise more capital to do more business invariably depends upon p Credit Risk Dissertation Credit Risk Dissertation CREDIT RISK EXECUTIVE SUMMARY The future of banking will undoubtedly rest on risk management dynamics. Only those banks that have efficient risk management system will survive in the market in the long run. The major cause of serious banking problems over the years continues to be directly related to lax credit standards for borrowers and counterparties, poor portfolio risk management, or a lack of attention to deterioration in the credit standing of a banks counterparties. Credit risk is the oldest and biggest risk that bank, by virtue of its very nature of business, inherits. This has however, acquired a greater significance in the recent past for various reasons. There have been many traditional approaches to measure credit risk like logit, linear probability model but with passage of time new approaches have been developed like the Credit+, KMV Model. Basel I Accord was introduced in 1988 to have a framework for regulatory capital for banks but the â€Å"one size fit all† approach led to a shift, to a new and comprehensive approach -Basel II which adopts a three pillar approach to risk management. Banks use a number of techniques to mitigate the credit risks to which they are exposed. RBI has prescribed adoption of comprehensive approach for the purpose of CRM which allows fuller offset of security of collateral against exposures by effectively reducing the exposure amount by the value ascribed to the collateral. In this study, a leading nationalized bank is taken to study the steps taken by the bank to implement the Basel- II Accord and the entire framework developed for credit risk management. The bank under the study uses the credit scoring method to evaluate the credit risk involved in various loans/advances. The bank has set up special software to evaluate each case under various parameters and a monitoring system to continuously track each assets performance in accordance with the evaluation parameters. CHAPTER 1 INTRODUCTION 1.1 Rationale Credit Risk Management in todays deregulated market is a big challenge. Increased market volatility has brought with it the need for smart analysis and specialized applications in managing credit risk. A well defined policy framework is needed to help the operating staff identify the risk-event, assign a probability to each, quantify the likely loss, assess the acceptability of the exposure, price the risk and monitor them right to the point where they are paid off. Generally, Banks in India evaluate a proposal through the traditional tools of project financing, computing maximum permissible limits, assessing management capabilities and prescribing a ceiling for an industry exposure. As banks move in to a new high powered world of financial operations and trading, with new risks, the need is felt for more sophisticated and versatile instruments for risk assessment, monitoring and controlling risk exposures. It is, therefore, time that banks managements equip them fully to grapple with the demands of creating tools and systems capable of assessing, monitoring and controlling risk exposures in a more scientific manner. According to an estimate, Credit Risk takes about 70% and 30% remaining is shared between the other two primary risks, namely Market risk (change in the market price and operational risk i.e., failure of internal controls, etc.). Quality borrowers (Tier-I borrowers) were able to access the capital market directly without going through the debt route. Hence, the credit route is now more open to lesser mortals (Tier-II borrowers). With margin levels going down, banks are unable to absorb the level of loan losses. Even in banks which regularly fine-tune credit policies and streamline credit processes, it is a real challenge for credit risk managers to correctly identify pockets of risk concentration, quantify extent of risk carried, identify opportunities for diversification and balance the risk-return trade-off in their credit portfolio. The management of banks should strive to embrace the notion of ‘uncertainty and risk in their balance sheet and instill the need for approaching credit administration from a ‘risk-perspective across the system by placing well drafted strategies in the hands of the operating staff with due material support for its successful implementation. There is a need for Strategic approach to Credit Risk Management (CRM) in Indian Commercial Banks, particularly in view of; (1) Higher NPAs level in comparison with global benchmark (2) RBI s stipulation about dividend distribution by the banks (3) Revised NPAs level and CAR norms (4) New Basel Capital Accord (Basel -II) revolution 1.2 OBJECTIVES To understand the conceptual framework for credit risk. To understand credit risk under the Basel II Accord. To analyze the credit risk management practices in a Leading Nationalised Bank 1.3 RESEARCH METHODOLOGY Research Design: In order to have more comprehensive definition of the problem and to become familiar with the problems, an extensive literature survey was done to collect secondary data for the location of the various variables, probably contemporary issues and the clarity of concepts. Data Collection Techniques: The data collection technique used is interviewing. Data has been collected from both primary and secondary sources. Primary Data: is collected by making personal visits to the bank. Secondary Data: The details have been collected from research papers, working papers, white papers published by various agencies like ICRA, FICCI, IBA etc; articles from the internet and various journals. 1.4 LITERATURE REVIEW * Merton (1974) has applied options pricing model as a technology to evaluate the credit risk of enterprise, it has been drawn a lot of attention from western academic and business circles.Mertons Model is the theoretical foundation of structural models. Mertons model is not only based on a strict and comprehensive theory but also used market information stock price as an important variance toevaluate the credit risk.This makes credit risk to be a real-time monitored at a much higher frequency.This advantage has made it widely applied by the academic and business circle for a long time. Other Structural Models try to refine the original Merton Framework by removing one or more of unrealistic assumptions. * Black and Cox (1976) postulate that defaults occur as soon as firms asset value falls below a certain threshold. In contrast to the Merton approach, default can occur at any time. The paper by Black and Cox (1976) is the first of the so-called First Passage Models (FPM). First passage models specify default as the first time the firms asset value hits a lower barrier, allowing default to take place at any time. When the default barrier is exogenously fixed, as in Black and Cox (1976) and Longstaff and Schwartz (1995), it acts as a safety covenant to protect bondholders. Black and Cox introduce the possibility of more complex capital structures, with subordinated debt. * Geske (1977) introduces interest-paying debt to the Merton model. * Vasicek (1984) introduces the distinction between short and long term liabilities which now represents a distinctive feature of the KMV model. Under these models, all the relevant credit risk elements, including default and recovery at default, are a function of the structural characteristics of the firm: asset levels, asset volatility (business risk) and leverage (financial risk). * Kim, Ramaswamy and Sundaresan (1993) have suggested an alternative approach which still adopts the original Merton framework as far as the default process is concerned but, at the same time, removes one of the unrealistic assumptions of the Merton model; namely, that default can occur only at maturity of the debt when the firms assets are no longer sufficient to cover debt obligations. Instead, it is assumed that default may occur anytime between the issuance and maturity of the debt and that default is triggered when the value of the firms assets reaches a lower threshold level. In this model, the RR in the event of default is exogenous and independent from the firms asset value. It is generally defined as a fixed ratio of the outstanding debt value and is therefore independent from the PD. The attempt to overcome the shortcomings of structural-form models gave rise to reduced-form models. Unlike structural-form models, reduced-form models do not condition default on the value of the firm, and parameters related to the firms value need not be estimated to implement them. * Jarrow and Turnbull (1995) assumed that, at default, a bond would have a market value equal to an exogenously specified fraction of an otherwise equivalent default-free bond. * Duffie and Singleton (1999) followed with a model that, when market value at default (i.e. RR) is exogenously specified, allows for closed-form solutions for the term-structure of credit spreads. * Zhou (2001) attempt to combine the advantages of structural-form models a clear economic mechanism behind the default process, and the ones of reduced- form models unpredictability of default. This model links RRs to the firm value at default so that the variation in RRs is endogenously generated and the correlation between RRs and credit ratings reported first in Altman (1989) and Gupton, Gates and Carty (2000) is justified. Lately portfolio view on credit losses has emerged by recognising that changes in credit quality tend to comove over the business cycle and that one can diversify part of the credit risk by a clever composition of the loan portfolio across regions, industries and countries. Thus in order to assess the credit risk of a loan portfolio, a bank must not only investigate the creditworthiness of its customers, but also identify the concentration risks and possible comovements of risk factors in the portfolio. * CreditMetrics by Gupton et al (1997) was publicized in 1997 by JP Morgan. Its methodology is based on probability of moving from one credit quality to another within a given time horizon (credit migration analysis). The estimation of the portfolio Value-at-Risk due to Credit (Credit-VaR) through CreditMetrics A rating system with probabilities of migrating from one credit quality to another over a given time horizon (transition matrix) is the key component of the credit-VaR proposed by JP Morgan. The specified credit risk horizon is usually one year. A rating system with probabilities of migrating from one credit quality to another over a given time horizon (transition matrix) is the key component of the credit-VaR proposed by JP Morgan. The specified credit risk horizon is usually one year. * (Sy, 2007), states that the primary cause of credit default is loan delinquency due to insufficient liquidity or cash flow to service debt obligations. In the case of unsecured loans, we assume delinquency is a necessary and sufficient condition. In the case of collateralized loans, delinquency is a necessary, but not sufficient condition, because the borrower may be able to refinance the loan from positive equity or net assets to prevent default. In general, for secured loans, both delinquency and insolvency are assumed necessary and sufficient for credit default. CHAPTER 2 THEORECTICAL FRAMEWORK 2.1 CREDIT RISK: Credit risk is risk due to uncertainty in a counterpartys (also called an obligors or credits) ability to meet its obligations. Because there are many types of counterparties—from individuals to sovereign governments—and many different types of obligations—from auto loans to derivatives transactions—credit risk takes many forms. Institutions manage it in different ways. Although credit losses naturally fluctuate over time and with economic conditions, there is (ceteris paribus) a statistically measured, long-run average loss level. The losses can be divided into two categories i.e. expected losses (EL) and unexpected losses (UL). EL is based on three parameters:  ·Ã¢â€š ¬Ã‚   The likelihood that default will take place over a specified time horizon (probability of default or PD)  · â‚ ¬Ã‚  The amount owned by the counterparty at the moment of default (exposure at default or EAD)  ·Ã¢â€š ¬Ã‚   The fraction of the exposure, net of any recoveries, which will be lost following a default event (loss given default or LGD). EL = PD x EAD x LGD EL can be aggregated at various different levels (e.g. individual loan or entire credit portfolio), although it is typically calculated at the transaction level; it is normally mentioned either as an absolute amount or as a percentage of transaction size. It is also both customer- and facility-specific, since two different loans to the same customer can have a very different EL due to differences in EAD and/or LGD. It is important to note that EL (or, for that matter, credit quality) does not by itself constitute risk; if losses always equaled their expected levels, then there would be no uncertainty. Instead, EL should be viewed as an anticipated â€Å"cost of doing business† and should therefore be incorporated in loan pricing and ex ante provisioning. Credit risk, in fact, arises from variations in the actual loss levels, which give rise to the so-called unexpected loss (UL). Statistically speaking, UL is simply the standard deviation of EL. UL= ÏÆ' (EL) = ÏÆ' (PD*EAD*LGD) Once the bank- level credit loss distribution is constructed, credit economic capital is simply determined by the banks tolerance for credit risk, i.e. the bank needs to decide how much capital it wants to hold in order to avoid insolvency because of unexpected credit losses over the next year. A safer bank must have sufficient capital to withstand losses that are larger and rarer, i.e. they extend further out in the loss distribution tail. In practice, therefore, the choice of confidence interval in the loss distribution corresponds to the banks target credit rating (and related default probability) for its own debt. As Figure below shows, economic capital is the difference between EL and the selected confidence interval at the tail of the loss distribution; it is equal to a multiple K (often referred to as the capital multiplier) of the standard deviation of EL (i.e. UL). The shape of the loss distribution can vary considerably depending on product type and borrower credit quality. For example, high quality (low PD) borrowers tend to have proportionally less EL per unit of capital charged, meaning that K is higher and the shape of their loss distribution is more skewed (and vice versa). Credit risk may be in the following forms: * In case of the direct lending * In case of the guarantees and the letter of the credit * In case of the treasury operations * In case of the securities trading businesses * In case of the cross border exposure 2.2 The need for Credit Risk Rating: The need for Credit Risk Rating has arisen due to the following: 1. With dismantling of State control, deregulation, globalisation and allowing things to shape on the basis of market conditions, Indian Industry and Indian Banking face new risks and challenges. Competition results in the survival of the fittest. It is therefore necessary to identify these risks, measure them, monitor and control them. 2. It provides a basis for Credit Risk Pricing i.e. fixation of rate of interest on lending to different borrowers based on their credit risk rating thereby balancing Risk Reward for the Bank. 3. The Basel Accord and consequent Reserve Bank of India guidelines requires that the level of capital required to be maintained by the Bank will be in proportion to the risk of the loan in Banks Books for measurement of which proper Credit Risk Rating system is necessary. 4. The credit risk rating can be a Risk Management tool for prospecting fresh borrowers in addition to monitoring the weaker parameters and taking remedial action. The types of Risks Captured in the Banks Credit Risk Rating Model The Credit Risk Rating Model provides a framework to evaluate the risk emanating from following main risk categorizes/risk areas: * Industry risk * Business risk * Financial risk * Management risk * Facility risk * Project risk 2.3 WHY CREDIT RISK MEASUREMENT? In recent years, a revolution is brewing in risk as it is both managed and measured. There are seven reasons as to why certain surge in interest: 1. Structural increase in bankruptcies: Although the most recent recession hit at different time in different countries, most statistics show a significant increase in bankruptcies, compared to prior recession. To the extent that there has been a permanent or structural increase in bankruptcies worldwide- due to increase in the global competition- accurate credit analysis become even more important today than in past. 2. Disintermediation: As capital markets have expanded and become accessible to small and mid sized firms, the firms or borrowers â€Å"left behind† to raise funds from banks and other traditional financial institutions (FIs) are likely to be smaller and to have weaker credit ratings. Capital market growth has produced â€Å"a winners† curse effect on the portfolios of traditional FIs. 3. More Competitive Margins: Almost paradoxically, despite the decline in the average quality of loans, interest margins or spreads, especially in wholesale loan markets have become very thin. In short, the risk-return trade off from lending has gotten worse. A number of reasons can be cited, but an important factor has been the enhanced competition for low quality borrowers especially from finance companies, much of whose lending activity has been concentrated at the higher risk/lower quality end of the market. 4. Declining and Volatile Values of Collateral: Concurrent with the recent Asian and Russian debt crisis in well developed countries such as Switzerland and Japan have shown that property and real assets value are very hard to predict, and to realize through liquidation. The weaker (and more uncertain) collateral values are, the riskier the lending is likely to be. Indeed the current concerns about deflation worldwide have been accentuated the concerns about the value of real assets such as property and other physical assets. 5. The Growth Of Off- Balance Sheet Derivatives: In many of the very large U.S. banks, the notional value of the off-balance-sheet exposure to instruments such as over-the-counter (OTC) swaps and forwards is more than 10 times the size of their loan books. Indeed the growth in credit risk off the balance sheet was one of the main reasons for the introduction, by the Bank for International Settlements (BIS), of risk based capital requirements in 1993. Under the BIS system, the banks have to hold a capital requirement based on the mark- to- market current values of each OTC Derivative contract plus an add on for potential future exposure. 6. Technology Advances in computer systems and related advances in information technology have given banks and FIs the opportunity to test high powered modeling techniques. A survey conducted by International Swaps and Derivatives Association and the Institute of International Finance in 2000 found that survey participants (consisting of 25 commercial banks from 10 countries, with varying size and specialties) used commercial and internal databases to assess the credit risk on rated and unrated commercial, retail and mortgage loans. 7. The BIS Risk-Based Capital Requirements Despite the importance of above six reasons, probably the greatest incentive for banks to develop new credit risk models has been dissatisfaction with the BIS and central banks post-1992 imposition of capital requirements on loans. The current BIS approach has been described as a ‘one size fits all policy, irrespective of the size of loan, its maturity, and most importantly, the credit quality of the borrowing party. Much of the current interest in fine tuning credit risk measurement models has been fueled by the proposed BIS New Capital Accord (or so Called BIS II) which would more closely link capital charges to the credit risk exposure to retail, commercial, sovereign and interbank credits. Chapter- 3 Credit Risk Approaches and Pricing 3.1 CREDIT RISK MEASUREMENT APPROACHES: 1. CREDIT SCORING MODELS Credit Scoring Models use data on observed borrower characteristics to calculate the probability of default or to sort borrowers into different default risk classes. By selecting and combining different economic and financial borrower characteristics, a bank manager may be able to numerically establish which factors are important in explaining default risk, evaluate the relative degree or importance of these factors, improve the pricing of default risk, be better able to screen out bad loan applicants and be in a better position to calculate any reserve needed to meet expected future loan losses. To employ credit scoring model in this manner, the manager must identify objective economic and financial measures of risk for any particular class of borrower. For consumer debt, the objective characteristics in a credit -scoring model might include income, assets, age occupation and location. For corporate debt, financial ratios such as debt-equity ratio are usually key factors. After data are identified, a statistical technique quantifies or scores the default risk probability or default risk classification. Credit scoring models include three broad types: (1) linear probability models, (2) logit model and (3) linear discriminant model. LINEAR PROBABILITY MODEL: The linear probability model uses past data, such as accounting ratios, as inputs into a model to explain repayment experience on old loans. The relative importance of the factors used in explaining the past repayment performance then forecasts repayment probabilities on new loans; that is can be used for assessing the probability of repayment. Briefly we divide old loans (i) into two observational groups; those that defaulted (Zi = 1) and those that did not default (Zi = 0). Then we relate these observations by linear regression to s set of j casual variables (Xij) that reflects quantative information about the ith borrower, such as leverage or earnings. We estimate the model by linear regression of: Zi = ÃŽ £ÃŽ ²jXij + error Where ÃŽ ²j is the estimated importance of the jth variable in explaining past repayment experience. If we then take these estimated ÃŽ ²js and multiply them by the observed Xij for a prospective borrower, we can derive an expected value of Zi for the probability of repayment on the loan. LOGIT MODEL: The objective of the typical credit or loan review model is to replicate judgments made by loan officers, credit managers or bank examiners. If an accurate model could be developed, then it could be used as a tool for reviewing and classifying future credit risks. Chesser (1974) developed a model to predict noncompliance with the customers original loan arrangement, where non-compliance is defined to include not only default but any workout that may have been arranged resulting in a settlement of the loan less favorable to the tender than the original agreement. Chessers model, which was based on a technique called logit analysis, consisted of the following six variables. X1 = (Cash + Marketable Securities)/Total Assets X2 = Net Sales/(Cash + Marketable Securities) X3 = EBIT/Total Assets X4 = Total Debt/Total Assets X5 = Total Assets/ Net Worth X6 = Working Capital/Net Sales The estimated coefficients, including an intercept term, are Y = -2.0434 -5.24X1 + 0.0053X2 6.6507X3 + 4.4009X4 0.0791X5 0.1020X6 Chessers classification rule for above equation is If P> 50, assign to the non compliance group and If P≠¤50, assign to the compliance group. LINEAR DISCRIMINANT MODEL: While linear probability and logit models project a value foe the expected probability of default if a loan is made, discriminant models divide borrowers into high or default risk classes contingent on their observed characteristic (X). Altmans Z-score model is an application of multivariate Discriminant analysis in credit risk modeling. Financial ratios measuring probability, liquidity and solvency appeared to have significant discriminating power to separate the firm that fails to service its debt from the firms that do not. These ratios are weighted to produce a measure (credit risk score) that can be used as a metric to differentiate the bad firms from the set of good ones. Discriminant analysis is a multivariate statistical technique that analyzes a set of variables in order to differentiate two or more groups by minimizing the within-group variance and maximizing the between group variance simultaneously. Variables taken were: X1::Working Capital/ Total Asset X2: Retained Earning/ Total Asset X3: Earning before interest and taxes/ Total Asset X4: Market value of equity/ Book value of total Liabilities X5: Sales/Total Asset The original Z-score model was revised and modified several times in order to find the scoring model more specific to a particular class of firm. These resulted in the private firms Z-score model, non manufacturers Z-score model and Emerging Market Scoring (EMS) model. 3.2 New Approaches TERM STRUCTURE DERIVATION OF CREDIT RISK: One market based method of assessing credit risk exposure and default probabilities is to analyze the risk premium inherent in the current structure of yields on corporate debt or loans to similar risk-rated borrowers. Rating agencies categorize corporate bond issuers into at least seven major classes according to perceived credit quality. The first four ratings AAA, AA, A and BBB indicate investment quality borrowers. MORTALITY RATE APPROACH: Rather than extracting expected default rates from the current term structure of interest rates, the FI manager may analyze the historic or past default experience the mortality rates, of bonds and loans of a similar quality. Here p1is the probability of a grade B bond surviving the first year of its issue; thus 1 p1 is the marginal mortality rate, or the probability of the bond or loan dying or defaulting in the first year while p2 is the probability of the loan surviving in the second year and that it has not defaulted in the first year, 1-p2 is the marginal mortality rate for the second year. Thus, for each grade of corporate buyer quality, a marginal mortality rate (MMR) curve can show the historical default rate in any specific quality class in each year after issue. RAROC MODELS: Based on a banks risk-bearing capacity and its risk strategy, it is thus necessary — bearing in mind the banks strategic orientation — to find a method for the efficient allocation of capital to the banks individual siness areas, i.e. to define indicators that are suitable for balancing risk and return in a sensible manner. Indicators fulfilling this requirement are often referred to as risk adjusted performance measures (RAPM). RARORAC (risk adjusted return on risk adjusted capital, usually abbreviated as the most commonly found forms are RORAC (return on risk adjusted capital), Net income is taken to mean income minus refinancing cost, operating cost, and expected losses. It should now be the banks goal to maximize a RAPM indicator for the bank as a whole, e.g. RORAC, taking into account the correlation between individual transactions. Certain constraints such as volume restrictions due to a potential lack of liquidity and the maintenance of solvency based on economic and regulatory capital have to be observed in reaching this goal. From an organizational point of view, value and risk management should therefore be linked as closely as possible at all organizational levels. OPTION MODELS OF DEFAULT RISK (kmv model): KMV Corporation has developed a credit risk model that uses information on the stock prices and the capital structure of the firm to estimate its default probability. The starting point of the model is the proposition that a firm will default only if its asset value falls below a certain level, which is function of its liability. It estimates the asset value of the firm and its asset volatility from the market value of equity and the debt structure in the option theoretic framework. The resultant probability is called Expected default Frequency (EDF). In summary, EDF is calculated in the following three steps: i) Estimation of asset value and volatility from the equity value and volatility of equity return. ii) Calculation of distance from default iii) Calculation of expected default frequency Credit METRICS: It provides a method for estimating the distribution of the value of the assets n a portfolio subject to change in the credit quality of individual borrower. A portfolio consists of different stand-alone assets, defined by a stream of future cash flows. Each asset has a distribution over the possible range of future rating class. Starting from its initial rating, an asset may end up in ay one of the possible rating categories. Each rating category has a different credit spread, which will be used to discount the future cash flows. Moreover, the assets are correlated among themselves depending on the industry they belong to. It is assumed that the asset returns are normally distributed and change in the asset returns causes the change in the rating category in future. Finally, the simulation technique is used to estimate the value distribution of the assets. A number of scenario are generated from a multivariate normal distribution, which is defined by the appropriate credit spread, t he future value of asset is estimated. CREDIT Risk+: CreditRisk+, introduced by Credit Suisse Financial Products (CSFP), is a model of default risk. Each asset has only two possible end-of-period states: default and non-default. In the event of default, the lender recovers a fixed proportion of the total expense. The default rate is considered as a continuous random variable. It does not try to estimate default correlation directly. Here, the default correlation is assumed to be determined by a set of risk factors. Conditional on these risk factors, default of each obligator follows a Bernoulli distribution. To get unconditional probability generating function for the number of defaults, it assumes that the risk factors are independently gamma distributed random variables. The final step in Creditrisk+ is to obtain the probability generating function for losses. Conditional on the number of default events, the losses are entirely determined by the exposure and recovery rate. Thus, the distribution of asset can be estimated from the fol lowing input data: i) Exposure of individual asset ii) Expected default rate iii) Default ate volatilities iv) Recovery rate given default 3.3 CREDIT PRICING Pricing of the credit is essential for the survival of enterprises relying on credit assets, because the benefits derived from extending credit should surpass the cost. With the introduction of capital adequacy norms, the credit risk is linked to the capital-minimum 8% capital adequacy. Consequently, higher capital is required to be deployed if more credit risks are underwritten. The decision (a) whether to maximize the returns on possible credit assets with the existing capital or (b) raise more capital to do more business invariably depends upon p