Saturday, August 31, 2019

Critical Analysis of Delta Airline

Critical Analysis of Delta Air Lines, Inc. Financial Reporting and Disclosure Table of Contents Description of Delta Air Lines, Inc. Background, Industry, Market3 Financial Reporting Similarities and Differences4-5 Direction of Disclosure Three Year Comparison5-6 Disclosure Techniques7-8 Financial Derivatives8-9 Financial Statement Analysis Three Year Ratio Analysis10-13 Disclosure of Note Items Application of GAAP13-18 Conclusion Closing Comments18-19 Description of Delta Air Lines, Inc. Background and ProductsDelta Air Lines, Inc. was originally formed as Huff Daland Dusters, Inc. on May 30, 1924, in Macon, Georgia. This began as an aerial crop dusting operation until the company moved to Ouachita Parish in northeastern Louisiana, in 1925, and began acting as a passenger airline in late 1929. Collett E. Woolman purchased the company on September 13, 1928, and renamed it Delta Air Service, with headquarters in Monroe. In the ensuing decades, Delta grew through the addition of routes and the acquisition of other airlines.It transitioned from propeller planes to jets in the 1970s, and entered international competition to Europe in the 1970s and across the Pacific in the 1980s. Delta Air Lines, Inc. is currently a major airline based in the United States headquartered in Atlanta. Delta is the world's largest airline operating under a single certificate, operating flights on six continents across the globe. Delta operates an extensive domestic and international network, spanning North America, South America, Europe, Asia, Africa, the Middle East, the Caribbean and Australia.Delta and its subsidiary Delta Connection operate over 4,000 flights every day. Delta and the Delta Connection carriers fly to 348 destinations in 64 countries. Industry and Market Typically, airline companies and aircraft manufacturers are more prone to swings in revenue and equity market prices due to the release of economic indicators. Delta had an increase of 38% in domestic revenue since 2 008. This is due to increased cargo and baggage handling fees due to new policy implementation. Delta increased its international revenue by 26% since 2008.This is mostly due to an increased focus in the international arena due to the lower demand and higher competition from discount airliners in the U. S. The airline industry contains a variety of different airlines. Some of Delta’s biggest competitors are AirTran Holdings, Southwest Airlines Company, Continental Airlines, American Airlines, JetBlue Airways, United Airlines, and US Airway Group. All of these competitors are diversified in terms of the number of different things they offer, allowing companies in the industry to have access to a number of different profitable markets.Similarities and Differences in Financial Reporting Comparison of Annual Report, 10K and 10Q Delta Air Lines, Inc. uses a number of different elements to supply pertinent information to consumers, investors, creditors, employees, and anyone with a general interest in or curiosity about the company. This pertinent information comes in the form of reports that companies file with the Security and Exchange Commission or SEC, such as the company annual report, the 10K and the 10Q.The annual report is a comprehensive report on a company’s activities throughout the preceding year. Annual reports are intended to give shareholders and other interested persons information about the company’s activities and performance. The 10K is a summary report of a company’s performance that must be submitted annually to the SEC. The 10Q, on the other hand, is a report of a company’s performance submitted quarterly by all public firms to the Securities and Exchange Commission. In the 10Q, firms are required to disclose only newly relevant information egarding their financial position. We see that all three reports are very similar in general as to the information they provide, as well as their purpose. There are a numbe r of similarities and differences between the three reports. The annual report, unlike the 10K and the 10Q, is designed for the benefit of the stockholders and any potential investors. The annual report is published once a year, like the 10K, and usually provides information over a two or three year period to show growth or decline.The annual report is produced to be aesthetically appealing, with color, pictures, quality paper, and printing all for the benefit of current or potential stockholders. The annual report usually includes a company overview, a letter to shareowners, information on the company and its brands, products, and initiatives, its financial highlights, a list of the members of the board of directors, goals and opportunities, and then any important financial statements, information and notes, all of which is meant to promote investment and provide information.The 10K is also a form of an annual report but is only filed with the SEC. It is merely a financial snapshot of the company over the previous year and lacks any visually appealing elements. It too includes a company of the important financial statements, information and notes, but unlike the annual report, it gives much more detail and insight into the operations and cash flow functions of the company. The 10K includes detailed information regarding the business, risk factors, properties, legal proceedings, controls and procedures, transaction relationships, and much more.Like the annual report, the 10K provides information for the current year as well as for one or two years before the current. The 10K is not meant for the benefits of stockholders, but is produced for the sole use of being files with the SEC. The last report is the 10Q, which is a quarterly report filed exclusively with the SEC. This report gives a snapshot of the company’s financial situation in the last quarter, usually a three month period, and also supplies the information for the same quarter in the previous year. The 10Q sually contains information for the total year to date as well. The 10Q, unlike the 10K, is an unaudited version of the financial information and may contain a significant amount of estimation. The report contains sufficiently less information than the other two reports, and gives a general overview of the following topics: financial statements, operations, quantitative and qualitative disclosures, controls, and risk factors. Like the 10K, the 10Q lacks any visually appealing elements because its sole use is for that of the SEC and not for the stockholder’s or potential investors.While still being of importance, the 10Q is of less important than that of the annual report or 10K because of its unaudited and estimated nature, as well as the fact that it reports on a significantly shorter time period than that of the reports and therefore enables users of the report to draw fewer conclusions. Overall, the 10Q is not as useful as those interested in the financial in formation because it provides much less detail and gives a much smaller picture of the company’s financial outlook. Direction of Disclosure Three Year ComparisonOver the last three years, Delta Air Lines, Inc. has made few changes in regard to its direction of disclosure. Delta Air Lines, Inc. discloses its Notes to Financial Statements directly following its Financial Statements and Supplementary Data. In 2008 and 2009, Delta Air Lines, Inc. disclosed all of the same eighteen notes to financial statements in the same order. In 2010, the number of notes was increased to nineteen. The three added notes in 2010 consist of Note 8: JFK Development, Note 11: Bankruptcy Claims Resolution, and Note 19: Subsequent Events.In the 2008 10K, Note 17: Valuation and Qualifying Accounts was stated and kept in the 2009 10K as Note 17 as well. However, it was not included in the 2010 10K. All the Notes added in each year were due to issues that arose within the company. Delta Air Lines, Inc. Note 11: Bankruptcy Claims Resolution was added because In September  2005, we and substantially all of our subsidiaries filed voluntary petitions for reorganization under Chapter  11 of the U. S. Bankruptcy Code. On April  30, 2007, the Delta Debtors emerged from bankruptcy.Under the Delta Debtors’ Joint Plan of Reorganization, most holders of allowed general, unsecured claims against the Delta Debtors received or will receive Delta common stock in satisfaction of their claims. There will be no further material impact to our Consolidated Statements of Operations from the settlement of claims because the holders of such claims will receive under Delta’s and Northwest’s Plan of Reorganization, as the case may be, only their pro rata share of the distributions of common stock contemplated by the applicable Plan of Reorganization.Delta Air Lines, Inc. Note 8: JFK Redevelopment states the company’s annual rent, operation and maintenance payments for the use of terminal facilities at JFK were approximately $135  million in 2010, and estimate the future annual payments to be approximately $200 million after the project is complete in 2016. We will be responsible for the management and construction of the project and bear construction risk, including cost overruns. As construction progresses, the project will be recorded on our Consolidated Balance Sheet as a fixed asset as if we owned the asset.We will also record a related construction obligation on our Consolidated Balance Sheet. Future rental payments will reduce this construction obligation and result in the recording of interest expense on our Consolidated Statement of Operations. The last aspect of Delta Air Lines, Inc. direction of disclosure that has changed with the last three years is Note 19: Subsequent Events. In February 2011, the company completed a $100 million offering of Pass Through Certificates and a $135 million offering of Pass Through Certificates through two separate pass through trusts. This has a final maturity in January 2016.The company received $75 million in net proceeds from the 2010-2B EETC at the closing of the offering and the remaining $59 million is being held in escrow until they refinance other aircraft. Techniques of Disclosure Companies should disclose information as completely as possible in relation to financial condition, contingencies, methods of valuing assets and liabilities, and contracts and agreements. In order to do so, a company may use a number of different disclosure techniques, which include but are not limited to, parenthetical explanations, notes, cross references and contra tems, and supporting schedules. Delta Air Lines, Inc. uses a number of these techniques in the disclosure of their pertinent financial information. Delta Air Lines, Inc. uses parenthetical explanations in a number of different places throughout their financial reporting. Companies use parenthetical explanations to add clarity and com pleteness where it may be needed. This technique brings additional information into the body of the text or statement an afforded for less oversight by readers or users of the financial information. Delta Air Lines, Inc. uses parenthetical explanations in their financial reporting.For example, on the balance sheet under â€Å"Stockholders’ Equity†, Delta Air Lines, Inc. shows parenthetical explanation of the price per share when stating: Shares of common stock issued and compensation expense associated with equity awards (Treasury shares withheld for payment of taxes, $10. 73 per share). (This example is in the 2010 annual report). Notes are another important technique that companies use for disclosure purposes. Notes allow companies to supply additional information or explanations without writing lengthy or inconvenient parenthetical explanations.Notes are commonly used to disclose the existence and amount of any dividends in arrears, terms of or obligations concernin g purchase commitments, special financial arrangements, financial instruments, depreciation policies, changes in accounting principles or policies, and any contingencies. Companies who use notes are obligated to present all essential facts as completely and precisely as possible in an effort to relay the appropriate and accurate information to readers. Delta Air Lines, Inc. relies heavily on notes in their financial reporting and discloses them in a section called Notes to the Consolidated Financial Statements.Each of these notes adds or clarifies information already presented in the report. An example of such is Note 4: Goodwill and Other Intangible Assets. This note in the Notes to Consolidated Financial Statements section of the annual report describes that the company experienced a significant decline in market capitalization primarily from record high fuel prices and overall airline industry conditions. We determined that these factors combined with further increases in fuel pr ices were an indicator that a goodwill impairment test was required.As a result, we estimated fair value based on a discounted projection of future cash flows, supported with a market-based valuation. We determined that goodwill was impaired and recorded a non-cash charge of $6. 9  billion for the year ended December  31, 2008. This is just one of many notes disclosed by Delta Air Lines, Inc. in their financial reports (this example is in the 2010 annual report). Cross-references and contra items are another important techniques used to supplement the disclosure of financial information. Cross-referencing shows a direct relationship between an asset and a liability on the balance sheet.Cross-referencing is not a technique used by Delta Air Lines, Inc. in their disclosure. Along with cross-referencing, Delta Air Lines, Inc. does not disclose any contra or adjunct accounts in its financial reports. Delta Air Lines, Inc. reports its assets at net and does not quantitatively divulge any contra account information. Contra and adjunct accounts are listed on the balance sheet. Contra accounts either reduce an asset, liability, or owner’s equity account. Adjunct accounts increase an asset, liability, or owner’s equity account. Some examples of such accounts are accumulated depreciation and discount or premium on bonds payable.Delta Air Lines, Inc. does not list any of these accounts specifically in disclosing their financial information, but instead lists all their assets and liabilities at net. The last technique of disclosure to discuss is supporting schedules. Supporting schedules are used to present more detailed information about certain assets or liabilities. Typically, Delta Air Lines, Inc. does not use this technique in disclosure. Financial Derivatives Financial derivative instruments are products developed to manage the financial risks associated with constant change due to volatile markets, new technology, and deregulation.Derivative instr uments help to smooth out fluctuations caused by various types of risk. Companies, such as Delta Air Lines, Inc. use the fair values or cash flows of derivative instruments to offset changes in fair values or cash flows of any at-risk assets. Delta Air Lines, Inc. discloses information on their use of financial derivative products in their Notes under Consolidated Financial Statements. In Note 1: Background and Summary of Significant Policies, Delta Air Lines, Inc. discusses a change in accounting policy in regards to derivative instruments.In March of 2008, FASB issued â€Å"Disclosure about Derivative Instruments and Hedging Activities†. The standard requires enhanced disclosure about how and why entities use derivative instruments, how the instruments and related hedging items are accounted for and how the instruments affect an entity’s financial position, performance, and cash flows. This standard amends required disclosures about the fair value of financial instru ments in interim and annual financial statements. In Note 3: Risk Management and Financial Instruments, Delta Air Lines, Inc. discuss their disclosure of financial derivatives and how they are accounted for.Delta Air Lines, Inc. results of operations are materially impacted by changes in aircraft fuel prices. In an effort to manage exposure to this risk, the company periodically enters into derivative instruments generally comprised of crude oil, heating oil and jet fuel swap, collar and call option contracts to hedge a portion of our projected aircraft fuel requirements, including those of our Contract Carriers under capacity purchase agreements. All hedges are recorded at fair value, and gains and losses on hedges are recorded in other income (expense) at net.Within the Consolidated Statement of Cash Flows, settlements for fair value and cash flow hedges are classified as an operating activity, while all other derivatives are classified as a financing activity. Financial Statement Analysis Analysis: Three Year Ratio Comparison | 2010| 2009| 2008| Liquidity Ratios|   |   |   | Current Ratio: | 0. 64| 0. 79| 0. 81| current assets / current liabilities | | | | Quick or Acid Test Ratio:| 0. 61| 0. 76| 0. 77| current assets – inventories / current liabilities | | | | Current Cash Debt Coverage Ratio:| N/A| 0. 14| -0. 15| net cash from operating activities / average current liabilities| | | | | | | |Activity Ratios| | | | Receivables Turnover Ratio:| 21. 81| 20. 74| 15. 73| net sales / average (net) trade receivables | | | | Inventory Turnover Ratio:| N/A| N/A| N/A| cost of goods sold / average inventory | | | | Asset Turnover Ratio:| 0. 74| 0. 64| 0. 50| net sales / average total assets| | | | | | | | Profitability Ratios| | | | Profit Margin on Sales: | 0. 02%| -0. 04%| -0. 39%| net income / net sales | | | | Rate of Return on Assets:| 0. 01%| -0. 03%| -0. 20%| net income / average total assets| | | | Rate of Return on Common Stock Equity| 0. 73%| 0 . 31%| 1. 5%| net income – preferred dividends / average common stockholder’s equity| | | | Earnings Per Share| $0. 71| -$1. 50| -$19. 06| net income – preferred dividends / weighted shares outstanding| | | | Diluted Earnings Per Share| $0. 70| -$1. 50| -$19. 08| given in the financial statements | | | | Payout Ratio| N/A| N/A| N/A| cash dividends / net income| | | | | | | | Coverage Ratios| | | | Debt to Total Assets Ratio:| 33. 59%| 38. 06%| 35. 50%| debt / total assets| | | | Times Interest Earned:| -0. 61| 1. 74| 13. 20| income before interest and taxes / interest expense| | | | Cash Debt Coverage Ratio:| N/A| 0. 3| 0. 04| net cash from operating activities / average total liabilities| | | | Book Value Per Share: | $1. 08| $0. 30| $1. 87| common stockholder’s equity / outstanding shares | | |   | Explanation A financial analysis of Delta Air Lines, Inc. is best done through the calculation and interpretation of financial ratios. There are four categ ories of financial ratios: liquidity, activity, profitability, and coverage. Each ratio gives a piece of information about the financial stability of the company and collectively portrays the big picture in regards to finances.The first type of ratios, liquidity ratios, measures a company’s short-run ability to pay its maturing obligations. The first ratio, the current ratio, is mainly used to give an idea of the company’s ability to pay back its short-term debts with its short-term assets. The higher the current ratio, the more capable the company is of paying its obligations. Delta Air Lines, Inc. current ratio has decreased gradually in the past three current years, which means the company is becoming less capable of paying off their maturing obligations. In all three years Delta Air Lines, Inc. as remained with a current ratio under one. A ratio under one suggests that the company would be unable to pay off its obligations if they came due at that point. The next r atio, the quick/acid test ratio indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. Like the current ratio, the higher the ratio, the better the financial outlook of the company. Delta Air Lines, Inc. acid test ratio has continued to decrease over the last few years, which is an indication that the company is becoming less liquid. Once again, Delta Air Lines, Inc. atio remained under one, implying that the company is not capable of paying off its maturing debts at this current point in time. The last liquidity ratio is the current cash debt coverage ratio which indicates whether a company can pay off its current liabilities from its operations in a given year. Delta Air Lines, Inc. current cash debt coverage ratio has increased from 2008 to 2009. The information needed to calculate 2010 was unavailable. The higher the current cash debt coverage ratio, the more capable the company is of paying off its current liabilities with the proceeds from its operations in a given year.Delta Air Lines, Inc. ratio was again below one in the two years calculated, meaning that the proceeds from their operations cannot support their current liabilities. The next type of financial ratios is the activity ratios, which measures how effectively the company is using the assets employed. The first ratio, the receivables turnover, measures the number of times on average a company collects receivables during the period. A low ratio implies that a company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm.Delta Air Lines, Inc. receivables turnover ratio increased over the last three years, meaning the company gradually started effectively using its employed assets. The inventory turnover ratio shows how many times a company’s inventory is sold and replaced over a period. This ratio should be compared against industry averages. A low turnover implies poor sales or ineffective buying. This ratio could not be calculated for all three years because the company does not have a cost of goods sold since they do not sell inventory.The last activity ratio, the asset turnover ratio, is useful to determine the amount of sales that are generated from each dollar of assets. Companies with low profit margins have a high asset turnover ratio, and those with high profit margins have a low asset turnover because of pricing strategies. Delta Air Lines, Inc. asset turnover ratio was increased over the last few years and was highest in 2010. This ratio indicates that over the last few years, the company has not been able to effectively use their assets to generate sales.A third type of financial ratios is the profitability ratios that measure the degree of success and failure of a company during a given period of time. The profit margin on sales measures how much out of every dollar of sales a company usually keeps as earnings . Delta Air Lines, Inc. profit margin on sales had increased gradually over the last few years. While this is a positive indication, the company generally has a lower profit margin than other companies in its industry. The rate of return on assets shows how profitable a company uses its assets during a period of time. Delta Air Lines, Inc. as a low rate of return indicating an inefficient use of assets to generate earnings. This company’s return on assets has increased over the last three years, indicating an increase in profitability. The rate of return on common stockholder’s equity measures a company’s profitability in terms of how much profit the company generates with the money shareholders have invested. Delta Air Lines, Inc. has a rather low rate of return on equity and has not shown consistent growth over the last few years. This indicates less profit per dollar invests, as well as a decrease in company profitability.The next ratios are the basic earning s per share and the diluted earnings per share. Basic earnings per share are the portion of a company’s profit allocated to each outstanding share of common stock. Diluted earnings per share expand on this idea by including any dilutive securities. Over the last three years, Delta Air Lines, Inc. basic and dilutive earnings per share have increased, indicating an increase in the company’s profitability. The last profitability ratio is the payout ratio, which is the percentage of earnings paid out as dividends to common stockholders. Delta Air Lines, Inc. ayout ratio cannot be calculated due to the fact that this company has no cash dividends. The last type of ratios used for financial analysis is the coverage ratios. Coverage ratios measure the degree of protection for long-term creditors and investors. The debt to total assets ratio shows the proportion of a company’s assets that are financed through debt. Companies with high debt to total asset ratios are said to be â€Å"highly leveraged†, and would be in danger if creditors start to demand repayment of debt. Delta Air Lines, Inc. ratio is on the low side and has been consistently low over the last three years.This could be an indication that many of the company’s assets are not financed through debt, which is good for the company. The times interest earned ratio or TIE is used to measure a company’s ability to meet its debt obligation. It is usually quoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these obligations could force a company into bankruptcy. The next ratio, the cash debt coverage ratio, indicated a company’s ability to repay its obligations from net cash provided by operating activities without having to liquidate the assets employed in its operations.Delta Air Lines, Inc. is very low which means that liquidation of assets would be required to repay current obligation. The last ratio we must analyze is the book value per share. Book value per share is the amount each share would receive if the company were to liquidate in the basis of amounts reported on the balance sheet. Delta Air Lines, Inc. book value per share has fluctuated significantly over the last few years but increased from 2009 to 2010, which is a good indication. Disclosure of Note Items Standard Applied and Application Delta Air Lines, Inc. ses Generally Accepted Accounting Principles (GAAP) for all of their financial reporting, disclosure, and statement analysis. Delta Air Lines, Inc. flies globally after its merge North West. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U. S. (GAAP). The company’s Consolidated Financial Statements include the accounts of Delta Air Lines, Inc. and their wholly-owned subsidiaries. As a result of the Merger, the accounts of Northwest are included for all pe riods subsequent to the Closing Date.Preparation of these find financial statements require estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements, reported amounts of revenues and expenses during the reporting period and related disclosures of contingent assets and liabilities. Item 1: Equity Disclosure of stockholder’s equity requires a company to disclose changes in the separate accounts comprising stockholder’s equity in order to make financial statements sufficiently informative.These changes may be disclosed in separate statements or in the basic financial statements or notes. In October  2009, the Financial Accounting Standards Board issued â€Å"Revenue Arrangements with Multiple Deliverables. † The standard revises guidance on the determination of when individual deliverables may be treated as separate units of accounting and the allocation of consideration among separate ly identified deliverables. It also expands disclosure requirements regarding an entity’s multiple element revenue arrangements. Item 2: DebtIn terms of long-term debt, disclosure generally must indicate the nature of the liabilities, maturity dates, interest rates, call provisions, conversion privileges, restrictions imposed by creditors, and assets designed or pledged as securities. It is recommended that companies show any assets pledged as a security for the debt in the assets section of the balance sheet. The fair values for all long-term debt should be disclosed if a practical estimation can be made. Lastly, it is required that companies disclose future payments for sinking fund requirements and maturity amounts of long-term debt during each of the next five years.This type of disclosure allows users of financial statements to evaluate amounts and timing for future cash flows. Any off-balance sheet accounting that a company may do is required to be included in the notes in extensive detail. In Note 5, Delta Air Lines, Inc. acknowledges debt and gives specific details regarding its terms and conditions. For example, during 2010, the company recorded a $391  million loss on extinguishment of debt, of which $304  million related to a non-cash write-off of debt discounts that were recorded as part of purchase accounting.In the 2010 annual report, the company includes a table summarizing scheduled maturities of the company’s debt, including current. The nature of this disclosure aligns with the GAAP requirements. Item 3: Income Taxes Delta Air Lines, Inc. accounts for deferred income taxes under the liability method. They recognize deferred tax assets and liabilities based on the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities, as measured by current enacted tax rates. A valuation allowance is recorded to reduce deferred tax assets when necessary.Deferred tax assets and liabilities are recorded net as current and noncurrent deferred income taxes on the Consolidated Balance Sheets. The income tax provisions are based on calculations and assumptions that are subject to examination by the Internal Revenue Service (the â€Å"IRS†) and other taxing authorities. Although the positions they have taken on previously filed tax returns are reasonable, they have established tax and interest reserves in recognition that taxing authorities may challenge these positions, which could result in additional liabilities for taxes and interest.This company reviews and adjusts the reserves as circumstances warrant and events occur, such as lapsing of applicable statutes of limitations, conclusion of tax audits, a change in exposure based on current calculations, identification of new issues, release of administrative guidance or the rendering of a court decision affecting a particular issue. They adjust the income tax provision in the period in which the facts that give ri se to the revision become known. Item 4: Earnings per ShareBasic earnings per share (EPS) are net income divided by the weighted average number of common shares outstanding during the period. Diluted EPS includes the incremental shares assumed to be issued upon exercise of stock options and the incremental shares assumed to be issued under performance shares and restricted stock unit arrangements. For the 2010, 2009, and 2008 EPS computations, 18 million, 26 million, and 12 million stock options were excluded from the calculation of weighted shares for diluted EPS because their affects were ant dilutive.Item 5: Accounts Receivables Accounts receivable primarily consist of amounts due from credit card companies from the sale of passenger airline tickets, customers of the company aircraft maintenance and cargo transportation services and other companies for the purchase of mileage credits under the company’s SkyMiles Program. Delta Air Lines, Inc. provides an allowance for unco llectible accounts equal to the estimated losses expected to be incurred based on historical chargeback’s, write-offs, bankruptcies and other specific analyses.Bad debt expense and write-offs were not material for the years ended December  31, 2010, 2009 and 2008. Item 6: Cash and Cash Equivalents Short-term, highly liquid investments with maturities of three months or less when purchased are classified as cash and cash equivalents on the Consolidated Balance Sheets and are recorded at cost, which approximates fair value. Restricted cash and cash equivalents on the Consolidated Balance Sheets are primarily held to meet certain projected self-insurance obligations and are recorded at cost, which approximates fair value.According to Note 2, at December  31, 2010 and 2009, the company recorded $407  million and $419  million, respectively, in restricted cash, cash equivalents and short-term investments and $33  million and $16  million, respectively, in other noncurr ent assets on the Consolidated Balance Sheets. Item 7: Short-Term Investments Investments with maturities of greater than three months, but not in excess of one year, when purchased are classified as short-term investments on the company’s Consolidated Balance Sheets.At December 31, 2010, the short-term investments are treasury bills recorded at cost, which approximates fair value. At December  31, 2009, the short-term investments were invested in a money market fund that was recorded at fair value and liquidated in an orderly manner in 2010. According to Note 2 in the 2010 Annual Report, at December  31, 2010, short-term investments on the Consolidated Balance Sheet consisted of treasury bills and were recorded at cost, which approximates fair value. During the year ended December  31, 2010, Delta Air Lines, Inc. eceived $77  million from an investment in a money market fund that was liquidated in an orderly manner, $71  million of which was recorded in short-term investments on the Consolidated Balance Sheet at December  31, 2009. This investment was classified in Level 3 of the three-tier fair value hierarchy due to uncertainty regarding the timing and expected amount of the distribution. Item 8: Revenue Recognition Delta Air Lines, Inc. recorded the sales of passenger tickets in air traffic liability on the Consolidated Balance Sheets.Passenger revenue is recognized when they provide transportation or when the ticket expires unused, reducing the related air traffic liability. The company periodically evaluates the estimated air traffic liability and records any adjustments in their Consolidated Statements of Operations. These adjustments relate primarily to refunds, exchanges, transactions with other airlines and other items for which final settlement occurs in periods subsequent to the sale of the related tickets at amounts other than the original sales price.This company is required to charge certain taxes and fees on passenger tickets , including U. S. federal transportation taxes, federal security charges, airport passenger facility charges and foreign arrival and departure taxes. These taxes and fees are legal assessments on the customer for which Delta Air Lines, Inc. acts as a collection agent. Because they are not entitled to retain these taxes and fees, they do not include such amounts in passenger revenue. The company records a liability when the amounts are collected and reduce the liability when payments are ade to the applicable government agency or operating carrier. Item 9: Goodwill and Other Intangible Assets Delta Air Lines, Inc. applies a fair value-based impairment test to the net book value of goodwill and indefinite-lived intangible assets on an annual basis and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. The annual impairment test date for goodwill and indefinite-lived intangible assets is October 1. They value goodwill and i dentified intangible assets primarily using the income approach valuation technique.These measurements include the following significant unobservable inputs: the projected revenues, expenses and cash flows, an estimated weighted average cost of capital, assumed discount rates depending on the asset and  a tax rate. These assumptions are consistent with those hypothetical market participants would use. Since the company is required to make estimates and assumptions when evaluating goodwill and indefinite-lived intangible assets for impairment, the actual amounts may differ materially from these estimates. Changes in assumptions or circumstances could result in impairment.Factors which could cause impairment include, but are not limited to, negative trends in our market capitalization, an increase in fuel prices, declining passenger mile yields, lower passenger demand as a result of the weakened U. S. and global economy,  interruption to the operations due to an employee strike, t errorist attack, or other reasons,  changes to the regulatory environment and  consolidation of competitors in the airline industry. According to Note 4, during 2008, Delta Air Lines, Inc. experienced a significant decline in market capitalization primarily from record high fuel prices and overall airline industry conditions.In addition, the announcement of their intention to merge with Northwest established a stock exchange ratio based on the relative valuation of Delta and Northwest It was determined that these factors combined with further increases in fuel prices were an indicator that a goodwill impairment test was required. As a result, they estimated fair value based on a discounted projection of future cash flows, supported with a market-based valuation. The company determined that goodwill was impaired and recorded a non-cash charge of $6. 9  billion for the year ended December  31, 2008.Item 10: Inventories Inventories of expendable parts related to flight equipmen t are carried at moving average cost and charged to operations as consumed. An allowance for obsolescence is provided over the remaining useful life of the related fleet for spare parts expected to be available at the date aircraft are retired from service. The company also provided allowances for parts identified as excess or obsolete to reduce the carrying costs to the lower of cost or net realizable value. These parts are assumed to have an estimated residual value of 5% of the original cost.Conclusion Closing Statements In summation, Delta Air Lines, Inc. is not a highly profitable company. Although it is currently a major airline in the United States and grew through the addition of routes and the acquisition of other airlines, they are not performing so well due to the economic recession. The current economic environment has taken a toll on the company, like most companies throughout the United States in the last few years. Delta Air Lines, Inc. is not as liquid as it would li ke to be, and the coverage ratios are being affected.Over the last few years, the company’s profitability has increased in all facets. If this trend continues, Delta Air Lines, Inc. will be on its way to becoming more liquid and therefore, more financially stable. Delta Air Lines, Inc. management seems to be trying to efficiently utilize all its resources but is falling short in placing this company in a promising financial position. If this company continues to conduct their business in the same manner and direction as they have thus far, then they will fall short of continuing to be a profitable and successful company for years to come.

Friday, August 30, 2019

Blanche Dubois and Tom Wingfield’s Struggle Between Fantasy and Reality

Blanche DuBois and Tom Wingfield’s Struggle Between Fantasy and Reality The two characters, Blanche DuBois from A Streetcar Named Desire and Tom Wingfield of The Glass Menagerie, both share an intense struggle between fantasy and reality in their lives causing dependency upon alcohol. Blanch DuBois approaches as a high class Southern Belle who depends upon others to care for her, but in reality she thrives on her self-proclaimed royalty. Meanwhile, Tom Wingfield is a pessimistic character who deprives his life working at a shoe factory for his mother and sister while living in the shadows of his father. Both these characters also develop a dependency upon alcohol to overcome conflicts they are faced with. Blanche’s struggle occurs after losing all she had back home in Belle Reve except her trunk of clothes and props, but is exposed to the hash reality of the real world where she cannot cope and must depend on others. One example, such as Stanley Kowalski’s friend, Mitch, whom she instantly wants to marry to be saved from her current degrading lifestyle. â€Å"Ms. DuBois says that she is on vacation at the Kowalski’s, but in fact has lost the family mansion, Belle Reve, and her teaching position due to her sexual indiscretions, the last one with a 17-year-old boy while earning a reputation for sleeping with men indiscriminately, in the meantime pretending to be a Southern bell (Magill pars. 1-2). Blanche is so caught up in her fantasy world that she even had relations with the delivery boy, as well, so she may mask her age with youth and to have control of another. Tom finds himself struggling to fulfill his dreams of writing poetry. This is due to his working at the local shoe factory so he can support his family. â€Å"Mr. Wingfield is desperately unhappy in his warehouse job, and finds himself standing on the fire-escape to the apartment in his hopes of one day fleeing to pursue his dreams as his father did (Bloom pars. 15-16). Tom is always speaking of how he is held down from his hopes, goals, dreams, and ambitions stuck in the shoe factory making a lousy salary for his family, made up of a sick sister and delirious mother. Tom cannot accept the reality that surrounds him and is always contemplating about his dream life, which he is kept from achieving. Blanche, like Tom, abuses alcohol to escape her struggles between fantasy and reality. Blanche is noticeably an abuser of alcohol as she is found constantly sipping away at liquor to forget her past, which her conscience knows is guilty. Tom is said to be at â€Å"the movies,† meanwhile he is actually out at the bars all hours of the night. This is Tom’s way of temporarily escaping his home and forgetting his duties that trap and prevent him from accomplishing his goals in life. Neither character was in need of alcohol, but abused it to an intolerable level, where they consumed it when facing rough times or troubling memories that followed. Also, in both plays these two characters hid the fact that they ever even consumed liquor, while they were always drinking in complete denial. The two characters, Blanche DuBois from A Streetcar Named Desire and Tom Wingfield of The Glass Menagerie, both share an intense struggle between fantasy and reality in their lives causing dependency upon alcohol. Blanche’s inability to cope with the real world alone makes her a weak character. She cannot live independently and has lost all that once made her life, back in Belle Reve, due to her confused relationship with a student of hers. Tom, on the contrary, has a strong character that is chipped away at over time due to the tormenting lifestyle he must live to support his family. After time this strong foundation of character diminishes as Tom wants to flee his stationary life back at home. 1. Magill Book Reviews 1990/03/15 2. Bloom's Modern Critical Interpretations: The Glass Menagerie; 1988, p31-41, 11p 3. Merriam-Webster's Encyclopedia of Literature; Letter D, pN. PAG, 1p 4. Tennessee Williams. A Streetcar Named Desire. Harold Bloom – editor. Publisher: Chelsea House. Place of Publication: New York. 1988. 5. Tennessee Williams. The Glass Menagerie. Harold Bloom – editor. Publisher: Chelsea House. Place of Publication: New York. 1988.

American Dream or American Nightmare – Essay

American Dream or American Nightmare America and its people have upheld the concept of the â€Å"American Dream. † The meaning of this concept has changed and altered throughout the years. As stated in the Declaration of Independence, every man has the right to life, liberty, and the pursuit of happiness. Multitudes of movies and books have depicted their personal versions of this single ideology. All having a stereo typical, happily ever after ending, but is this so-called dream even possible. I believe the American Dream is slowly dying out. In today’s society, families are struggling to make ends meet, and to ensure a good future for their children. Once upon a time the American Dream was everyone’s reality; however now this fantasy is just that, a far off fairytale, as families fight just to provide basic living needs. â€Å"A family of four earning $22,050 a year is living below the federal poverty line (Huffman). † According to this quote a salary of $22,050 a year can barely manage to keep up with the livelihood of a family of four; whereas an income of that amount ten years ago would have placed families in the middle class bracket. Over the years American household living costs have greatly increased, causing family to sink lower on the economic level. With monthly bills such as utilities, rent/house payment, groceries, and car payments, and average American family can find themselves in debt quickly. The basic American Dream boasts of prosperity and wealth. In actuality, Americans are realizing the difficulties of being financially secure every month. It doesn’t stop there. To make things more difficult, parents must worry about being able to guarantee a decent future for their children. Even though public schooling is free for kids, they have other necessities like clothing and school materials. With parents barely making ends meet with bills for the household, children will suffer by having to wear inexpensive clothing and using hand me down things. â€Å"For struggling parents, keenly aware that adolescents agonize over the social pecking order,†¦, there is a small sense of failure in telling a child she cannot have what her classmates take for granted (Johnson 183. † A parent will want their child to strive towards the highest education possible, but with that comes more expensive costs. The competitive job market today forces people to attend college, just to ensure they will land a job in a secure career field. It’s a deadly Catch 22 with young adults entering the working world. Yet they must go through this battle to be able to support themselves, because parents just can’t afford to put money into a savings. With families lacking the means to give future generations to look forward to, Americans moral is decreasing. Our perfect American family ideal that this is a land of wealth and opportunity has become endangered. ————————————————- America searches frantically for answers from the government and all other sources to fix the declining economic issues. This nation needs to be reminded what the definition of the American Dream originally was. Not being able to provide for your family while working and children who are not taught the correct values when growing up, will as a result diminish the American dream. Some remain optimistic about this concept, but I remain firm in my belief that if something isn’t done about this growing problem then the fate of this country will be in real danger. ————————————————- Works Cited Huffman, Mark. â€Å"Having a Job May Not Be Enough to Make Ends Meet† Common Dreams. 1 Apr 2011. Web. 9 Jan 2012. Johnson, Dirk. â€Å"When Money is Everything, Except Hers. † Introduction to College Reading and Writing. Svetlana Lynch. Boston: Pearson, 2006. 182-186. Print.

Thursday, August 29, 2019

Media Control Research Paper Example | Topics and Well Written Essays - 2000 words

Media Control - Research Paper Example The definition clearly states that media is a communication aimed at reaching a mass audience and when an attempt to control it is; the outcome is not beneficial to the mass audience. The media are the public watchdog informing the masses of the happenings in the country. Many a time’s hostile regimes to free media, use the government machinery at their disposal to oppress their freedom. Some countries use the legislature to introduce laws that are oppressive and ensure that the media is silent. Their best weapon of choice is punitive fines and indefinite closure of the broadcasting stations. Journalists are the most affected by this barbaric behavior. They experience punishments that equate abuse of human rights and constant threats on their lives or their immediate family. Some have even paid with their dear life or forced to go into exile. This research paper aims at bring to light the impact of media control to a country and the lives of journalists who are directly linked with media houses. The main intention of discussing this topic is to highlight the impact of media control and, to provide possible solutions to the menace. The technicality used to discuss the points is literature review on related works by renowned scholars and an interview with a journalist. Types of media control In order to understand the impact of media control it is important to know the forms of media control and the people responsible for controlling the media. Most scholars argue that the government is responsible of controlling the media industry (Sonin 3). When the media in such states try to expose their evils, these governments move with their state machinery to silence the media. The state may decide to control the media directly or indirectly. When the state controls the media directly it entails controlling the type of news media is able to air. The state determines what coverage the media gives to particular incidents and whom to focus on. Most of the time, the me dia are forced to focus on the president of the state and the ruling party politics. This direct control is common in countries as china and Uganda in Africa. In Uganda, a newspaper owned by the Nation Media group The Daily Monitor shutdown indefinitely for exposing the evils done by the government. The police later moved into a Television station affiliated to the newspaper Ntv Uganda offices and vandalized the broadcasting equipment arresting journalists at the same time. This is a form of direct control. Indirect control occurs when the government sweet talks privately owned media station into airing the government-preferred content. Such a case occurred in Mexico when the government offered tax incentives to privately owned media station to only air ruling party agenda and sideline the politicians (Lawson 320). The station had the freedom to air the type of advertisement they wanted and programs in return they pushed for the government agenda to the people. Many countries make d ecisions on the media model they want the country to operate. The different models brought out evidently by various media control scholars include libertarian and authoritarian models. By determining their print, audio and video content as they see fit in the advancement of their business through ads, libertarian model takes center stage. Contrary to freedom of choice of content is the authoritative model where the political big wigs call the shots. They determine

Wednesday, August 28, 2019

The Cross Elasticity of Demand and Indifference Curve Assignment

The Cross Elasticity of Demand and Indifference Curve - Assignment Example Indifference curve depicts equal levels of utility (satisfaction) for a consumer faced with various combinations of goods. There is no preference for one combination versus another as they render the same amount of satisfaction for the consumer. Consumer theory uses indifference curves and budget constraints to produce consumer demand curves. The curves are convex to the origin as a result of diminishing marginal utility. Ans: When the price elasticity of demand is less than one, the demand is inelastic. When the demand is inelastic, a given change in price causes a smaller proportionate change in the quantity demanded. Inelastic demand is for things which do not have a close substitute. When a tax is imposed on the product, the consumer bears the burden of the tax. The more inelastic the demand, the greater financial burden of a tax is placed on the consumer. When the demand is perfectly inelastic, the entire burden of a given tax will be borne by the consumer. Ans: In order to maximize profit, a firm would always try to sell more and more pollution permits and avoid buying permits for own, if possible. At the same time, there will be an effort to improve the efficiency of production to reduce pollution by less waste generation and yet keeping production cost low. Thus, the total cost of pollution abatement would be influenced by the degree of a transaction of pollution permits. For example, if a fir m earns high revenue from trading permits, it would not mind spending a part of the profit in reducing waste generation or carrying out better pollution abatement. Since eventually, it is the environmental groups who would be buying more and number of permits from most of the firms, the firms would be forced to generate less and less waste and the overall cost of pollution abatement will go down till an optimal level of pollution abatement is reached.  

Tuesday, August 27, 2019

Soft determinism Essay Example | Topics and Well Written Essays - 500 words

Soft determinism - Essay Example Freedom, in this case, can be defined as the ability to act without external impediments, which allows an individual to forbear and do as he wills (Trusted 24). In addition, it is also the power for an individual to act in the manner in which his will determines, meaning that if one chooses to rest, he could either rest or move as he wills. Therefore, one is free unless they are forced to take actions that are not according to their will. Soft determinism differentiates between external and internal causes. The internal causes are those actions that are as a result of one’s inner desires and wishes, as well as those that result from one’s freewill (Trusted 39). For instance, a person may leave the country because of their desire to travel overseas. External causes, on the other hand, are those that an individual is forced to undertake due to outside influences, such as being forced to leave the country because of government action. The distinction between external and internal causes explains the reason why a soft determinist needs freewill. Acting with freewill in soft determinism means that one is acting as per his/her nature, rather than according to external pressures exerted upon their situation. This is referred to as the liberty of spontaneity theory, which is a central theme in self-determinism (Trusted 39). While man’s nature is also determined by external factors, he also has freewill b ecause they possess spontaneity freedom. Although circumstance and nature determine man’s choices, the option taken is as a result of free will. With regards to moral responsibility, if internal causes like desires and wishes have a significant impact on actions taken, one is considered to be morally responsible (Trusted 41). For instance, choosing not to save a burning child because one does not feel like doing so means they are morally responsible for the death of that child, while failing to do so because one is crippled means they are

Monday, August 26, 2019

LEE IACOCCA Essay Example | Topics and Well Written Essays - 1250 words

LEE IACOCCA - Essay Example The biography of Lee Iacocca happens to be the story of an ordinary person who took the initiative, as and when the life presented opportunities to him and made something out of himself. One thing that set apart Lee Iacocca’s leadership style from others was that he happened to have a strong conviction in his ideas and beliefs. Part of the issues that Iacocca faced at the Ford Car Company was that he seldom hesitated from sitting down and defending the ideas and views that seemed right and effective to him. No wonder Lee Iacocca’s personality carried an immense sense of charisma that made others trust him, believe in him and follow him. Hus style of leadership was marked by a sense of courage that not only motivated others to do their best, but also assured his followers that if anything went wrong, he will be there to help and defend them as Iacocca says, â€Å"Leadership means setting an example (Iacocca & Novak 241)†. The communication style of Iacocca was mar ked by astuteness in being able to and willing to talk about facts, even when they sounded unpalatable and unsavory. I was his ability to bear with hard facts that helped him turnover Chrysler. In the context of Kouzes-Posner model of leadership one thing that Iacocca learned when he was fired from Ford was the fact that a leader ought to set the principles as per which people need to be treated and made to achieve the goals. Iacocca possessed remarkable people skills. Iacocca not only firmly believed in his vision, but also had the ability to make others trust his vision and do their best to further and facilitate that vision. One thing that Iacocca did after joining Chrysler was to challenge the status quo and to question the way things were done earlier, so as to do away with the old flab and make the company focus on the things that added to its success. Both at Ford and at Chrysler, Iacocca pursued a collaborative approach with his team members and acted as a leader who believe d in empowering others. It was Iacocca’s ability to keep alive the hope and belief at Chrysler that enabled him and the people working with him to make Chrysler a success. The personality of Iacocca possessed a trait that happened to be both his strength and a weakness. One thing that made Lee Iacocca peculiar was that he tended to be quiet emotive about his professional life. He associated with his work with a marked sense of emotional passion and took both the success and the failures coming his way with an emotive sense of conviction. For instance when Iacocca was fired from Ford, instead of merely taking it as one other aspect of his job, Iacocca rather took this instance quiet personally and meditated on the impact that firing had on his personal and family life. However, one could certainly say that this emotive sense of temperament could have turned out to be a tragic flaw in any other person, but Lee Iacocca instead of allowing his emotions to benumb and stymie him, r ather used them to his advantage and moved on to utilize his innate talent to make Chrysler a burgeoning success. On thing that could be strongly attributed to Lee Iacocca’

Sunday, August 25, 2019

If Overestimation of Performance is Common, Management Attempts to Assignment - 1

If Overestimation of Performance is Common, Management Attempts to Introduce Benchmarking Procedures are Likely to Meet with Employee Resistance - Assignment Example Perceived weakness in performance would, therefore, be an important motivator for staff to support activities, such as benchmarking, that is geared towards improving their performance. Furthermore, when we analyze the statement, management attempt to introduce benchmarking procedures what comes to mind is that the organization in its current state lacks these procedures. This essentially implies that management will be engaging in a change effort. Change efforts are done under many banners. The basic goal of introducing benchmarking procedures is to make fundamental changes in how the business is conducted in order to help it cope with new, more challenging market environments. Kotter’s statement confirms this to be a change effort. For this reason, we find the need to discuss this question from two viewpoints: firstly as a Lake Wobegon effect challenge and secondly as a change effort challenge. As the Lake Wobegon effect challenge, this problem is a double whammy. For starters, management is faced with the challenge of transforming employee perception on the organization and secondly, the tool that they think is most appropriate for bringing a solution faces the resistance of adoption because of the very perception that they seek to reign in. This is the dilemma. Let us try to break down the problem into more comprehensible parts. First, employees perceive that their performance is better than it is in reality. This means that they will not see the reason to implement any new performance enhancing procedure such as benchmarking. Second, management has identified that there is indeed a problem that has to begin with changing employee perception. Management believes benchmarking is the way to go and would like to implement it. Third, employees – in our deduced scenario – resist managements push to implement benchmarking since they are convinced that what they ar e currently doing is already better than their peers.

Saturday, August 24, 2019

Discuss the US immigration problem Essay Example | Topics and Well Written Essays - 250 words

Discuss the US immigration problem - Essay Example Since we already have a great number of illegal workers, it seems to me that the best solution for them is to have equal rights and obligations to those the US citizens have, as well as legalization of their status in the country. I take this position due to the fact that many US industries and manufactures greatly depend on the immigrants’ labor. However, this should be applied only to those who showed to follow our laws and live in peace with the nation, who have jobs, and are to become valued members of our society. Besides, such a step can be taken only after a profound analysis of the current situation is performed. If some are to be deported, this should not negatively influence our economy. On the other hand, I believe, there should be taken measured for complete reducing of the illegal workers’ inflow. In my opinion the government should take care of enforcing the existing land borders as well as immigration laws so that our borders are crossed only legally, and only by people whom our employers really need. Therefore, while I insist on a complete restriction of borders and immigration laws, I believe, those already working in the US must be given a right to stay in order to become the equal members of the

Friday, August 23, 2019

Critical analysis of an Artifact of popular culture Essay

Critical analysis of an Artifact of popular culture - Essay Example viewed, following with examination of two artifacts taken from it as well as identification of the audience for which it was intended; finally, the function of the meanings will be explored. The movie Nightcrawler presents a story which shows that some professionals are willing to sacrifice their ethical principles in order to keep the job. This largely contradicts with the conventional perception that â€Å"practical results often count more that do self improvement, ethics, or other principles† (Brummett 195). Speaking of the context of the movie, it would not be an exaggeration to point out that it largely employs different themes from the modern world when numerous people gained access to various electronic devices and the public is no longer interested in the news unless something extremely horrible is shown. Thus, the influence of technology should be viewed through the prism that it â€Å"is never composed of merely the electronic of mechanical but is also made up of the social uses of electronic or mechanical† (Brummett 295). In other words, the context for this text might be read as reactive since the plot of the movie is conditioned by the events that have already taken place and shaped the current state of affairs. There are several artifacts that should be analyzed in great detail. On the one hand, there is the camera which is constantly shown in the hands of the main character. Indeed, for the majority of people it is not able to convey any extraordinary message; however, in the context of the movie, as well as the kind of events that it becomes associated with, the ordinary camera becomes and important artifact. The next object on which the story also focuses is the radio that the main character bought. It is quite obvious that the acquisition of the two above mentioned objects was able to mark his â€Å"career† as a nightcrawler. While the camera and the radio are not usually associated together, they become and important tools that drive the

Thursday, August 22, 2019

The management of salivary gland infection Essay

The management of salivary gland infection - Essay Example The management of these two types of salivary gland infection is possible with certain preventive measures and treatments. In certain cases, treatment is not required for curing these infections. The acute bacterial infection of the salivary glands occurs because of two important physiological mechanisms. Firstly, there are certain bacteria present in the oral cavity. Due to poor oral hygiene, the salivary duct and parenchyma tissue inhabited by these bacteria is contaminated which results in the infection. Secondly, the obstruction of salivary gland results in the stasis of salivary flow through the ducts and parenchyma promotes acute suppurative infection. The bacterial infection can affect any of the three pairs of the salivary glands however the most commonly affected gland is the Parotid gland. Several physiological and anatomic factors attribute to the predilection of the Parotid gland's infection. The composition of the Parotid gland secretion is completely different from that of the submandibular and sublingual glands. The saliva secreted by the Parotid gland is serous while that of the other two glands have higher proportion of mucinous material. The kind of saliva secreted by the other two glands contains lysosomes and IgA antibodies, which serve an antimicrobial function in protecting these glands from the bacterial infection. Mucins also contain sialic acid, which agglutinates bacteria, preventing its adherence to host tissues. Finally, specific glycoproteins found in mucins bind epithelial cells, competitively inhibiting bacterial attachment to these cells. There are certain anatomic factors as well that contribute to the p redilection of the parotid gland's infection. Stensen's duct lies adjacent to the upper mandibular molars, whereas Wharton's ducts rests on the floor of the mouth near the tongue. Tongue mobility may prevent salivary stasis in the area of warton's ducts, reducing the rate of infections involving the submandibular gland. The submandibular gland is more prone to bacterial infection rather than the sublingual gland in spite of its composition. Sialothiasis can produce mechanical obstruction of the duct, resulting in salivary stasis and subsequent bacterial infection. Calculus formation is associated frequently with acute bacterial infections of the submandibular gland because Wharton's duct is far more likely to harbor a calculus than stensen's duct.85 % to 90% of salivary calculi is located in the submandibular duct. Submandibular secretions are more mucinous than parotid secretions and therefore more viscid. They are also more alkaline containing a higher percentage of calcium phosphates. These characteristics contributes to the formation of submandibular calculi, despite the submandibular gland's predisposition for calculus formation. The parotid gland remains the most common site of acute suppurative salivary infection. Sialography, a method used for diagnosis of the internal structure of the salivary gland can also result in the infection of the submandibular glands rather than sublingual glands. There are small and numerous sublingual ducts which may not allow the catheter to enter unless there are anatomic variations.[ Bailey, Byron , Healy, Gerald ., Johnson, Jonas , Jackler, Robert , Calhoun, Karen , Pillsbury, Harold ,

Vitality Health Final Paper Essay Example for Free

Vitality Health Final Paper Essay Vitality Health Enterprises, Inc., a manufacturer and distributor of beauty products, is at risk of losing market share in this highly competitive industry. James Hoffman, the newly appointed Vice President of HR, has been tasked with the evaluation of Vitality’s performance management system, to ensure that it is generating the outcomes Beth Williams, the CEO, is expecting. ISSUE IDENTIFICATION After a period of strong revenue growth, Hoffman is concerned that the workforce is becoming complacent. The research and development department is not producing quickly enough, resulting in a growing number of missed product launches. The company has realized a slow but significant turnover of highly talented research scientists, leading Williams and Hoffman to suspect that the performance management system is ineffective. ISSUE ANALYSIS Prior to 2009, Vitality was operating an old performance management system that failed to properly incentivize and recognize top performers and did not emphasize employee accountability. As a result, there was a lack of differentiation between top talent, average performers, and poor performers, which frustrated some of the company’s most valuable scientists and engineers. In an effort to keep the peace, managers categorized almost everyone as average performers, and because performance ratings were tied to merit-based wage increases, top talent felt slighted. Vitality used a flawed comparative ratio system to determine wage increases, which often resulted in giving low performers a greater raise percentage. Because high performers were not adequately recognized or compensated for their efforts, the performance management system failed to keep them engaged. In 2009, Vitality implemented a new performance management system based on forced distribution, which saw an increase in employee buy-in, but a decrease in  manager buy-in. Many managers disliked ranking their employees as it has the potential to cause conflict and animosity; however, top performers saw the new system as fair. Despite significant modification to the performance management system, problems still existed including a continuation of uniform ranking, and the mentality that the system was too rigid. Managers and employees had difficulty comprehending the new system, particularly considering there was little to no training. Thus, many of the issues share a similar cause poor implementation and thus poor understanding of the system. ACTION PLAN AND SOLUTIONS There are four interrelated issues that the following action plan addresses. These issues include the following: compensation related to performance, managers who give uniform rankings and do not rank new hires, a lack of training on the new performance management system, and managers who lie to employees about rankings. Each section of the action plan is designed to work in coordination with the other three sections in order to resolve these issues. To improve issues with compensation related to performance within the performance management system, we recommend eliminating all target percentages as well as constraints on the low achiever and unacceptable categories, and eliminating the use of the compa-ratio. By eliminating the target percentages and some of the constraints on the ranking, the flexibility of the performance management system will be increased. No manager will be forced to rank employees as top achievers, low performers, or under performers if there are none. However , the constraint for top achievers not exceeding 14% will stay in place to prevent managers from ranking all their employees as top achievers. To supplement this, we also eliminated the compa-ratio. Instead, top achievers will have the option of receiving a 3% raise plus stock options, or a 5% raise with no stock options, and average employees will receive a 2% raise with no stock options. No raises will be given to low performers or under performers. Thus, raises will be based only on performance and not on current salary. This will ensure that top performers are rewarded and properly incentivized. Since there will be no targets and no constraints to ranking everyone as average, managers may be tempted to take advantage of this and uniformly rank their employees. In order to prevent this, managers must be held  accountable for their appraisals of employee performance. According to Roberts (2002), accountability is one of five barriers to an effective performance appraisal, and he recommends that performance appraisal management be a component in manager ratings. Based on this research, we recommend that managers who uniformly rank their employees will get an unacceptable rank ing. As a result, managers will be accountable for differentiating between their team members and will not rank all employees as average. We also recommend changing the Not Rated ranking to New Hire to ensure that new hire performance is discussed and assessed. In this system, new hires with tenure of 6 months or less would have a ranking system that only includes new hires. This ranking system would be based on objectives that assess how well the employee is gaining knowledge of the company and his or her overall cultural fit. Therefore, the new employee would receive feedback on his or her performance as well as an initial understanding of the performance management process. Beyond compensation and rating issues, many managers and employees expressed confusion about how the new performance management system worked. Initially, when the transition was made to forced distribution, HR sent out a companywide email informing employees of the new system and later sent directors and managers a link to an online guidebook. However, no formal training was ever conducted. According to Elaine D. Pulakos (2004), an organizational psychologist specializing in performance management, training is essential when implementing a new performance management system because it not only teaches employees how to use the system but also motivates them to utilize it to its fullest capability. In order to remedy this lack of understanding, training for all employees at all levels must be administered within the next month. Specifically, it should consist of classroom training that emphasizes role-playing for providing constructive feedback during performance appraisal meetings. This role-playing will offer managers an opportunity to become more comfortable with delivering undesirable appraisals, which was identified as a barrier to proper system implementation. Moreover, providing classroom training indicates the importance of the performance management system because it demonstrates that the company is committed to the new system and values proper implementation of the system (Pulakos, 2004). Simply emailing an online guidebook does not emphasize this importance.  The final step in the action plan is to directly combat the issue of managers lying to employees about their performance ranking in order to avoid difficult conversations. Clearly, this practice not only jeopardizes the integrity of the system but it also diminishes its transparency. In order to remedy this, once HR has received and approved the performance rankings, they will send out an email to each employee with his or her ranking along with a brief summary explaining why he or she received that specific ranking. This email will be sent two days prior to an employee’s performance appraisal meeting with his or her manager. Consequently, managers will be discouraged from lying about rankings, and employees will be more prepared to enter these appraisals. This notification also serves as a way to begin the performance conversation and holds managers more accountable for delivering constructive feedback. By implementing this action plan, we believe many of the current issues will be resolved. However, in order to evaluate the effectiveness of these new practices, HR will collect survey data in two years. The collection of this data will use the same method as the performance management data collected in 2011. SOLUTION LIMITATIONS The proposed solutions address many issues of the new system; however, there are still some limitations. Specifically, managers could still manipulate the system by rotating their subordinates from year to year between the Top Achiever and Achiever rankings. Moreover, changing the percentage constraint of employees who are listed as Low Achiever (from the minimum of 7% to no minimum) and maintaining no constraint of the Unacceptable category could potentially allow managers to distribute no one in those ranks. The company, consequently, will have trouble identifying those who are actually low performers and those who are truly high performers. Secondly, the system still requires all managers to complete the evaluations during a specific time of year. Some managers complained that this practice was resource consuming when they should be utilizing this time and effort to complete more important and productive tasks. As a result, issues concerning divisional productivity and low quality evaluations are potential problems. Finally, the sheer nature of comparative performance management systems creates the  potential of conflicts among employees and managers or among employees themselves. Even with the adjustments to the new system, these conflicts may still arise. According to Aguinis (2013), collaboration and organizational goals are potentially in jeopardy when there is employee conflict. As a result, this further emphasizes the importance of carefully implementing the performance management system as well as ensuring that all managers and employees understand the system’s purpose and how it works. References Aguinis, H. (2013). Performance Management. Prentice Hall: Upper Saddle, NJ. Roberts, G. E. (2002). Employee Performance Appraisal System Participation: A Technique that Works. Public Personnel Management, 31(3), 333. Pulakos, E. D. (2004). Performance Management: A roadmap for developing, implementing and evaluating performance management systems. Alexandria, VA: SHRM Foundation.

Wednesday, August 21, 2019

Medical Device Regulations in the European Union

Medical Device Regulations in the European Union INTRODUCTION TO MEDICAL DEVICE REGULATIONS IN THE EUROPEAN UNION: A Medical Device under the jurisdiction of the European Union is defined as â€Å"an instrument, apparatus, appliance, material or other article, whether used alone or in combination, together with any software necessary for its proper application, which a) is intended by the manufacturer to be used for human beings for the purpose of i. diagnosis, prevention, monitoring, treatment or alleviation of disease, ii. diagnosis, monitoring, treatment, alleviation of or compensation for an injury or handicap, iii. investigation, replacement or modification of the anatomy or of a physiological process, or iv. control of conception; and b) does not achieve its principal intended action in or on the human body by pharmacological, immunological or metabolic means†.1 The clinical investigation and the subsequent introduction of a medical device in the European market is primarily regulated and governed by the MHRA (Medicines and Healthcare products Regulatory Agency) with the assistance of competent regulatory institutions called the Notified Bodies. â€Å"A Notified Body is a certification organization which the national authority (the Competent Authority) of a Member State designates to carry out one or more of the conformity assessment procedures described in the annexes of the Directives.†3 The MHRA regulates with the help of two sets of medical device regulations viz. the Statutory Instruments 2002 No.618 (Consolidated legislation) and 2003 No.1697. These legislations employ the three device directives issued by the competent authority into the european law. The directives help the manufacture in better understanding of the manufacturing and the requirments for inroduction into the market of the devices. These directives are: Directive 90/385/EEC: Active Implantable Medical Devices directive Directive 93/42/EEC: Medical Devices directive Directive 98/79/EC: In vitro Diagnostic Medical Device directive Directive 90/385/EEC: Active Implantable Medical Devices directive: This directive encompasses medical devices that are active(i.e powered) and implanted(i.e left in the human body). These include pacemakers, implantable defibrillators, implantable infusion pumps, cochlear implants and implantable neuromuscular stimulators etc. Regulations realizing the Directive came entirely into force in the United Kingdom on January 01 1995. Directive 93/42/EEC: Medical Devices directive: This directive covers an extensive array of devices from uncomplicated bandages to orthopaedic implants and high-end radiology apparatus. Regulations realizing the Directive came entirely into force in the United Kingdom on June 13 1998. Directive 98/79/EC: In vitro Diagnostic Medical Device directive: â€Å"This Directive covers any medical device, reagent, reagent product, kit, instrument, apparatus or system which is intended to be used for the invitro examination of substances derived from the human body, such as blood grouping reagents, pregnancy testing and Hepatitis B test kits. Regulations implementing the Directive came into force in the UK on 7th June 2000 with a transitional period until 7th December 2003. There is no clinical investigation system for in-vitro diagnostic medical devices. Performance evaluations of in vitro diagnostic devices that are performed outside the manufacturers premises should be notified to the UK Competent Authority in accordance with the Medical Devices Regulations 2002: Section 44.†2 The rationale backing these directives is to permit easy movement of the medical devices throughout the European Union whilst upholding high standards of device safety and up-to-the-mark quality. Classification of medical devices: Devices are classified purely based on risk associated with their use. Ranging from low risk to high risk, they are Class I, IIa, IIb and III. A classic example of a class III medical device is a cochlear implant, which is both active and implantable and thus comes under the purview of Directive 90/385/EEC: Active Implantable Medical Devices directive. Let us discuss in detail the regulatory requirments specified as per the MHRA to bring an active implantable cochlear implant into the market designated bt the European Union as the EFTA(European Free Trade Area). â€Å"Examples of AIMDs include: implantable cardiac pacemakers implantable defibrillators leads, electrodes, adaptors for 1) and 2) implantable nerve stimulators bladder stimulators sphincter stimulators diaphragm stimulators cochlear implants implantable active drug administration device catheters, sensors for 9) implantable active monitoring devices programmers, software, transmitters.†4 Cochlear Implants: â€Å"Cochlear implants are electronic hearing prostheses that bypass the damaged hearing components by providing electrical stimulation directly to the auditory nerve fibres in the cochlea. The electrical stimulation is interpreted by the brain as sound. Cochlear implants consist of an external microphone, speech processor and transmitter coil, and an internal stimulator (implanted under the skin just behind the ear) attached to a stimulation electrode which passes into the cochlea. A variation of the cochlear implant is the auditory brainstem implant where electrodes are implanted directly into the auditory area of the brainstem. This can be used in patients who do not have a functional auditory nerve.†5 The regulatory process of bringing a cochlear implant in the European market: It is mandated by law that the manufacturer who intends to bring the device into the EFTA abides by the Essential Requirments stated in the Directive 90/385/EEC: Active Implantable Medical Devices directive and demonstrate the compliance of the device with the safety and efficacy standards set forth in the directive. There are essentially two ways to do it viz. â€Å"either a compilation of the relevant scientific literature currently available on the intended purpose of the device and the techniques employed, together with, if appropriate, a written report containing a critical evaluation of the compilation; or the results and conclusions of a specifically designed clinical investigation†2 Product launch on the basis of evaluation and review of scientific literature can be considered as acceptable if equivalence can be scientifically demonstrated with a device existant in the market and routinely used in clinical practice. Equivalence has to be demonstrated w.r.t technology, critical performance, design, principles of operation, biological safety, population involved, conditions of use and clinical purpose. However, unless satisfactory evidence can be collected by means of scientific literature review, the use of a well-planned clinical trial/investigation should be considered as the best way to attest permissible levels of safety and efficacy. In case of scientific review or pre-clinical assessment, the following fees apply: Class I, IIa, or IIb other than implantable or long-term invasive:  £3,000 (Re-notification incase of objection by MHRA  £2,100). Class IIb implantable or long-term invasive, Class III, and active implantable:  £4,100 (Re-notification incase of objection by MHRA  £2,700). Applications for a proposed clinical investigation of the medical device should be made by filling the forms PCA1 and PCA2 along with the necessary information required by the clauses in the forms. Applications should be labeled clearly as â€Å"documentation only†. The use of English language is mandatory. Documentation should be clear and legible and remain so after reproduction. Electronic applications should be discussed with the MHRA. The manufacturer, for scrutiny by the MHRA should make a total of eight full submission copies available. The charges for the scrutiny of applications are laid out in the Medical Devices Regulations 2002: section 56. They are as follows: â€Å"Fees for Group A (low risk) devices are  £2,700 (initial application) or  £1,800 (resubmission). Increasing to  £3,000 and  £2,100 on 1st April 2008. Fees for Group B (high-risk) devices are  £3,800 (initial application) or  £2,400 (resubmission). Increasing to  £4,100 and  £2,700 on 1 st April 2008.†2 Applications should be forwarded to: Mrs Daniella Smolenska, Medicines Healthcare products Regulatory Agency (MHRA), European and Regulatory Affairs, Market Towers, 1 Nine Elms Lane, London, SW8 5NQ, Tel: 020 7084 3363, Email [emailprotected]. Approval from the MREC (Multi-centre Research Ethics Committee)/LREC (Local Research Ethics Committee) can be obtained along with the notification to the Competent Authority. However, a clinical investigation can begin only after approval has been obtained from the MREC/LREC and the Competent Authority has not raised an objection to the investigation within the 60 days time constraint period; or approval has been obtained from both the authoritative bodies. General Requirements: A well-defined clinical plan whose methodology and ethical considerations conforms to the standards set forth in the Medical Devices Regulations 2002: section 16 and section 29, the Active Implantable Medical Devices Directive, Annexes 6 and 7, and the Medical Devices Directive, Annexes VIII and X. Supplementary standards are set forth in Standard BS EN ISO 14155-1; 2002, â€Å"Clinical Investigation of Medical Devices for Human Subjects-part 1: General Requirements†, and BS EN ISO 14155-2:2002, â€Å"Clinical Investigation of Medical Devices for Human Subjects-part 2: Clinical Plan†. The CA should be notified incase of differences in the EU and non-EU protocols and the reasons for the same. â€Å"All applications must contain a statement (Active Implantable Medical Devices Directive: Annex 6,2.2; Medical Devices Directive: Annex VIII, 2.2): that the device in question conforms to the Essential Requirements except with regard to those aspects of the device that are to be investigated and that in respect of those aspects, every precaution has been taken to protect the health and safety of the patient. By signing this statement, the manufacturer is declaring that the device meets all of the relevant Essential Requirements, other than those subject to the investigation. Manufacturers must therefore ensure that at the time a notification is made to the Competent Authority, they have all documentation required to demonstrate conformity with the relevant Essential Requirements available for submission to the Competent Authority when requested.†2 Device information like name, model, materials used and sterilization standards etc must be provided as set forth in the directive. Pertinent information about the clinical investigation plan, investigation parameters and design, data collection and analysis methods etc. should be made available to the CA. It is strongly advised that Class III devices follow a well-designed post-marketing plan under the Medical Devices Vigilance. Extra care should be taken when labeling devices meant for clinical investigations. â€Å"All devices intended for clinical investigation must bear the wording exclusively for clinical investigation (Medical Devices Directive: annex 1, para 13.3(H) and the Active Implantable Medical Devices Directive: annex 1, 14.1).†2 Reporting of adverse incidents: â€Å"A serious adverse incident is one which: led to a death led to a serious deterioration in the health of the patient, user or others and includes: a life threatening illness or injury a permanent impairment to a body structure or function a condition requiring hospitalisation or increased length of existing hospitalisation a condition requiring otherwise unnecessary medical or surgical intervention and which might have led to death or serious deterioration in health had suitable action or intervention not taken place. This includes a malfunction of the device such that it has to be monitored more closely or temporarily or permanently taken out of service led to foetal distress, foetal death or a congenital abnormality or birth defect might have led to any of the above†2 All such incidents should be recorded and reported to the CA as set forth in the Regulation 16(10)(a) of the Medical Devices Regulations 2002 (SI 618) and Annex X of the Medical Devices Directive 93/42. Final written report: A report in conjunction with the Medical Devices Directive (Medical Devices Regulations 2002: Section 16(10) and Section 29(9)) should be submitted to the CA for devices undergoing investigation for a CE marking. However, Class III devices need to be highly regulated, before, after and during the clinical investigation. Owing to the high risks associated with their use, some say the risk can be quantified only as social and not scientific. â€Å"Risks, rather than being inherent within these implant devices, may be seen as socially derived, in processes of negotiation and conflict such as those in the case of hip and breast implants†¦.most recently, in the wake of the controversies surrounding breast implants and the 3M Capital hip, attention has been drawn to the uneven performance of notified bodies in the EU, which approve new products. This has led to the setting up of a new European Notified Bodies Operations Group (NEBOG) and calls by the MDA for all implants to be reclassified as high risk, Class III. A review of the operation of EU EMDD is also about to begin (MDA, 2001b). It thus appears that increased political scrutiny is being focused on this sector.†6 BIBLIOGRAPHY: THE MEDICAL DEVICES REGULATIONS: IMPLICATIONS ON HEALTHCARE AND OTHER RELATED ESTABLISHMENTS, BULLETIN No. 18, COMPETENT AUTHORITY (UK), Amended January 2006 EC MEDICAL DEVICES DIRECTIVES GUIDANCE FOR MANUFACTURERS ON CLINICAL INVESTIGATIONS TO BE CARRIED OUT IN THE UK, COMPETENT AUTHORITY (UK), Updated November 2007 THE NOTIFIED BODY, BULLETIN No. 6, COMPETENT AUTHORITY(UK), Amended January 2006 http://www.mhra.gov.uk/Howweregulate/Devices/ActiveImplantableMedicalDevicesDirective/index.htm, Last Date Accessed: April 08 2008 http://www.mhra.gov.uk/Safetyinformation/Generalsafetyinformationandadvice/Product-specificinformationandadvice/Cochlearimplants/index.htm, Last Date Accessed: April 08 2008 Kent, Julie and Faulkner, Alex (2002) Regulating human implant technologies in Europeunderstanding the new era in medical device regulation, Health, Risk Society, 4:2, 189 209 Medical Device Development: From Prototype to Regulatory Approval, Aaron V. Kaplan, Donald S. Baim, John J. Smith, David A. Feigal, Michael Simons, David Jefferys, Thomas J. Fogarty, Richard E. Kuntz and Martin B. Leon, 2004;109;3068-3072 Circulation, DOI: 10.1161/01.CIR.0000134695.65733.64,Circulation is published by the American Heart Association. 7272 Greenville Avenue, Dallas, TX, 72514, Copyright 2004 American Heart Association. All rights reserved. Print ISSN: 0009-7322. Online, ISSN: 1524-4539.

Tuesday, August 20, 2019

Red Bulls Marketing Strategy

Red Bulls Marketing Strategy All big brands around the world are now shifting towards the phenomenon of globalization. A product is no more confined to geographical boundaries. Globalisation calls for global marketing strategies being implemented around the world to resonate the brands identity and its image to target customers. A synonymous marketing strategy is cost-effective and this is the strategy applied by many big companies around the world. However, experts also say that this is not always a wise strategy because consumer behaviour around the world varies from culture to culture and from nation to nation. For instance, an American consumer will react and respond differently as compared to a Nepalese consumer. Thus, while implementing global marketing strategies, a wiser move would be to tweak it, customise it, and to relate it with the local consumer behaviour. Similarly, few international big names in Nepal have only implemented their global strategies and are not probably exploiting the huge potential they have. One such case is that of Red Bull in Nepal. Since the entrance of this drink in Nepal, it has done well enough to survive in the Nepalese market as compared to some of the other energy drink brands. Red Bull has implemented its global marketing strategy such as unconventional method without really evaluating its effects on the customer loyalty in Nepal. Thus, the question still remains whether the customer loyalty is influenced by Red Bull in Nepal that uses global unconventional marketing strategies. Statement of problem Red Bulls marketing strategy around the world is to use unconventional strategies that involve guerilla stunts and buzz generating tactics to communicate to their customers. Guerilla marketing is based on below-the-line (BTL) activities where brand recall is created through events and stunts that are mostly related to sports (X-games), parties, adventure and music. The sports Red Bull supports are ones that are not popular in Nepal. Formula one and X-games are not really popular. Similarly, Red Bull does a lot of promotional events at discotheque to enhance its brand. But this is not applicable in Nepalese situation because we dont have any such type of place. This is where the problem lies for Red Bull in Nepal. Like everywhere, the strategy depends on unconventional marketing which is not applicable and does not relate to the Nepalese culture and tradition. For example, how many people in Nepal would be interested in free style football? Hence, if they conduct a sports event based on free style football, still many people who are unrelated to these events will not consider joining there. Also, the idea of X-games that involve moto (motorcycle racing), skiing (ski big air, skier cross), snowboarding, snowmobile, Inline skating, skateboarding, and car racing are not played in Nepal. Thus, any event based on these games would be absolutely useless here. We do not have well organised night clubs and discotheques, as already described. These areas are the best places where most of Red Bulls promotions and selling would take place around the world. Red Bull also conducts a lot of its adventurous events around the world in deserts and mountainous areas. In these contexts, security is the prime issue. One would also argue Red Bull should use above-the-line (ATL) methods of promotions (e.g. television, print and radio) to communicate to a larger audience. The bottomline here is that Red Bull Nepal is not considering the local culture and consumer behavior and is blind ly implementing its global marketing strategies to communicate with its customers. That is why the current research has been done to find out the effectiveness of Red Bulls global unconventional marketing strategy, for example BTL method, in customer loyalty in Nepal. Aim and Objectives Aim The current research was conducted to find out the effectiveness of Red Bulls global unconventional marketing strategy (e.g. BTL strategy) in customer loyalty in Nepal. Objectives To analyse the situation of consumers in energy drink Do they consume energy drink? Are they aware of energy drinks available in markets? Do they prefer any energy drinks? To analyse the factors that affect potential target market of Red Bull in Nepal. Do gender, age-groups, marital status and income of consumers have any effect on Red Bull market in Nepal? Analysis of the Red Bull brand in customer loyalty What consumers think about Red Bull quality? Why consumers think Red Bull was unique among drinks? What consumers think about Red Bull brand? Will Red Bull consumers keep on purchasing it on future? Will Red Bull non-consumers consider purchasing it on future? To analyse the effectiveness of Red Bulls marketing strategy in customer loyalty in Nepal? Will sampling affect customer loyalty? Will promotion events affect customer loyalty? Any suggestion in enhancing customer loyalty? Justification of the study At the end of this study, our research will help understand the effectiveness of Red Bulls global unconventional marketing strategy (e.g. BTL strategy) in customer loyalty in Nepal. In addition, this study will be important to analyse the Red Bull brand in customer loyalty. A detailed report would be generated regarding consumer behavior, preferences, attitudes, reactions, lifestyles, and characteristics which would help us prepare an in-depth analysis on our research objectives. An exciting prospect of this project would be to find out to what extent Red Bull possesses the ability to reach markets and reach consumers as using unconventional marketing strategies limits their reach and opportunities. Lastly, the study will generate recommendations that will be crucial in Red Bull marketing strategy in future. Scope of the study The study comprises of conducting a research in different parts of Kathmandu targeting individuals and groups (principally university and college students, celebrities and media related persons) falling into our target criteria in order to find out the effectiveness of Red Bulls unconventional marketing in Nepal. The research also involves interviews with industry experts to gain their viewpoints and comments on the matter which was important to understand about Red Bull markets in this country. CHAPTER-2 LITERATURE REVIEW Unconventional marketing In the corporate world, the term marketing simply refers to activities carried out by organizations or individuals in order to generate awareness capture interest and boost sales. There are mainly two strategies to generate marketing, for example conventional and unconventional marketing. The first, conventional marketing, a traditional marketing technique, mainly refers to the use of media or ATL activities for the purpose of promoting the brand. These conventional methods comprise of television advertisements, print advertisements in newspapers, magazines, broadcasts on radios, billboards or hoardings and other sources of media. Unlike conventional marketing, the unconventional marketing refers to all those forms of marketing that require lower budgets and more time, imagination, creativity and a lot of energy rather than monetary support. Compared to conventional marketing that lacks an interaction between the organization and the end user, unconventional strategy is more interact ive with customers and gets them really engaged with the activity itself. Examples involve public interceptions, random giveaways or free sampling, and publicity stunt (PR). Unconventional marketing is synonymously used as guerrilla marketing, buzz marketing, public relation tactics, viral marketing, social media, BTL in various literatures. This marketing campaign is principally interactive with consumers who are unexpectedly targeted in unexpected places. Therefore, this campaign is aimed at generating buzz and viral marketing via a unique, engaging and thought-provoking ideology (Romane Knight, The Best Guerrilla Marketing Strategies, http://marketingnotesja.hubpages.com/hub/The-Best-Guerrilla-Marketing-Strategies (Blog), accessed on 21 September 2012). While both forms of marketing result in increased awareness, persuasion and education of the brand, unconventional marketing helps build a bond between the brand and the customer. The Exforsys Inc. website (2011) states that unconventional marketing is an experiential marketing which appeals to the emotions. The customer develops an emotional attachment to a brand, product, person, or idea. Therefore, unconventional marketing greatly enhance the customer interaction in order to gain valuable insights and consequently enhance loyalty. Customer loyalty When a company or a business organisation is opened, it is aimed to generate and retain a loyal customer who would continuously attach with the company in the context of its long-term cost-effective business. The ideology of retaining a long term relationship with brand loyal, i.e. the customer who has the continuous requirement of the same product is called customer loyalty. Customers will leave the company or organisation if it is not aimed at curomer loyalty. Various explanations have been found regarding customer loyalty in literatures. Sivadas and Baker-Prewitt (2000) said there is an increasing recognition that the ultimate objective of customer satisfaction measurement should be customer loyalty. Anton (1996) described satisfaction is positively associated with repurchase intentions, likelihood of recommending a product or service, loyalty and profitability. In 1997, Guiltinan, Paul and Madden (1997) said that satisfied customers are more likely to be repeat (and even become l oyal) customers (Guiltinan, Paul and Madden 1997). While these statements indicate that customer satisfaction is one of the factors of customer loyalty, customer dissatisfaction does not always lead to a reduction in loyalty. For example, even dissatisfied, some customers may be loyal because they dont expect to get any better service even if they did change (Reichheld 1996). In addition to customer satisfaction, brand loyalty may be another factor which may play in customer loyalty. Sometimes, customers can also feel a sense of loyalty and emotional attachment to a particular brand (Fournier 1998). However, the relationship of the brand with a customer is a two-way process in which it is not concerned how a customer feels to a particular brand, and this association is just preference or proclivity (Peppers and Rogers 2004). Customer Acquisition The assurance phase Customer Development The education bonding phase Customer Commitment The sales phase Customer Retention The continuation activity phase Customer Loyalty Cycle Satisfaction Satisfaction Satisfaction Satisfaction S2 S1 S3 S4 Figure 1: Customer Loyalty Cycle as a Business Model used by the Scuba Schools International (SSI) Dive Centres. They acquire students and convert them into loyal customers. S1: Step 1, S2: Step 2, S3: Step 3 and S4: Step 4 (Adapted from http://divessi-indo.com/acquisition/systems.php, accessed on 24 September, 2012). Finally, price may be one of the determining factors of customer loyalty (Fisher 2001). For example, good pricing is an important factor in encouraging customer loyalty (Abratt and Russell 1999). In contrast, if a customer is loyal to a brand, he/she will not care of future price changes (Clark et al. 1995) indicating price may not play a role in customer loyalty. While customer loyalty depends on different factors, the process of customer loyalty is not an easy task in business. The process of customer loyalty can be achieved in 4 steps (Figure 1). The first step is called the assurance phase in which customer is acquired via different marketing or business strategy. Then, customers are made satisfied and then, they are given different trainings and education programs to keep them bonded. This is the education and bonding phase and is the second step of customer loyalty. Again, the customers are made satisfied and customers make commitment in the sales phase or third phase. The satisfaction to customers is continued and customers will stick to the same brand or the same company in the continuation and activity phase. This is quite important to keep the customers retention. The cycle is repeated followed by customer satisfaction. Therefore, customer satisfaction may be one of the important factors in customer loyalty (Figure 1). Measuring marketing effectiveness Companies spend billions of dollars annually on marketing. Because of increasingly competitive markets, firms strive to produce higher and higher profits. This leads to calls for justifying the marketing expenditures (Rust et al 2004). Powell (2002) states that marketing effectiveness is the quality of how marketers perform their marketing activities in order to optimize their expenditures and achieve both short and long term goals. The difference between marketing effectiveness and efficiency is explained by Rust et.al (2004) as they state for example, that price promotions may be efficient in delivering short-term revenues and cash flows but ineffective in the long run if it is destroying profitability and brand equity in the long run. Figure 2: The Chain of Marketing Productivity (Adapted from Journal of Marketing 2004, vol. 68, pp. 76-89). The Chain of Marketing Productivity is a conceptual context that can be utilized for evaluating marketing effectiveness (Figure 2). This model explains the effects of certain marketing actions of a firm on its position and standing in the market. Rust et al (2004) believe that every firm must have a business model which is used to track the effectiveness of marketing expenditures in influencing the knowledge, beliefs and emotions of the customers that ultimately leads to purchase behaviours. They stress on the fact that marketing efforts such as advertising and product improvements help in building long term assets such as brand equity. These long term assets are leveraged to deliver profitability in the short run. Customer thoughts, beliefs and feelings that lead to purchase behaviours are usually measured through non-financial measures such as attitudes and behavioural intentions. These non-financial measures drive financial performance measures like sales, profits and stock values in the short and long runs (Rust et al 2004). Behaviours Hoyer and Macinnis (2009) states that consumer behaviour reflects the sum of all consumer decisions from acquisition to disposition of goods, services and experiences. Behaviour of the consumers is a dynamic process reflecting acquisition, usage and disposition activities. The questions of what, why, how, when and how much to acquire, use and dispose a particular offering can have a major impact on how strategies for marketing and communications are developed. In order to produce, communicate and provide appropriate goods and services, marketers need rich insights on consumer behaviours and what they value (Hoyer Macinnis, 2009). Marketing efforts such as communications and promotions have a long term impact on consumer behaviour. In recent years, consumers have become more price- and promotion-sensitive over the time because there is a lot of information and choice available to them. This is why more and more companies are attempting to influence consumer behaviours through marketing efforts such as promotions and communications (Mela, Gupta Lehman, 1997). Sales Revenue Sales revenue numbers are the most objective measures of marketing effectiveness. Financial benefits, such as sales, from particular marketing efforts are assessed in numerous ways. One traditional method is the Return on Investment (ROI) which is the relative return that is obtained from the required expenditure. Financial impacts like these affect the firms financial position in terms of profit and cash flow. However, these methods are controversial and ineffective if relied upon solely. This is because most of marketing efforts are played out in the long run; there effects cannot be observed in the short run, while methods such as ROI only assess short term effectiveness of marketing efforts. A better usage of such methods must incorporate future cash flows so as to predict and determine the long run marketing effectiveness (Rust et al 2004). Brand Equity Brand equity is a relatively new concept which has developed from the past two decades as core marketing concept. It suggests that brand value can be derived from the discounted cash flows received from the sale of products/services as a result of associations of the brand with those products/services (Rust et al 2004). Rust et al. (2004) further cite Tybout and Carpenter on the enormous brand equity of Home Depot which was the US$84 billion in 1999. This shows that even though there may be a short-term divide between ROI and marketing efforts, it may not be completely ineffective due long laSting value offered through brand equity. Elements of brand equity such as customer lifetime value, brand awareness, associations and recognition can be determined by recognizing prevailing perceptions regarding the brand and functional as well as emotional value propositions that the brand provides (Dunn Halsall, 2009). The impact on customers and resultant developments in valuable assets such as brand and customer equity influence a brands market share and revenue, hence, enhancing its competitive position in the market. Long term benefits of these assets can increase customer responsiveness to brands and its extensions, willingness to pay premiums, referrals, increased usage rates, lower after sales support costs, customer retention and loyalty. All of these factors reflect a larger market share to be enjoyed by the brand with guaranteed greater profitability (Rust et al 2004). There is a wealth of means to measure market effectiveness. Methods to evaluate marketing tactics and impact of marketing expenditures provide the necessary tools to affect the practice of management and to bring further credibility to marketers. From an accounting standpoint, marketing productivity must be categorized into modifications in financial assets as well as intangible assets such as brand equity (Rust et al 2004) . Red Bull-History Red Bull is a popular energy drink that had been manufactured since the early 1962 by the TC Pharmaceutical Co., in Thailand by Chaleo Yoovidhya. The name of the company was subsequently changed into Red Bull Beverage Co. Ltd. It was introduced into the Europe by the Austrian guy Dietrich Mateschitz, who found out that one of the Thai energy drink called Krating Daeng (Thai: Red Bull) was good at soothing the Jetlag. He finally realized that the Asia has a wide potential market for Energy Drinks and there was no such kind of product available in the West or the Europe. In 1984, he established an Austrian company called Red Bull GmbH that sold about a million cans in 1987. Consequently the sale was expanded to other countries like the UK, Germany, Switzerland and others (http://www.fundinguniverse.com/company-histories/red-bull-gmbh-history/). Throughout the world, it is the leader in the energy drinks market and has about 70% of the market share and has annual sales of billion dollar s (Data Monitor, Red Bull GmbH, 2004). Red Bull-Branding When introduced to the markets of the world, very few believed in the successful potentiality of Red Bull as a brand and product. The mere concept of energy drink was brought into inception by Red Bull and most believed that such a confined product category of energy drink was not required when you had other options such as tea or coffee as energy boosters. Beardwood (2010) remarked that Red Bull might be a slightly safer alternative to alcohol. Although there are negative assumptions related to Red Bull brand, it has now become the leading energy drink manufacturer around the world. Regani in 2006 believes that the soul reason of the success of Red Bull in marketing is due to its audacity to think out of the box and its trend setters rather than followers (Regani (2006). Red Bull-The brand While considering Red Bull as a brand, it reflects energy, enthusiasm, active life, trend setters, adventurous and everything that is about youth and its whereabouts. When a person is found to consuming Red Bull, the image created in mind is a cool and trendy one and that is the kind of positioning they have achieved as a brand. All brand managers at Red Bull maintain that the positioning of Red Bull will never change no matter what the situation is, as that is what Red Bull, as a brand has thrived on. Red Bull is more about the brand than the product itself. According to Gschwandtner (2004), it is not Red Bulls sales strategy that helps it sell like hot cakes around the world, but it is its innovative branding strategy that has helped it become the number one energy drink name of the world. Red Bull-Marketing strategy across the world Red Bull as a brand is rebellious in nature and it certainly proves the kind of unconventional marketing strategy it has chosen. They absolutely refuse to advertise and use some of the conventional modes of promotions such as billboards, banner advertisements, taxicab holograms and blimp in a way that many brands would opt to do. Even their TV spots are very different from others. Played only on niche channels, they are merely sketches of a mysterious Austrian artiest that tries to amuse the audience more rather than educating them. They completely pursue unconventional marketing techniques to build the brand that majorly includes buzz generating tactics, event-based marketing, hiring brand ambassadors, supporting student projects, free sampling and others. Rather than going on mass, Red Bull targets underground style with BTL activities. It aims to produce viral buzz by paying college going students, disc jockey (DJ)s and young opinion leaders to host events and parties where the drink can be served. These are the sort of parties Red Bull encourages its ambassador to lead or organise as it aims to associate its brand with such events. Therefore, strong Red Bull branding can be observed at club, cafà © and discotheque where young crowds are mostly present. Red Bull does not spend on advertising and flashy celebrity endorsement. They hire hip youngsters, students and unconventional sports athletes to endorse their brand and promote it. These not only cost less but are also more effective as they are closest to the target market and know the required consumer behaviors. Besides that Red Bull organize and sponsor extreme sports events like the X-games and freestyle football which against complements their strategy of unconventional marketing. Campaigns Their campaigns are mostly based on organizing events that are associated with the brand. These events usually include unconventional sports, parties, student based events and exhibitions. They use such events to heavily brand their product using all kinds of aesthetics and tools. Plus, they also sample at these events to generate product trial and to let their target consumer experience the functionality of Red Bull. Their most recent campaign was the world tour of free style biking champion Kenny Belaey who was taken to all Red Bull operating countries where he performed stunts at different schools, colleges and universities. This event was used to build an impression for Red Bull as an adventurous, outrageous and unique brand. Sampling was also conducted at all stunt venues. Before the tour of Kenny Belaey, Red Bull organized the Free Style footballing competition all around the world where youngsters flaunted some cheeky skills to win the major prize of going to the World Cup in South Africa. Publicity stunt/buzz generating tactics The main motive of Red Bull behind using unconventional and unique marketing strategies is to generate or create people talking about them that gradually support to promote them. They aim to create a buzz through their events that is why they do not prefer using the conventional modes of communication (e.g. TV, radio and print media). Red Bull aims to create a viral fever through its events where people are amazed by the activities they perform and talk about it. The message spreads like wild fire that is the thing each Red Bull brand manager or brand ambassador targets in all its operating countries. Main motive is to do something so outrageous and unique, that people keep talking about it. Therefore, the brand is both getting the required mileage and developing a customer base for itself. A small example of how Red Bull tried to generate a buzz was the high jump that their hired athlete attempted from the tallest buildings in all the Red Bull operating countries. Media was invited to the stunt and heavy Red Bull branding was exhibited. There was great hype and anticipation because of such an outrageous attempt being made by a person. People kept talking about it and there was a certain buzz about this stunt. The venues for the stunt were heavily branded with Red Bull aesthetics to demonstrate that it is Red Bull who owns the event. The stunts were successfully completed in all Red Bull operating countries with the media heavily publishing it on TV, print and radio. The amazing factor was achieved as people were talking about it and this was exactly what Red Bull wanted to achieve with this stunt. In this context, it might not be selling the product through these stunts but it is actually developing the brand as an adventurous and unique one and also that it is creatin g a buzz about Red Bull which is basically the target and aim of the Red Bull brand manager or ambassador at the closing of the event. Endorsements Red Bull does not really rely on celebrity endorsement as that is not its style. What it does is acquiring sports teams around the world and supporting them as its official sponsor. The following endorsements are currently made by this brand: Red Bull is the official sponsor of all X-games conducted around the world. This endorsement complements their marketing strategy of being unconventional. All venues and player dresses are Red Bull branded and heavy sampling is done at these events. Red Bull has acquired two football teams around the world. One plays in the Major League Soccer in the United States of America and is known as the New York Red Bulls (http://www.newyorkredbulls.com/), accessed on 25 September, 2012). The other one is in the Austrian Football League and is known as Red Bull Salzburg (http://www.austria-salzburg.at/, accessed on 25 September, 2012). Both the teams have their kits branded with Red Bull. Red Bull Salzburg even have their stadium named after Red Bull and is called the Red Bull Arena. One can easily notice the heavy branding of Red Bull at the stadium. This is an effective plan that involves the heavy media coverage of football all over the world. Red Bull owns a Formula One team which has been doing incredibly well since the acquisition took place (http://www.formula1.com/news/headlines/2010/5/10796.html, accessed on 25 September, 2012). The car and the drivers dress are completely branded with Red Bull logos. This is again a very effective because Formula One racing gets a lot of coverage around the world and gives Red Bull the required mileage in its target audience. Red Bull endorses the major stars in unconventional sports and gaming. A stand out example is Kenny Belaey who has been supported by Red Bull throughout his career as a free style biker (http://www.tribalzine.com/?Kenny-Belaey-after-the-success-of, accessed on 25 September, 2012). Sampling through brand ambassadors Another strategy of the marketing by Red Bull is the contract with brand ambassadors at schools, colleges and universities to represent the brand at social events and hangouts. These brand ambassadors are given cartoon/s of Red Bull to sample at parties and spots where Red Bull might be needed. These situations occur when students are in mental or physical stress due to various reasons, for examples sports events or time of academic examinations. The idea is to hire cool college going students to represent the brand amongst its intended target market. Another promotional strategy is involved in educating consumers. Red Bull organises travel in by its staffs in a car that carries large cans of Red Bull. The Red Bull staffs target those individuals who lack energy and wishes of energy. Then, the staffs give a free can of Red Bull to these people. This strategy seems to be successful during the introduction of Red Bull into public. Red Bull-Establishment in Nepal and structure Red Bull was finally launched in Nepal in 2002 and since it has been a leader in the market with relatively lesser competition. Red Bull was brought to Nepal by S.M. Chawla Company that only handled distribution of Red Bull initially. When the headquarters in Dubai assessed the sales in Nepal, they decided to officially start their operations in an office of their own. In 2004, Red Bull Nepal was established with three functional departments namely Marketing, Sales and Finance. Red Bull is currently being operated in Kathmandu with the Asian head office being in the United Arab Emirates (Figure 3). It has set up its premises in all three cities where distribution and marketing operations are executed. The current organizational structure of Red Bull Nepal is shown in Figure 3. Figure 3 : The current organizational structure of Red Bull Nepal. Marketing The current organizational structure of Red Bull Nepal is governed by Asian Head Office. This office primarily plans and executes BTL promotional activities for Red Bull. Understanding the consumer need and coming up with activities to fulfill them is one of their most important tasks. Pre- and Post- event communications of all promotional activities are also taken care of by this office. Each city has one marketing head and three Student Brand Managers hired from popular universities to work as a team. Marketing department also handles communication via social media like Facebook and others. Sports and Events This is a dedicated team that plans around the year activities based on sports and other functional events. Red Bull conducts all its marketing through guerilla style and that is why this department has its special importance. They primarily plan and execute accompanied by collaboration with the marketing department. Finance Finance Department consists of a precise and dedicated full-time team member. The finance team distributes the budget for executing the marketing activities. This department also looks after the wage control system. The team also maintains and keeps track record of monthly sales. This department submits the monthly reports of sales performance to the head office in Dubai. Communication This department handles all the pre- and post-event communication of Red Bull events and activities through all media that include TV, print, radio and social media. This strategy is similar to the idea of communication in unconventional marketing of Red Bull brand to its audience. This department actively stays in touch with people in the media to disseminate news about everything that Red Bull is doing not just in