Impact of Electronic Media Advertising

Some examples of electronic media can be television, radio, and Internet. Consumerism can be defined as a fact or practice of an increasing consumption of goods. Since the beginning of society has relied on advertising to publicly promote a product or a specific service. Advertising has impacted consumers in many different ways. People believe that advertisements brainwashes the consumer into purchasing unnecessary items. Other people believe that advertising does not sell any products, but it will convince the people who desire certain product to purchase it.Advertisements affect sports as well, without companies sponsoring these events they would disappear due to lack of funding. Advertising Is everywhere People see celebrities In their new trendy outfits on TV shows or commercials and want to Imitate their fashion statement. Health and weight Is another trend that the electronic media uses to reach the public. A large amount of celebrities Americans seen on television shows or mov ies are in a perfect shape.This role makes an important impact on American culture because it makes Americans think that the celebrities seen in music videos or movies are the body shape everybody should be. People today are also gaining new outlooks towards situations or people. Americans are watching television shows called â€Å"reality shows. † These shows are letting Americans see how celebrities behave in their daily lives. In some ways this shows are causing Americans to think and act differently of what they thought a celebrity live should It be.Americans are Imitating these attitudes that before middle and poor Americans would not know. Electronic media has propagated new trends that Americans would never thought It could It exist such as Internet blobbing, online shopping, and cell phone testing. Internet blobbing Is In the popular American culture. Most Americans use some kind of blob web page to communicate to his friends or any one that wants know about them. Blo bbing can be used as an advertisement. Celebrities use blob pages such as twitter to promote a new movies or just a product they use.Online shopping has become a trend in the past 10 years for the popular culture. Online shopping has given the consumer the convenience to decide if he or she wants the item ship or pick it up at the store. Testing was not even a word back 15 years ago and in the present time is a large trend in pop culture. Testing is being used to communicate with friends and business also used his to trend in a form of advertisement to companies and television shows. Television shows use testing as way to promote their businesses.A famous show call American Idol use testing to decide what contesters should be eliminated or stay on the competition. These three trends have an Impact on American views and values concerning consumerism and work. The Consumerism causes these trends to promote over ten world For example, elegant would not work walkout consumerism. The soc iety is the main reason the chain keeps moving and advertising works well for companies or television show such as American idol. These trends also have an impact when speaking of work.For example, online shopping has caused some problems of unemployment because it reduces the personal customer service that a salesperson can bring to the customers. The impact of electronic media advertising on consumerism make Americans have a reaction to purchase or not products offered in media. Electronic media has developed new trends in the popular American culture and has an impact in Americans' views and values in consumerism and work. The trends have increased consume of products by Americans, and work has unemployment problems cause by the technology.

Education Vision Essay

I believe that all students should be held to the same standards of education. While there should always be accommodations for an individual student’s strengths, weaknesses and learning style, there should also be a universal set of criteria by which a student’s progress is measured. While those standards may sometimes seem exacting to the students expected to meet them, they are far less demanding than what is required of today’s workers in an economy where competition has become global. An innovative and creative spirit has become in the last twenty years something that is generally expected of everyone rather than something only expected of the exceptional, a solid foundation in the basic elements of education, math and reading have become ever-more vital to succeeding in the modern world. Where education is concerned, I have found that creativity and innovation can oftentimes be fostered by the experience of overcoming challenges and, thereby, attaining a justified belief in one’s own abilities. A student who is taught to take pride in their work and, especially, to take pride is turning a failure into a success is someone likely to succeed in a world where competition is fierce and belief in one’s self is the most advantageous thing. Where the application of standards are concerned, I believe that any leader in an educational setting must be held to high standards just as are the students. By holding myself accountable to the highest standards, I gain the legitimacy to expect the same of my students and the ability to inspire them to do more than they may have thought possible. The position of a leader is one that is at least partially earned by gaining credibility in the eyes of those whom I am charged to lead. This can best be accomplished by setting an example; by continually challenging myself with new ideas and new situations while at the same time having the conviction to stand by those practices that have proven effective over time. Having worked as a teacher and a teacher’s assistant in various settings for the past five years, I have learned that both students and educators must never loose touch with their essential humanity and that empathy must always accompany high expectations. When a student knows that their teachers understand the hardships they face but still expect them to perform at a level of excellence, the student can be assured that they are not being driven unreasonably but are only expected to perform at the level their teachers know that student can achieve. Where sympathy and lowered expectations are really forms of condescension, empathy and high expectations communicate to a student that their instructor has not only high hopes for their student, but also a sincere and justified respect for their student’s potential. I have always felt a visceral connection and genuine responsibility for the successes and failures of my students. I hope to always be there to help my students experience the satisfaction of success and of overcoming failure.

Nepal Economy Essay Example | Topics and Well Written Essays - 1500 words

Nepal Economy - Essay Example Mica, hydropower and forest products are the other sources of income for this country. The only Hindu nation in the world is a picturesque unit of living for visitors and dwellers as well. An estimation done last year shows a population of about 29,331,000 people with the annual growth rate of 2.2 per cent. The country has its capital Katmandu, a very historic city. The people of this country, commonly called Nepalese speak Nepali and English for their communication. The country follows several political aspects adopted from India. The currency of this country is Rupees. Population: about 29,331,000 (2009 estimate) The geographical location of Nepal is at southern Asia. It shares its boarders with India and China. This roughly trapezoidal shaped country’s troposphere is uncommonly diverse. The total area of land mass is 147,181 Sq. Kms. It spreads a long line of 800 kms with a width of 200 Kms. Nepal can be seen as three physiographic areas; the Mountain Hill, Siwalik region and Terai regions. This diversity accounts for the abundant river water in the country. This environmental unevenness intersects Nepal’s north to south flowing river systems. Nepal is surely a very poor country. Lack of exploitation methodology implemented on natural resources accounts for the failure of increase in living standards of the people. Even today, about half of its population live below the international poverty line(IPL) of US$1.25 a day. The country’s telecommunication system is under rated at the world standards of the current point of international usage of phones. An alarming figure of over 19 people is estimated to use one phone. Jaggedness of the landscapes add to the failure of installation of land line telephones. They are limited to the use of city and town centers only. Nepal’s economy stands at 115th position in the world level. Over 70 percent of the work force in the country contributes to 40 per cent of its GDP. Rest of the work force and

Hospitality Management Assignment Example | Topics and Well Written Essays - 3500 words

Hospitality Management - Assignment Example The whole project is expected to cost an approximate of 294,949,980 pounds both in the construction of the structures and the provision of services for the first three months of the business' operations. The projected gross profit of the establishment is 850,000 Pounds per month. The resort mostly targets customers around the river Thames and the entire United Kingdom and travellers from the world over. For a start, a total of 150 staff is going to be employed and the numbers are expected to grow as time goes by. During the first year of its operations, the resort expects to host at least 30, 000 visitors both domestic and international. The management of the resort has however foreseen challenges in terms of threats and weaknesses that they may face in establishing and running the record. Various considerations have been made and hence ways of dealing with such challenges will be devised. This will be effective in ensuring that the resort operates at the optimum level and making the maximum possible profits. Hospitality management is a sector which has existed since time immemorial and has since then grown greatly. All countries the world over rely greatly on their hospitality sector for their economic growth and so does the United Kingdom. The hospitality management sectors like the Food Management and Operations, entertainment management, tourism, hotel management, event management and lodging operations have also been instrumental in providing job opportunities both locally and internationally and this to a great extent has contributed to the growth of economies and hence improved standards of living. Because of this realization, the family which owns the land in which the Thames River cuts across wishes to establish a holiday centre which will be able to serve tourists and visitors from all over the land. The establishment which is to cover the whole 150 acre piece of land will accommodate a variety of structures including car park facilities for the staff and the visitors, hotels, swimming pools, fishing activities, business centre etc. The establishment of a camping Caravan Park will be appropriate for travellers and camp groups who frequently visit the Thames River and all the tourist attraction centres within the region. Individuals of all ages will be catered for within the planned establishment. This means that students and other social societies will be our common visitors. However, all the facilities will be constructed with the varying ages of people in mind and hence it will be open to all individuals within the society. Different outlets will be constructed in line with the needs of the different age groups so that individuals of all

US foreign policy during the Iraq Iran war Essay

US foreign policy during the Iraq Iran war - Essay Example The foreign policy of America is very influential to the world since it is the only super power left. The US foreign policy towards Iraq was illegitimate since it contravened the procedures and justifications provided by the United Nation’s charter. The UN charter stipulates clearly the procedures that should be followed by a country to perpetrate coercion or violence to another state. The UN charter is the only legitimate basis that a country can use to attack another sovereign state since it has been reached through consensus by the member states forming the United Nations. The United States of America acted in total disregard of this charter and used its influence in the world to attack the regime of Saddam Hussein, condemning it of threatening the world peace. Iraq was supported by America during its war with Iran; it was assisted both financially and technologically. The US supported Saddam despite the fact that it knew that it was Iraq that had invaded Iran as a result o f border disputes which had been in existence for several years. The US used its foreign policies in an attempt to solve the crisis but was biased since it decided to support one side.The war was also as a result of suspicions of Shia insurgency which was influenced largely by the revolution in Iran. The United States of America supported the Iraq government and as a result about half a million people died comprising soldiers from both countries and civilians too. A lot of economic loss was also lost, the US which was supposed to use its foreign policies to enable it to effectively play the role of big brother to help the two countries resolve their differences, instead took sides in the war which only made matters worse. In fact, before the war began, American president, Carter, gave Saddam Hussein and his government the much needed green light for him to invade Iran. Zbigniew Brzezinski, the United States national security advisor met the Iraq president in Jordan so as to discuss how the two nations can join their efforts to oppose Iran on the issue of the border disputes which was the main contentious issue between the Iranians and the Iraqis (Gerber, Para 7-8). Brzezinski recommended in a memorandum, the destabilization of Iran by the US government by use of the surrounding countries. Although, the government of the united states of America denied any involvement in the Iraq-Iran war in the early 1980s, a few months before Iraq invaded Iran the US security advisor indicated that US was willing to work with Iraq. Just two months before Saddam Hussein invaded Iran, Brzezinski assured him that US was fully behind the Iraq government and that US was not opposed to the separation of the Khuzestan which was part of Iran. In this case the united states used their influence to attack Iran through Iraq and thus its foreign policies could not be said to be for the welfare of the world but for the good of the Americans and their allies and thus if a country is opposed to the opinion of the united states of America like Iran was in the 1980 war then it might be attacked either directly or through its neighbors by the US government (Gerber, Para 5). By the end of the US sponsored war both Iraq and Iran were devastated both economically and politically. The two countries had lost a lot of property and thousands of lives. Had the US kept off the war could not have reached such high magnitudes and thus such losses could have minimal. The US foreign policy in Iraq during the Iraq Iran war was favorable to the Iraqis but very unfavorable to the Iranians (Hiltermann, pp 180). US foreign policy during the 2003 Iraq war Things later changed when the regime of Saddam Hussein was blamed by the American government to threaten the world peace by manufacturing weapons of mass destruction. Again the

Colgate Toothpastes Essay Example | Topics and Well Written Essays - 3250 words

Colgate Toothpastes - Essay Example The 7Ps of marketing are discussed to give a clear understanding of the marketing strategy of Colgate for its toothpaste products. The various target markets of the different types of Colgate toothpastes are pinpointed. The positioning strategies of Colgate will also be ascertained. At the end of this report, some recommendations will be suggested to further strengthen Colgate toothpastes’ hold of the toothpaste industry. Introduction Colgate-Palmolive Company is a $16.7 billion global company which serves more than 200 countries (Colgate-Palmolive Company, 2011). It has operations in North America, Latin America, Europe/South Pacific, and Greater Asia/Africa. Their core business is in oral care, personal care, home care and pet nutrition. Their key products are toothpastes, toothbrushes, bar and liquid soaps, deodorants/antiperspirants, dishwashing detergents, household cleaners, fabric conditioners and specialty pet food. This study will focus on the marketing strategy of th e toothpaste line of Colgate. It was in 1873 when Colgate introduced its first toothpaste in jars. Today, Colgate has a 44.7% global market share of the toothpaste market (Colgate-Palmolive Company, 2011). Situational analysis (SWOT) (PESTLE) A. SWOT Analysis 1. Strengths Has been in the toothpaste business since 1873 Strong financial position Consistent market leader and has strong presence worldwide Has a high brand awareness and has strong brand recall Offers a wide choice in toothpaste varieties Known to be the â€Å"No. 1 brand recommended by dentists† Has an image of producing high quality products Strong product development and research program which leads to consistent product innovation Wide channels of distribution 2. Weaknesses Too many toothpaste... This paper stresses that Colgate is the leading brand of toothpaste, it should not rest on its laurels because of the highly competitive industry. Their marketing strategy should be appropriately adjusted depending on the dictates of the times, if it wants to remain competitive and retain its current position in the market. Brand image may not be enough assurance that they will remain on top. Since toothpaste is already in the mature stage, Colgate should find ways and means to innovate their products and continue to address the changing needs of its consumers. The author of the paper declares that with regards to Colgate’s promotional strategy, it is suggested that they emphasize the functionality of their toothpastes more than those that arouse the emotions. It was found out in a research that Colgate’s live demo campaign is a valuable way of increasing usage of a product. This report makes a conclusion that Colgate has 16 varieties of toothpastes, not counting the different flavors in some of its toothpaste brands. It is recommended that product duplicates be removed. Colgate offers too many types of toothpastes but some of them have almost identical active ingredients and characteristics. Too many products tend to confuse the consumer. An example of this is the Colgate Triple Action which is almost the same as the Colgate Cavity Protection and Colgate Total. Their whitening toothpastes such as the Colgate Sparkling White and Colgate Luminous targets the same market. One thinks that Colgate can just retain their most highly-saleable toothpaste and concentrate on marketing it.

Writing assignment 2 Essay Example | Topics and Well Written Essays - 1500 words

Writing assignment 2 - Essay Example ferent", Apple has been able to convince its present and potential consumers of its product superiority in the technological industry through advertising. Basing primarily on television and internet advertising apple has been able to persuade a majority of personal electronics consumers of the need, simplicity and product superiority in their products (Dooley, 2007). Apple’s television advertising kick-started in 1984 towards the launch of the Macintosh computer, and it was dubbed ‘1984’. The advertisement hyped the Macintosh computer while promising 1984 not to be the same again after using the Macintosh computer. With 85% of the European population being active Television users, the use of televised commercial advertising was very effective until late 2000’s. The use of celebrities in their advertising has been so instrumental in creating brand awareness. In the European, as well as other markets different local celebrities, were used with the same original theme and music. The latest in television advertising was â€Å"I am a PC, and I am a Mac† that started off in 2006 and ended towards 2010 (Forker& Ward, 1993). After the end of television advertising, Apple shifted its focus to internet advertising through videos uploaded online to its website, YouTube plus other captivating slogans on social media. This was as a result of the digital migration where more than 50% of the world population became active internet users by 2009.With the increase in social media uses over the past few years; Apple has gone social too by creating dynamic pages and setting sales promotions and brand awareness whilst actively engaging its customers. Their internet advertising move has received some criticism over unethical interruptions, but this cannot be equalled to the increased sales revenue both online and in vendor shops. The internet has enabled it to provide an active customer support globally as well as create potential customers (Moriety et al., 2012). The latest

Hisory question from a pdf need argent Essay Example | Topics and Well Written Essays - 250 words

Hisory question from a pdf need argent - Essay Example The Normans also sought to establish and expand their land possession, which was the overarching objective of attacking other territories and sealing agreements with various rulers at the height of their power. The author admires courage and bravery throughout the text. His narrations are particularly favourable towards rulers and counts who demonstrated great valour in battle even when the odds appeared to be going against them. For instance, the quality of courage he attaches to the character of the Normans is evident throughout the different actions of conquest in which they engaged. Particularly, the author reserved the most kind and glorious tribute to the courageous actions of Count William who even rose and backed up his people while still suffering from a fever (History Week 8 12). Such actions are brought out in vivid descriptions that even tend to portray the characters as some kind of super-humans who went beyond the call of duty for the sake of higher purposes. Consistently, the people of courage do not portray avarice but are instead described as generous and wise by the

Argument Essay Example | Topics and Well Written Essays - 1000 words - 1

Argument - Essay Example The discourse would present a separate examination of each article’s arguments including supporting contentions. A concluding portion would then assess which editorial was deemed most effective. Editorial One: Australian gun control holds lessons for U.S. The editorial article entitled â€Å"Australian gun control holds lessons for U.S.† published online in the USA Today on December 18, 2012 proffered issues that apparently compared the measures taken by Australia in terms of gun control. As an editorial article, the author comes from the Editorial Board, but was not specifically identified. The article’s main thesis was despite sharing similarities between the United States and Australia in terms of having previously experienced violent deaths due to indiscriminate firing of guns, Australia’s gun control policy which was enforced after a 1996 shooting eventually solved the dilemma. According to the discourse, Australian law on gun control necessitated cat egorizing firearms into five distinct classifications, where â€Å"some of the deadliest assault-style weapons and large ammunition clips are now all but impossible for individuals to lawfully own. (Further), firearms are subject to a strict permitting process, and dealers are required to record sales, which are tracked by the national and territorial governments†¦ (In addition,) the law encouraged people to sell their firearms back to the government, which purchased and destroyed about 700,000 of them† (Australian gun control holds lessons for U.S. pars. 4 & 5). Due to the passing of this law, the report disclosed that evident result was no violent gun-related incidents ever occurred. The author used logical arguments through the support of evidential historical records and citing credible findings that apparently revealed the effectiveness of gun control through the law enforced by Australia. However, to verify the details, one made a quick research on the veracity of the facts through a report entitled â€Å"Firearm related deaths in Australia, 1991 – 2001† (Mouzos and Rushforth). The report revealed that although there was a decline in the number of firearm related deaths of 521 in 1996, there were still 437 deaths in 1997, 327 in 1998, 353 in 199, 331 in 2000 and 333 in 2001 (Mouzos and Rushforth). The information therefore clearly negates the assertion that no gun-related incidents ever occurred after enforcement of the gun control law. Editorial Two: Gun rights and gun control aren't necessarily exclusive From the Denver Post, the editorial article entitled â€Å"Gun rights and gun control aren't necessarily exclusive† published online on September 23, 2012 was likewise written by an unnamed member of the editorial board. The main argument that the article was disclosing apparent preference of the American public through public opinion polls which disclose that â€Å"polls in recent years have consistently affirmed that Americans believe it's more important to protect the right to own guns than to enact gun control† (Gun rights and gun control aren't necessarily exclusive par. 6). The discourse likewise made mention of advocates for the right to bear and keep firearms pursuant to the Second Amendment, to wit: â€Å"

Did the history of the People's Republic after the 1949 fulfil or Essay

Did the history of the People's Republic after the 1949 fulfil or depart from Mao's promises before 1949 - Essay Example This further resumed the civil war in China, after which the war restarted only in 1946, a year after the conflict with Japan. The war ceased in 1950, and the Republic of China was under the jurisdiction of the islands of Taiwan, Quemoy, Penghu as well as several other outlying areas. Mao Zedong was commonly regarded as Chairman Mao, who was a Chinese communist, revolutionary and a political theorist. He is known as the father of People’s Republic of China since its foundation in 1949. He ruled the nation as the chairman of the Communist Party of China until his death. Here the topic under discussion is the changes that were brought about in China during Mao’s period, after the Chinese revolution of 1949. There existed some inequalities in PRC due to the dissimilarities between the Mao period and the reform eras. To know the underlying nature of the Chinese society, one needs to understand China’s transition into the present era after Mao’s period. This ch ange was brought in its due effect after the era of Mao. Analysis: The changes that took place during Mao’s rule were based on the economy of China. There was the involvement of foreign capital in China from economic zones such as southern and eastern coasts. There was a connection of the part of China in terms of family and cultural relationships to other countries like Hong Kong, Taiwan and Singapore. During this time, the economy of Asia was growing fast and starting to play a more important role all over the world. This was one of the advantages of China; this led to the economic reforms in the country. China took its steps for development through various fields such as agriculture in the private sector, independence in the non-state sector in industry, transport and construction, which was in crisis during the USSR times. There arose some problems in the economy. â€Å"There has been a tendency for cycles of economic boom followed by centrally – induced restraint , but these have not called the whole project into question† (Bowles et al. 70). Even if there were problems in China, there developed some reform programs such as agricultural reforms in 1978, the industrial, commercial and urban reforms in 1984 and again the coastal strategy reforms in 1978. Some legal facilities were provided in order to surpass all the rights and duties when the economic policies were being developed in China. It was the situation of flexibility in the rules rather than the communist regime. In Mao’s rule there were limitations to implement rules and regulations over the labourers in the aspects of wage rates, trade unions and working conditions. This raised market oriented businesses in the economy, and the Cultural Revolution resulted in the independence of China from other foreign countries. The banks in China followed liberalization, and authoritarianism was not acceptable anymore in the Chinese society. In this era, discontent with socialism ha d started to grow. Chinese economy survived after the Cultural Revolution of 1966 by the implementation of Five Year Plan; however, this revolution overwhelmed the political system of China, and as a result, chaos spread. â€Å"Two years after the Cultural Revolution ended in October 1976, the principal survivor of that cataclysm, onetime CCP general Secretary Deng Xiaoping, initiated

Everyday Use Essay Example for Free

Everyday Use Essay Everyday Use is tale of two siblings who are the exact opposite of each other and how they view the world around them. Dee and Maggie are on the opposite ends of the spectrum, as Dee is more of an outgoing woman who fervently pursued education to get away from her humble beginnings. She wanted to be successful as her mother recalls â€Å"Dee (Wanergo) wanted nice things†, while Maggie always embraced the conventional role of woman (Walker 273). Dee is not quite feminine like her sister as she says â€Å"I can kill and clean a hog as mercilessly as a man† (273). However, Maggie is an introvert who prefers being at home and doing household chores. Maggie, ever since her accident is not so confident, as her mom recalls â€Å"she will stand hopeless in corners, homely and ashamed† (272). Dee is also very selfish and inconsiderate about her family’s feelings, as she views her family quilt as a mere cultural artifacts and tries to take away it away from them with no remorse. On the contrary, Maggie never tries to deny her sister any of her, although it may at the cost of her own happiness. Her mom says that Maggie â€Å"thinks her sister has held life always in the palm of one hand† (272). However, she is very saddened by her wanting to take away the quilt that she and her grandmother made with their own hands. However, Dee says â€Å"Maggie can’t appreciate these quilts†, failing to see the sentimental value of the quilt to her sister (278). Conclusion Dee is more pretentious as she tries to put up an African persona to sound more cultured and cosmopolitan. She changes her name and her appearance to suit her new found African heritage and justifies it by saying â€Å"I couldn’t bear it any longer being named after the people who oppress me† (276). Maggie, on the other hand, is content with her life and comfortable with her African-American descent. Works Cited Page Walker, A. (1973). †Everyday Use†. In Love and Trouble, 272-276.

Introduction to DNA and Genetics

Introduction to DNA and Genetics Genetics is the study of the qualities that are inherited and transmitted to the offspring from the parents during reproduction. Parents pass traits to their offspring, making the basis of heredity. The inherited traits are coded for in genes, which are the inherited elements. Genes are the functional units of DNA. Through genetics, biologists and other scientists get to understand the processes and principles of heredity, genetic variation and genes. Genetics is of great interest in the contemporary society. With the completion of the Human Genome Project, a lot of information about genetics has been exposed that is essential to the understanding of the human health. Understanding of the genome and mutations that affect it has led to an explanation of genetically inherited traits. These characteristics were previously mysterious and could not be contained as drugs could not be developed against them. The information gained from genetics has aided the research into these diseases. It has also opened a window to the possibility of finding a cure for the deadly cancer diseases (Sack, 2008). The building block of all genetic concepts is DNA. DNA is one of the nucleic acids which stores hereditary or genetic information. It is found in the nucleus in eukaryotic organisms and the cytoplasm in the prokaryotic organisms. DNA is composed of nucleotides, which are composed of sugar, a phosphate group and a base. The DNA sugar is deoxyribose sugar. There are four essential bases in the structure of DNA. From the four bases, the numerous different sequences arise which lead to the differences observed among organisms. The bases are Thymine, Adenine, Guanine and Cytosine. The nucleotides bond to each other by a phosphor-diester bond, leading to a ladder-like double helix structure. The double helix structure is formed by the pairing of anti-parallel strands of DNA. The nucleotide bases from the two strands bind to each other through hydrogen bonds. Thymine pairs with Adenine and Guanine pairs with Cytosine (Hawley, 2010). The DNA is divided into functional regions called genes. Genes have varying sizes, from a few hundred DNA bases to more than two million bases. The genes code for the traits expressed by each individual. Each gene has specific sets of instructions that code for particular proteins or protein functions. The nucleotide sequence of each gene forms the genetic sequence, which is crucial in the central dogma. The central dogma explains that the phenotypic appearance of an individual is a characteristic of their DNA. From the DNA sequence, RNA (another nucleotide) can transcribe and translate the information into proteins. The proteins are the building structure of the body. Therefore, the protein that is expressed in the DNA is the one that will be manufactured and expressed physically as the structure of the individual (Hawley 2010, Sack, 2008). Genes are found in packaged DNA sets called chromosomes. Each chromosome has millions of DNA bases, from fifty to two hundred million in number. Many genes make a chromosome. The chromosomes are the means of transferring genetic information from the parents to the offspring. They are more complex as they are made up of the genes and binding proteins know as histones. The DNA is usually tightly wound around each of the proteins. Each organism has a specific number of chromosomes, which if exceeded or reduced result in an abnormality. The human beings have twenty-three pairs of chromosomes (46 chromosomes). One of the pairs is the sex chromosomes (XX for female and XY for male). The other twenty-two pairs of chromosomes are autosomes (Hawley 2010, Sack 2008). Traits are inherited from both parents following the Mendelian inheritance laws. The genetic makeup of an individual (genotype) is made of two alleles of each gene. An allele is a copy of a gene that codes for the same trait. Each allele is inherited from either parent. If the alleles are identical, they are called homozygous, and if they are not identical, they are heterozygous. If alleles are indeed identical, they have similar coding sequences at that particular locus. Each gene has a dominant allele that will be expressed in a case of the presence of a heterozygous pair of the alleles (Jobling, Hurles, Tyler-Smith, 2013). The genetic material of the human cells (and other eukaryotic cells) except the red blood cells is found in the nucleus. The RBC do not have a nucleus and hence do not carry genetic information. However, some organelles such as the mitochondria and the chloroplasts have their DNA. The organelles contain multiple copies of small chromosomes and are only inherited from the mother. They are found in the ovum during fertilization as the sperm cell only contributes the nuclear genetic information. The exact location of a gene on a chromosome is called a locus. There are fifty thousand to hundred thousands of genes in the human genome. However, the DNA in the genes is only approximately 2% of the total genomic DNA. Much of the information on the non-coding DNA has not yet unearthed, despite successfully completing the human genome project (Hawley, 2010). Formerly called junk DNA, the non-coding DNA is increasingly being considered to be of essential function in the central dogma. Scientists are, however, working to find out the exact role of the DNA, which has so far remained elusive. The locus of each gene has enabled the formation of the genetic map, as more than 13,000 genetic sites have been correctly identified (Sack, 2008). The genetic maps have enabled the study of different inherited diseases. The particular location of the gene(s) responsible for the conditions can be identified and studied. The development of the gene maps makes it faster, cheaper and more practical for scientists to identify and diagnose a given genetic disease. Genetic mapping has made it possible to identify most hereditary diseases such as cystic fibrosis, enabling adequate pharmaceutical research to be carried out on them. Hereditary diseases occur as a result of a mutation in the genes that code for given proteins. The mutation can either occur through deletions, substitutions or insertions of DNA bases at certain points leading to frameshifts in the structure of the gene. These frameshifts will result in coding for abnormal or non-functioning proteins (Loewe, 2008). Without these proteins to act in their usual roles, the body faces challenges adapting to situations that require the proteins. For example, the Duchenne Muscular Dystrophy is as a result of a deletion in a gene that codes for an important muscle protein, dystrophin. The absence of dystrophin results to muscle weakness and inevitable early death (Behrman, Kliegman, Jenson, 2011). However, some mutations are as a result of adaptation. For example, the mutation to cause sickle red blood cells was an adaptation to prevent malaria in the tropics. Genetics has not only enabled us to understand more about ourselves, but has also given us more information about our origins. Evolutionary genetics allows the comparison of genetic data of proteins from different organisms and establishing where they diverged or converged in the evolutionary tree. With the development of technology and computers, the branch of bioinformatics has explored worlds unknown before. Accurate data on genetic sequences has been compared with previous generations to establish the relationships between human beings and other organisms (Jobling, Hurles, Tyler-Smith, 2013). With the understanding of the past and evolution, genetics helps us to predict the future. The future of genetics is one of the exciting branches of science that has fascinated many biologists. Genetics is not without its shortcomings. The cloning debates and other ethical issues have brought the in-depth study and application of genetics into questions. The knowledge of Genetics might tempt scientists to try to act God in establishing human beings without blemish. The cloning of human being is also a much-debated question as well as the issues of personalized medicine. The study of the genetics of an individual also means that one gets to understand the genetics of the parents, raising ethical questions about the informed consent. Ethical dilemmas also arise when two carrier parents are expecting a child who has been diagnosed with the disease. Do they end the pregnancy or wait for the baby to be born and suffer? In some instances, genetics has led to more questions than answers (Fulda, Lykens, 2006). Despite its shortcoming, genetics opened multiple doors in the contemporary science. References: Behrman, R. E., Kliegman, R., Jenson, H. B. (2011). Nelson textbook of pediatrics. Philadelphia: W.B. Saunders Co. Fulda, K. G., Lykens, K. (2006). Ethical issues in predictive genetic testing: a public health perspective. Journal of medical ethics, 32(3), 143-147. Hawley, R. S. (2010). HUMAN GENOME. Academic Press. Jobling, M., Hurles, M., Tyler-Smith, C. (2013). Human evolutionary genetics: origins, peoples disease. Garland Science. Sack, G. H. (2008). Genetics. New York: McGraw-Hill Medical.

Shock Advertising Effective Way To Develop Social Awareness Media Essay

Shock Advertising Effective Way To Develop Social Awareness Media Essay Mass Media is the fundamental tool in the information society. In general, Mass Media can be defined as a message sent to a lot of people simultaneously; it is the vehicle to transmit information to an audience which is most of the time, heterogeneous regarding sex, age, religion, socio-economical level, etc. Nowadays, there are several kinds of Mass Media such as the radio, the television and the newspapers etc which deliver the information through audio, visual or audio visual channels. Lets think about the function of the Mass media! It is clear that one of the main function that they fulfill is to keep people acknowledge about the most current events that happen around the world both nationally and internationally, but it is the only one function that they have?-the answer is obvisoly no;Mass Media fulfill many functions in our society , but now I am going to mention only the most important ones which are :1)inform, 2) Surveillance,3)Service the economic system ,4)Entertain 5)Hold the society together 5)Persuade , etc. Now, I want to focus myself on the third and the fifth function because they are very connects into each other. Lets analyze the following situation : economic system in any country depends on a key element called consumers, so if there are not consumers , I mean , people who buy the products and services that the market offers(food , clothes, electro domestics, etc) it could be possible that an area of the economic system suffers a crisis. If it oc curs one of the most effective way to encourage people to buy, would the use of the Mass Media as persuasive technique .So as I you see, economic system and persuasion are elements closely connected. Nowadays, one of the strongest tools that Mass Media use to persuade is Adverting. , Advertising is the attempt to inform and persuade a large number of people with a single communication (Longman, 1971). Advertising is about delivering controlled messages to many people simultaneously and at a low cost per message (Wilmshurst, 1985).The main feature of the ads is that they are created in an attractive manner for the viewers. Most of the advertisement that we watch or listen to are created for an economic purpose; they offer products and services in order to persuade the audience to buy them. But, they also can be focused on promoting certain ideas in relation with controversial topics that are currently affecting our society. At the same time they deliver information, they also dissuade people to purchase their behavior and to develop awareness in regards to social issues (heath, politics, social and environmental issues etc): in this category can be found the so- called Shock advertisements. This name refers to particular features that this type of advertising ha s such as that are controversial, disturbing , explicit and crass at the time to deliver the message( ). They also apply certain tactics to persuade their audience which are mainly, fear, guilty, compassion, etc. That way, the combination of those feelings in an announcement is supposed to work well to. But does it really work? Is shock advertising an effective way to develop social awareness? or are they just a manner of offending people? Shock ads can be effective depending on the way they appeals to audiences feelings. Shock ads appeal to the deepest feelings of fear, guilty, sadness, disgust, etc .So, they used to work with impacts images that usually show the consequences of approaching behavior.Currently, one of the most common examples of shock advertisements are related to lethal diseases that are affecting strongly to the society such as HIV, Breast cancer, diseases caused by the excessive use of cigarettes etc .Lets think in this last one, the use of cigarettes. In our society is has become very that people start smoking to early age and continue smoking during all their life. This excessive usage of cigarettes can cause serious diseases such Lung cancer and other health problems which decrease the quality of peoples life. Smoking is a dangerous vice which can end with peoples death. So, what do advertisers do to develop awareness in regard to this issue? They resort to the persuasion through the creation of shock ads which show impacts images about the negative effects of smoking in people parts of body like teeth, mouth, trachea, lungs etc. Even though, these images can impact to the audience, they also need to produce change in peoples behavior so they need to appeal to the precise feeling to obtain positive results. According to researchers in the United States, in order for anti-smoking adverts to be effective they must either scare or disgust the audience. A study by researchers at the University of Missouri has revealed that ads which have a combination of both fear and disgust content decrease viewers attention and memory but those which focus on one or the other, increased attention in viewers. But, to be honest, the fact that these images attract the viewers attention and impact them is a guarantee that they will change their behaviors and will stop smoking? And what happen when the audience becomes accustomed to see those kinds of ads? Does it cause the hopeful results? In 2009, several researches were carried out to pro the effectiveness of shocking advertisements in Great Britain and according to Professor Alex Gardner, a chartered psychotherapist and psychologist, shocking ads traditionally worked however, if the same tactics and the same message are being used all the time, and then it will only become wallpaper to a person. So, as this research shows, using the same images and tactics all the time for communicating messages to the audience doesnt work very well. Now, lets analyze what happen with the case of shock advertisement used for anti- smoking campaigns. They used to work with images that show the negatives effects of smoking in peoples body parts: damaged teeth, gory lungs, etc. That way, with the purpose of keeping peoples interest and for they dont become desensitized, advertisers use another images which are also shocking but in a different way: for example, showing pictures where a child is smoking a cigarette and is saying: I wanna be like you .What does this ad communicate? Essentially, it also talks about the consequences of smoking but through of a new message which is not as explicit as the images of damaged part of the body .This message makes people realize that when they smoke , they damage not only their heath but also theirs children heath. As Andy Nairn, the executive planning di- rector of Miles Cal crafts Briginshaw Duffy in Great Britain. Says:By featuring extreme, shocking images, youre giving people a get-out clause, making them think: I m not that bad. Shock stimuli influence in a positive way the comprehension of the messages and increase retention of them in the viewers. There are three levels of shock in advertising: visceral shock, intellectual shock, and for lack of a better term, soul shock (Bruce Grierson, 1998). So, when an audience watches a shock ad about a specific issue (social, health, environmental, etc) one of these three levels will react. Although shock advertising is effective as they attract peoples attention and facilitate retention in the viewers, they can also be people in several ways. What is more, in one of theirs definition Venkat and Abi Hanna said, shock advertising appeal and, indeed shock, is regarded as, and advertisement that deliberately offends its audience. Lets analyze what kind of offences shock ads can elicit to the audience that watch or listen to them. The offences are closely in relation with violating norms either social or religious which should not be broken up. But, what is norm violation? According to Baron and Byrne (1997), is the violation of shared expectations within a social group, of their rules what is acceptable what is unacceptable. That way, shock ads show both certain messages and images that break these norms in many ways. There are a lot of manners that advertisers can offend their audience which are :obscenity, sexual references, profanity , vulgarity ,religious taboos , etc . There are many ways in which shock ads offend people ,specially, social and religious organizations. Members of Catholic religion have been strongly offended by the images that shock ads show,. One of the most reminded ads is called kissing-nun sensual kiss with the sacred vows pronounced by men and women who enter religious orders. This advertisement caused a high impact in the viewers who are encoring to refuse the ideas and beliefs of Catholicism. This offended in a terrible way the whole catholic community. So, the use of this ad was finally banned. But lets think in the final purpose of this ad , it try to bring awareness or it is just trying to promote ideas against the Catholicism. It actually does not have a real purpose. Taking all in consideration, we are living in a society which is constantly receiving lot information. This information is delivered by the Mass Media which can be defined as a message sent to a lot people simultaneously .It is the vehicle to deliver information to the audience which is most of the time heterogeneous.Mass media is a key tool in the knowledge and information society because it fulfills several functions such as: :1)inform, 2) Surveillance,3)Service the economic system ,4)Entertain 5)Hold the society together 5)Persuade , etc.There are of these functions which are closely related: they are the economic system and to persuade. Economic system of any country depends in a direct way of a key element called costumers, that is to say, people who buy the products and services that the market offers. If there are not buyers it is probably that an economical crisis occurs. Therefore, it is necessary that exist something which encourages people to buy: Something or someone that persuade people. This is the role of a technique called advertising. Advertising is the attempt to inform and persuade a large number of people with a single communication (Longman), 1971).It needs to be created in a very attractive manner to attract audiences attention and persuade people for they to buy the products and services that the ad offers. But, ads not also offer products and services but also they promote ideas regard to social issues that are affecting our society. In that category we can find a special type of advertising which is called shock advertising. This type of ads has become very popular in our society because of the particular tactics that they use to attract the attention of the viewers. In few words, shock ads are disturbing, controversial and crass at the time to deliver the messages. They use the shock factor in order to impact their audience for influencing behavioral changes. But does it work? It is shock advertising an effective to develop social awar eness? Shock ads use the shock factor which a very strong tool at the time to attract the attention. Shock factor cause a high impact in peoples mind and help to promote changes in their behaviors. Nowadays, Shock advertisements are focused on communicates messages which have relation with health problems and its effects. Antismoking Campaigns have become popular because they used to work with shock images. That appeal to the most deepest peoples feelings..the effeteness of a shock ad depends on the way it appeal t audiences feelings , how the shock stimuli works for people to comprehend the messages and change their behavior..Shock ads can be a very useful tool to develop awareness in our society but it also can be offensive in the way they do not contribute to the society.

Aristotle, Temperance, Pleasure, and Pain :: Philosophy Research Papers

Aristotle, Temperance, Pleasure, and Pain(1) ABSTRACT: Aristotle argues that temperance is the mean concerned with pleasure and pain (NE 1107b5-9 and 1117b25-27). Most commentators focus on the moderation of pleasures and hardly discuss how this virtue relates to pain. In what follows, I consider the place of pain in Aristotle’s discussion of temperance and resolve contradictory interpretations by turning to the following question: is temperance ever properly painful? In part one, I examine the textual evidence and conclude that Aristotle would answer no to our question. The temperate person does not feel pain at the absence of appropriately desired objects. In parts two and three, I reconstruct some reasons why Aristotle would hold such a view based. My discussion here is based upon Aristotle’s discussion of continence and the unity of the virtues. While the accounts of temperance in the Eudemian Ethics and the Nichomachean Ethics share some similarities, the treatment of the topic in the latter is much more developed.(2) As Charles Young argues, Aristotle draws a distinction between common appetites and peculiar appetites. The appetite for food when one hasn’t eaten for several hours is a common, natural appetite. The appetite for a particular food or a particular amount is peculiar. Temperance most properly concerns the peculiar appetites, because, Aristotle says, people don’t tend to go wrong about common appetites since the appetite disappears with replenishment (NE 1118b15-19).(3) A further refinement in the Nicomachean account comes at 1119a16-20. Here Aristotle distinguishes between pleasures conducive to health (called healthful foods by Young) and pleasures that do not interfere with health (called treats by Young). On this more positive account of temperance, one has temperance just in case one’s peculiar appetites for food, sex, and drink are determined by judgments about the contribution to or compatibility with healthfulness.(4) One nice result of this account is that temperance loses any connotations of austerity that it might have had. For a temperate person, on Aristotle’s account, enjoys treats to the extent that they are compatible with health. This quick summary of the Nicomachean and Eudemian treatments of temperance, while showing some of the subtlety of Aristotle’s position, has selectively omitted a range of issues. The focus has been on pleasure rather than pain. Clearly the intemperate person enjoys consuming foods to an excess. However, it also surely is true that the intemperate person is pained by the absence of those peculiar things he desires.

Animal Testing Essay -- Science Experiments, Animals, Guinea Pigs

Canary in the kitchen detects carbon monoxide! Animal testing must be banned for unnecessary tests. Animals should not be guinea pigs. Animals still feel the pain when they are injected with medicine just like humans. Humans can defend themselves and stop the pain, but the animals get strapped down and cannot move. It is better to have tests run on animals because animals will help find cures faster. Animal testing must be banned for unnecessary tests because a lot of animals are dying for no reason. Ninety-four percent of animal testing is done to determine the safety of cosmetics and household products (Animal Testing 1). That only leaves six percent for medical research (1). Ninety percent of all animals used in research are rats and mine (Animals Used in Experiments 4). Cosmetic testing is banned in Belgium, Netherlands, and the United Kingdom (1). The United States has many companies that continue to legally perform horrible tests on animals (1). The United States Food and Drug Administration and the Consumer Product Safety Commission do not require animal testing for cosmetics or household products (1). The Animal Welfare Act is the only federal law to require basic standards of care, housing and treatment to the animals that are kept in the labs for testing (4). The LD50 test is one of the worst tests that was developed back in 1927 and is still used today (1) . Groups of animals are dosed with different amounts of a test substance in order to determine the does which kills half of the animals (1)! Animals are force-fed this substance (1). Why would we want to put poor animals in this kind of pain for no reason? Animals to the society can be their world. Animal lovers in the society would probably g... ...and are just like humans (3). Scientists on the other hand feel like there is a need to endanger the animals because they are trying to find a cure for the human population to all the diseases that are out in the world(3). Animal testing should be banned for unnecessary tests because why would the government want to put human through the same thing that the animals go through. Animals should not be guinea pigs to the horrible tests that the scientists run on them. The animals should be able to be free and not have to be strapped down and forced-fed. Animals feel the pain just as well as a human would, but a human can walk away from the pain and say â€Å"no†. Sometimes it is better to run tests on animals to find a cure for cancer, HIV, and other diseases but the government and the scientists should find a different way to do this with out killing so many animals.

A Different Foreigner :: essays research papers fc

A Different Foreigner   Ã‚  Ã‚  Ã‚  Ã‚  We have talked about the typical foreigner: Someone living in a country other than their own, having a different culture and different beliefs than everyone else around them. But can one be a foreigner in their own country, their own city, or their own town? If one has different beliefs than those of his/her friends and/or family, can we call that person a ‘foreigner’ if they are going through the same things that Julia Kristeva describes in her book? In today’s culture, the same aspects that apply to foreigners, such as loneliness, separation, and the need to fit in, apply to many teenagers, whether they grow up in a town they have lived in all their lives, or if they move to a foreign place.  Ã‚  Ã‚  Ã‚  Ã‚  In Strangers to Ourselves, Kristeva writes, â€Å"Who is a foreigner? The one who does not belong to the group, who is not â€Å"one of them,† the other† (Kristeva, 95). If I were to discuss beliefs with my parents, such a s political or moral beliefs, and agreed with everything my parents said, what happens when all of my friends at school believe in completely different things? To them, my beliefs would be very different, almost foreign. To them, I would be the other.   Ã‚  Ã‚  Ã‚  Ã‚  If, over time, I were to change my beliefs to mirror the beliefs of my friends, one day I would come home and realize how different I was from my family. My beliefs would be the opposite of theirs. Like many foreigners living in a country different than the one they were born in, going home would not be the same as it was when I was still the same as my family. If a typical teenager goes through the same scenario that I have described above, how different is it if a teenager becomes a foreign exchange student. One immediately thinks of the obvious†¦the teenager is, of course, in a foreign country, away from home. But, that particular teen is still trying to fit in, and is growing in ways that are changing the person that he/she used to be.   Ã‚  Ã‚  Ã‚  Ã‚  During the transition from believing what my family believes to what my friends believe in, there would be a time in which I would fit in neither world. My views would have changed enough for me to be different from my parents, but not enough for me to be the same as my friends.

Excellence in Financial Management

Excellence in Financial Management Course 7: Mergers & Acquisitions (Part 2) Prepared by: Matt H. Evans, CPA, CMA, CFM Part 2 of this course continues with an overview of the merger and acquisition process, including the valuation process, post merger integration and anti-takeover defenses. The purpose of this course is to give the user a solid understanding of how mergers and acquisitions work. This course deals with advanced concepts in valuation. Therefore, the user should have an understanding of cost of capital, forecasting, and value based management before taking this course. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam which is administered over the internet at www. exinfm. com/training Published June 2000 Chapter 4 Valuation Concepts & Standards As indicated in Part 1 of this Short Course, a major challenge within the merger and acquisition process is due diligence. One of the more critical elements within due diligence is valuation of the Target Company. We need to assign a value or more specifically a range of values to the Target Company so that we can guide the merger and acquisition process. We need answers to several questions: How much should we pay for the target company, how much is the target worth, how does this compare to the current market value of the target company, etc.? It should be noted that the valuation process is not intended to establish a selling price for the Target Company. In the end, the price paid is whatever the buyer and the seller agree to. The valuation decision is treated as a capital budgeting decision using the Discounted Cash Flow (DCF) Model. The reason why we use the DCF Model for valuation is because: Discounted Cash Flow captures all of the elements important to valuation. ? Discounted Cash Flow is based on the concept that investments add value when returns exceed the cost of capital. ? Discounted Cash Flow has support from both research and within the marketplace. The valuation computation includes the following steps: 1. Discounting the future expected cash flows over a forecast period. 2. Adding a terminal value to cover the period beyond the forecast period. 3. Adding investment income, excess cash, and other non-operating assets at their present values. . Subtracting out the fair market values of debt so that we can arrive at the value of equity. Before we get into the valuation computation, we need to ask: What are we trying to value? Do we want to assign value to the equity of the target? Do we value the Target Company on a long-term basis or a short-term basis? For example, the valuation of a company expected to be liquidated is different from the valuation of a going concern. Most mergers and acquisitions are directed at acquiring the equity of the Target Company. However, when you acquire ownership (equity) of the Target Company, you will assume the outstanding liabilities of the target. This will increase the purchase price of the Target Company. Example 1 – Determine Purchase Price of Target Company Ettco has agreed to acquire 100% ownership (equity) of Fulton for $ 100 million. Fulton has $ 35 million of liabilities outstanding. Amount Paid to Acquire Fulton$ 100 million Outstanding Liabilities Assumed 35 million Total Purchase Price$ 135 million Key Point ( Ettco has acquired Fulton based on the assumption that Fulton's business will generate a Net Present Value of $ 135 million. For publicly traded companies, we can get some idea of the economic value of a company by looking at the stock market price. The value of the equity plus the value of the debt is the total market value of the Target Company. Example 2 – Total Market Value of Target Company Referring back to Example 1, assume Fulton has 2,500,000 shares of stock outstanding. Fulton's stock is selling for $ 60. 00 per share and the fair market value of Fulton's debt is $ 40 million. Market Value of Stock (2,500,000 x $ 60. 00) $ 150 million Market Value of Debt 40 million Total Market Value of Fulton$ 190 million A word of caution about relying on market values within the stock market; stocks rarely trade in large blocks similar to merger and acquisition transactions. Consequently, if the publicly traded target has low trading volumes, then prevailing market prices are not a reliable indicator of value. Income Streams One of the dilemmas within the merger and acquisition process is selection of income streams for discounting. Income streams include Earnings, Earnings Before Interest & Taxes (EBIT), Earnings Before Interest Taxes Depreciation & Amortization (EBITDA), Operating Cash Flow, Free Cash Flow, Economic Value Added (EVA), etc. In financial management, we recognize that value occurs when there is a positive gap between return on invested capital less cost of capital. Additionally, we recognize that earnings can be judgmental, subject to accounting rules and distortions. Valuations need to be rooted in â€Å"hard numbers. † Therefore, valuations tend to focus on cash flows, such as operating cash flows and free cash flows over a projected forecast period. Free Cash Flow One of the more reliable cash flows for valuations is Free Cash Flow (FCF). FCF accounts for future investments that must be made to sustain cash flow. Compare this to EBITDA, which ignores any and all future required investments. Consequently, FCF is considerably more reliable than EBITDA and other earnings-based income streams. The basic formula for calculating Free Cash Flow (FCF) is: FCF = EBIT (1 – t ) + Depreciation – Capital Expenditures + or – Net Working Capital ( 1 – t ) is the after tax percent, used to convert EBIT to after taxes. Depreciation is added back since this is a non-cash flow item within EBIT Capital Expenditures represent investments that must be made to replenish assets and generate future revenues and cash flows. Net Working Capital requirements may be involved when we make capital investments. At the end of a capital project, the change to working capital may get reversed. Example 3 – Calculation of Free Cash Flow EBIT$ 400 Less Cash Taxes (130) Operating Profits after taxes 270 Add Back Depreciation 75 Gross Cash Flow 345 Change in Working Capital 42 Capital Expenditures (270) Operating Free Cash Flow 117 Cash from Non Operating Assets * 10 Free Cash Flow$ 127 * Investments in Marketable Securities In addition to paying out cash for capital investments, we may find that we have some fixed obligations. A different approach to calculating Free Cash Flow is: FCF = After Tax Operating Tax Cash Flow – Interest ( 1 – t ) – PD – RP – RD – E PD: Preferred Stock Dividends RP: Expected Redemption of Preferred Stock RD: Expected Redemption of Debt E: Expenditures required to sustain cash flows Example 4 – Calculation of Free Cash Flow The following projections have been made for the year 2005: ? Operating Cash Flow after taxes are estimated as $ 190,000 ? Interest payments on debt are expected to be $ 10,000 ? Redemption payments on debt are expected to be $ 40,000 ? New investments are expected to be $ 20,000 The marginal tax rate is expected to be 30% After Tax Operating Cash Flow$ 190,000 Less After Tax Depreciation ($10,000 x (1 – . 30)) ( 7,000) Debt Redemption Payment (40,000) New Investments (20,000) Free Cash Flow$ 123,000 Discount Rate Now that we have some idea of our income stream for valuing the Target Company, we need to de termine the discount rate for calculating present values. The discount rate used should match the risk associated with the free cash flows. If the expected free cash flows are highly uncertain, this increases risk and increases the discount rate. The riskier the investment, the higher the discount rate and vice versa. Another way of looking at this is to ask yourself – What rate of return do investors require for a similar type of investment? Since valuation of the target's equity is often the objective within the valuation process, it is useful to focus our attention on the â€Å"targeted† capital structure of the Target Company. A review of comparable firms in the marketplace can help ascertain targeted capital structures. Based on this capital structure, we can calculate an overall weighted average cost of capital (WACC). The WACC will serve as our base for discounting the free cash flows of the Target Company. Basic Applications Valuing a target company is more or less an extension of what we know from capital budgeting. If the Net Present Value of the investment is positive, we add value through a merger and acquisition. Example 5 – Calculate Net Present Value Shannon Corporation is considering acquiring Dalton Company for $ 100,000 in cash. Dalton's cost of capital is 16%. Based on market analysis, a targeted cost of capital for Dalton is 12%. Shannon has estimated that Dalton can generate $ 9,000 of free cash flows over the next 12 years. Using Net Present Value, should Shannon acquire Dalton? Initial Cash Outlay$ (100,000) FCF of $ 9,000 x 6. 1944 * 55,750 Net Present Value $ ( 44,250) * present value factor of annuity at 12%, 12 years. Based on NPV, Shannon should not acquire Dalton since there is a negative NPV for this investment. We also need to remember that some acquisitions are related to physical assets and some assets may be sold after the merger. Example 6 – Calculate Net Present Value Bishop Company has decided to sell its business for a sales price of $ 50,000. Bishop's Balance Sheet discloses the following: Cash$ 3,000 Accounts Receivable 7,000 Inventory 12,000 Equipment – Dye 115,000 Equipment – Cutting 35,000 Equipment – Packing 30,000 Total Assets$ 202,000 Liabilities 80,000 Equity 122,000 Total Liab & Equity$ 202,000 Allman Company is interested in acquiring two assets – Dye and Cutting Equipment. Allman intends to sell all remaining assets for $ 35,000. Allman estimates that total future free cash flows from the dye and cutting equipment will be $ 26,000 per year over the next 8 years. The cost of capital is 10% for the associated free cash flows. Ignoring taxes, should Allman acquire Bishop for $ 50,000? Amount Paid to Bishop$ (50,000) Amount Due Creditors (80,000) Less Cash on Hand 3,000 Less Cash from Sale of Assets 35,000 Total Initial Cash Outlay$ (92,000) Present Value of FCF's for 8 years at 10% – $ 26,000 x 5. 3349 138,707 Net Present Value (NPV)$ 46,707 Based on NPV, Allman should acquire Bishop for $ 50,000 since there is a positive NPV of $ 46,707. A solid estimation of incremental changes to cash flow is critical to the valuation process. Because of the variability of what can happen in the future, it is useful to run cash flow estimates through sensitivity analysis, using different variables to assess â€Å"what if† type analysis. Probability distributions are used to assign values to various variables. Simulation analysis can be used to evaluate estimates that are more complicated. Valuation Standards Before we get into the valuation calculation, we should recognize valuation standards. Most of us are reasonably aware that Generally Accepted Accounting Principles (GAAP) are used as standards to guide the preparation of financial statements. When we calculate the value (appraisal) of a company, there is a set of standards known as â€Å"Uniform Standards of Professional Appraisal Practice† or USAAP. USAAP's are issued by the Appraisals Standards Board. Here are some examples: To avoid misuse or misunderstanding when Discounted Cash Flow (DCF) analysis is used in an appraisal assignment to estimate market value, it is the responsibility of the appraiser to ensure that the controlling input is consistent with market evidence and prevailing attitudes. Market value DCF analysis should be supported by market derived data, and the assumptions should be both market and property specific. Market value DCF analysis is intended to reflect the expectations and perceptions of market participants along with available factual data. In developing a real property appraisal, an appraiser must: (a) be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a creditable appraisal; (b) not commit a substantial error of omission or co-omission that significantly affects an appraisal; (c) not render appraisal services in a careless or negligent manner, such as a series of errors that considered individually may not significantly affect the result of an appraisal, but which when considered in aggregate would be misleading. Another area that can create some confusion is the definition of market value. This is particularly important where the Target Company is private (no market exists). People involved in the valuation process sometimes refer to IRS Revenue Ruling 59-60 which defines market value as: The price at which the property could change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. A final point about valuation standards concerns professional certification. Two programs directly related to valuations are Certified Valuation Analyst (CVA) and Accredited in Business Valuations (ABV). The CVA is administered by the National Association of CVA's (www. nacva. com) and the ABV is administered by the American Institute of Certified Public Accountants (AICPA – www. aicpa. org). Enlisting people who carry these professional designations is highly recommended. Chapter 5 The Valuation Process We have set the stage for valuing the Target Company. The overall process is centered around free cash flows and the Discounted Cash Flow (DCF) Model. We will now focus on the finer points in calculating the valuation. In the book Valuation: Measuring and Managing the Value of Companies, the authors Tom Copland, Tim Koller, and Jack Murrin outline five steps for valuing a company: 1. Historical Analysis: A detail analysis of past performance, including a determination of what drives performance. Several financial calculations need to be made, such as free cash flows, return on capital, etc. Ratio analysis and benchmarking are also used to identify trends that will carry forward into the future. 2. Performance Forecast: It will be necessary to estimate the future financial performance of the target company. This requires a clear understanding of what drives performance and what synergies are expected from the merger. 3. Estimate Cost of Capital: We need to determine a weighed average cost of capital for discounting the free cash flows. 4. Estimate Terminal Value: We will add a terminal value to our forecast period to account for the time beyond the forecast period. 5. Test & Interpret Results: Finally, once the valuation is calculated, the results should be tested against independent sources, revised, finalized, and presented to senior management. Financial Analysis We start the valuation process with a complete analysis of historical erformance. The valuation process must be rooted in factual evidence. This historical evidence includes at least the last five years (preferably the last ten years) of financial statements for the Target Company. By analyzing past performance, we can develop a synopsis or conclusion about the Target Company's future expected performance. It is also importa nt to gain an understanding of how the Target Company generates and invests its cash flows. One obvious place to start is to assess how the merger will affect earnings. P / E Ratios (price to earnings per share) can be used as a rough indicator for assessing the impact on earnings. The higher the P / E Ratio of the acquiring firm compared to the target company, the greater the increase in Earnings per Share (EPS) to the acquiring firm. Dilution of EPS occurs when the P / E Ratio Paid for the target exceeds the P / E Ratio of the acquiring company. The size of the target's earnings is also important; the larger the target's earnings are relative to the acquirer, the greater the increase to EPS for the combined company. The following examples will illustrate these points. Example 7 – Calculate Combined EPS Greer Company has plans to acquire Holt Company by exchanging stock. Greer will issue 1. shares of its stock for each share of Holt. Financial information for the two companies is as follows: Greer Holt Net Income$ 400,000 $ 100,000 Shares Outstanding 200,000 25,000 Earnings per Share$ 2. 00$ 4. 00 Market Price of Stock$ 40. 00$ 48. 00 Greer expects the P / E Ratio for the combined company to be 15. Combined EPS = ($ 400,000 + $ 100,000) / (200,000 share s + (25,000 x 1. 5)) = $ 500,000 / 237,500 = $ 2. 11 Expected P / E Ratio x 15 Expected Price of Stock$ 31. 65 Before we move to our next example, we should explain exchange ratios. The exchange ratio is the number of shares offered by the acquiring company in relation to each share of the Target Company. We can calculate the exchange ratio as: Price Offered by Acquiring Firm / Market Price of Acquiring Firm Example 8 – Determine Dilution of EPS Romer Company will acquire all of the outstanding stock of Dayton Company through an exchange of stock. Romer is offering $ 65. 00 per share for Dayton. Financial information for the two companies is as follows: Romer Dayton Net Income$ 50,000 $ 10,000 Shares Outstanding 5,000 2,000 Earnings per Share$ 10. 00$ 5. 00 Market Price of Stock$ 150. 00 P / E Ratio 15 1) Calculate shares to be issued by Romer: $ 65 / $ 150 x 2,000 shares = 867 shares to be issued. 2) Calculate Combined EPS: ($ 50,000 + $ 10,000) / (5,000 + 867) = $ 10. 23 3) Calculate P / E Ratio Paid: Price Offered / EPS of Target or $ 65. 00 / $ 5. 00 = 13 4) Compare P / E Ratio Paid to current P / E Ratio: Since 13 is less than the current ratio of 15, there should be no dilution of EPS for the combined company. 5) Calculate maximum price before dilution of EPS: 15 = price / $ 5. 0 or $ 75. 00 per share. $ 75. 00 is the maximum price that Romer should pay before EPS are diluted. It is important to note that we do not want to get overly pre-occupied with earnings when it comes to financial analysis. Most of our attention should be directed at drivers of value, such as return on capital. For example, free cash flow and economic value added are much more important drivers of value than EPS and P / E Ra tios. Therefore, our financial analysis should determine how does the target company create value – does it come from equity, what capital structure is used, etc.? In order to answer these questions, we need to: 1. Calculate value drivers, such as free cash flow. 2. Analyze the results, looking for trends and comparing the results to other companies. 3. Looking back historically in order to ascertain a â€Å"normal† level of performance. 4. Analyzing the details to uncover how the Target Company creates value and noting what changes have taken place. Value Drivers Three core financial drivers of value are: 1. Return on Invested Capital (NOPAT / Invested Capital) 2. Free Cash Flows 3. Economic Value Added (NOPAT – Cost of Capital) NOPAT: Net Operating Profits After Taxes A value driver can represent any variable that affects the value of the company, ranging from great customer service to innovative products. Once we have identified these value drivers, we gain a solid understanding about how the company functions. The key is to have these value drivers fit between the Target Company and the Acquiring Company. When we have a good fit or alignment, management will have the ability to influence these drivers and generate higher values. In the book Valuation: Measuring and Managing the Value of Companies, the authors break down value drivers into three categories: Type of Value DriverManagement's Ability to Influence Level 1 – GenericLow Level 2 – Business UnitsModerate Level 3 – OperatingHigh For example, sales revenue is a generic value driver (level 1), customer mix would be a business unit value driver (level 2), and customers retained would be an operating value driver (level 3). Since value drivers are inter-related and since management will have more influence over level 3 drivers, the key is to ascertain if the merger will give management more or less influence over the operating value driver. If yes, then a merger and acquisition could lead to revenue or expense synergies. Be advised that you should not work in reverse order; i. e. from level 1 down to level 3. For example, an increase in sales pricing will add more value to level 1, but in the long-run you will hurt customers retained (level 3) and thus, you may end-up destroying value. Once we have identified value drivers, we can develop a strategic view of the Target Company. This strategic view along with drivers of value must be considered in making a performance forecast of the Target Company. We want to know how will the Target Company perform in the future. In order to answer this question, we must have a clear understanding of the advantages that the Target Company has in relation to the competition. These competitive advantages can include things like customer mix, brand names, market share, business processes, barriers to competition, etc. An understanding of competitive advantages will give us insights into future expected growth for the Target Company. Forecasting Performance Now that we have some insights into future growth, we can develop a set of performance scenarios. Since no-one can accurately predict the future, we should develop at least three performance scenarios: . Conservative Scenario: Future growth will be slow and decline over time. 2. General Industry Scenario: Continued moderate growth similar to the overall industry. 3. Improved Growth Scenario: Management has the ability to influence level 1 value drivers and we can expect above average growth. Keep in mind that performance scenarios have a lot of assumptions and many of these assumptions are based on things like future competition, new technologies, changes in the economy, changes in consumer behavior, etc. The end-result is to arrive at a â€Å"most likely† value between the different scenarios. Example 9 – Overall Value per Three Scenarios You have calculated three Net Present Value's (NPV) over a 12 year forecast period. Based on your analysis of value drivers, strategies, competition, and other variables, you have assigned the following values to each scenario: ScenarioProbability xNet Present Value =Expected Value Conservative 20% $ 180,000$ 36,000 Normal 65% 460,000 299,000 M & A Growth 15% 590,000 88,500 Overall Value of Target Company$ 423,500 The Valuation Model should include a complete set of forecasted financial statements. Usually a set of forecasted financial statements will start with the Sales Forecast since sales is a driver behind many account balances. A good sales forecast will reflect future expected changes in sales prices, volumes, and other variables. NOTE: For more information about preparing forecasted financial statements, refer to Short Course 2 – Financial Planning & Forecasting. Two important points when preparing your forecast are: Historical Perspective: Make sure the pieces of your forecast fit together and flow from historical performance. Historical values are very important for predicting the future. You can gain an historical perspective by simply plotting financial trends (see Example 10). Forecast Period: Your forecast period should cover a long enough period for the target company to reach a stable and consistent performance level. For example, a company has reached a stable point when it can earn a constant rate of return on capital for an indefinite period and the company has the ability to reinvest a constant proportion of earnings back into the business. Rarely is the forecast period less than seven years. When in doubt, use a longer forecast than a shorter forecast. The final step in forecasting the financials is to estimate the value drivers and verify the value drivers against historical facts. As we indicated, three core drivers are return on capital, free cash flow, and economic value added. Make sure you test your results; are key drivers consistent with what has happened in the past, what are the trends for future growth, what are the competitive trends, how will this impact performance, etc.? Example 10 – Plotting Historical Trends to help with preparing forecasted financial statements 1990 1991 1992 1993 1994 Operations: Growth in Revenues 14% 12% 11% 11% 10% Growth in Margins 7% 7% 6% 5% 5% Working Capital: Cash 2% 2% 2% 3% 3% Accts Rec 12% 13% 13% 13% 14% Accts Payable 4% 4% 5% 5% 5% Investments: Assets to Sales 30% 31% 28% 29% 28% Return on Capital 14% 12% 13% 13% 12% When we have completed the Valuation Model, we will have a set of forecasted financial statements supporting each of our scenarios: Forecasted Income Statement – 3 Scenarios ? Forecasted Balance Sheet – 3 Scenarios ? Forecasted Free Cash Flows – 3 Scenarios ? Forecasted Return on Capital – 3 Scenarios ? Forecasted Performance Ratios – 3 Scenarios Example 11 – Forecasted Income Statement for Scenario 2 – Moderate ($ million) 2001 2002 2003 2004 2005 2006 2007 Revenues $ 6. 50$ 6. 70 $ 6. 85 $6. 95 $7. 05 $7. 09 $7. 12 Less Operating 3. 20 3. 30 3. 41 3. 53 3. 65 3. 72 3. 78 Less Depreciation . 56 . 54 . 2 . 85 . 80 . 77 . 72 EBIT 2. 74 2. 86 2. 92 2. 57 2. 60 2. 60 2. 62 Less Interest . 405 . 380 . 365 . 450 . 440 . 410 . 390 Earnings Before Tax 2. 335 2. 480 2. 555 2. 12 2. 16 2. 19 2. 23 Less Taxes . 780 . 810 . 870 . 650 . 660 . 71 . 73 Net Income 1. 555 1. 670 1. 685 1. 470 1. 500 1. 48 1. 50 Terminal Values It is quite possible that free cash flows will be generated well beyond our forecast period. Therefore, many valuations will add a terminal value to the valuation forecast. The terminal value represents the total present value that we will receive after the forecast period. Example 12 – Adding Terminal Value to Valuation Forecast Net Present Value for forecast period (Example 9) $ 423,500 Terminal Value for beyond forecast period 183,600 Total NPV of Target Company$ 607,100 There are several approaches to calculating the terminal value: Dividend Growth: Simply take the free cash flow in the final year of the forecast, add a nominal growth rate to this flow and discount the free cash flow as a perpetuity. Terminal value is calculated as: Terminal Value = FCF ( t + 1 ) / wacc – g ( t + 1 ) refers to the first year beyond the forecast period wacc: weighted average cost of capital g: growth rate, usually a very nominal rate similar to the overall economy It should be noted that FCF used for calculating terminal values is a normalized free cash flow (FCF) representative of the forecast period. Example 13 – Calculate Terminal Value Using Dividend Growth You have prepared a forecast for ten years and the normalized free cash flow is $ 45,000. The growth rate expected after the forecast period is 3%. The wacc for the Target Company is 12%. ($ 45,000 x 1. 03) / (. 12 – . 03) = $ 46,350 / . 09 = $ 515,000 If we wanted to exclude the growth rate in Example 13, we would calculate terminal value as $ 46,350 / . 12 = $ 386,250. This gives us a much more conservative estimate. Adjusted Growth: Growth is included to the extent that we can generate returns higher than our cost of capital. As a company grows, you must reinvest back into the business and thus free cash flows will fall. Therefore, the Adjusted Growth approach is one of the more appropriate models for calculating terminal values. Terminal Value = EBIT ( 1 – tr) ( 1 – g / r ) / wacc – g tr: tax rateg: growth rater: rate of return on new investments Example 14 – Calculate Terminal Value Using Adjusted Growth Normalized EBIT is $ 60,000 and the expected normal tax rate is 30%. The overall long-term growth rate is 3% and the weighted average cost of capital is 12%. We expect to obtain a rate of return on new investments of 15%. $ 61,800 ( 1 – . 30 ) ( 1 – . 03 / . 15 ) / (. 12 – . 03) = $ 43,260 ( . 80 ) / . 09 = $ 384,533 If we use Free Cash Flows, we would have the following type of calculation: Earnings Before Interest Taxes (EBIT)$ 60,000 Remove taxes (1 – tr ) x . 70 Operating Income After Taxes 42,000 Depreciation (non cash item) 12,000 Less Capital Expenditures ( 9,000) Less Changes to Working Capital ( 1,000) Free Cash Flow 44,000 Growth Rate @ 3% x 1. 03 Free Cash Flow ( t + 1 ) 45,320 Adjust Growth > Return on Capital x . 80 Adjusted FCF ( t + 1 ) 36,256 Divided by wacc – g or . 12 – . 03 . 09 Terminal Value$ 402,844 EVA Approach: If your valuation is based on economic value added (EVA), then you should extend this concept to your terminal value calculation: Terminal Value = NOPAT ( t + 1 ) x ( 1 – g / rc ) / wacc – g NOPAT: Net Operating Profits After Taxesrc: return on invested capital Terminal values should be calculated using the same basic model you used within the forecast period. You should not use P / E multiples to calculate terminal values since the price paid for a target company is not derived from earnings, but from free cash flows or EVA. Finally, terminal values are appropriate when two conditions exist: 1. The Target Company has consistent profitability and turnover of capital for generating a constant return on capital. . The Target Company is able to reinvest a constant level of cash flow because of consistency in growth. If these two criteria do not exist, you may need to consider a more conservative approach to calculating terminal value or simply exclude the terminal value altogether. Example 15 – Summarize Valuation Calculation Based on Expected Values under Three Scenarios Present Value of FCF' s for 10 year forecast period$ 62,500 Terminal Value based on Perpetuity 87,200 Present Value of Non Operating Assets 8,600 Total Value of Target Company 158,300 Less Outstanding Debt at Fair Market Value: Short-Term Notes Payable ( 6,850) Long-Term Bonds (25 year Grade BB) ( 26,450) Long-Term Bonds (10 year Grade AAA) ( 31,900) Long-Term Bonds ( 5 year Grade BBB) ( 22,700) Present Value of Lease Obligations ( 17,880) Total Value Assigned to Equity 52,520 Outstanding Shares of Stock 7,000 Value per Share ($ 52,520 / 7,000)$ 7. 50 Example 16 – Calculate Value per Share You have completed the following forecast of free cash flows for an eight year period, capturing the normal business cycle of Arbor Company: Year FCF 2001$ 1,550 002 1,573 2003. 1,598 2004. 1,626 2005. 1,656 2006. 1,680 2007. 1,703 2008. 1,725 Arbor has non-operating assets of $ 150. These assets have an estimated present value of $ 500. Based on the present value of future payments, the present value of debt is $ 2,800. Terminal value is calculated using the dividend growth model. A nominal growth rate of 2% will be used. Arbor's targeted cost of capital is 14%. Arbor ha s 3,000 shares of stock outstanding. What is Arbor's Value per Share? Year FCF x P. V. @ 14%Present Value 2001$ 1,550. 8772$ 1,360 2002 1,573. 7695 1,210 003. 1,598. 6750 1,079 2004. 1,626. 5921 963 2005. 1,656. 5194 860 2006. 1,680. 4556 765 2007. 1,703. 3996 681 2008. 1,725. 3506 605 Total Present Value for Forecast Period $ 7,523 Terminal Value = ($ 1,725 x 1. 02) / (. 14 – . 02) = 14,663 Value of Non Operating Assets 500 Total Value of Arbor 22,686 Less Value of Debt( 2,800) Value of Equity 19,886 Shares Outstanding 3,000 Value per Share$ 6. 63 Special Problems Before we leave valuations, we should note some special problems that can influence the valuation calculation. Private Companies: When valuing a private company, there is no marketplace for the private company. This can make comparisons and other analysis very difficult. Additionally, complete historical information may not be available. Consequently, it is common practice to add to the discount rate when valuing a private company since there is much more uncertainty and risk. Foreign Companies: If the target company is a foreign company, you will need to consider several additional variables, including translation of foreign currencies, differences in regulations and taxes, lack of good information, and political risk. Your forecast should be consistent with the inflation rates in the foreign country. Also, look for hidden assets since foreign assets can have significant differences between book values and market values. Complete Control: If the target company agrees to relinquish complete and total control over to the acquiring firm, this can increase the value of the target. The value assigned to control is expressed as: CV = C + M CV: Controlling Value C: Maximum price the buyer is willing to pay for control of the target company M: Minority Value or the present value of cash flows to minority shareholders. If the merger is not expected to result in enhanced values (synergies), then the acquiring firm cannot justify paying a price above the minority value. Minority value is sometimes referred to as stand-alone value. Chapter 6 Post Merger Integration We have now reached the fifth and final phase within the merger and acquisition process, integration of the two companies. Up to this point, the process has focused on putting a deal together. Now comes the hard part, making the merger and acquisition work. If we did a good job with due diligence, we should have the foundation for post merger integration. However, despite due diligence, we will need to address a multitude of issues, such as: ? Finalizing a common strategy for the new organization. We need to be careful not to impose one strategy onto the other company since it may not fit. ? Consolidating duplicative services, such as human resources, finance, legal, etc. ? Consolidating compensation plans, corporate policies, and other operating procedures. ? Deciding on what level of integration should take place. ? Deciding on who will govern the new organization, what authority people will have, etc. It is ironic that in many cases, senior management is actively involved in putting the merger together, but once everything has been finalized, the job of integrating the two companies is dumped on middle level management. Therefore, one of the first things that should happen within post merger integration is for senior management to: ? Develop an overall plan for integrating the two companies, including a time frame since synergy values need to be recovered quickly. If synergy values are dependent upon the target's customers, markets, assets, etc. , then a fast integration process should be planned. If expected synergies come from strategies and intellectual capital of the target, a more cautious approach to integration may be appropriate. ? Directing and guiding the integration process, establishing governance, and assigning project managers to integration projects. ? Leading change through great communication, bringing people together, resolving issues before they magnify, establishing expectations, etc. Once the two companies announce their merger, an entire set of dynamics goes into motion. Uncertainty and change suddenly impact both companies. Several issues need to be managed to prevent the escape of synergy values. Managing the Process The integration of two companies is managed within a single, centralized structure in order to reduce duplication and minimize confusion. A centralized structure is also needed to pull everything together since the integration process tends to create a lot of divergent forces. A Senior Project Team will be responsible for managing post merger integration (PMI). This includes things like coordination of projects, assigning task, providing support, etc. As previously indicated, it is important for both senior management and middle management to share in the integration process: Senior ManagementSenior Project Team Cultural & Social IntegrationFunctional Integration Strategic Fit between the CompaniesSelection of Best Practices CommunicationSet up Task Forces Identify Critical Issues Problem Solving The Senior Project Team will consist of representatives from both companies, covering several functional areas (human resources, marketing, operations, finance, etc. ). Team members should have a very strong understanding of the business since they are trying to capture synergy values throughout PMI. Special task forces will be established by the Senior Project Team to integrate various functions (finance, information technology, human resources, etc. ). Task forces are also used to address specific issues, such as customer retention, non-disruption of operations, retention of key personnel, etc. Task forces can create sub-teams to split an issue by geographic area, product line, etc. All of these teams must have a clear understanding of the reasons behind the merger since it is everybody's job to capture synergies. There is no way senior management can fully identify all of the expected synergies from a merger and acquisition. It is not unusual for some task forces to begin meeting before the merger is announced. If integration begins before announcement of the merger, team members will have to act in a confidential manner, exercising care on who they share information with. The best approach is to act as though a merger will not take place. Example 17 – Timeline leading up to Post Merger Integration (PMI) June 21, 1998: Officers from both companies plan post merger integration. July 17, 1998: Orientation meeting for key management personnel from both companies. July 30, 1998: Project Managers are assigned to Task Forces. August 16, 1998: Launch Task Forces. August 27, 1998: Critical Issues are identified by Task Forces. Set goals and time frames. October 26, 1998: Task Force develops detail plan for PMI. October 30, 1998: Reach consensus on final plan. November 6, 1998: Officers from both companies approve detail integration plans. November 11, 1998: Operating (action steps) are outlined for implementing the PMI Plan. January 17, 1999: Begin Post Merger Integration Example 18 – Outline for Post Merger Integration (PMI) by Senior Task Force or Senior Project Team 1. Assess current situation – where do we stand? 2. Collect information and identify critical issues for integration. 3. Develop plans to resolve critical issues. 4. Obtain consensus and agree on PMI Plan. 5. Train personnel, prepare for integration, work out logistics, map out the process, etc. 6. Implement PMI Plan – conduct meetings, setup teams, provide direction, make key decisions, etc. 7. Revise the PMI Plan – measure and monitor progress, make adjustments, issue progress reports to executive management, etc. . Delegate – Move the integration process down into lower levels of the organization, allow staff personnel to control certain integration decisions, etc. 9. Complete – Move aggressively into full integration, coordinate and communicate progress until integration is complete. Decision Making Post merger integration (PMI) will require very quick decision-making. This is due in part to the fact that fast integration's work better than slow integration's. The new organization has to be established quickly so people can get back to servicing customers, designing products, etc. The more time people spend thinking about the merger, the less likely they will perform at high levels. Many decisions within PMI will be difficult, such as establishing the new organizational structure, re-assigning personnel, selling-off assets, etc. However, it is necessary to get these decisions behind you as quickly as possible since the synergy meter is running. In addition, failure to act will leave the impression of indecisiveness and inability to manage PMI. In order to make decisions, it is necessary to define roles; people need to know who is in charge. People who are responsible for integration should be highly skilled in coordinating projects, leading people, and thinking on their feet while staying focused on the strategies behind the merger and acquisition. People Issues Productivity and performance will usually drop once a merger is announced. The reason is simple; people are concerned about what will happen. In the book The Complete Guide to Mergers and Acquisitions, the authors note that â€Å"at least 360,000 hours of lost productivity can be lost during an acquisition of just a thousand person operation. † Quick and open communication is essential for managing people issues. Constant communication is required for addressing the rumors and questions that arise within PMI. People must know what is going on if they are expected to remain focused on their jobs. Communication should be deep and broad, reaching out to as many people as possible. Face to face communication works best since there is an opportunity for feedback. Even cursory communication is better than no communication at all. â€Å"Get all the facts out. Give people the rationale for change, laying it out in the clearest, most dramatic terms. When everybody gets the same facts, they'll generally come to the same conclusion. Only after everyone agrees on the reality and resistance is lowered can you get buy-in to the needed changes. † – Jack Welch, CEO, General Electric It is also a good idea to train people in change management. Most people will lack the knowledge and skills required for PMI. Immediately after the merger is announced, key personnel should receive training in how to manage change and make quick decisions. People must feel competent about their abilities to pull off the integration. Managing Resistance The failure to manage resistance is a major reason for failed mergers. Resistance is natural and not necessarily indicative of something wrong. However, it cannot be ignored. Four important tools for managing resistance are: Communicate: As we just indicated, you have to make sure people know what is going on if you expect to minimize resistance. Rumors should not be the main form of communication. The following quote from a middle level manager at a meeting with executive management says it all: â€Å"How can I tell my people what needs to be done to integrate the two companies, when I have heard nothing about what is going on. † Training: As we just noted, people must possess the necessary skills to manage PMI. Investing in people through training can help achieve â€Å"buy-in† and thus, lower resistance. Involvement: Resistance can be reduced by including people in the decision making process. Active engagement can also help identify problem areas. Alignment: One way to buffer against resistance is to align yourself with those people who have accepted the merger. Ultimately, it will be the non-resistors who bring about the integration. Do not waste excessive resources on detractors; they will never come around. Closing the Cultural Gap One of the biggest challenges within PMI is to close the cultural divide between the two companies. Cultural differences should have been identified within Phase II Due Diligence. One way of closing the cultural gap is to invent a third, new corporate culture as opposed to forcing one culture onto another company. A re-design approach can include: ? Reducing the number of rules and policies that control people. In today's empowered world, it has become important to unleash the human capacities within the organization. ? Create a set of corporate policies centered around the strategic goals and objectives of the new organization. ? Implement new innovative approaches to human resource management, such as the 360-degree evaluation. Eliminate various forms of communication that continue with the â€Å"old way† of doing things. ? Re-enforce the new ways with incentive programs, rewards, recognition, special events, etc. Specific Areas of Integration As we move forward with the integration process, a new organizational structure will unfold. There will be new reporting structures based on the needs of the new company. Structures are built around workflows. For best results, collaboration should take place between the two companies; mixing people, combining offices, sharing facilities, etc. This collaboration helps pull the new organization together. As noted earlier, a centralized organization will experience less difficulty with PMI than a decentralized organization. Collaboration is also enhanced when there are: ? Shared Goals – The more common the goals and objectives of the two companies, the easier it is to integrate the two companies. ? Shared Cultures – The more common the cultures of the two companies, the easier the integration. ? Shared Services – The closer both company's can come to developing a set of shared services (human resource management, finance, etc. ), the more likely synergies can be realized through elimination of duplicative services. Many functional areas will have to be integrated. Each will have its own integration plan, led by a Task Force. Two areas of concern are compensation and technologies. Compensation Plans: It is important to make compensation plans between the two companies as uniform as possible. Failure to close the compensation gap can lead to division within the workforce. Compensation plans should be designed based on a balance between past practices and future needs of the company. Since lost productivity is a major issue, compensation based on performance should be a major focus. Technologies: When deciding which information system to keep between the two companies, make sure you ask yourself the following questions: ? Do we really need this information? ? Is the information timely? ? Is the information accurate? ? Is the information accessible? One of the misconceptions that may emerge is to retain the most current, leading-edge technology. This may be a mistake since older legacy systems may be well tested and reliable for future needs of the organization. If both systems between the two companies are outdated, a whole new system may be required. Retaining Key Personnel Mergers often result in the loss of key (essential) personnel. Since synergies are highly dependent upon quality personnel, it will be important to take steps for retaining the high performers of the Target Company. The first step is to identify key personnel. Ask yourself, if these people were to leave, what impact would it have on the company? For example, suppose a Marketing Manager decided to resign, resulting in the loss of critical customers. Other people may be critical to strategic thinking and innovation. Once you have a list of key personnel, the next step is to determine what motivates essential personnel. Some people are motivated by their work while others are interested in climbing the corporate ladder. Retention programs are designed around these motivating factors. The third step is to implement your retention programs. Personally communicate with key personnel; let them know what their position will be in the new company. If compensation is a motivating factor, offer key personnel a â€Å"stay† bonus. If people are motivated by career advancement, invite them to important management meetings and have them participate in decision making. Don't forget to reinforce retention by recognizing the contributions made by key personnel. It is also a good idea to recruit key personnel just as if you would recruit any other key management position. This solidifies the retention process. Finally, you will need to evaluate and modify retention programs. For example, if key people continue to resign, then conduct an exit interview and find out why they are leaving. Use this information to change your retention programs; otherwise, more people will be defecting. Retaining Customers Mergers will obviously create some disruptions. One area where disruptions must be minimized is customer service. Once a merger is announced, communicate to your customers, informing them that products and services will not deteriorate due to the merger. Additionally, employees directly involved with customer service cannot be distracted by the merger. If customers are expected to defect, consider offering special deals and programs to reinforce customer retention. As a minimum, consider setting up a customer hotline to answer questions. Finally, do not forget to communicate with vendors, suppliers, and others involved in the value chain. They too are your customers. Measuring PMI The last area we want to touch on is measurement of post merger integration (PMI). Results of the integration process need to be captured and measured so that you can identify problem areas and make corrections. For example, are we able to retain key personnel? How effective is our communication? We need answers to these types of questions if we expect success in PMI. One way of ensuring feedback is to retain the current measurement systems that are in place; especially those involved with critical areas like customer service and financial reporting. Day to day operations will need to be monitored for sudden changes in customer complaints, return merchandise, cancelled orders, production stoppages, etc. New measurements for PMI will have to be simple and easy to deploy since there is little time for formal design. For example, in one case the PMI relied on a web site log to capture critical data, identify synergy projects, and report PMI progress. On-line survey forms were used to solicit input and identify problem areas. A clean and simple approach works best. A measurement system starts with a list of critical success factors (CSF) related to PMI. These CSF's will reflect the strategic outcomes associated with the merger. For example, combining two overlapping business units might represent a CSF for a merger. From these CSF's, we can develop key performance indicators. Collectively, a complete system known as the Balanced Scorecard can be used to monitor PMI. Process leaders are assigned to each perspective within the scorecard, collecting the necessary data for measurement. Example 19 – Balanced Scorecard for Post Merger Integration (PMI) PerspectiveKey Performance Indicator Customers- Retention of Existing Customers – Efficiency in Delivering Services Financial- Synergy Components Captured to Date â€Å"- Timely Financial Reporting â€Å"- Timely Cash Flow Management Operational- Completion of Systems Analysis â€Å"- Reassignments to all Operating Units â€Å"- Resources Allocated for Workloads Human Resource- Percentage of Personnel Defections â€Å"- Change Management Training â€Å"- Communication Fe edbacks Organizational- Cultural Gaps between company's â€Å"- Number of Critical Processes Defined â€Å"- Lower level involvement in integration Chapter 7 Anti-Takeover Defenses Throughout this entire short course (parts 1 & 2), we have focused our attention on making the merger and acquisition process work. In this final chapter, we will do just the opposite; we will look at ways of discouraging the merger and acquisition process. If a company is concerned about being acquired by another company, several anti-takeover defenses can be implemented. As a minimum, most companies concerned about takeovers will closely monitor the trading of their stock for large volume changes. Poison Pills One of the most popular anti-takeover defenses is the poison pill. Poison pills represent rights or options issued to shareholders and bondholders. These rights trade in conjunction with other securities and they usually have an expiration date. When a merger occurs, the rights are detached from the security and exercised, giving the holder an opportunity to buy more securities at a deep discount. For example, stock rights are issued to shareholders, giving them an opportunity to buy stock in the acquiring company at an extremely low price. The rights cannot be exercised unless a tender offer of 20% or more is made by another company. This type of issue is designed to reduce the value of the Target Company. Flip-over rights provide for purchase of the Acquiring Company while flip-in rights give the shareholder the right to acquire more stock in the Target Company. Put options are used with bondholders, allowing them to sell-off bonds in the event that an unfriendly takeover occurs. By selling off the bonds, large principal payments come due and this lowers the value of the Target Company. Golden Parachutes Another popular anti-takeover defense is the Golden Parachute. Golden parachutes are large compensation payments to executive management, payable if they depart unexpectedly. Lump sum payments are made upon termination of employment. The amount of compensation is usually based on annual compensation and years of service. Golden parachutes are narrowly applied to only the most elite executives and thus, they are sometimes viewed negatively by shareholders and others. In relation to other types of takeover defenses, golden parachutes are not very effective. Changes to the Corporate Charter If management can obtain shareholder approval, several changes can be made to the Corporate Charter for discouraging mergers. These changes include: Staggered Terms for Board Members: Only a few board members are elected each year. When an acquiring firm gains control of the Target Company, important decisions are more difficult since the acquirer lacks full board membership. A staggered board usually provides that one-third are elected each year for a 3 year term. Since acquiring firms often gain control directly from shareholders, staggered boards are not a major anti-takeover defense. Super-majority Requirement: Typically, simple majorities of shareholders are required for various actions. However, the corporate charter can be amended, requiring that a super-majority (such as 80%) is required for approval of a merger. Usually an â€Å"escape clause† is added to the charter, not requiring a super-majority for mergers that have been approved by the Board of Directors. In cases where a partial tender offer has been made, the super-majority requirement can discourage the merger. Fair Pricing Provision: In the event that a partial tender offer is made, the charter can require that minority shareholders receive a fair price for their stock. Since many states have adopted fair pricing laws, inclusion of a fair pricing provision in the corporate charter may be a moot point. However, in the case of a two-tiered offer where there is no fair pricing law, the acquiring firm will be forced to pay a â€Å"blended† price for the stock. Dual Capitalization: Instead of having one class of equity stock, the company has a dual equity structure. One class of stock, held by management, will have much stronger voting rights than the other publicly traded stock. Since management holds superior voting power, management has increased control over the company. A word of caution: The SEC no longer allows dual capitalization's; although existing plans can remain in effect. Recapitalizations One way for a company to avoid a merger is to make a major change in its capital structure. For example, the company can issue large volumes of debt and initiate a self-offer or buy back of its own stock. If the company seeks to buy-back all of its stock, it can go private through a leveraged buy out (LBO). However, leveraged recapitalizations require stable earnings and cash flows for servicing the high debt loads. And the company should not have plans for major capital investments in the near future. Therefore, leveraged recaps should stand on their own merits and offer additional values to shareholders. Maintaining high debt levels can make it more difficult for the acquiring company since a low debt level allows the acquiring company to borrow easily against the assets of the Target Company. Instead of issuing more debt, the Target Company can issue more stock. In many cases, the Target Company will have a friendly investor known as a â€Å"white squire† which seeks a quality investment and does not seek control of the Target Company. Once the additional shares have been issued to the white squire, it now takes more shares to obtain control over the Target Company. Finally, the Target Company can do things to boost valuations, such as stock buy-backs and spinning off parts of the company. In some cases, the target company may want to consider liquidation, selling-off assets and paying out a liquidating dividend to shareholders. It is important to emphasize that all restructurings should be directed at increasing shareholder value and not at trying to stop a merger. Other Anti Takeover Defenses Finally, if an unfriendly takeover does occur, the company does have some defenses to discourage the proposed merger: 1. Stand Still Agreement: The acquiring company and the target company can reach agreement whereby the acquiring company ceases to acquire stock in the target for a specified period of time. This stand still period gives the Target Company time to explore its options. However, most stand still agreements will require compensation to the acquiring firm since the acquirer is running the risk of losing synergy values. 2. Green Mail: If the acquirer is an investor or group of investors, it might be possible to buy back their stock at a special offering price. The two parties hold private negotiations and settle for a price. However, this type of targeted repurchase of stock runs contrary to fair and equal treatment for all shareholders. Therefore, green mail is not a widely accepted anti-takeover defense. 3. White Knight: If the target company wants to avoid a hostile merger, one option is to seek out another company for a more suitable merger. Usually, the Target Company will enlist the services of an investment banker to locate a â€Å"white knight. † The White Knight Company comes in and rescues the Target Company from the hostile takeover attempt. In order to stop the hostile merger, the White Knight will pay a price more favorable than the price offered by the hostile bidder. 4. Litigation: One of the more common approaches to stopping a merger is to legally challenge the merger. The Target Company will seek an injunction to stop the takeover from proceeding. This gives the target company time to mount a defense. For example, the Target Company will routinely challenge the acquiring company as failing to give proper notice of the merger and failing to disclose all relevant information to shareholders. 5. Pac Man Defense: As a last resort, the target company can make a tender offer to acquire the stock of the hostile bidder. This is a very extreme type of anti-takeover defense and usually signals desperation. One very important issue about anti-takeover defenses is valuations. Many anti-takeover defenses (such as poison pills, golden parachutes, etc. ) have a tendency to protect management as opposed to the shareholder. Consequently, companies with anti-takeover defenses usually have less upside potential with valuations as opposed to companies that lack anti-takeover defenses. Additionally, most studies show that anti-takeover defenses are not successful in preventing mergers. They simply add to the premiums that acquiring companies must pay for target companies. Proxy Fights One last point to make about changes in ownership concerns the fact that shareholders can sometimes initiate a takeover attempt. Since shareholders have voting rights, they can attempt to make changes within a company. Proxy fights usually attempt to remove management by filling new positions within the Board of Directors. The insurgent shareholder(s) will cast votes to replace the current board. Proxy fights begin when shareholders request a change in the board. The next step is to solicit all shareholders and allow them to vote by â€Å"proxy. † Shareholders will send in a card to a designated collector (usually a broker) where votes are tallied. Some important factors that will influence the success of a proxy fight are: 1. The degree of support for management from shareholders not directly involved in the proxy fight. If other shareholders are satisfied with management, then a proxy fight will be difficult. 2. The historical performance of the company. If the company is starting to fail, then shareholders will be much more receptive to a change in management. 3. A specific plan to turn the company around. If the shareholders who are leading the proxy fight have a plan for improving performance and increasing shareholder value, then other shareholders will probably support the proxy fight. Proxy fights are less costly than tender offers in changing control within a company. However, most proxy fights fail to remove management. The upside of a proxy fight is that it usually brings about a boost in shareholder value since management is forced to act on poor performance. It is worth noting that proxy fights are sometimes led by former managers with the Target Company who recognize what needs to be done to turn the company around. In any event, studies clearly show that changes in management are much more likely to occur externally (tender offers) as opposed to internally (proxy fights). Course Summary A merger is like a marriage; the two partners must be compatible. Each side should add value so that together the two are much stronger. Unfortunately, many mergers fail to work. Overpaying for the acquisition is a common mistake because of an incomplete valuation model. Therefore, it is essential to develop a complete valuation model, including analysis under different scenarios with recognition of value drivers. A good starting point for determining value is to extend the Discounted Cash Flow Model since it corresponds well to market values. Core value drivers (such as free cash flows) should be emphasized over traditional type earnings (such as EBITDA). Some key points to remember in the valuation process include: 1. Most valuations will focus on valuing the equity of the Target Company. 2. The discount rate used should match-up with the associated risk of cash flows. . The forecast should focus on long-term cash flows over a period of time that captures a normal operating cycle for the company. 4. The forecast should be realistic by fitting with historical facts. 5. A comprehensive model is required based on an understanding of what drives value for the company. 6. The final forecast should be tested against independent sources. If pre merger pha ses are complete, we can move forward to integrate the two companies. This will require the conversion of information systems, combining of workforces, and other projects. Many failures can be traced to people problems, such as cultural differences between the companies, which can lead to resistance. Additionally, if you fail to retain key personnel, the integration process will be much more difficult. The best defense against personnel defections is to have a great place to work. If the company has a bad reputation as an employer, then defections will surely occur. Some of the risk factors associated with post merger integration are: 1. What level of integration do we implement? 2. What can we do to retain key personnel? 3. How serious are the cultural differences between the companies? . What kinds of conflicts and competition can we expect during integration? 5. To what extent do the people of both company's understand the merger? 6. Who will govern and control the new company? Success with post merger integration is improved when: 1. The two companies have a history of effective planning and strategizing. 2. The two companies have a history of succ essful change management. 3. The merger will improve the strategies