Every manufacturer of the children’s products, being a part of business organization has the responsibilities to the consumers and the society. Every business organization tries very hard to survive by the effective use of factors of production and other facilities of the society. With the help of this process the organization get into an interdependent relation with the community at large, the environment and the target customers. Such interdependence gives rise to a series of broader responsibilities to society and the targeted customers.
According to the business environment theory of Palmer and Hartley, the business organization should act in social responsible manner in two different ways, one philosophic and one pragmatic. The philosophical way includes the model of the organizational requirement and other includes the social values of the society which is very important for an organization to resist in the social market.
Every organization has a responsibility towards the consumers and the society and that particular responsibility is being termed as Corporate Social responsibility, which can be defined as economic, legal, ethical and different expectations that a society has from an organization. The concept of corporate social responsibility means that organizations have moral, ethical, and philanthropic responsibilities.
Previously many organizations opposed consumerism but now most companies have grown to accept the responsibilities towards customers and the society. The philosophy of enlightened marketing says that even the marketing practices should also be socially responsible which consist consumer oriented marketing and societal marketing which aims at serving and satisfying the needs and wants of the customers and to produce such products which are not only pleasing but also beneficial.
As a manufacturer of the products which are specially designed for the children the, the manufacturer has some special responsibilities to consumers and society, because children often lack the literacy to completely understand how things may work, the toys must be safe in all use including non-intended use in order to protect the children. The manufacturers should not only create the safe toys but they must also be sensitive to the societal concerns on children’s rights and privacy.
Manufacturers of the children’s product specially have obligations to the consumers. This is in assurance that children continue to have highest levels of protection when it comes to toys. An obligation that manufacturer do is that manufacturers must carry out assessments as it relates to safety and health hazards and add to it technical information on specific such as chemicals, in order to support findings and present accurate information. The warning should be put on certain toys to indicate what the intended age is for use of the toy. Moreover after all testing is done on the toys, if any toy or part is significantly under the standard, then it must be destroyed in order to prevent the public from gaining access to it in any way, shape, or form.
When we talk about Mattel that how Mattel has met the responsibilities then the things are quite clear the Mattel did it by creating such a product that consumers and parents trust and building a successful and positive brand image. They also integrate this responsibility with their “Corporate responsibility” report in which they state their goals are to ensure product safety, volunteer in communities, and treat colleagues with respect in order to work hard to be a leader in making our communities and the lives of the children better.
The core brands of Mattel are Barbie, Hot wheels, Fisher price, and American Girl. Each brand clearly has its own demography, each brand catering to infants and preschoolers, Girls, Boys and those adults that are still young at heart. One of the strengths of the brand “Mattel” is the rich history of the company. The company began in 1945 out of a small and simple idea that started in a garage workshop. Each brand also has good staying power at the forefront of their market.
The evidences that show the strengths of Mattel in the area of fulfillment of the responsibilities to the customers and the society special as the manufacturer of children’s products are.
Mattel recognizes international environment, different legal systems and cultural expectations, and the use of technology especially with regard to consumer privacy and has taken steps to strengthen its commitment to business ethics and social responsibility.
Mattel recently published its first “Corporate Social Responsibility” report, including a strong statement about its commitment to economic, legal, ethical and philanthropic responsibilities which includes commitment to product safety, volunteering in a community, developing a best practice or even treating colleagues with respect and dignity.
Makers of American Girl collection provided $449,500 in grants to support children’s projects as environmental education for elementary school children, various cultural programs and a performing arts series for children.
The Barbie brand debuted a worldwide cause related-program called “Barbie Cares: Supporting children in the Arts” dedicated to supporting Arts education for children funded by a $2 million donation to the Entertainment Industry Foundation.
The weaknesses of Mattel in the same area are.
The Children’s privacy- Mattel’s attempts to follow their market into the technological realm have included the development of a number of children-friendly websites to accompany their toys. Targeting children with internet sites, however, brings about extra concerns. Mattel must be very careful to protect their legal and moral reputations by respecting the privacy of the children and their families, which is put in jeopardy every time the website asks a minor to provide information.
Lack of total control over business partners-Though Mattel has embarked on the Global manufacturing Principles (GMP) and regular social audits, Mattel cannot intensively monitor the business processes and activities of its partners. There is no guarantee that its business partners will completely comply with Mattel’s corporate social responsibility (CSR), ethical business conducts and product safety requirements. Mattel somehow could be facing legal actions and criticisms from various stakeholders around the world.
Q.2- Comment on the strengths and weaknesses of Mattel’s core brands. In looking at Barbie specifically, has Mattel’s success with the American Girl collection cannibalized sales from Barbie? Explain.
Mattel’s core brands have multiple strengths. Mattel’s image overall is one of which parents and consumers trust. The Barbie brand is highly accessorized allowing for multiple products to be marketed and purchased. Other brands such as Hot Wheels and American Girl also have the flexibility to accessorize and customize consumer needs and desires. Some weaknesses that Mattel’s core brands may have are the lifespan of their products. As children grow older, they are no longer interested in playing with dolls and cars such as Barbie and Hot wheels and the life span of the product shortens for continual use.
The strengths of the Mattel’s core brands are-
1. Barbie is Mattel’s flagship brand and its number one seller-routinely accounting for more than 50 percent of Mattel’s sales revenue.
2. Barbie was the only Mattel brand that made the list of the 2002 “The 100 Best Global Brands”.
3. American Girl is targeted for girls in from 7 – 12 years old. This is due to different taste in different target market.
4. American girl is a well-known line of a historical dolls, books and accessories.
Intense demand of the product-
Barbie- Captured the attention of girls under 7 years old that resulted in high demand. The intense demand seen at the retail stores was insufficiently met for several years.
Barbie- The best-selling fashion dolls in most global market with $2 billion in worldwide sales annually and more than 1 billion dolls sold in four decades.
Mattel redesigned Barbie to more naturally reflect a normal athletic woman in an attempt to meet the demands for a more realistic doll.
Opening of American Girl Place shops New York, Chicago and Los Angeles. The New York store features three floors of dolls, accessories, and books in the heart of the 5th Avenue shopping district. The store offers a cafe where girls can dine with their dolls and a stage production where young actresses bring American Girl stories to life.
Product variety and differentiation of the product-
Barbie has taken on an extension of different characters, family and friends, and profession.
For Barbie, there are Barbie clothing for children, computers and digital cameras with Barbie theme. This is done to recapture more customers and expand their market to attract girls after the age of 7.
For American girl, they have books, accessories and even a Store that offers a café for girls. This has resulted in an increase the product variety for both brands that generates more revenues.
Mattel introduced the new line of My Scene dolls aimed at “Tweens” with as trendier, young looking and are considered to be more hip for girls of age group above 7.
Other efforts targeted at “Tweens” include the Mystery Squad, a crime-solving crew, and the Barbie Doll as Elle Woods, which is a tribute to the blond character in the MGM Pictures film Legally Blond 2.
The weaknesses of Mattel’s core brands include-
Foreign Market Customization being ineffective-Traditional Barbie has triggered the possibility of banned in Malaysia by the Malaysian Consumers’ Association of Penang, due to her non-Asian appearance and the lack of creativity but it was not success. Some other cases like in Iran, the non-Islamic characteristics of Barbie and western influences resulted in the confiscation of Barbie doll from toy stores. In Russia, it is interpreted as harmful to young minds that awaken sexual impulses and consumerism among infants. This creates a negative brand images that can bring loss to Mattel.
Not only children are leaving tangible toys at earlier ages, but the impact of the global market is affecting the success of Mattel. Mattel’s Barbie is well recognized throughout the global market, but is not considered appropriate in all cultures which are one of the weaknesses of the core brand of Mattel in the international market.
The problem of limited distribution networks of American girl in the international market is also found to be one of the weakness of Mattel’s core brand, it is been seen that American girl is sold exclusively through catalogues and different stores in New York, Los Angeles and Chicago but there is no evidence or details of the product sold in international market. Even though there has been lots of product innovation of the Barbie but its slipping popularity failed it to be the top five selling dolls due to competition in the market.
If we talk about the Cannibalization of American girl’s sales from Barbie several points came into light which tells that American girl has out-performed the sales of Barbie as-
1. Barbie had been successfully catered only to the young girls of 7 years old and below.
2. American Girl has a better image. American Girl dolls have a wholesome and educational image- the antithesis to Barbie. The retro versions of Barbie dolls, feature Hooker Barbie, Trailer Trash Barbie and Drag Queen Barbie are seen less decent than the image of American girl. These points explain the Cannibalization sales of American girl from Barbie.
Q-3- What are the opportunities and threats that Mattel faces as it looks ahead?
Mattel has lots of opportunities as it moves ahead with its product in the market. The opportunities of Mattel’s product in international markets include its venture into more interactive, educational and product line as today children are prefer to spend time with music, movies or on the Internet. The American toy market is becoming increasingly saturated and competitive, along with a downward shift in age of when children abandon tangible toys such Hot Wheels and Barbie for more interactive and technological products. If Mattel continues with the same product it provides better opportunities to grow ahead in the domestic market.
All of Mattel’s core brands are instantly recognizable around the world. Therefore, Mattel has the ability to highly leverage one or all of these brands. Mattel can expand more to international distribution networks apart its reliance on Wall Mart and target hypermarkets like Giant (Malaysia), Carrefour, Cold Storage and local toy distribution network could make Mattel’s products highly visible in the international market which would led Mattel to have a better future prospects ahead.
Mattel can also have an alliance with an Asian company, Bandai, which can prove very beneficial as numerous eastern countries open their markets to western goods. This market has been left largely untapped, and offers a huge increase in customer base.
Finally, Mattel must address is that of selling its products in foreign markets. An important aspect of going global is being able to adapt to different cultures and to break down cultural barriers. Mattel has done a little bit of this with the changing of the product packaging, and some of their Barbie lines. However, there are still some countries that are boycotting Mattel because they are offended by some of their products that are being sold. While Mattel is expanding their product lines, they need to take into consideration the message each of their products is conveying.
By conducting market research, Mattel can find out what values are important in foreign markets. If Mattel neglects to customize to all of their markets, their new products can fail overseas, and therefore the company as a whole will not be able to expand.
The threat that Mattel faces as it looks ahead is that the market is shifting away from tangible toys, which account for a majority of Mattel’s core products. Children are adopting more interactive and electronic toys earlier in age today, eroding Mattel’s primary market of children under the age of 10. This has already forced Mattel to enter, and may force Mattel to further their involvement in the technological realm, a product category in which the firm has performed very poorly. Young customers have less time spending on traditional toys today and the same is expected in the future.
Intense competition from other toy-makers like Bratz has slowed down the sale of the Mattel’s product Barbie worldwide and the realization of Mattel for its product distribution mainly on Wal-Mart and Target diminishes its pricing power.
Mattel has also experienced problems breaking into foreign markets due to cultural barriers. The Chinese found it offensive that the Barbie doll did not represent, the Russians believe that the doll promotes adolescents to think in a promiscuous fashion at a young age, and the Islamic countries find that the doll goes against their religion with regards to the role and image of women. The foreign market will be very prosperous for Mattel if they can structure their entry into the market appropriately.
Q-4 – If you could make only one recommendation to Mattel, what would be it?
According to the case, we find that Mattel in the United States, Europe and Latin America market growth is more and more slow, even appear saturation sign, although they try to into Iran and Russia market, but due to without considering the cultural differences lead to sales were almost forced to withdraw from there. So our proposal is in full consideration of cultural and religious differences influence, produce to accord with other local culture habit of products, continue to develop and enter into the emerging market, such as Asia’s China and Africa, which support the company’s globalization strategy, and realize the great-leap-forward development.
Through the Mattel in Iran market failure we recognize that if a company would like to sell their products to abroad, it must pay attention to the product whether will conflict with local customs and culture, once things happen, be sure to adjust. As is known to all, the Barbie doll is Mattel’s most famous product, which is fashion and filled with the western world liberal breath. But in Iran, such as makeup and revealing clothes, are not wanted in a society where women must wear head scarves in public and men and women are not allowed to go to the poll or beach together (page 484 of case study). So if Mattel want to re-enter Iran market in the future, must adjust their products style.
On the other hand, in order to expand the market, increase sales, Mattel should seize the opportunity into some of the good prospects for emerging markets, especially Chinese market, which is a toy production country, it is estimated that China toy enterprise has more than 6000, about 75% of the toys made in China over the world. The toy market size of mainland has the rapid development. In children’s toys market as an example, toy sales from 2.13 billion RMB in 2001 to 4.44 billion RMB in 2006, which raised by 108%, with an average annual growth rate of 15.8%. The mainland toy market rise space is enormous. From toy joint network industry report, China’s per capita consumption in toy only 20 – 30 RMB (2.4-3.6 dollars), far lower than per capita consumption in Asian children toys $13 and children all over the world in per capita consumption level of $34 toys. If they reach the Asian average level, children’s toys market scale is expected to will exceed 30 billion RMB. (Long long, M.2006)
In the business strategies, because China’s toy productions are mostly applied in the low-standard level, breed is monotonous, mainly plush and wooden material. However, the mainland local toys and international brand compared with large price gap, so the low-standard market has a strong competitive power, the general basic monopoly wholesale market and vendors, and other sales pipeline. So Mattel should positioning in high-end, give full play to their own advantages, for example, in a Barbie doll legend marketing history story, telling the story is always the conventional methods. They sell toys as well sell a way of life. According to Mattel’s design, Barbie have their own lives, thoughts, need a friend, like to dress up, have belong to him “fairy tale world”. Make good use of this advantage, the company entered into the China market is no longer a dream. (Li, L.2011)
Like many foreign brands to enter the Chinese market, Mattel need pay enough time and patience. After all, in China’s such a big Oriental country, want to get common identity is not a simple matter. But one thing is sure, respect local culture and customs is very important and necessary.
Q-5 -How can Mattel reverse the decline in Barbie’s sales? Should Mattel give up on Barbie and accept that fact that the brand will never regain its former sales status? Explain.
Mattel, Inc. (“Mattel”) designs, manufactures, and markets a broad variety of toy products worldwide which are sold to its customers and directly to consumers. Mattel’s vision is “creating the future of play.” Mattel’s objectives are to grow its share in the marketplace, sustain gross margins of about 50%, leverage its scale to deliver cost savings and lower its selling and administrative costs, and create long-term stockholder value.
Barbie doll happiness concept is based on human sensibility, through happiness brand image and happy shopping experience to satisfy consumer demand happy emotion, so that consumers will be product or brand with the happy feeling together, then will be happy with the product or brand linked, to stimulate consumption desire and to promote the marketing concept of consumers’ purchasing behavior.
The concept of” Barbie” has not only toys, and became an immortal symbol of American culture. Until now, the business of “Barbie” bigger and bigger, not only toys, books, clothing, cosmetics, movies and electronic games. Even today, see any one of the two in standard, sexy blonde doll, almost all of people were not consciously known as “Barbie”¼Œwhether this doll is not Mattel produced. This is also proved “Barbie industry is how success. As a result of population, technology and social change, Mattel is undergoing modernization, Mattel, in my opinion, cannot reverse the decline of Barbie sales. Although there are still to be improved, Mattel weakness seems to be far less than they were just a few years ago.
Specifically, the Mattel Inc. has some very famous brand. The largest is Barbie doll, and now accounts for more than half of the company’s revenue. However, the most interesting news for Mattel declining popularity rate of its core products Barbie doll. As of 2002, Barbie out of the top five best-selling. Mattel Inc. subsequently has been undertaken to reclaim market share items, such as computer software and the girl’s clothing line of Barbie doll. Barbie has tried to fight back. Internet becomes another weapon to reverse the sales decline in 2007; Mattel launched a brand new Barbie Girls. com site where kids can create their own virtual Barbie, and placed in a virtual commercial buildings can also directly involved in product design. The girls also can have around Barbie’s virtual community space, this was considered a breakthrough attempt, also let Mattel in sales for 7 consecutive years after the decline appeared to pick up. Mattel is also faced with many cultural barriers, these need to overcome the market penetration strategy will be successful. Lack of understanding of cultural replacement, the brand awareness of self-protection is too strong, the Barbie doll isolated in new era outside, so that the target consumers become more and more narrow. Unresponsive market, the Mattel have not been able to guide the trend, the competitors took the opportunity to split its market share Andin the occasion of Mattel Barbie doll become fashionable rage, the former Mattel CEO Jill made a series of mistakes and expensive acquisitions, to make the world’s largest toy manufacturer long-term stock price in a slump. In addition, Mattel in new product launch, behave not just as one wishes, the new design style also no expectation. These are all Mattel’s malpractice.
Sweet chocolate, eat more will be tired. Barbie’s decline has a deep-rooted cultural factors and the impact of social thought, to give people a profound inspiration. We can see that the United States of America culture is moving toward a diversified ethnic culture, to encourage the pursuit of self-direction stride, and popular culture trend change quickly. Mattel ignore this value orientation, or excessive protection is of brand ego blinded their visions, do not have a proper understanding o of the mind of the public, lost the lead market opportunities. After opponents successfully host, Mattel still did not take timely measures, wait for the opponent create a certain threat after to respond but too weak. Finally, caused the market share to be cut, the lesson is painful.
The first thing Mattel need to do is solve the inner problem, straighten a relation, in order to solve the problem of providing external guarantee. For the external development of Mattel, the problems which should be paid attention to, not in order to cope with the market competition and to launch new products with the opponent, but in the consolidation of existing customers on the Barbie dolls loyalty. They are supporting the Barbie dolls core strength, so that through interaction and understanding of their needs, provide their satisfaction with the program to maintain this part of customers. In order to consolidate the customer base, and prevent competitors directly off the market share.
With the development of computer and networks, such as Face book and Twitter applications, Barbie doll will be able to control its sales decline. This is a very expensive to change their production and advertising means. The only advantage of this strategy, both short-term and long-term within, they will not bear any additional costs. In this way, Mattel can use their own resources make full use of social networking technology environmental advantage in price, and try to participate in the market competition. Having the correct marketing strategy and innovative products Barbie doll product line, will become more interactive and educational products, Mattel can still create the market to meet their needs. Also around the world set up Barbie doll flagship store, experiential marketing, will drive the Mattel sales market, strive for the biggest market share.
Telecommunications has transformed from a simple method of voice communication to one of the most important methods that our society uses to connect. In particular the cell phone and its wireless descendants like the Smartphone have come to dominate this realm of technology. One of the companies leading the change in wireless devices and technology is Verizon. The purpose of this report is to analyze the internal and external aspects of Verizon Corporation and propose solutions to maintain their dominance in this industry. The internal analysis will include the history, objectives, value chain analysis, current strategies, market, financial performance, and relevant information regarding the internal factors of the firm. The external analysis will include overview of the industry and the general environment. We will also discuss the issues we found with Verizon Communications and suggest solutions they should consider implementing.
The Bell Atlantic-NYNEX wireless partnership marked the beginnings of Verizon Wireless. “Verizon Wireless” was introduced in April 2000 and on June 30, 2000 Verizon Wireless Incorporated was formed. Verizon’s mission statement reflects on the importance of their customer base and business practices:
As a leader in communications, Verizon’s mission is to enable people and businesses to communicate with each other. They are also committed to providing full and open communication with their customers, employees and investors. Verizon’s value statement keys on their fundamental beliefs, such as putting customers first, integrity, respect, performance excellence, and accountability (verizon.com 2011).
Verizon’s objective is to create the future of communications by ushering in a new era in wire line and wireless broadband connectivity. They are transforming their networks, products and services to provide their customers with the best possible communications experience at home, work or on-the-go. Verizon’s strategic investments have created the nation’s most reliable wireless voice network, delivered a portfolio of innovative mobile products and produced over 43 million loyal customers. They are also transforming their wire line networks to deliver superior broadband services. Because of their commitment to innovation and investment, their customers are better informed, better entertained and better connected to the things that matter most to them. Verizon is transforming their revenue base around the growth markets of the future and positioning themselves to compete for an increasing share of the new markets being created by broadband and wireless technologies.
One of Verizon’s array of strengths is that they are the largest provider of wireless and broadband communication in America. In America, it is available in twenty eight states and has a customer base of 49.3 million. Verizon added value to their human capital with the merger of the companies, thus gaining individuals with invaluable experience. Another strength, is that the company has four business segments; Domestic Wireless, Domestic Telecom, Information Services and International. From these four segments the company generates annual revenues reported to be more than $106 million (finance.yahoo.com). The diversification of technology found at Verizon Communications is also one of its strengths.
Although Verizon has its strengths, they also recognize their weaknesses. As mentioned before, Verizon was formed due to a merger. The two merging companies had different cultures resulting in conflicts of beliefs, norms and philosophies. The dominance of the diverse cultures has resulted in mixed practices being followed in different areas of the company. One of the major weaknesses affecting Verizon is that the company has been in debt for long term. However; Verizon is working on building their profitability to recover from this long-term debt.
To solidify their status as a leader in the industry, Verizon must identify their opportunities and pursue them. Verizon has been serving as a local exchange carrier in many areas, which gives them a strong position in comparison with their competitors. Growing needs for communication has resulted in potential markets for the company to enter, which include local, global, business, government and residential markets. Brand recognition has given Verizon opportunity to launch new services and products in the future, such as the Apple iPhone.
The threats that Verizon faces include the decline in the use of landlines since wireless networks have been on the rise. Landlines demand is considerably being decreased in the 21st Century. Many wireless and wire line services are now being offered by local as well as global companies. The competition is harsh and customers have a wide variety of available substitutes. Due to the economic recession all over the world, customers are cutting down their expenses to reduce their telecommunications services.
In terms of the legal/political segment of the macro-environment, Verizon has to keep watch of laws that relate to cell phone usage within school zones and cell phone driving laws in general. For example, in San Antonio it is now illegal for drivers to use cell phones without hands-free devices in school zones. In addition, there are laws in Texas which prohibit drivers under the age of eighteen from using “wireless communications devices”, they also say that those who hold learners permits are prohibited from using hand-held cell phones in the first six months of driving and that school bus operators are prohibited from using cell phones while driving if children are present (http://handsfreeinfo.com/texas-cell-phone-laws-legislation). Verizon should keep these laws in mind when developing new products; in particular any cell phones that they make should be compatible with hands-free devices in order to keep up with their demand as these types of laws continue to increase across the country and around the world.Verizon must also keep a watchful eye over the recent Middle East protests which have resulted in some of the governments in countries such as Egypt blocking cell phone and Twitter use (http://www.guardian.co.uk/world/blog/2011/jan/26/egypt-protests).
In regards to the technological segment of the macro-environment, new innovations have developed such as the iPhone, iPad and others which blur the line between cell phones and computers. For example, new wireless standards such as 4G LTE will allow consumers to download data at speeds up to 12 mbps (http://news.vzw.com/news/2011/03/pr2011-03-22c.html). In addition, there are developments in hardware technology such as touch-less gesture interface where users are able to control their cell phones by waving their arms or moving their hands, which “could be useful for controlling a cell phone while in a car” (http://reviews.cnet.com/8301-13970_7-20032732-78.html?tag=mncol;posts) . This would be relevant, considering what was stated above in the legal and political segment of the macro-environment.
In terms of the Global segment of the macro-environment, the number of cell phone subscriptions will continue to rise along with demand for mobile access to the Internet, even in developing countries with regards to health care and banking. According to an article from cnet, the International Telecommunication Union (ITU) says that, the number of cell phone subscriptions across the globe will hit 5 billion in 2010 and that the number of broadband subscriptions will surpass 1 billion around the world this year. The organization also predicts that within the next five years, more people will hop onto the Web from laptops and mobile gadgets than from desktop computers (http://reviews.cnet.com/8301-13970_7-10454065-78.html). This is an important issue because it shows that Verizon must be able to meet the coming demand that comes with increasing cell phone usage around the world and that they must also pay attention to the various cultural nuances that exist in the developing countries that they would be catering to as a result.
The demographics of the telecommunication industry have changed over the years, as mobile devices have become an essential element of the American lifestyle. “Nine in ten U.S. adults today use at least one mobile device” (Kats), making it almost impossible to find an American that does not own at least one mobile device. “Adults under age 50 are the most likely to be mobile users with 93% owning a mobile phone today”. The cell phone trend is most definitely apparent with the younger generations, not excluding the older generation. According to the article, over 78% of adults over the age of 60 are now mobile. Mobile devices have begun to appeal to all different ages, so the target market has expanded, but now Verizon must concentrate on what users use them the most and what they use them to do. “Generation Yers (ages 18 to 30) are the most active mobile usersâ€¦” (Anderson). In order to remain one of the top leaders in this industry, Verizon Wireless must make sure they appeal to those who utilize their mobile devices.
In order to ensure that they set their products and services at an appropriate price, Verizon must examine the economic conditions. The state of the current economy is a major factor in this industry, since some do perceive Verizon’s products and services as luxury items and not essential items to everyday living. The current economic state has played a factor in how Verizon prices their products and services. Verizon must continue to examine the unemployment rates and the current recession. According to Experian Simmons, 35 % of mobile phone users pay $100 a month or more for service. Verizon must make certain that they always offer competitive service at a competitive price.
Verizon’s degree of rivalry with the competition is relatively high compared with other industries. Electronic communications, such as email, voice, data, and messaging are growing quickly especially within the cell and Smartphone technology segments. Competitors in the communications industry have made switching costs fairly high with contracts and hardware exclusive devices. For example, in order to switch from Verizon to another network consumers would have to wait for their contract to expire or pay to break it, purchase a new cellular device that works on that network, spend time searching to determine who has the best prices to meet their needs, and negotiate a new contract for that service. Additionally, most people heavily consider how many family and friends they have with a network before making a switch. If a majority of their contacts are with Verizon Wireless, their chances of switching to one of their competitor are much smaller. Another major benefit Verizon has going for them is their brand identity, setting themselves in a class of only a few by becoming differentiators and competing on better customer service and a stronger network. For example, most people comparing a new cell phone carrier will review Verizon’s offerings while few may look at Pocket and Cricket. Finally, exit costs are relatively high for telecommunications as there are a large number of cell tower contracts, trunk lines, and a high inventory of devices with limited shelf life.
At this point in the industry the threat of new entrants is relatively low. While large companies like AT&T and Verizon were simply competing with each other, new carriers such as Pocket and Cricket entered the market and took a low cost leader approach to the service, leading several companies competing for a piece of the pie. With the larger companies competing on strong differentiation strategies and smaller companies taking a cost approach there is not much room for new entrants to snag a foothold. While expected retaliation would be low, access to inputs, ensuring they are meeting governmental policy and controls, economies of scale, high capital requirements, proprietary product lines, and switching costs will make it difficult for aspiring competitors to enter the market successfully.
Verizon has a low threat of substitutes, since their Internet packages and offers make them competitors in email, instant messaging, and Voice Over Internet Protocol (VOiP) the only real substitute to their communication business is snail mail. While switching costs to snail mail would be relatively low it is not a realistic substitute. The necessity of high speed communication, low price-performance trade off, and little buyer inclination to substitute don’t make this a viable alternative.
The buyer power that is used by Verizon Wireless is relatively high due to competition. The way Verizon Wireless is trying to reduce this buyer power is by creating a competitive advantage that will attract more customers thanks to the quality and innovation of their services as well as products and features such as GPS systems offered in cell phones. Verizon Wireless is also improving their customer service and providing a high network quality through new technologies like EV-DO, which improves data transmission rates and creates a competitive advantage in this buyer powered industry.
Verizon Wireless has many suppliers that provide different varieties of wireless telephones and devices such as Smartphones and PDAs’. Main suppliers are Samsung, LG, Blackberry, Motorola, Nokia and Palm. Each one of them offers a distinct range of colors, sizes and innovative technologies, which are geared towards a wide range of targeted users. Therefore, the supplier power is low as the customers have many choices to go with. The suppliers are evaluated on their ability to deliver on five key components: technologies, practices, quality, service and total cost. Using a strategic sourcing process, the election is run on a competitive bid process to find the best compared to the market place. The bid process allows them to find the best proposal, and the best match based on economic value, quality and innovation (Verizon Supplier Diversity).
Verizon Wireless utilizes numerous valuable resources to set itself apart in such a competitive market. One of the resources is strong Research and Development department, a very valuable asset for Verizon Wireless to have. They compete in an industry that demands a very high level of technology. It is essential to have a Research and Development department that can meet the demands of our market. It is rare for a company to have such a superb Research and Development department because it is extremely expensive to imitate a department such as Verizon’s. This in turn, leads to them having a sustained competitive advantage against their competitors. They have witnessed and will continue to witness above average returns with this resource. Another resource that their company embraces is its brand name awareness. Verizon Wireless is the largest mobile telecommunications network and wireless phone provider in the United States. They have a very well known brand name and logo, a resource that is both very valuable and rare, making it impossible for another company to come an imitate them. Americans want to be part of the Verizon Wireless network. Their brand name gives them a sustained advantage, which in return gives them above average returns. Their network coverage is another resource that they take advantage of. They provide their customers with outstanding network coverage. They out number all of their competitors in the amount of cell towers they provide to their customers. It is no secret that Verizon Wireless has far more network coverage than even its number one competitor, AT&T. Their network coverage could easily be their most valuable asset. It is extremely costly for any of their competitors to try and imitate their network coverage and since there is no substitute for this resource, it gives them a sustained competitive advantage. They can definitely expect above average normal returns with this resource.
Verizon Wireless uses a value chain analysis to understand the parts of their operations that create value and those who do not. It is important because they will only earn above average returns if the value it creates is greater than the costs incurred to create that value. A firm’s value chain is segmented into primary and support activities. Some of the primary activities they perform are inbound logistics, customer service, operations, marketing and sales, and after sales service. All of these are monitored in a different way.
First and foremost, they must make certain to have the products that customers demand. They need to have excellent inventory control. They have bar code scanners that keep track of what comes in the stores and what goes out the stores. They make sure that new shipments of products are being shipped to the necessary stores to meet the demand. Next, they use customer surveys and secret shoppers, so they can know exactly what their customers think of the customer service they receive. They receive feedback directly from their customers on what they need to improve upon and what they are satisfied with. Furthermore, they have many operations to handle on a daily basis. Two of their most important operations is billing and collecting. They want to ensure that they are billing all of their customers the correct amount and receiving the correct payments from their customers. They have multiple billing and payment options, including online. They also have the option of online retail to satisfy their customers after store hours. In addition, marketing and sales play a major role in the success of Verizon Wireless. They conduct market research to better understand their customers’ needs and wants, and then they use various pricing strategies, promotions, and advertising to get through to their customers. Verizon can compare their strategies to their competitors by comparing their number of subscribers to their competitor’s, analyzing opportunities and areas for improvement. Additionally, it is imperative that they not only satisfy their customers during sales, but also after sales. They occasionally offer their customers rebates and they must guarantee that the customers receive their promised rebate. Verizon has 24-hour online support that can provide their customers with any assistance they may need. Verizon offers warranties to their customers and with a line repair center at Verizon Wireless locations their customers are able to replace and or repair a device.
Verizon’s support activities provide them with the assistance necessary for the primary activities to take place. Their human resources management is key to their success as a company. They use recruiting, training, incentive system, and employee feedback to attract and retain the best and brightest employees, leading them to have the best people on their team to beat their biggest competitors. In the telecommunications industry technology development is essential for a company to remain competitive. Verizon needs the industry’s smartest people on their research and development team, so they can utilize their research capabilities. They also need to be able to collaborate with different companies to provide their customers with the best products and services.
Verizon uses a global differentiation strategy as its marketing tool to target a specific niche of customers. Their aim is not to target all customs but to target specific groups of individuals by providing high quality service, efficient customer service and improved data transmission rates and its latest push for differentiation is around local programming.
Verizon began trading on the New York Stock Exchange (NYSE) under the VZ symbol on Monday, July 3, 2000. The symbol was selected because it uses the two letters of the Verizon logo that graphically portray speed, while also echoing the genesis of the company name: veritas, which is the Latin word connoting certainty and reliability, and horizon, signifying forward-looking and visionary. Verizon Communications was added to the Dow Jones Industrial Average in 2004. With the addition of MCI, Inc., in 2006, Verizon was a leading provider of advanced communications and information technology solutions to large business and government customers worldwide.
Verizon is a leader in the telecommunications industry. Verizon owns 55% of Verizon Wireless, a joint venture with Vodaphone serving about 94 million customers across the U.S. They serve about 33% of the U.S. local phone population and owns a long-haul network that reaches cities around the globe.
Verizon has launched its iPhone offering and continues to expand its wireless 4G LTE network, posting the best margins of any U.S. carrier by steadily growing its customer base and dominating the industry. Though margins will come under pressure over the near term, adding the iPhone device should be a positive over the long run.
Verizon recently announced their acquisition of Terremark Worldwide, Inc., a global provider of managed IT infrastructure and cloud services. Verizon has already received regulatory approval for the acquisition and plans to keep the Terremark name and run the company as a wholly owned subsidiary under its current management, it is believed this will bolster their business enterprise side and provide synergistic expansion.
As of December 2010, 26% of Verizon Wireless’ retail post-paid customers had a Smartphone. Management expects this percentage to grow to 50% Smartphone penetration in 2011 due to popularity of Android devices and the new iPhone 4. Given that Smartphone users have much higher ARPU (average revenue per user), Verizon is on track to substantially increase revenue over the next several years.
Compared to a 13% rise in the S&P 500, Verizon shares are up 33% over the last year. A strong run-up in the shares has raised valuation metrics, though trailing P/E remains below the peer group average. Verizon’s trailing multiple of 17.2 is above the company’s own five-year average range of 12.0-14.6, below the peer group average of 19.4, but above AT&T’s multiple of 9.1. The price/sales multiple of 1.02 is in the upper half of the range of 0.89-1.07 and the price/EBITDA ratio of 3.5 is above the high end of the range of 2.8-3.3. The segment’s EBITDA service margin of 47% was the best in the industry. Most analysts estimate the 2011 EPS (earnings per share) to be $2.19 with a 2012 forecast of $2.47. The 2011 estimate falls toward the low end of management’s EPS growth forecast of 5%-8% marking a long-term growth rate forecast of 4%.
The credit agencies give Verizon ratings in the low A’s, comfortably within investment grade, with a stable outlook. However, S&P lowered its rating a notch to A- in December, citing its belief that Verizon will be unable to lower its debt quickly enough. The company has been steadily reducing its debt, redeeming $9.2 billion in 2010 and leaving the debt-to-total capital ratio at 57.8%, a drop of 2.3% from end 2009. Management intends to continue this practice in 2011.
Verizon needs to stay atop of the industry with its 4G LTE rollout and other new innovative service to offset the decrease of the traditional access-line business as Telecom companies are highly susceptible to disruptive technological change. Note that wireless, despite its rapid growth, is also a highly competitive sub-industry, and rates on voice services continue to decline.
Verizon’s business lines are highly regulated which could become an important issue given rumblings from the Obama administration. The FCC order on net neutrality for the Internet has already triggered a test suit from Verizon.
Over the past six years, the US market for data revenues has steadily increased and it is predicted to continue to increase. According to Chetan Sharma Consulting, data revenues in 2004 were below $10,000 and for 2011, they are predicted to be about $68,000. That is a enormous amount of growth in revenues in only a couple of years. There are four major carriers that account for this data revenue: Sprint, Verizon, AT&T, and T-Mobile. Verizon Wireless and AT&T both lead with roughly the same amount of revenue. Verizon Wireless’ Average Rate per User is about $19. It is well above the average, which is about $17. As of Quarter 4 2010, there were over 20 million wireless subscriptions. Verizon Wireless and AT&T account for three fourths of those subscriptions. Verizon and AT&T are highly competitive with one another for customers. They almost have the same amount of market share. According to Chetan Sharma Consulting, the carrier market share for 2010 was Verizon leading with 33%, AT&T in a close second with 31%, Sprint with 16%, T-Mobile with 11%, and all others with only 9%. As you can see, AT&T is very closely behind us in market share. Verizon must take action to ensure that they continue to hold the greatest amount of market share in the telecommunication industry. They want to continue to be the leader of their industry.
Verizon focuses on two marketing initiatives, sponsorship and marketing to diverse markets. Sponsorship is a tool that enables Verizon to expand its visibility in their key markets and is a strategic component in their overall marketing mix. It allows them to inform consumers about new products and services in a manner which is acceptable and unobtrusive. It links Verizon’s brand attributes and values with their customers’ values, reinforces their brand positioning efforts and provides a platform to deliver credibility for the brand. They achieve sponsorship in various ways to fit with their marketing brand strategies and general sponsorship guidelines.
Verizon serves approximately 35% of the multicultural market. The diversity is reflected in their marketing efforts and how they communicate with these customers. They speak customers’ languages and participate in the celebration of their lifestyles’ and cultures. To help them understand the needs of these customers, their multicultural marketing team conducts in-depth market research; focus groups and surveys. They also work with agencies that specialize in targeting African-Americans, Asians and Hispanics. So when they reach out to each of these diverse communities, they communicate in their language and focus on relevant topics for each. Verizon’s multicultural marketing team also communicates with our multicultural sales to gather feedback about their services and products. The customers’ feedback gives them first-hand knowledge and even more insight into what their customers want.
Verizon Wireless’ marketing mix currently includes television advertisements, print advertisements, online advertisements, pop-ups, and affiliate programs. They recognize the importance of effective marketing, so they put millions of dollars into their marketing budget every year. The more educated consumers are on their products and services the more likely they will do business with them, increasing the return on their investments with their advertising techniques.
Another current issue facing Verizon Wireless is that on March 20, 2011 AT&T announced a deal to buy T-Mobile USA from Deutsche Telekom in a cash and stock deal worth $39 billion. If the United States government approves the deal, it will make AT&T the nation’s largest wireless carrier by a wide margin. As stated before, AT&T is already one of the top wireless providers with about 31% of the market while T-mobile currently has 11 % of the market share. An acquisition such as this one would make AT&T the leader by far. We will no longer be the industry leader with our 33 %. It will be about twelve more months before we know if the government will accept the deal. Verizon Wireless will face some issues if this deal does make it through legislation, however, history would suggest that Verizon’s market share would actually increase due to the historical churn rate of merging telecommunication companies. Verizon must begin to prepare now on the assumption that the deal does in fact go through.
Verizon wireless has established itself as a leader in the industry in regards to broadband access. In addition with the acquisition of the iPhone, Verizon also has good standing in regards to hardware/software. However one must also recognize that Verizon does not seek to use a cost-strategy and instead uses a differentiation strategy. It is important that Verizon seeks to continue to develop new technologies in the area of hardware and software.
Verizon already does a phenomenal job with their marketing, but we think they can enhance their strategies. We know that television advertisements are amongst some of the most successful strategies. Verizon has previously concentrated mostly on advertising their wireless services through television advertisements, but it is time to advertise more of their other products and services via television advertisements. Their competitors have found great success in advertising their other products in television advertisements. In order to remain a good competitor Verizon must adjust. They must make consumers aware of their other services, they have diversified, but many consumers are unaware of that. Consumers need to be aware that they can have wireless high speed Internet, home phone services, and cable with Verizon as well. For example, a marketing opportunity Verizon can improve is FiOS service, which is not being marketed to USA customers like the other services they offer. Verizon has a great opportunity for advancement, if they market the service of the Nation’s largest 100% fiber optic network with campaigns and commercials to offer an incentive to consumers in the market of cable television. Verizon should advertise the following statements; Benefiting from a fiber optic network that’s faster than fast, FiOS delivers the speediest uploads and downloads around, it’s the fastest Internet in the U.S. High Definition TV; only network that can deliver picture perfection to every last pixel. Allowing less interruptions or weather interference, picture quality is sharper and more reliable in bad weather higher quality TV brought to customers by the nation’s largest 100% fiber optic. Also, Verizon FiOS TV has been rated the # 1 in value, overall quality, and customer loyalty according to the American Customer Satisfaction Index. Over 130 HD channels and access to more than 19,000 On Demand movies and programs each month. (www22.verizon.com/Residential/aboutFiOs/Overview.htm). Verizon should definitely consider this marketing soultion, because if AT&T does in fact acquire T-Mobile, Verizon will no longer have the largest market share in the telecommunications industry and consequently they will have to open up their target markets to a whole new segment. If they concentrate on their other services, this could be the solution to future problems.
One key advantage Verizon has over its competitors is a much stronger 4G experience. According to Christina Bonnington, a Wired correspondent, “Verizon 4G networks leaves other carriers in the dust.” Before looking at the results of data tests she presents what each carrier promises you can expect from each of their respective services. Verizon’s LTE network promises download speeds of 5-12 Mbps, AT&T’s HSPA+ network should provide 6Mbps down, Sprint’s WiMax offers an average of 3-6 Mbps, and T-Mobile’s HSPA+ is supposed to provide 5-10 Mbps. Clearly Verizon is the frontrunner, promising speeds of up to quadruple the rate of the competition. To put this in comparison Road Runner Turbo speed promises up to 10.0 Mbps (http://www.cabledeals.org/internet.html). Of course DSL and bandwidth are still faster, but Verizon (and other networks) are catching up by leaps and bounds.
RootMetrics performed an extensive study across the Seattle area to analyze how each network’s 4G speeds hold up to their claims. Their conclusion was that “Verizon’s LTE network performed at a 100% data-success rateâ€¦ with average data speeds between four and 14.5 times faster than competitors, and average upload speeds between 4.7 and 49.3 times faster.” Interestingly enough RootMetrics’ CEO Paul Griff showed that performance is almost all
This case study aims to analyse, compare and contrast strategic financial management of Diageo plc and SAB Miller plc. The analysis also identifies and explores the factors which are responsible for the current financial position and development of both the companies and critically evaluate the factors involves in future growth, development and change. To evaluate the performance of each company and compare them the financial analysis tools used are SWOT, the profit impact of market strategy (PIMS) and some comparison continued thereafter. In the end there is a conclusion for taking the summary of involved companies into consideration as to which company can be concluded to be more successful.
Diageo is known for one the of world leading manufactures in liquors market. It is manufacturer of branded beer, premium spirits and wine products. Diageo market its premium alcohol beverages in more than 180 markets around the world. Its 17 brand range comes in the top 100 premium distilled spirits brands worldwide.
Diageo produces premium spirits under brands including Smirnoff, Johnnie Walker, Captain Morgan, Baileys, J&B, Jose Cuervo, Tanqueray, Guinness, and Crown Royal. Diageo’s wine brands include Blossom Hill, Sterling, Beaulieu, Chalone, Navarro Correas, Rosenblum Cellars and Santa Rita. There are few other beer brands of the company include Harp, Smithwick’s, Tusker and Red Stripe.
Diageo operates in four mail markets are: Asia Pacific, Europe, International and North America. Diageo sees a revenue of £12,958 million ($20,491.8 million) during the financial year ended June 2010 (FY2010), an increase of 5.5% over FY2009. Hence contribute to operating profit of the company to £2,574 million ($4,070.5 million) in FY2010, an increase of 6.5% over FY2009. The net profit was £1,629 million ($2,576.1 million) in FY2010, an increase of 1.5% over FY2009. (www.datamonitor.com)
SWOT Analysis for Diageo plc
Adequate range of brand in premium spirits segment
Due to involvement in various area of operations leads to less business
Debt is a huge burden for this company
The way legal procedure goes in this firm that may affect corporate image in bad manner
A great increase in demand in global spirits market
Buying new companies, widen the market space and range of product as well
Wine market growth also a positive sign
High degree of competition
Very strict advertising rules
Unavailability of cheaper labour
SABMiller is also a world’s biggest giant in liquor industries who has spanned across the six continents around the world. This company has more than 200 brands under its belt and market it across 75 countries.
SABMiller operation mainly involves across producing beer and soft drinks. SABMiller offers premium beers brands such as Draft, Grolsch, Miller Genuine, Peroni Nastro Azzurro and Pilsner Urquell. It also markets a range of local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. Additionally, the company is engaged in the bottling business, and is one of the largest bottlers of Coca-Cola products.
SABMiller’s operates in: Latin America; Europe; South Africa; Africa; Asia; and North America and headquartered in London, which employs about 70,131 people.
SABMiller earned revenues of $18,020 million during the financial year ended March 2010 (FY2010), less than of 3.7% as compared to 2009. The operating profit of the company was $2,619 million in FY2010, less than of 16.8% as compared to 2009. The net profit was $1,910 million in FY2010, an increase of 1.5% over 2009. (www.datamoitor.com)
SWOT Analysis for SABMiller plc
Top runner globally diversified brewer especially in African and Latin American countries
Huge range of international and local brands
Impressive cash productivity
Less involvement to the Asian beer market though important player in China and India
Tie up with big retailers for distribution.
Latin American acquisition to expand operations
To improve the business and financials so restructuring initiatives
Margins can be affected by hike in raw materials
Bad perception pertaining to health in terms of beer as compared to wine
PIMS (Profit Impact of Marketing Strategy) Analysis of Diageo Plc vs. SAB Miller Plc
Competitive Position: Diageo is world’s top 10 premium spirit brands having volume of 55% in market and leads among each segment of beverage alcohol. Diageo focus on essential market taking that parts bigger economies in consideration. Diageo manage these markets are under four geographical areas: North America (United States and Canada), Europe (Great Britain, Ireland, Continental Europe, Iberia and Russia). The International business area comprises Latin America and the Caribbean (including Mexico), Africa and the Global Travel and Middle East business. The Asia Pacific business area comprises India, China, South Korea, Japan and other Asian markets, Australia and New Zealand. North America accounts for the largest proportion of Diageo’s operating profit. (www.diageo.com)
On the other hand when we compare the market share of SABMiller with that of Diageo, SABMiller operating brewing and distribution across six continents and is involves in over 55 countries. They have over 200 owned brands and six of their brands are among the top 50 in the world. In South Africa, where SAB Ltd began the year with the loss of a major premium brand to a competitor, overall volumes remained level while mainstream volumes grew satisfactorily by mid-single digits. (www.sabmiller.com)
Production Structure: Diageo establishes its most of the product as world premium brands, regional brands and segmented brands. In the market the major player for Diageo is its world premium brands which are responsible for its growth. Commenting on Company’s operational performance in a conference of the US analysts (2008), Chief Executive, Paul Walsh mentioned, “We’ve reported another year of strong organic growth, with net sales up 7% and operating profit up 9%, with free cash flow of £1.25 billion. Our return on invested capital increased 50 basis points to 14.9%. We have returned £1.9 billion to shareholders, with dividends of £857 million and share buybacks of £1 billion. And we’re recommending a full-year dividend per share of 34.35p, which will be up 5% on last year.” (www.diageo.com)
As we talk about SAB Miller, the firm grown to some US$1,978 million (2008: US$1,191 million) by simultaneously investing huge budget. This investment also improves manufacturing and selling to take full advantage of the market. Investment also increased due to the some key market currency strengthening as compared to US dollar. (www.sabmiller.com)
In Morgan Stanley Conference, held in New York (2008), the company announced that they will continue to invest for growth while re-examining costs and CapEx. This includes continued investment in brands, packaging and innovation, new capacity being commissioned over coming year, cost productivity remaining a focus and re-examining all capital expenditures. (www.sabmiller.com/files/presentations)
Attractiveness of the served market: Diageo long term goal aims at the continuous growth and increase shareholder value. When merger of Grand Metropolitan Public Limited Company (GrandMet) and Guinness PLC (the Guinness Group) took place Diageo was formed and simultaneously take over some companies and sold non-profit properties with the strategy of mainly focusing on premium brand. In the period from the merger in December 1997 to 30 June 2009, the group has received approximately £10.5 billion from disposals (including £4.3 billion from the sale of Pillsbury, £1.9 billion from the sale of General Mills shares and £0.7 billion from the sale of Burger King) and spent approximately £5.6 billion on acquisitions (including £3.7 billion in relation to certain Seagram businesses). (www.diageoreports.com)
According to report of Chief Executive in the annual report (2009) of SAB Miller Group, “This year has seen another strong performance with results continuing the trend of several very strong years. Adjusted earnings per share grew by 19%, bringing the compound annual growth rate over the last six years to some 20% per annum. At 143.1 US cents, our adjusted earnings per share have very nearly trebled since 2002.” In the annual report of SAB Miller they have highlighted their key area of focus is to improve their routes to market both to remove costs and to ensure that the right products reach the right outlets in the right condition, accompanied by the right messages and merchandising material.
Comparison of Financial Strategies of Diageo Plc and SAB Miller Plc
Diageo operates worldwide with its premium drinks and one of few companies who involves in beer, spirit and wine market. Diageo stood 8th of the world’s top 20 premium spirits brands on profit and business basis. Diageo’s produce world famous beer like Guinness, and contribute to approximately 22% of net sales while wine comes approximately 6% of Diageo’s net sales.
Diageo’s size adds to low cost in production, selling and marketing. Due to this cost cutting they concentrate on cost effectiveness of the product and betterment of consumer services
The most important it retains and attracts talented individuals who contribute for betterment of the strategies and increase business through organic sales hence profit as well acquisition of premium brands that valuable to the shareholders.
According to Bender and Ward (2004), “if a key competitive strength of the existing business is built on the current product attributes or strong branding which have created very local customers, a strategic thrust for continued growth could be based on umbrella branding of new products with comparable attributes.” From the above discussion it is clear that Diageo’s strategy is focused on its strength.
SAB Miller Plc
Within the span of 20 years SAB Miller expended its business from its base South Africa to the world, following is the list of their strategic priorities:
Creating a balanced and attractive global spread of businesses: As in recent years SAB Miller acquired new companies leads to world market approach and introduced to emerging market not sticking on a particular part of the world. Few of the achievement are 7% organic volume growth and 9% group revenue growth.
Developing strong, relevant brand portfolios in our local markets: Main motto to produce a good brand range that meets every consumer type and brings new improvement in terms of premiumisation, and growing demand for beer female consumers. To match with this demand a strategy is needed which tells each market dynamics and produce right range of brand for that particular market to grab the opportunity which leads to positioning of the distinct brand.
Constantly raising the performance of local businesses: The greatest strength of SABMiller is operational performance. It is clearly shown by EBITA that their standard increasing day by day. At local level they are joining hand with big retailer to increase the performance.
Comparison of Current Position and Performance of Diageo Plc and SAB Miller Plc
Diageo Plc consisted with 9% organic operating profit growth for the 30 June 2010. For 9 month span till 31 March 2010 Diageo’s organic net sales growth was 7% (Appendix 2), where as the growth seen in the first half on 30 June 2010. Hence no change in terms of financial position for the company. The return of cash to shareholders through the payment of dividends and the continued share buyback programme led to a reduction in net assets from £4.2 billion at 30 June 2009 to £3.9 billion at 31 March 2009.
Paul Walsh, Chief Executive of Diageo commented: “Trading in the third quarter continued in line with the first half and we are therefore maintaining our guidance for 9% organic operating profit growth for the current fiscal year. We continue to believe that the diversity and strength of our brands, the success of our marketing campaigns, our superior routes to market and our global reach will be key in delivering our performance.” (Reuters, 2009)
SAB Miller Plc In the year ending 30 June 2009, according to Graham Mackay, Chief Executive of SABMiller, “The group recorded 1.5% growth in larger volumes. As expected organic volume performance was subdued, with larger volumes down 1.6% following the extraordinarily high growth of 13% in the prior year comparative period and reflecting lower volumes in China and the moderation of consumer spending in some markets. Group revenue growth has remained firm and financial performance in the quarter was in line with the group’s expectations, although the challenging trading environment in South Africa impacted financial performance there.” In the year ended 31 March 2009, the group reported US$3,639 million in adjusted pre-tax profit and revenue of US$21,410 million. (www.hemscott.com)
This attitude towards good corporate governance is echoed in a statement made by Howard Davies, the chairman of the Financial Service Authority of the UK, who said “in my view, investment in good corporate governance arrangements, and good regulation all those arrangements, is among the most effective and rewarding investment a developing market can make, and there are figures to prove it.” (Davies, 2002)
Diageo Plc vs. SAB Miller Plc – Future growth and Development change
Diageo Plc – Looking at the current performance of Diageo Plc, they should invest to take leadership positions in every category, market and consumer occasion in which they choose to compete.
They should drive brand growth by exploiting complete category participation opportunities, rather than solely focusing on individual brands within categories. Key categories include Scotch whisky, vodka and rum. In order for Diageo to grow the brand, they should ensure that they have personnel to grow. They can chose to add another brand or expand into another market segment – but they need to be certain that they have a brand that they can expand upon. As mentioned by Saunders (2008) “Carefully consider your existing brand. Does it evoke stability? Flavour? Health? In order to successfully expand your brand, you have to give people the same feeling they had when you first established it in the first place. Don’t rush the process. Use a thesaurus to come up with like words and turn to compendiums of famous quotes and common phrases.”
Next step towards growth is to invest more resources into these and other brands with the best growth prospects. For this they are searching for opportunities in emerging markets. With European markets becalmed and continued economic uncertainty in the US, the emerging markets of Brazil, Russia, India and China have assumed even greater importance for Diageo. (Woodard, 2006) Though on year ending 30 June 2009, the only growth witnessed was in the top line 2% as they gained share in China and expanded in India and the markets of South East Asia. Finally, they should seek out selective acquisitions to support their brands growth.
One of the key development for Diageo Plc this year is its deal with the United Spirits as United Spirit negotiates a deal with Diageo Plc for picking up a 14.9% stake. The total value of the deal works out to be around INR 18 billion. (www.businessweek.com)
SAB Miller Plc – SABMiller’s net profits climbed to 2.023 billion dollars (1.3 billion euros) in the 12 months to March 31, compared with the group’s performance in 2008/09. “This strong outturn to the year is particularly pleasing given the scale of the challenge we faced at its outset, with exceptional prior year comparatives, rising input costs and an increasingly competitive environment in many of our markets,” SABMiller chairman Meyer Kahn said in the earnings statement. (www.uk.biz.yahoo.com)
SABMiller is expected to produce a mixed bag of results with global volumes already reported to be 10% higher, led by South America, Europe and Africa/Asia, all ahead by more than 10%. The downside would be Miller in North America, which had suffered falling volumes and forecast lower earnings as higher costs like aluminium bite, analysts said. In addition, earnings growth from South Africa would be held back by the rand, which is 13 % down against the dollar from the previous year. “We see the outlook statement as reassuring. The key point is SABMiller’s continuing confidence that it can fully offset these cost increases through price and mix improvements,” said Cazenove analyst Matthew Webb. He raised his provisional earnings forecast for the year to March 2009 by 5 % to 162 %. (Reuters, 2009)
The key development for SAB Miller in the current year is its decline in sales volume for the third quarter ended December 2009. The company recorded a 22% decline in the sales volume of its beer in Russia in October-December 2009 compared to the same period of 2008 due to a drop in purchases by distributors. The company sales in Europe fell 1% in the period, while global sales edged up 1%. Also, SABMiller plc may plan to make acquisitions. (www.businessweek.com)
According to the consolidated balance sheets (Appendix 2 & 3) of Diageo Plc & SAB Miller Plc respectively, one can easily interpret that with an increase of revenue from last year by 14.47% for SAB Miller, gross profit has also gone up by 14% however when compared with that of Diageo Plc, it has shown an increase of only 7.53% in revenue and 7% in gross profit. From the balance sheet of both the companies it is clear that increase in the Net asset value of SAB Miller (24%) is almost double than that of Diageo Plc (12%). Diageo, under whose belt are Johnnie Walker whisky and Smirnoff vodka, fails to gain the trust of the North American and European consumer. This can be understood by as the profit without tax dipped from £1.41bn to £1.39bn in the first half on 31 December. There is an increase in Net sales by 3% however downfall of 2% due constant currency basis. Except from Guinness all world premium brand sales fell.
SAB Miller showing great growth in world market (Appendix 1) especially in South Africa where it originated from. According to Jones (2008) “British drinks giant Diageo and Dutch brewer Heineken agreed to strengthen their ties in South Africa and take on dominant domestic brewer SABMiller by building a brewery there by end-2009.” Heineken’s chance to expand in South Africa came in March 2007 when an International Chamber of Commerce court ruled to terminate SABMiller’s license to brew and distribute Heineken’s Amstel beer in South Africa. Amstel dominated South Africa’s premium market, accounting for 9% of the national beer market and SABMiller said the license loss would cost it $80 million in annual profits. Therefore it can concluded that though looking at the current position (Appendix 1) SAB Miller’s performance is better than that of Diageo Plc, however it has threat from Diageo and its other competitors when we look at their upcoming acquisition strategies.
Appendix 1.Share price comparison between Diageo plc, SABMiller plc and FTSE 100
Source: Yahoo UK & IRELAND FINANCE
In the share price chart the blue line represents SABMiller, green line Diageo and red line FTSE 100 respectively.
The graph above shows share price comparison of SAB Miller plc & Diageo Plc with FTSE 100 for the last 2 years.
Appendix2. Consolidated Balance Sheet for Diageo plc (Source: Yahoo FINANACE)
Appendix3. Consolidated Balance Sheet for SABMiller plc (Source: Yahoo FINANCE)
Daoism: An Introduction
China has contributed immensely towards the culture of the world, some significant contributions include T’angculture which is Bhuddhist influence in art and the same is predominant in the field of sclupture and numerous other masterpieces which are well admired all round the world.One such masterpiece is Daoism, the term may sound complicated but in reality it is not as complicated as it sounds. This paper will discuss the evolution and the principles of Daoism.
Daoism has a native connection like another term which is Confucianism, the spirit of the Chinese people is reflected by Daoism. It evolved from the ancient Chinese society and it portrays the beliefs and idealogy of the Han nationality. The souce of its origination is from the workship of gods and spirits. Daoism is regarded as philosophical tradition of China malong with Confucianism. Daoism encompasses thought and practice that sometimes are viewed as philosophical, as religious, or as a combination of both. While modern scholars, especially those in the West, have been preoccupied with classifying Daoist material as either philosophical or religious, historically Daoists themselves have been uninterested in such categories and dichotomies.(IEP.UTM 1, September 2008)
Scholars across Europe have been working maticulously on how to classify Daoism, whether it constitutes to philosphy or religion. The confusion has prevailed for quite sometime now. During the time of the Han Dynasty, Daoism was not in existence but early texts like Daodejing and the Zhuangzi triggered off the beginning of Daoism. There is a common belief among the people that a teacher by the name Laozi founded the school and also wrote himself all the major works called as Daodejing, the same is also known as Laozi. Daoists were the people who followed Daoism; they firmly believed that immortality was not a gift from god. They also believed that this is a connection between the nature and their bodies. People who though like this were believed to be living in the mountains and considering the same they considered their bodies to be mountains and walked on the path of immortality. They involved themselves in interesting activities such as physical exercises, discovering new sexual postitions to make sure that the flow of energy is greater than what it wasin the earler position, they also tried their hands at Chemistry but many of them died becuause of over experimentation. Not only did they die but a few emporers who followed in their footsteps also met with the same fate as the Daiosts.
Daoism always wanted people to cultivate the quality of self-cultivation in them. The teachings that were later called Daoism were first known under the name of Huanglao Dao in the 3rd and 2nd cent. BCE. The thought world transmitted in this stream is what Sima Tan meant by Daojia. The Huanglao School was a center of Daoist practitioners in the state of Qi (modern Shandong). Huangdi was the name for the Yellow Emperor, from whom the rulers of Qi said they were descended. When Emperor Wu, the sixth sovereign of the Han dynasty (r. 140-87 BCE) elevated Confucianism to the status of the official state ideology and training in it became mandatory for all bureaucratic officials, the tension with Daoism became more evident. And yet, at court people still sought longevity. Wu continued to engage in many Daoist practices, including the use of alchemy, climbing sacred Taishan (Mt. Tai), and presenting petitions to heaven. (IEP.UTM 1, September 2008).
Principles of natural order as first established in ancient Chinese philosophy
To define the principles, a step by step approach towards learning a few new concepts is required. The most important term is Dao, translating the Chinese word into English is very difficult because no word in English exactly gives the Chinese meaning but the english word which comes closest is the way, the meaning is the right path, the word describes the nature of the world in the true sense. People believe that Dao keeps the universe balanced, it is a strange belief but the sentiments of the Chinese people are attached with it. Knowing the key terms is very important as it paves the way in understanding Daoism better. The term Dao should not be misunderstood, it is not treated as god or a guiding figure, it is merely the path which should be adopted by an individual. The term is also perceived as a road. By this it is understood that the Chinese believed in changes, where as resisting changes is human nature, so from this it can be made out that the Chinese were unlike other people who had this feeling of resisting changes.
The next important term is Wu Wei, this is the core of Daoism or in other words it will not be unfair to say that this forms the center of Daosim. If the literal meaning of this term is taken, it means without action or in other words doing a task effortlessly. The main goal of Wu Wei is to align with Tao, hence it can be made out that the two terms are realted in more ways than one. Wu wei should be the way of life, because the dao always benefits, it does not harm (ch. 81) The way of heaven (dao of tian) is always on the side of good (ch. 79) and virtue (de) comes forth from the dao alone (ch. 21). What causes this natural embedding of good and benefit in the dao is vague and elusive (ch. 35), not even the sages understand it (ch. 76). But the world is a reality that is filled with spiritual force, just as a sacred image used in religious ritual might be (ch. 29). (IEP.UTM 1, September 2008).
The next term is Pu, the terms sound really strange because these are taken from Chinese language and any language which is not familiar creates a strange impact on people. The term means simplicity; it is all about passive reception. This is perception of people leaving prejudice out of the equation, which is very difficult in any circumstances. Prejudice plays a key role in anyones perception and leaving it out of the equation is a very very big ask for all the normal people. The term Pu is all about being content with what is available with a person. The fourth and the last principle is De, the concept is very very complex and obviously very difficult to understand. To simplify the concept and understand it better it is fair to say that De is nothing but the expression of personal integrity. So the four terms aim at developing four qualities in a person namely oneness, all are equal and no differentiation of any kind should be shown towards anybody, harmonial action aims at maintaing harmony among the people, dynamic balance focusses upon bringing stability in the people and cyclic growth makes sure that the people grow as individuals which is imperative for any individual, everyone should always strive to grow, there should not be a standstill as far as growth is concerned. All the four principles have their aims and all are meant to instill some quality or the other in an individual.
How the style of poetry conforms to the basic ideals of the Daoists
The poems written by the Daoists were called the Ci-poetry; it followed strict rhymic notes and lines. It was also made sure that the words used in the poetry were precise and made good sense. The Daoists composed Ballads, a musical poem which tells a story. The Book of Laozi’s Conversion of the Barbarians also collects 18 pieces of Ci of the Venerable Sovereign’s 16 Transformations. They belong to Daoist tales about deities’ transformation. Tales about deities’ transformation are a means of relating the transformation of deities. “Daoist tales about deities’ transformation” refer to the style of relating the transformation of Daoist deities. In order to be adapted to the need of reciting and singing, this genre always adopts the form of “yunwen” (i.e. literary composition in rhyme). For example, Ci of the Venerable Sovereign’s 16 Transformations is a piece of yunwen. The author arranges the plots according to the changes in orientations, and the shifting in places is based on the positions of the Eight Trigrams 4 in nine palaces of “change”. The Eight Trigrams represent the eight directions, and two cycles of the Eight Trigrams produce 16 pieces of Ci of transformation. (Eng. Taoism, 1 September 2008). The concept of the poems generally focussed upon immortality, ways to become immortal and what it takes to be immortal. Poetry was very influencial in shaping up the people at that time.
Classifying the term Daoism as philosphical or relioginal causes an ambiguity, let the scholars decide that but the positives can be taken and applied in day to day life, results will surely be visible if people stick to the four principles of Daoism which focus upon oneness, harmony, growth and dynamic balance.
Daoist Philosphy. In Iep.Utm. Retrieved on 1 September 2008 from: http://www.iep.utm.edu/d/daoism.htm#H2
A General Introduction. In Taoist.Org. Retrieved on 1 September 2008 from: http://www.taoist.org.cn/English/daoism.htm
Daoism in Brief. In His.com. Retrieved on 1 September 2008 from: http://www.his.com/~merkin/daoBrief.html
Taoism. In ReligiousTolerence. Retrieved on 1 September 2008 from: http://www.religioustolerance.org/taoism.htm
We should begin by talking about what free will is, and what free will is not. Free will is not the same as freedom of action. Freedom of action refers to things that prevent a willed action from being realized. For example, being in prison means you are not free to go out with your friends on Friday night to the local bar. Being in a straight jacket means you are not free to comb your hair. Being paralyzed means not being able to move your limbs. These are not issues of free will. Free will means being free to try to escape (or not), to comb your hair (or not), to try to move your limbs (or not).
Neither is free will the same as political or social freedom or better known as liberty. Just because you will be taking to jail for carrying a concealed weapon, does not mean you are not free to try, or even free to actually do so. For every action there is a reaction. In other words you are free to do just about anything you want, you will just have to face the consequences of your actions
Now on the other side of the argument, we need to point out that determinism is not the same thing as fatalism, destiny, or predestination. Determinism means that the way things are at one moment is the necessary result of the ways things were the moment before. Determinism means that every effect has a cause, and that nothing, not even the will, is exempt. Determinism does not mean that the future has already been established for us.
We should define free will. As I understand it, it is a matter of intent: The mental and emotional processes that we engage in when confronted by a choice result in intent to engage in certain actions or non-actions. I have before me a chocolate éclair and a blueberry muffin. I look, I sniff, I consider past experiences, I feel good about both prospects, and then I decide. I intend to eat the chocolate éclair (or the muffin, or neither, or both, or part of one and the other…). Whether I am free to actually eat it, or whether I can expect severe punishment for doing so, is irrelevant. I have made up my mind!
The determinist would respond with the same argument he made with imagination and creativity: Your perceptions and cognitions and emotions, your past experiences, inevitably lead to your projecting that goal and working toward it. It only appears to you to be free of necessity. Please note though how quickly we give up our goals when other, more powerfully supported forces push in upon us and make us feel as though there way is “the right way.”
The argument of free will versus determinism is in some measure a false one. Both sides have been reduced to straw men or easily destroyed arguments, by oversimplification. For example, free will has never meant freedom to ignore the laws of nature, and determinism does not mean everything is predictable. There has to be a different answer. As a middle-aged man, I have dozens of years of experiences: my childhood, the books I’ve read, conversations with my friends, my own thoughts ,all of that has made me who I am today. All this is on top of my unique genetics and other physical realities of who I am. The things that happen to me now are experienced though “me”, through this mass that I am, and my responses depend, not only on my present situation, but on all that I am. This may not be “free will” in the absolute sense, but it is certainly self-determination.
If we possess a somewhat limited freedom, we also possess a somewhat limited responsibility for our actions. For most adults, it can be legitimately claimed that who we are includes basic moral concepts and a rational respect for the law conveyed to us by our parents and others. These things are a part of who we are, and are available to us when we make a choice to behave one way or another. We are therefore culpable if we disregard these moral and legal concepts. This flows nicely into the legal tradition that asks whether or not a person actually “knows” right from wrong, and whether the person has the maturity or the cognitive ability to “choose” right over wrong.
In other words, we don’t have to be “above” the natural world in order to have a degree of freedom within that world. As the band Rush would say:
You can choose a ready guide in some celestial voice.
If you choose not to decide, you still have made a choice.
You can choose from phantom fears and kindness that can kill;
I will choose a path that’s clear
I will choose free will.
Epicurus is a founder of a philosophical thought known as Epicureanism. The need of human beings to live a happy and tranquil life was the reason as to way Epicurus was able to develop his philosophies. According to Epicurus, for people to live a happy life, they must be free from fear, and must not experience any aspects of pain. According to him, evil brings out pain, while good brings out pleasure (Keefe, 2010). Epicurus further denotes that death signifies the end of an individual’s soul and body, and therefore there is no need of fearing it. He further goes on to state that, there is no life after death, and the gods cannot punish human beings after they are dead.
This is because the universe is eternal, infinite, and is composed of atoms which move freely around the empty place. This paper analyzes the teachings of Epicurus, by looking at his concept of ataraxia (Keefe, 2010). This paper identifies how Epicurus defines pleasure, and happiness in a person. On this basis, this paper expands Epicurus explanation of happiness. It explains in detail how pleasure comes out as a result of doing good, and pain as a result of doing evil. This paper further identifies specific desires that human beings have, and the view of Epicurus concerning these desires. It also identifies the virtues that Epicurus thought an individual needs in order to live a good life, and his religious views. This paper has a conclusion which is a summary of the major points found in the text.
Pleasure and Happiness:
Epicurus denotes that happiness is the supreme good and it comes as a result of maximizing all aspects of pleasure. Epicurus further goes on to identify two types of pleasures; namely dynamic and static pleasures. Dynamic pleasure comes from the food that people eat and drink. Static pleasure comes as a result of having a stable mental, physical and emotional stability. According to Epicurus, pleasure comes as a result of eliminating all the needs and wants of an individual.
At this stage, there is no pain, or frustration that an individual suffers from. Epicurus further denotes that in order to identify the differences between good and evil, it is important to look if pain and pleasure exists (Keefe, 2010). Pain exists if there is fear of uncertainty, or retribution from spiritual beings and people. Death is uncertain to many people. On this note, Epicurus teaches that pleasure comes as a result of freedom from the fear of death.
On this basis therefore, a person becomes happy, because he does not suffer any pain, and is in a state of ataraxia. According to Epicurus, this is the only form of true happiness. When a person is at the state of ataraxia, he or she does not fear death, or punishment from spiritual beings. At this state, an individual does not concern himself with disruptive politics, or dishonest people. The person surrounds himself with trustworthy friends, and he or she is affectionate, and a virtuous person.
Epicurus further goes on to state that when an individual is at the state of ataraxia, then he does not overindulge in any affairs of mankind that includes love, wine, and religion (Keefe, 2010). If a person does this, then he or she will suffer pain. Epicurus further goes on to explain that there exist mental and physical pains and pleasures. The mental aspect of pain and pleasure arises when an individual ponders over the past and the future. For instance, when a person regrets of his past mistakes, and is not sure of what will happen in the future, then he or she suffers mental pain. On the other hand, physical pain occurs only in the present. For instance, lack of food or water.
The Desires of mankind and Epicurus view on how to live a pleasant life:
In his letter to Menoeceus, Epicurus identifies three types of desires. They are (Keefe, 2010);
Necessary and natural desires.
Natural and unnecessary desires.
Unnecessary and unnatural desires.
Epicurus denotes that mankind must satisfy natural and necessary desires, failure to do so will amount to pain on an individual (Keefe, 2010). These desires include the need for health, shelter, food and security. Epicurus denotes that eliminating these desires is impossible, because they are necessary to sustain life. And according to his opinion, happiness starts by satisfying these necessary and natural desires. On unnecessary and natural desires, Epicurus identifies desires such as luxurious foods, expensive clothes, or even good houses.
According to Epicurus, man does not need a luxurious food to survive; he only needs food (Keefe, 2010). He denotes that depending on such kind of items for survival is a sure way of achieving pain, leading to unhappiness. In his own opinion, Epicurus denotes that if a person can afford to have these substances, then it is good to enjoy them. But to guard against pain, he must not rely on these luxurious items for survival. Unnecessary and unnatural desires refer to the desire to accumulate too much wealth, power, fame and other trappings of prestige and status.
According to Epicurus, an individual does not gain any satisfaction by fulfilling these desires (Keefe, 2010). For example, when he acquires power, the same individual will want to gain more power. This to him is unacceptable, because it will eventually lead to unhappiness. On this note therefore, for an individual to achieve a status of happiness, he must eliminate these desires. By doing this, he will achieve a sense of mental stability which is a key element an individual needs to achieve pleasure, and hence happiness.
Epicurus religious views:
In his letter to Menoeceus, Epicurus denotes that the universe consists of space and matter, and is divisible into atoms. According to him, the universe is eternal, and it is impossible to destroy or create it. On this basis therefore, Epicurus beliefs that there was no creation and nature does not have any purpose. Basing on this background therefore, Epicurus denotes that there is no life after death, and an individual’s soul and body is composed of atoms. On this note, when a person dies, his or her body disintegrates, thus there is no punishment or reward after death. On this note, people should not fear of the uncertainties of the afterlife, because there is none. According to him, gods were there, but they were also made of atoms. They lived in a vacuum, free of contact with humans. In his own opinion, the gods were happy with their lives, and there was no need of appeasing them through prayers, and sacrifices. To him, religion was a means of instilling fear amongst people, leading to pain, and unhappiness (Keefe, 2010). On this basis, it is important to avoid religion in order to lead a happy and pleasurable life.
In conclusion, it is correct to denote that reducing the desires of an individual is the only way of achieving pleasure, and happiness. This is because; the pursuit of an individual’s desire can cause pain, and especially if the desire is unnecessary, and unnatural. For instance the pursuit of power, will lead to emergence of sycophants. These people will mislead the leader, and this might cause pain to him. Pursuit of more wealth will attract thieves and burglars, and might result to the death of the rich person, or unstable mental condition arising from constant worries on how to protect their wealth. On this basis therefore, an individual’s way of life is to seek pleasure, happiness and peace of the mind. To Epicurus, the greatest pleasure that man should seek is that of friendship, mind and contentment.
Moral standards inform our actions, behaviours, and thoughts. The foundation of these standards stem from our cultural heritage passed on through generations. Introducing morals into the ego bears the philosophy of ethical egoism, which is a normative theory, based on the promotion of one’s own good in accordance with morality (Moseley). Shaver avers that based on the ethical egoism theory it is necessary and sufficient for an action to be morally right and that it maximizes own good. The promotion and pursuance of one’s self-interest underscores the normative theory. It prescribes the motivation of one’s thought, behaviour, and action.
To understand the ethical egoism theory we must first know certain principles behind it. Ethical egoism is a normative theory, which means it prescribes how we should think, behave, and act. Shaver presents three features of ethical egoism as individual, personal and universal. He states that individual ethical egoism is notion that all persons should serve self-interest. Personal ethical egoism is the belief that one should act from the motive of self-interest (Shaver). Universal ethical egoism is the doctrine that all persons should pursue their own interests exclusively (Shaver).
The foundation of a coherent theory of ethics is in truth, consistency, and completeness. ‘In truth’ means that a statement of action is either true or false and not both. Consistency means that there should be no contradictions or incompatible statements. Completeness means that there should be no moral truth, which is not provable from the basic moral principles of the theory (Moseley).
Shaver’s argument (qtd. in Rachels) in favour of the theory is that we are better position to know what is good for us. He further argues that since to seek out the good of others is to interfere, we should mind our own business. His point is that all of our commonplace practices from corporate social responsibility to a welfare system are borne of self-preservation and interest.
Shaver’s other submission (qtd. in Rand) in favour of the theory is that a form of egoism was one of the thrust the American Revolution. He further argues that capitalism a 19th Century business model of the American history helped in rapid economic and cultural development that the nation also experienced.
In opposition to the theory, Moseley (qtd. in Bayer) believes that it fails to provide the moral and arbitration framework to resolve conflicts. He holds that it is contradictory that pursuit of self-interest can be right and wrong. Moseley states that a successful pursuance of self-interest can be a deterrent if it prevents others from seeking their interest though perceived as a moral triumph.
Finally, opponents say that ethical egoism is prejudicial because it divides people into two groups and discriminates against one group based on some subjective difference. Critics have touted this as best objection to the theory, for it provides the soundest reason why the interests of others ought to concern the interests of the self. The theory fails to answer certain fundamental questions of criteria of categorization, like the difference between self and others that justifies placing self in a special category. This makes the theory an arbitrary doctrine, in the same way that racism is arbitrary (Moseley).
Some strengths of the theory are that, sometimes acting in one’s self-interest often benefits others .e.g. going to college is in your self-interest, and it will help keep you off welfare, crime. In pursuing your self-interest, you will get a job, which will benefit others, or you start a business to make money, but you must have satisfied employees and a competitive product thereby helping others. In choosing your own interest, you must have the personal freedom to choose. Hence, as an egoist you must allow everyone to pursue his own personal interest (universal ethical egoism); consequently, egoism leads into a right-based theory where each individual has certain inalienable rights or a rule-based theory where certain rules of conduct are in the interest of everyone to observe. That is we are all better off if everyone obeys the law for we have to give up some good to achieve our maximum possible good. (Moseley).
Notable weaknesses of the theory include the fact that it cannot be generalized or recommended to others because such a recommendation would be against one’s self-interest; there is no way to justify the belief since it applies to just one person. Another problem is that it is difficult to figure out what “own interests” means. It cannot be ascertained whether the phrase mean short-term or long-term benefit, pleasure, happiness, preference, or something else, for what gives you pleasure might not be a benefit or in your interest. (Moseley).
One thing is certain about all the arguments presented, that the theory is controversial, inconsistent, and incongruous and cannot therefore be used as a basis to guide and direct our actions, habits, and beliefs. It is imperative to state that a theory is but an opinion or point of view if not grounded in truth, consistency, and completeness.
Have you ever seen gay or lesbian people in public; in other words homosexuals? If you have, what is your opinion on the issue? Do you feel it is something normal or abnormal? Michael Levin strongly believes that homosexuality is an act that is absurd and abnormal. He states that homosexuality is abnormal and therefore it is unfavorable. He defends his opinion with several different arguments. In his first argument, he states that same sex intimacy is a misuse of sexual organs. Then he goes on to say that homosexuality causes unhappiness. In conclusion, he states that the act of homosexuality should never be taken into consideration to become legalized since it is something against human nature. I strongly agree with Levin on his point of view about homosexuality. In this essay, I will be discussing Levin’s arguments for the view that homosexuality is abnormal.
What Levin means by the word “abnormal” is something that is biologically unnatural or in other words, against human nature. He doesn’t mean that homosexuality is immoral or sinful; but for purely mechanical reason; it is a misuse of bodily parts. In his first argument, he states that “misusing the body’s sexual organs could frustrate the intention of some purposeful agent”. What Levin means by this is that if one is not heterosexual, he/she would be damaging their sexual organs which causes frustration and therefore, decreases happiness. He also points out that homosexuals are much unhappier than heterosexuals. His main argument on the misuse of body parts is on grounds of natural selection, which he believes is also connected to the unhappiness of homosexuals. Levin argues that a man and a woman’s private parts are made for each other. To prove his point true, he gives an example about a person named Mr. Jones wearing his teeth as a necklace around his neck instead of using his teeth for the use of chewing. In other words, his teeth are being used for ornamentation. Another example was about a man named Mr. Smith; he used his teeth for playing music; something I personally find troublesome to imagine! He concludes from these two examples that individuals who don’t use their teeth for the reason of chewing will be selected out of the natural selection. In this example, he is comparing people who don’t use their teeth for chewing to homosexuals; what he is trying to make clear is that homosexuals may be eliminated in the future from natural selection due to their misuse of their sexual organs. In other words, nature has created a specific job or function for every single body part. Therefore, the accurate use of body parts leads to happiness and the opposite is also true. In my opinion, this is obviously common sense. Levin states the example that the male sex organ is used to ejaculate semen into the female sex organ; by doing this, more offspring are produced and therefore the family tree expands. So when a homosexual uses his sexual organ in a way to insert his penis into another males’ anus, no desires will be fulfilled, and no offspring will be produced; this causes unhappiness. The same is true for heterosexuals; but they won’t be as unhappy as homosexuals. After this statement he says, “There are after all genuinely jolly fat men”. What he means by this phrase is that there really are fat people in this world that are extremely happy and have no problem with being obese. He is comparing this example to homosexuals and heterosexuals. For example, a lazy person might be happy at some point in his life to a certain standard, but he is likely to be less happy than someone otherwise like him who exercises. Levin believes that calling homosexuality involuntary does not place it outside the scope of evolution. Victims of homosexuality are not blameworthy, but it is absurd to pretend that nothing is wrong with them! Homosexual activists believe that genetic causes exempt homosexuals from blame. What he means by this is that maybe homosexual people are born with traits that make them so. But this fact doesn’t make this normal; there is still something wrong with them and in this case it is something absurd and against human nature. He believes that people should try to solve this problem or illness and should unquestionably defy this so called anomaly. This is why Levin strongly believes that homosexuality is abnormal. After Levin proved all his statements, he concluded that since the misuse of body parts is abnormal and will lead to unhappiness, then homosexuality can also be considered abnormal and that it leads to unhappiness as well. Therefore, we as a society should oppose homosexuality.
Levin feels that if performing an action that is very likely to lead to unhappiness, then the state should not legitimize that action by granting a right to perform that act. The state should have no business encouraging actions that lead to unhappiness by creating rights or protections related to those them. Therefore, the state should not legitimize homosexual actions by granting a right to perform homosexual acts. Levin recognizes that even if there is a correlation between homosexuality and unhappiness, it does not follow that homosexuals should be denied rights under the law. However, Levin does worry that laws granting homosexuals the right to engage in sodomy (or to marry) would actually encourage homosexuality and thus those laws would increase unhappiness. He says that a state that suddenly grants a right to homosexuals might as well legitimize homosexual actions and thus encourage them. It’s like saying let’s make taking drugs legal. It causes unhappiness, suicides health problems, death and so on. Why would a government make something so bizarre legal? This is how Levin feels about the matter of homosexuality. One crucial test on Levin’s account is his prediction that homosexuals will continue to be unhappy even if people altogether abandon their “prejudice” against homosexuality.
My opinion on this issue is very similar to Levin’s attitude. I personally believe that homosexuality is against human nature and should not be an act that is accepted in today’s society. It is true that God made man for woman. The sexual organs of a male should only be inserted to the sexual organs of a female. If homosexuality was something normal, then God would have allowed offspring to be born from two male or two female partners. But as you can see, this is not true. Therefore, it is wrong and deviant. I disagree with the fact that homosexual people were born with homosexual genes which make them so. There is no such thing. They are just people that are confused or have mental problems. No one is born with genes that make them gay or lesbian and I strongly believe this. There may be people born with sexual deficiencies but this does not mean that homosexuality is an alternative solution for them. Levin is right to state that it causes unhappiness because that is true; but that should not be the reason why homosexuality should be viewed as abnormal. Recently, the American Psychiatric Association announced “Surely the time has come for psychiatry to give up the archaic practice of classifying the millions of men and women who accept or prefer homosexual object choices as being by virtue of that face alone, mentally ill. The fact that their alternative life-style happens to be out of favor with current cultural conventions must not be a basis in itself for a diagnosis”. In my opinion, this is the beginning of a disaster in today’s society. When this association announces something like this, it’s like they are saying that this is something that is normal and accepted in today’s society and that the government should support this and give homosexuals rights just like the rest of the population. Some people may be wondering as to why I am making such a big deal about this matter. The reason I am so concerned is because this issue will have a negative effect on our children and our future society. By people accepting this would be a way of admitting that there is not a problem with being homosexual. Even though people may think that homosexuality is harmless, it actually is in fact extremely detrimental.
Mr Henderson has arrived in hospital after a history of falls at home and has just commenced a new medication regime.
It is very possible that he may be anxious, worried, frightened as a result of falling at home which also may result in loss of confidence. He may also be apprehensive about his new medication regime. Having been diagnosed with Parkinson’s for 5 years, he more than likely knowns the importance of getting his medications on time, in reducing the symptoms allowing him to maximise his independence. However, it is not for the nurse to presume this and she/he must sit down, talk to him, allowing him time to talk and express his worried and anxieties. This was help to establish a relationship and Mr Henderson will understand that you are there to support him throughout his journal of care. The nurse should also make sure that all members of the multidisciplinary team are aware of Mr Henderson’s condition and if they are not aware of the importance of getting medication on time out with ‘normal’ drug rounds then they should be informed of its importance and understand the significant consequences resulting from not getting the drugs on time such as reduced independence and prolonged hospital stay. As medications are a large part in maximising independence and mobility and it may be suggested that Mr Henderson receives his medications before getting out of bed in the morning. This will allow time for the drugs to work and therefore enabling him to get out of bed more easily.
‘Freezing’, a symptom of Parkinson’s’ disease can be distressing for patients. It affects gait initiation, turning and moving through small spaces, such a doors and busy areas. Anxiety can exacerbate freezing and it is vital that the nurse can firstly recognise anxiety, this may be achieve through effective communication and listening skills and secondly developing strategies to reduce anxiety levels such as allowing him time to talk, listening and taking on board his expressions allowing for a trusting relationship to be developed, helping him to build in confidence and preparing him psychologically for going home. Various strategies have been suggested to assist with ‘freezing’. Alexander, Fawcett and Runicnan (2006) suggest cognitive techniques in breaking down movement. They suggest breaking down the task of getting out of bed in the morning and describe that patients should bend their knees so that feet are flat on the mattress and they the patient should swing knees in the direction that he wants to turn. The next stage involves clasping both hands and lifting them straight up, straightening the elbows, then turning the head and swinging the arms in the same direction as the legs. Finally the patient can grip the edge of the mattress and adjust his position until comfortable. When Mr Henderson is mobilising then it is important that he does not have any distractions and the nurse or other members of staff should not disturb or interrupt if at all possible as this could lead to ‘freezing’. The Parkinson’s Disease Society describe cueing strategies as external meaning visual, auditory or preprioceptive or internal meaning cognitive.
Visual cues could be stepping over a cue in the floor, for example tape can be placed on the floor in strips to help initiate in confined spaces when freezing has taken place. Tape can also be placed on the edges of stairs. Mr Henderson may also find useful to imagine he is taking steps up stairs and this may prompt movement. The nurse should ensure that the area is clutter free and this can exacerbate freezing. Auditory cues as the name suggests would indicate sound used to enhance movement. Metronomes have been described as a useful tool in support gait initiation. Counting out rhythms or singing and walking in time to this can be beneficial. Proprioceptive cues which means taking a step back before starting to walk; rocking gently from side to side or marching on the stop before stepping.
The nurse should ask Mr Henderson if he has experienced falls in the past year and frequency, obtaining as much information as possible about the falls, this can form part of the patients assessment namely a Falls Risk Assessment. Nice (2004) provides clinical guidance on falls risk assessment and suitable referrals should be initiated to the physiotherapist who will help to improve balance and the occupational therapist can help to make Mr Henderson’s home safer place to live by attending a home visit and suggesting suitable aids that can improve safety, maximising independence. One of the most devastating consequences of falling in older people is a fractured neck of femur which can have significant impact on independence and quality of life. The nurse may suggest to Mr Henderson about wearing a hip protector, this again can improve confidence and also help to protect the hip if her were to fall. A full explanation as to why this is being suggested should be provided allowing for informed choice.
Falls can be as a result of loss of balance and posture, freezing, only being able to take small steps, or dyskinesia and it is important to use techniques such as cues to minimise the risk of falls. Also physiotherapy input will help with exercise, improving balance and posture. Multidisciplinary collaborating is essential in proving effective care. The nurse can find out what strategies are being taught to Mr Henderson and the nurse can encourage continuation of these exercises within the ward environment. It is important to continue to communicate with Mr Henderson allowing for evaluation in care and understanding what strategies are working and ones that are not. Once evaluated alternative strategies may be considered.
Postural hypotension should be monitored/assessed for patients with Parkinson’s as this increases the risk of falls as a result of dizziness or fainting in the drop in blood pressure. The patient should be supine for at least 10 minutes before taking a supine blood pressure reading. Then another reading should be taken within 3minutes of him standing up from the supine position. The nurse should be aware the dizziness the patient may experience when standing up should be standing next to him when she does the reading. If there is a significant fall in systolic blood pressure, by 20mmHg or goes below 90mmHg then this would indicate that the person has postural hypotension.
Strategies can be adopted to improve the deficit before considering pharmacological methods such as recommending gradual compression stockings to improve venous return and therefore blood pressure. For them to work efficiently they much be measured and fitted to ensure the correct pressure is applied to the legs and ensuring that Mr Henderson is achieving recommended fluid intake of 1500-2000ml per day.
If Mr Henderson is in a bay of beds for example 6 beds, then his location within the room should be considered in relation to the toilet. The bed should be relatively close to the toilet, if his fluid intake perhaps is being increased then frequency to micturate will potentially be increased. Mr Henderson is experiencing reduced mobility then bed position should be definitely considered to minimise the risk of unnecessary bowel or bladder incontinence. A commode may be considered and placed discretely closer to his bed for the evening or provision of urine bottles and buzzer placed in a position that is easily available.
Appropriate footwear should be consider, the nurse should ensure that the are well fitted and not falling off increasing the risk of falls. The nurse should also check his feet or ensure there are no problems such as ingrown toe nails or blisters. The nurse should also ensure that Mr Henderson’s vision is examined or glasses should be worn at all times if required as this could result in unnecessary falls.
Parkinson’s Disease Question 2b
Within the substantia nigra and basal ganglia there is progressive degeneration of cells which produce the neurotransmitter dopamine. The substantia nigra is a strip of dark pigmented cells located in the midbrain and the basal ganglia are collections of nerve cells located in near the base of the cerebrum. When motor impluses are initiated in the motor cortex, they need to be modified by the basal ganglia and substantia nigra by modifying motor activity, posture and making fine adjustments to movement. This is contained within the extrapyramid motor system and within the system there is normally a fine balance of neurotransmitters dopamine and acytylcholine.
Dopamine is inhabitory and acytylcholine is excitatory. Due to the reduction in dopamine there is excess of the excitory neurotransmitter acytlecholine resulting in excitable muscle tone and the symptoms associated with Parkinson’s disease.
Mr Henderson’s has begun a new medication regime using co-careldopa used to regain and maintain the balance between dopamine and acytlecholine.
Dopamine cannot be given on its own as it will fail to cross the blood-brain barrier (BBB). The BBB is a physiological barrier that prevents substances from getting across from the blood stream and into the brain. Instead of dopamine, the drug levadopa is used which can cross the blood brain barrier and is then converted into dopamine. The dopamine then acts on dopamine receptors in the extrapyraminal motor system to maintain the neurotransmitter balance and therefore control the Parkinson’s disease symptoms.
When levadopa is administered it is broken down in the gut and liver by an enzyme called dopa decarboxylase, therefore combined with levadopa is a drug that inhibits the enzyme from breaking down levadopa is used which will lengthen the effects of levadopa meaning that less drug is required. This drug is called dopa decarboxylase inhibitor (cardidopa)
This combination of levadopa can be provided as a preparation of one drug called co-careldopa or Sinemet (the brand name)
There may be side effect such as nausea and vomiting, postural fall in blood pressure, constipation, and red stained urine. Mr Henderson must be made made aware of these side-effects and should inform the nurses when he is experiencing them. Domperidone can be used as an anti-emetic to stop the side-effects of nausea and vomitting. Blood pressure should be monitored for signs of postural hypotension and if required a medication review may be required, the nurse may ask the patient not to sit up or stand up too quickly.
Parkinson’s Disease 2c