American Housing and Global Financial Essay Example for Free

American Housing and Global Financial Essay To do this, lawmakers needed to understand what had happened, particularly because housing had until then seemed like such a bright spot in the US economy. The US housing â€Å"bubble† in the early 21st century In his 2001 letter to shareholders, Fannie Mae CEO Franklin Raines wrote, â€Å"Housing is a safe, leveraged investment – the only leveraged investment available to most families – and it is one of the best returning investment to make. Home will continue to appreciate in value. Home values are expected to rise even faster in this decade than in the 1990’s. His optimism was due in part to the importance Americans attributed to owning a home. The importance was reflected in Fannie Mae’s motto, which was â€Å"Our Business in the American Dream. † Raines was not alone in touting the advantages of housing as an investment. While house prices in particular region had suffered temporary declines at various points, average housing prices across the United States had risen fairly steadily since at least 1975 (see Exhibit 1). This trend accelerated in 1996, and reached about 12 percent per annum in late 2005 and early 2006. Many observers felt that this rise in prices was due in part to the Federal Reserve’s policy of maintaining low interest rates after the 2001 recession. In the period from 1980 to 2001, the Federal Funds rate (an overnight interest rate that bank charged each other and which the Federal Reserve targeted) had generally tracked economic conditions (see Exhibit 2). After 2001 and until July 2004, however, the Fed kept interest rates low in spite of signs of growth in output and prices. Perhaps fearing a recession that did not materialize, the Federal Funds rate was set to only 1 percent from July 2003 to July 2004. After this, anxiety about inflation seemed to gain the upper hand and interest rates were increased steadily, with the Federal Funds rate reaching 5. 25% in September 2006. A debate over house prices started around 2004. Some economists, such as Dean Baker, the co-director of the Centre for Economic and Policy Research claimed at the time that house prices were like a bubble ready to burst, and that the economy needed to brace itself for a loss of $2 to $3 trillion in housing wealth. Others felt that, even though increases in housing prices had far outstripped increase in residential rents, this was reasonable in light of the low interest rates. Even in October 2005, when it was common to hear mentions of a housing bubble, developer Bob Toll disagreed and complained â€Å"Why can’t real estate just have a boom like every other industry? Why do we have to have a bubble and then a pop? † Meanwhile, several economists pointed out that house price increases were concentrated in particular areas such as San Francisco and New York, where zoning restriction made it difficult to expand the housing stock. Professor Chris Mayer of Columbia University saw the attraction of these areas coupled with the inability to increase supply as allowing house prices in these areas to remain high â€Å"basically forever†. Nothing that Tokyo real estate was still more expensive than real estate in Manhattan, he stated: â€Å"There’s no natural law that says US housing prices have to stop here. None. † While house prices reached eye-popping levels in what Chris Mayer called â€Å"superstar cities,† construction was booming elsewhere. Cities like Phoenix, as well as many communities in Florida and around Los Angeles, saw such a torrid pace of construction that builders had difficulty even procuring the cement they needed. New houses in these areas were often snapped up by eager investors and newspapers relished reporting on individuals who managed to resell houses at a gain even before they took possession of them. According to Loan Performance Inc, more than 12% of Phoenix-area mortgages were obtained by investors in 2004, as compared to just 5. 8% nationwide in 2000. Home finance before the 1990’s In the United States, it was common to talk about the â€Å"Traditional† fixed 30 year mortgage. This instrument required the borrower to make a constant stream of monthly payments during the 30 year term of the loan. These payments were specified in advance; so the interest rate on this loan was fixed. Many of these traditional loans allowed borrowers to ‘pre-pay† their mortgages without penalty. When interest rates declined, borrowers often took advantage of this feature and refinanced their homes at lower rates. Savings and Loan Associations (Samp;Ls) already offered mortgages with constant payments before the Great Depression, though they were typically less than 12 years long. At the time, other lenders mostly offered short-term mortgages that needed to be refinanced because they had â€Å"balloon† payments at the end. During the Great Depression, many households went into default in part because this refinancing became difficult. One government response was to create the Home Owners Loan Corporation (HOLC), which made simultaneous offers to borrowers and lenders. If they both agreed, lenders received HOLC obligations in exchange for their claims against households, although this exchange required bank to recognize a loss on their assets. Households, meanwhile, freed themselves of their previous obligation by accepting new ‘self-amortizing’ mortgages with fixed payments whose terms were based on new assessments of their home’s worth. After WWII, banks and Samp;Ls originated many fixed 30 year mortgages and held them to maturity. The results were not always happy. When short-term interest rates rose in the early 1980’s, the yield on mortgage assets fell below the cost of paying depositors for their funds. This mismatch was one of the causes for the failure of about half of the 32,234 Samp;L’s that existed in 1986. Because the government insured the Samp;L’s depositors, it incurred considerable losses and had to set up a special institution to dispose of the failed Samp;L’s assets. The Samp;L crisis also boosted the securitization of mortgages by two governments sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. Fannie Mae was originally created in 1938 as a government agency. Like Freddie Mac, a twin that Congress chartered in 1970, Fannie Mae eventually became a privately owned publicly traded company. Starting with bundles of mortgages purchased from mortgage originators, the GSEs created and sold mortgage-backed securities (MBSs), which delivered to holders the payments made on these mortgages. In exchange for a fee, the GSEs guaranteed the interest and principal on these loans. This meant that, assuming the GSEs remained solvent (or that the government came to their rescue if they found themselves in financial trouble), the only payment risk faced by the holders of these MBSs was the risk that the underlying mortgages would be repaid before they were due (Known as prepayment risk). Congress capped the size of the loans that GSEs could accept. In 2006, for example, the maximum loan for single-family homes was $417,000. To limit their credit risk, the GSEs used standards that were similar to those of traditional originators. To secure sufficient collateral, they took only senior mortgage and generally required the loan-to-value ratio (LTV) to be below 80 %. The LTV was computed as the ratio of the mortgage to the property’s market value at the time of origination. Before underwriting loans, the GSEs also looked at the borrower’s income and employment status, level of other assets, and history of foreclosures and bankruptcies. Consistent with the rules of GSEs, home lenders before the 1990s only lent to borrowers they deemed credit worthy, and generally required documentary evidence on these variables. Until the practice was penalized by a 1977 law, most lenders also denied mortgages to people living in certain â€Å"redlined† communities, where these were predominantly inner city neighborhoods with large black populations. An avenue that remained open to borrowers with problematic credit histories was to apply through conventional lenders for loans insured by the Federal Housing Administration (FHA). The lenders then had to verify that the loan met FHA requirements and the process for doing so was somewhat more time-consuming than in the case non-FHA mortgages. In spite of these standards, about 8 % of FHA loans were past-due in 1993, while the delinquency rate on standard mortgages was only 3 %. FHA loans were packaged into mortgage-backed securities by Ginnie Mae, a government owned corporation that dealt exclusively with federally guaranteed mortgages. Innovation in the mortgage In the 1990s new firms started to lend money to borrowers that did not qualify for ‘prime’ mortgages. Rather than lending directly, many of these firms sought the help of mortgage brokers to whom they paid commissions. The US Department of Housing and Urban Development’s list of lenders who specialized in such ‘subprime’ loans increased from 63 lenders in 1993 to 209 in 2005. Wall Street firms Lehman Brothers, Bear Stearns, Goldman Sachs, Merrill Lynch and Morgan Stanley all acquired such lenders, though all but Lehman Brothers and Bear Stearns did so only in 2006. One obvious difference between ‘subprime’ and ‘prime’ loans was that the former had higher interest rates and fees. There was, however, no precise dividing line between the two, so that there was no consensus on how to measure the fraction of subprime loans. According to one definition, the value of these loans grew from about 1% of new mortgages in 1993 to 20% in 2006. At the same time, the FHA share dropped from 11% to 1. 9%. An independent analysis by the Wall Street Journal concluded that 29% of the home loans made in 2006 had high interest rates. A large fraction of these loans refinanced existing loans. In many cases, these refinancing loans increased the borrowers’ mortgage debt and thereby made it possible for households to keep some cash for other purposes. From being virtually unknown in the 1980s, Countrywide Financial became the largest mortgage lender in 2005. A 2003 government report showed that it was also the leading mortgage lender to minority homeowners, as well as one of the largest providers of home loans in low-income communities. When this report was released, Countrywide’s CEO Angelo Mozilo said: ‘We’re extremely proud of our accomplishments, as they clearly demonstrate our long-standing commitment to provide all Americans with the opportunity to achieve the dream of homeownership. These results underscore our ongoing efforts to discover new approaches to turn individuals and families into homeowners, to develop new loan products that reduce or eliminate the obstacles to homeownership and to make it easier for families to qualify for loans. Contrary to what had been standard practice in the past, lenders such as Countrywide did not offer the same interest rate to all borrowers. This customization was facilitated by the use of automated statistical models that predicted the likelihood of default on the basis of borrower characteristics. Interestingly, the first statistical tools that came into wide use were those developed by Freddie Mac (called Loan Prospector) and Fannie Mae (called Desktop Underwriter). These were introduced to make it easy for mortgage originators to know whether their loans would be acceptable to the GSEs, though their use expanded well beyond this purpose. One variable that played a key role in these models, and which had apparently been absent from previous methods of qualifying borrowers for mortgage, was the borrower’s credit score. While there were several approved commercial credit score formulas (regulators did not allow scores to depend on race, gender, marital status or national origin), the most popular one was the FICO score invented by the Fair Isaac Corporation. This score, which ranged from about 300 for poor credit risks to about 850, appeared to give considerable weight to the punctuality with which borrowers had paid their previous obligations. One reason these scores became important in mortgage applications was that studies by Freddie Mac had shown a strong correlation between FICO scores and defaults on mortgages in the pre-1995 period. One type of mortgage that became popular among subprime lenders was known as 2/28 because its rate was fixed for 2 years and then became variable for the remaining 28 years. This mortgage was quite different from adjustable rate mortgage (ARMs) offered to prime borrowers. The introductory rate on 2/28 was above the typical rate offered on 30-year fixed mortgages, whereas ARMs for prime borrowers had initial rates below those on fixed mortgage. Also, rates on 2/28s rose considerably when they were ‘reset’ after 2 years. According to the President of the Federal Reserve Bank of Boston Eric Rosengren, the average initial rate for subprime mortgages issued in 2006 was 8. 5% (when the conventional 30-year mortgage rate was below 6. 4%) and reset to 610 basis points above the 6-month LIBOR rate (which averaged about 5% in 2006) after 2 years. In the case of reasonable 2/28 mortgages, there were pre-payment penalties if the mortgage was pre-paid in the first two years but there was no cost associated with pre-paying right before the interest rate was reset. From the point of view of mortgage brokers, this arrangement was attractive because it ensured that many borrowers would refinance after two years, allowing brokers to collect new origination fees. Borrowers were also told that this arrangement was good for them because, if they made timely payments, their FICO score would improve and they would be able to refinance at a lower rate. There were widespread allegations that some borrowers in this period received home loans on terms that were substantially less favorable than those of conventional or FHA loans for which these borrowers would have qualified. It was also claimed that unsophisticated borrowers had been duped into signing mortgage that continued to have severe pre-payment penalties even after interest rates had been reset to high levels. A lawsuit in Michigan claimed that a mortgage broker working for a unit of Lehman Brothers ‘confused and pressured’ an elderly couple so that they would sign a loan whose interest rate would reach 17. 5%. Several borrowers told Federal officials that they had simply been laid to regarding their future monthly payments. What is certain is that some borrowers agreed to make payments that were impossible for them to keep up with over time. A 79-year old retired engineer named Robert Pyle, for example, moved from a $265,000 to a $352,000 mortgage in 2005 and cleared his credit card debts in the process. Almost immediately after signing the mortgage, which involved over $33,000 in fees, he found himself unable to cover the $2200 monthly payment. Terry Dyer, the broker who issued Robert Pyle’s mortgage said, â€Å"It’s clear he was living beyond his means, and he might not be able to afford this loan. But legally, we don’t have a responsibility to tell him this probably isn’t going to work out. It’s not our obligation to tell them how they should live their lives. † Some subprime loans required less documentation than was traditionally demanded. Instead of requiring proof of income of independent appraisals of the value of the home, some subprime mortgages were based only on â€Å"stated income† or â€Å"stated value†. Stated income loans were very convenient for borrowers who had casual jobs that were difficult to document, though they opened the door to fraud by both borrowers and brokers. Another dimension in which some subprime loans departed from traditional ones was in their down-payments requirements.

Biomedical research on animals Essay -- essays research papers fc

Heart attacks, bladder failure, and lack of medical cures are all very serious problems that are killing people today. How can doctors learn more about these medical difficulties? Through animal testing doctors can obtain valid results regarding these medical problems and create cures for people with many other medical difficulties. The progression of medicine and the day to day life styles of the general population rely on the ethical practice of animal testing. The alternatives to animal testing are not very valid. â€Å"Artificial testing with computer simulations, have not reached a technological level at which these simulations can be trusted to give a valid results to experiments(3).† Also, human testing has many restrictions and guidelines that make it almost impossible to perform tests on humans that could mentally or physically harm the subject. Therefore, animals provide a necessary involvement in the tests being performed today because there are no other reliable, valid sources for medical or cosmetic experimentation. Animal testing is imperative to the progression of medical cures, procedures and drugs. Animal research is constantly insuring the healthy future of others or a future at all for infants and children. â€Å"Recent advancements in biomedical research have led to better treatments for common childhood ailments(5).† â€Å"Today, vaccines developed through animal research have all but eradicated diseases such as small pox and polio and treat asthma, juvenile diabetes, childhood cancer and many other illnesses.(5)† This can be seen especially in the advancements of drugs used to cure and inhibit the HIV virus and diabetes. Today, doctors are able to â€Å"achieve long-term insulin independence in a small group of severely diabetic patients who had received pancreatic islet cell transplant, something previously achieved in experimental mice and primates but never before in humans(5).† Now people with sever even life threatening diabetes can receive relief from this dis ease. Without the necessary preliminary testing on mice, this procedure would not be possible. Think about it, a common rodent that people try to eliminate everyday is now saving peoples lives! But why animals? Are they really that biologically close to humans? Now some may argue that an animal’s anatomy is very different than that of a human’s anatomy, which is very true for the most part. H... ...ls are raised in a contained environment just like animals used for experimental research. Both food producing animals and animals used in experiments provide humans with life sustaining products. Animal testing is a way of life because it sustains and extends life and until there are valid alternatives, animal testing will remain an ethical, valid, and conclusive practice. Works Cited Animal Experimentation. 14 Jan. 2002 . Animal Research Fact vs. Myth. 14 Jan 2002 . Are There Valid Research Methods. 14 Jan. 2002 . Bad Company. 18 Jan. 2002 . Breaking the Diabetes Transplant Barrier. 14 Jan. 2002 . Fox, Michael Allen. The Case For Animal Experimentation. Los Angeles: University of California Press, 1986. End Notes (1)Animal Experimentation. 14 Jan. 2002 . (2)Animal Research Fact vs. Myth. 14 Jan 2002 . (3)Are There Valid Research Methods. 14 Jan. 2002 . (4)Bad Company. 18 Jan. 2002 . (5)Breaking the Diabetes Transplant Barrier. 14 Jan. 2002 . (6)Fox, Michael Allen. The Case For Animal Experimentation. Los Angeles: University of California Press, 1986. The Argument Over Animal Testing

Operational Budgeting and Profit Planning Essay

Introduction: Why Budget? While a budget planning is a laborious process it is crucial for the success of any company. The budgeting process forces managers to be proactive in planning for the future while fostering communication and coordination within a company. Different departments must work together in order to develop a proper budget. A properly formulated budget will aid to define a company’s objectives and provides guidelines to avoid wasted actions. Also, risk can be mitigated when objectives and action plans are clarified through the budgeting process. This article will identify the key components of a budget as well as the methodologies involved in the budgeting process. The influences of management behavior will be discussed followed by a brief example of bad budgeting practices and its consequences. Master Budget The master budget is a summary of a company’s plans that sets concrete targets for sales, production, distribution and financing activities. Companies prepare cash budget not only for operating activities but also for investing and financial activities. This is because management should be aware in advance of any borrowing needs and when loans can be repaid. Budgets are interdependent because the figures of one budget are conventionally utilized in the preparation of another. Budget estimates are dependent on the nature of the business, its products and services, processes, organization, and management needs. It is a detailed model of the firm’s operating cycle that includes all internal processes which is developed into a cash budget, a budgeted income statement, and a budgeted balance sheet. Advantages The Master Budget defines the organizations objectives and strategies. As well as allowing the company to realistically project future cash flows, it also smoothens the functioning of organizations operating cycle. Disadvantages Disadvantages of developing a master budget is that it is both time consuming and highly complex. However, it should be noted that the advantages of a proper Master Budget far outweighs the disadvantages. Components of the Master Budget The Sales Budget includes the forecast of sales revenue, sale units and sales collection in the future market conditions. The Purchase budget would include purchase of merchandise for sale and raw material for manufacturing. It is expressed in terms of sales dollars. The Selling Expense Budget presents expenses the organization plans to incur in connection with sales and distribution. The General and Administrative Expense Budget presents the expenses the organization plans to incur in connection with general administration such as the accounts department, the IT department, law etc. The Cash Budget summarizes all cash receipts and disbursements expected to occur during the budgeting period. After a company makes sales predictions, an organization uses information regarding credit terms, collection policy, and prior collection experience to develop a cash collection budget. Other items included are an allowance for bad debt, cash sales, sales discount, allowance for volume discounts, and seasonal changes of sales prices and collections. The cash budget shows cash operations deficiencies and surplus expected to occur at the end of each month, which is used to plan for borrowing and loan payments. Budgeted Financial Statements are pro forma statements that reflect the â€Å"as  if† effects of the budgeted activities on the actual financial position of the organization. It reflects the results of operations assuming the budget predictions. Budget Development in a Manufacturing Organization Manufacturing organization converts the raw materials into finished goods and sells it to the customer for consumption. It prepares the master budget before production to make the organization successful and survive in a competitive environment. For example, a Bicycle manufacturer will plan a Master Budget in the following fashion: A Sales Budget will be based on the anticipation of sales of the Bicycle and pricing policy, expected number of units to be sold and the revenue generated. Once the sales budget is completed the Production Budget will derive the total volume of Bicycle units to be manufactured based on the targeted sales and inventory required to maintain sales. For example, if the expected number of sales of Bicylces for the month of January is 500 units, the production budget will plan for 650 units (Sales projected (500) + inventory as per company s strategy (30%)). The Purchase budget will be obtained based on volume of Bi Cycles to be manufactured, material required to manufacture a single unit and the cost of materials. As per the above example, the material required for 650 units will be budgeted for the month of January. The Manufacturing Cost Budget will be derived from the cost of making 650 units of bicycles using the design of product and process used to manufacture while considering the raw material cost, direct labor cost and manufacturing over headed cost. Finalizing the Budget For efficient and effective budgeting two questions must be addressed: Is the proposed budget feasible? Is the proposed budget acceptable? To be feasible the organization must be able to implement the proposed budget. Possible actions include obtaining equity financing, issue long-term debt, reducing the amount of inventory on hand, or obtaining a line of credit. Constraints for infeasibility are availability of merchandise and production capacity for a manufacturer. When evaluating the budget, management must consider various financial ratios such as return on assets, profit margins, etc. The company must compare the return provided by the proposed budget, the past budget and industry average as well as the organization’s goals. Budgeting Methodologies Input/Output Approach Companies using the Input/Output approach calculate the required input or resources through estimating the potential output or performance. For example, if a microchip manufacturing plant requires 5 grams of metal to create one microchip and each gram costs $2, then each microchip costs $10 of material. Thus, a projected output of 1000 microchips would cost $10,000 and 5 kilograms of material. This approach is mainly used for industries with a measurable relationship between effort and return, such as manufacturing, service, and merchandising but is not compatible with industries that are inelastic to unit level changes. Activity-based Approach The Activity-based Approach is subset of the Input/Output which reduces the potential for error by determining cost through evaluating the cost of each activity in the manufacturing process rather than focusing on inputs such as machine or labor hours. Thus, the approach provides a more accurate picture of costs involved by providing costs at each level of production. It results in a more efficient budget by allowing the identification of the optimal set of activities. However, it is far more time consuming to produce. Incremental Approach A budget prepared using the previous year budget as a base with some percentage increase or decrease is called incremental budget. Budget  justification is to be given only for the percentage change not for the base amount (previous year’s budget). This type of budget is best suited for non-profit organizations, government organizations or in organizations in which the amount of output is weakly correlated to the money spent. For example, the Boston Public School budget for FY12 increased by 1.2% from the FY 11 and for FY11 it increased by 0.4% of the FY 10 budgets (OBM 2011, 2012). The increase in both budgets was justified as improving opportunities for English Language learners, arts and physical education, but not for their existing programs. The advantages of this budget are that it is easy to practice, quick preparation, stability and conflict avoidance between departments due to different budget approval. Some of the main disadvantages are there is no incentive to red uce expense as peopmsle are tempted to spend the allotted expense so that their future budget is not affected. Also, no room for innovative changes to the budget is given. Minimum Level Approach In this type of approach a minimum budget level is fixed for carrying out ongoing projects and activities and anything above the budget should be justified. For example, the R&D budget in a pharmaceutical company is fixed for ongoing projects and new projects must be approved by the management. Main advantages are ongoing projects will not be disturbed due to budget changes and last year budget will not be approved without revision as in the case of Incremental approach. The Minimum level approach is considered as Zero Level Budgeting in some organizations in which for every amount spent, justification must be (TWF n.d.). For example if an R&D department of an Electronics manufacturer puts forth many project proposals to the management , based on the market trend and project feasibility, the management will approve the most profitable project. Advantages of this method are that allocation of resources is very efficient and detects inflated budgets. However, this method consumes a significant amount of time and resources. Manager Behavior Top-down vs. Bottom-up In addition to macro methods of budgeting (Input/output, activity based, incremental, and minimum level) there is also a distinction between top-down/imposed and bottom-up/participative budgets. These two methods represent opposite extremes of a spectrum of which a company’s budgeting procedure may fall on any point. As the name suggests, a Top-down Budget is formulated by a small number of high ranking managers who make all decisions regarding a company’s objectives which are then received by the lower managers who implement the plan. Because only a few people are involved in the decision making, it is quick and saves time. It also avoids the cushion that is lower management tend to build into their budgets. However, because only a few people are involved in the decision-making process, those not involved may lack the motivation and commitment to properly implement the plan. On the opposite end of the spectrum is the Bottom-up process of budgeting. It begins at the lowest possible management level, whose budget plan is then integrated with the proposals at the next level. The process is continued until a comprehensive holistic budget is developed for the company. The Bottom-up process ensures that managers at each level clearly understand their roles in meeting company objectives. Therefore, budgets are usually far more accurate and employees are more committed to their self-made budget. However, inefficiencies tend to occur with a bottom-up process. Managers tend to provide a budgetary slack (understating revenues or overstating expenses) in order to provide a cushion against underperformance or unfavorable reviews. While this may cause inefficient spending, it can provide funds to reduce risky activities of which there is insufficient information. Budgeting Periods There are three types of budgeting periods used by companies: Fixed-length, Life Cycle and Continuous/Rolling Budgets. The type of period used is determined by the context of the budget. Most companies use fixed-length budgets determined at the beginning of a specified period. However, for single projects, a Life Cycle budget is more attractive, where a company  determines the budget for the entire project; especially if the project occurs within a period or over multiple periods. A continuous budget may be more useful than a fixed-budget as it forces managers to be continually updating their budget. Where a one-year budget plan is only available at the beginning of the year, a 4 quarter rolling budget requires managers to continually have a budget plan for a whole year at the beginning of each quarter, thus, sustaining the budgets relevancy. Forecasts, Ethics, and Open Book Management In addition to deciding methodologies of budgeting, a manager must also consider company forecasts, ethics and employee support. A manager must allow for the development of various forecasts and consider them during the budgeting process. Industry forecasts, such as economic conditions, as well as internal forecasts, such as collection periods, should be factored into the budget. Because ethical issues regarding budgeting are rarely illegal, there is a strong incentive to either pad the budgetary slack or overstate performance. Organizations should be firm in their rules against unethical behavior as it is easy to fall into a moral gray area. Finally, in order to properly motivate employees by gaining support for the budget, many companies have adopted an Open Book Management approach. The approach involves interacting with employees by sharing information and teaching employees to understand the relevant financial information. Sample Analysis A well formulated budget is crucial in order to facilitate a company’s operations. However, when a company’s budget is poorly formulated, it can have disastrous consequences. An example is OGX Petrà ³leo e Gà ¡s Participaà §Ãƒ µes S.A. owned by Eike Batista. At the company’s peak in 2009, it achieved an IPO of $3 billion (Spinetto et al. 2013). However, the company filed for bankruptcy on Oct. 30, 2013 with debts of $5.11 billion with Batista being sued for violations of disclosure ruels (Fontevecchia 2013). While its failure was due to a variety of factors, we will argue that poor budgeting  is a crucial factor. Within the petroleum industry, the exploration and production process is both a high risk and high expense venture where predicted outputs require complex calculations (Suslick et al. 2009). Even after production has begun, the projected output may change depending on a variety of variables (Katusa 2012). OGX had calculated potential output at 4.8 billion barrels and therefore invested heavily into the required infrastructure based on this estimate (Spinetto 2013). However, these decisions were made before the wells were operational which resulted in final outputs at roughly 50% of the initial amount (Katusa 2012). Management decisions at OGX were made by Bastista and a small group of managers and its inputs were based on an estimation of outputs (Katusa 2012, Spinetto 2013). In addition, performance was highly overstated due to â€Å"[Batista’s] tendency to shoot the messenger† (Spinetto 2013). Therefore, OGX should have adopted a bottom-up minimum level approach of budgeting as well as adopting a policy of reporting performance after confirmation. A bottom-up approach would have generated a much more precise picture of performance and costs while a minimum-level approach would have required confirmation of projected outputs before beginning operations at the cost of time. In addition, reporting performance after confirmation would have avoided any overstatements of performance. Conclusion To be successful in a competitive environment a company must develop proper Master Budget in order to promote proactive thought, communication and coordination within a company. It is also an important aide to planning and risk management. In order for a company to run smoothly, the Master Budget must balance all the variable constituents of a company’s operational activities. In addition, methodologies used, while utilized at the management’s discretion, should reflect the context of the company’s operations. As illustrated in the OGX example, failure to properly develop a budget can have catastrophic consequences to a company. References City of Boston: Office of Budget Management (OBM). 2011. Summary Budget. Retrieved Oct. 2013 from http://www.cityofboston.gov/images_documents/02%20Summary%20Budget_tcm3-16341.pdf City of Boston: Office of Budget Management (OBM). 2012. Summary of Budget. Retrieved Oct. 2013 from http://www.cityofboston.gov/images_documents/02%20Summary%20Budget%20A_tcm3-24767.pdf Easton, P.D., Halsey, R.F., McAnally, M.L., Hartgraves, A., & Morse, W.J. 2013. Financial & Managerial Accounting for MBAs 3rd Ed. Cambridge: Cambridge Business Publishers. Fontevecchia, A. 2013. Death of the Brazilian Dream: Ex-billionaire Eike Batista’s OGX Files for Bankruptcy. Forbes, Oct. 30. Available at: http://www.forbes.com/sites/afontevecchia/2013/10/30/death-of-the-brazilian-dream-ex-billionaire-eike-batistas-ogx-files-for-bankruptcy/ Katusa, M. 2012. Brazilian Oil Dreams Get a Sobering Reality Check. Casey Research, July 2012. Available at: http://www.caseyresearch.com/cdd/brazilian-oil-dreams-get-sobering-reality-check Spinetto, J.P., Millard, P., & Wells, K. 2013. How Brazil’s Richest Man Lost $34.5 Billion in a Year. Bloomberg Businessweek. (October): 60-65. Suslick, S.B., Schlozer, D., & Rodriguez, M.R. 2009. Uncertainty and Risk Analysis in Petroleum Exploration and Production. Terrae 6 (1): 30-41.

Managing change, Qatar Telecommunications - OOREDOO case study Free Essay Example, 2500 words

Customer needs has been argued to be a major trigger for the need of change of management. Ian (2000) argued that an organisation that has to develop and maintain competitive advantage has to have clear mission of where it want to lead and develop strategies that would help it achieve its objectives including ways of managing changes require in achieving the objectives. The need for change management is supported the view of Hussey (2000) in that change is unpredictable and reactive may at times leads to organisational crisis if not managed. With the rise of Vodafone, business operations in the telecommunication sector changed as the company devised strategic ways of doing business and which enabled it capture a chunk of the market. Ooredoo did not see it coming until when it realised that Vodafone was slowly taking over the market. This led to Ooredoo in adapting to the reality of high competition and devised its own competitive strategies. Ooredoo is advantaged in that even before the rise of Vodafone, Ooredoo had already commanded a larger part of the market. We will write a custom essay sample on Managing change, Qatar Telecommunications - OOREDOO case study or any topic specifically for you Only $17.96 $11.86/pageorder now Besides, Ooredoo is backed by the government as the major shareholder (Ooredoo, 2014). In this regard, Ooredoo introduced significant changes especially on post-paid Shahry plans for mobile phones (Ooredoo, 2014). In addition, data allowances have also been increased for all plans. The plan to also have monthly charge for 4G services is seen as a strategy of retaining and attracting new customers. The strategy was aimed at counteracting the new low rates introduced by Vodafone and which was seen to advantage many subscribers. With such deliberations, it is indispensable to argue that Ooredoo’s need for change management has helped it stay in the course. Thus, improved services have been witnessed with the level of quality improving equally. Change in the systems perspective Ian, (2000) argued that organisational change is equated to system perspective either as an organic or a cybernetic model. In regard to organic model, change is viewed as a systematic adaptive response by the system to maintain its balance especially when subjected to a shifting environment. However, this model is viewed as a negative feedback by the system as it tries to strike a balance between the actual and desired conditions and the efforts put in reducing the disparity are critical for the maintenance of the balance of the system. In light of this, organisations can be viewed as systems in the organic model especially when confronted by situations that are not considered as desired situations, but in the actual sense, they are actual situations.

Analysis Of Toni Morrison s The Bluest Eye - 1232 Words

In modern society, women continue to be victimized by an illusory culture that offers the affectation of equality and hope but a reality of gender inequality. The little acts of chivalry conducted by men are just prolonged sugary illusions meant to hide the unpleasant truth of women and their strained relationship with the media s’ perception of beauty. Many women who are subjected to society s’ views of beauty often aim to convert to theses said beauty standards. This desire can, at many times, become unhealthy and lead to problems such as anorexia, bulimia, and self-hate. There is clearly a need for re-self-identification within the Black female community. With focus on self-hate one can see that this problem particularly becomes apparent in African American communities, author Toni Morrison in her novel The Bluest Eye not only highlights this self-hated within the Black community but also displays an urgent need for feminism within the black community, through her ch aracterization of Pecola, and Claudia. One indication of Morrison’s intentions is her creation of Pecola as an African American female character who apparently think that she is worthless, as she does not fit society s strict beauty standards of being white and or fair skinned. Secondly, Morrison portrays the narrator Claudia as a strong African-American female with an aversion to the beauty myths of her society. However, Morrison exposes Claudia fighting feelings of anger and self-hate towards not onlyShow MoreRelatedAnalysis Of The Bluest Eye1555 Words   |  7 Pages The Bluest Eeye Bbackground A woman’s race and the time period she lives in influences not only whether she will be a victim of sexual assault but also, the punishment of the offender. Toni Morrison, The author of The Bluest Eye, a victim of segregation, deals with sexual assault and segregation in her book. Chole Anthony Wofford, who goes by the name of Toni Morrison when writing her books, was born in Lorain, Ohio on February 18, 1931. Her father had several jobs to supportRead MoreToni Morrison s Beloved And The Bluest Eye2300 Words   |  10 PagesLiterary Analysis Paper Toni Morrison s Beloved and The Bluest Eye Toni Morrison is known for her use of poetic language. In many of her writings Morrison captures the pursuit of African Americans identities(Parnell). Considering Morrison never experienced the horrific tragedies she writes about, she is a witness to many identities that were destroyed by society depiction of them. The themes that Toni Morrison illustrates in her works Beloved and The Bluest Eye demonstrates how Toni Morrison worksRead MoreThe Bluest Eye Essay1462 Words   |  6 PagesToni Morrison’s The Bluest Eye (1970) takes place in Ohio towards the tail end of the depression. The story focuses on the character of Pecola Breedlove who wants to have blue eyes. Pecola becomes convinced that if she had blue eyes her life would be different. Through the eyes of our narrator, Claudia, and her sister Frieda we see the pervasive racism and abuse Pecola is subjected to. Claudia and Frieda act as witnesses to Pecola’s disintegration and as a result, they will spend the rest of theirRead MoreLiterary Analysis Of Recitatif1135 Words   |  5 PagesLiterary Analysis Paper: â€Å"Recitatif† by Toni Morrison Many authors write fictional novels about historical events. A common topic written about is the racial integration between African Americans and whites during the 1950’s. Although the short story â€Å"Recitatif† explicate many different themes, the central topic of Morrison’s writing is about racism. Throughout the story, the author expresses examples of hatred between black and white races at the shelter, the different encounters they have, andRead More Compare racial and cultural struggles in Alice Walker’s The Color2850 Words   |  12 PagesWalker’s The Color Purple as well as Toni Morrison’s The Bluest Eye. In African-American texts, blacks are seen as struggling with the patriarchal worlds they live in order to achieve a sense of Self and Identity. The texts I have chosen illustrate the hazards of Western religion, Rape, Patriarchal Dominance and Colonial notions of white supremacy; an intend to show how the protagonists of Alice Walker’s The Color Purple as well as Toni Morrison’s The Bluest Eye, cope with or crumble due to theseRead MoreBlack Naturalism and Toni Morrison: the Journey Away from Self-Love in the Bluest Eye8144 Words   |  33 Pagespostmodernism with its emphasis on race, class and gender, but the theory of naturalism as well: the idea that one s social and physical environments can drastically affect one s nature and potential for surviving and succeeding in this world. In this article, I will explore Toni Morrison s The Bluest Eye from a naturalistic perspective; however, while doing so I will propose that because Morrison s novels are distinctly black and examine distinctly black issues, we must expand or deconstruct the traditionalRead MoreThe Bluest Eye Essay1889 Words   |  8 Pageseasy bridge to cross and the road to recovery is never an easy route. In the â€Å"Bluest Eye† written by Toni Morrison, it tells a story in the narrative of Claudia MacTeer. She tells the story of childhood memories about what happened to Pecola through seasons and the influe ntial characters and events that shape Pecola s life. Pecola was an adolescent who felt her black beauty wasn’t enough and dreamed of having blue eyes. In the story, she was raped by her drunk father when she was eleven years oldRead MoreEssay on Themes in Song Of Solomon2113 Words   |  9 PagesToni Morrison is one of the most talented and successful African-American authors of our time. Famous for works such as The Bluest Eye, Sula, and Beloved, Morrison has cultivated large audiences of all ethnicities and social classes with her creative style of writing. It is not Morrison’s talent of creating new stories that attracts her fans. In contrast, it is her talent of revising and modernizing traditional Biblical and mythological stories that have been present in literature for centuries.Read MoreThe Bluest Eye And Alison Bechdel s Fun Home Essay2269 Words   |  10 PagesToni Morrison’s The Bluest Eye and Alison Bechdel’s Fun Home are both novels that e mploy a reflective narration of the past to address common themes of trauma, unorthodox family relationships, and sexuality. Although they demonstrate pronounced differences in setting and design, both stories utilize this retrospective narrative to expose masculinity’s stratified hegemony as a driving force of internalized shame, violence, and the death of self. Furthermore, it becomes clear that these shared themesRead MoreThe Bluest Eye By Toni Morrison1760 Words   |  8 Pagesmind, not knowing whether to doubt herself or listen to her screaming thoughts. in Toni Morrison’s The Bluest Eye, we meet Claudia, a young girl growing up in a puzzling environment. Claudia is growing up in an era where society’s ideology has been carved out by a single group—White America. Beauty is one of the aspects that is forged by this group. Claudia is aware of what society tells her: beautiful is blue eyes and blond hair, and it is not dynamic. Her awareness takes her on a muddled journey

Serial Killers Be Understood By Society - 924 Words

Serial killers are yet to be understood by society. Psychologists have no reason behind why serial killers do what they do and what motivates them to murder innocent people. In most cases, police investigations and forensic data collected from crime scenes leads to arrest. In â€Å"The Chessboard Killer† by Peter Savodnik, the case of Alexander Pichushkin, a Russian serial killer, in prison after being convicted of killing 48 people maliciously. Pichushkin stated, â€Å"For me, life without murder is like life without food for you.†(204). Psychologists have found him insane, yet they have no explanation for his madness. In this article about Alexander Pichushkin, Savodnik uses logos in the article through data collected, Pichushkin’s life details, and direct quotations from those involved to reveal how the Russian society created such a violent individual. On the outside, Alexander Pichuskin seemed to be an ordinary person. He spent most of his days living on the couch of his mother’s apartment with the rest of his family. He worked in a grocery store as a clerk. Pichushkin drank heavily, the way many Russians did, with cheap vodka and beer. He socialized with others on a regular basis that shows a sign of normalcy. However, signs of trouble were apparent. He began withdrawing from society and his family, yet no one really noticed. Many psychologists believe that the abandonment of parents does not necessarily contribute to a person becoming a serial killer. In many cases, childrenShow MoreRelatedSerial Killers in the World1085 Words   |  4 PagesOverview In the 1980s serial killers were understood to be a new development, a phenomenon frequently accredited to the excesses of American culture. It was a decade of change, one of freedom and great music. It was also a decade that brought the shock and fear of serial killers. Today it seems as if all societies have serial killers. People in today’s society are left with questions such as: Who are they? Why are they so different? Why do they commit such horrific crimes? There are many theoriesRead MoreA Critical Analysis of Healthcare Serial Killers1484 Words   |  6 PagesSerial murder, which is defined as â€Å"the unlawful killing of two or more victims, by the same offenders, in separate events†(Lubaszka Shon, 2013, p. 1), is a term that American society has become quite familiar with. At a ripe age, parents begin teaching their children not to talk to strangers in hopes of shielding them from the potential evil our world has to offer, but what if I told you the serial killer may not always be the scary man driving a van and offering candy? Our society, like it doesRead MoreJeffrey Dahmer : An American Serial Killer912 Words   |  4 PagesAccording to the FBI (Federal Bureau of Investigation), a Serial Murder is defined as â€Å"The unlawful killing of two or more victims by the same offender(s), in separate events.† Jeffrey Lionel Dahmer, who is well known as an American serial killer and sex offender who was born on May 21, 1960, in Milwaukee, Wisconsin. He is known for his murders committed in his teenage years between the years of 1978 and 1991; Jeffrey Dahmer murdered 17 males. He not only murdered 17 men, but horrifically disposedRead MoreIs Sociopaths Lack Of Guilt? Essay1479 Words   |  6 Pagesguilt.. Sociopaths are usually defined as people displaying antisocial behavior which is mainly characterized by lack of empathy towards others that is coupled with display of abnormal moral conduct and inability to conform with the nor ms of the society. People suffering from antisocial personality disorder are often referred to as sociopaths. Some of the other characteristics that sociopaths may display are stealing, lying, lack of remorse for others and towards living beings, irresponsible behaviorRead MoreSerial Killers1651 Words   |  7 Pagesthe case, then what makes a serial killer tick? The definition of a serial killer is; a series of two or more murders committed as separate events usually, but not always, by one offender standing alone. (Brookes, 1988) Over the years, many murderers have been given this term. From the early days of Jack the Ripper, to the most recently publicized case of the sniper, all have different motives and reasons to the crimes that they commit. Most of the serial killers suffer from mental illness/addictionsRead MoreWithout the Rule of Law Anarchy Would Prevail800 Words   |  4 Pagesto fight the law without even realising what is happening. People can not live side by si de without conflict. I think it is impossible. Everyone has opinions, and our own certain way of performing which might cause conflict. Such as in the worlds society. Not a single person on this earth has no opinion. We couldn’t count how many people, woman, and man child has died fighting for what they believe in, or basic civil rights. Tiananmen Square 1989, there was no one reason. People of China were inRead MoreAileen Wuornos1416 Words   |  6 PagesWuornos, serial killer. A serial killer is someone who murders more than three victims one at a time in a relatively short interval. Serial killers have the ability to behave in a manner that arouses no suspicion. There are, however, a few signs to identify their potential to become a serial killer. People who suffers from psychopathy, involves a huge tendency towards antisocial behavior, are most likely to develop into a serial killer. FBI estimated that any given time between 200 and 500 serial killersRead MoreThe Scien ce of Criminology: Understanding the Mind of a Killer1108 Words   |  5 Pagesindirectly brought it into the United States and rest of the world. On the other end Jeremy Bentham supported Beccaria and shared ideas and common theories about criminology and criminal behaviors, where both agreed that criminal conducts could be understood and well controlled. The classical school theory of criminology basically considers human nature rational and hedonistic where human beings acts caused self interest but at the same time rational and capable of creating new laws and punishmentsRead MoreCharacter Analysis Of Hannibal Lecter1543 Words   |  7 Pagesvillain become a villain? Is it not all just based on our society’s views on what is right and what is wrong? After binging Hannibal, this is pretty much all I could think for several days. One moment you’re hoping that whoever this cannibalistic serial killer is, gets caught and put away for a long, long time and then the next moment, you’ve fallen in love with him. It’s really quite a rollercoaster. This show raises a lot of questions about morality, it aims to take your preconceived notions aboutRead MoreThe Dangers Of Teenage Smoking Awareness987 Words   |  4 PagesHe decided to have a chat with his grandson in explaining why he shouldn’t get into the habit of smoking a cigarette. The grandpa straight goes to the point about why his grandson shouldn’t get in to the habit of smoking and he states that, â€Å"In a society it is not unordinary to see a teen year old child smoking a cigarette in public.† Grandpa describes how in big sports events in the major cities mostly around the world there are big cigarette companies sponsoring the sports event. Teenage students

The Social History Of Maycomb Essay Research free essay sample

The Social History Of Maycomb Essay, Research Paper The Social History Of Maycomb Maycomb is said to hold a really carinate societal construction. Some people would depict it as a societal trigon. In this piece of work I will seek to explicate that construction utilizing remarks made by Jem. At the top of the societal pyramid are the people that Jem describes as the normal common people, like themselves and the neighbors. These people would include Miss Stephanie, Mrs Dubose, The Radleys and Miss Maudie. However, we have found out that the Radleys are considered foreigners from the community because they don t tend to socialize. Jem and Scout had neer seen any of the Radleys outside their house until he saw Boo Radley, or Arthur Radley, one dark when Miss Maudie s house gimmicks on fire. The following people down on the societal graduated table are the people who are Like the Cunninghams, out in the forests. We will write a custom essay sample on The Social History Of Maycomb Essay Research or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page These people are rather hapless, but still hold self regard and certain regulations. For case, on Jem s foremost d ay at school, Walter Cunningham has no tiffin, so his instructor offers to impart him some money to run down to the stores for nutrient. However, he does non accept the money because he know he cant wage her dorsum. Below the Cunnighams are the people such as the Ewells. These are people who live down in the mopess and have particular regulations that they live by. Rules such as they can run all twelvemonth unit of ammunition and maintain what they kill. Besides, Burris Ewell and the other Ewell kids, merely have to travel to school for one twenty-four hours each twelvemonth. They don t attention what people think of them and they live their lives nevertheless they want. At the underside of the ladder are the inkinesss. In the narrative we don t here much about the inkinesss, except that Atticus is supporting one in tribunal. Because of this, Atticus is called a nigga lover by some members of the community. In simple footings, and in the words of Jem ; Our sort of common people Don T like the Cunninghams, the Cunninghams don T like the Ewells and the Ewells hatred and contemn the colored common people.