Advertising, What Is It ? :: Free Essay Writer

Advertising, What Is It ? Advertisements are methods used to commercialize a product or anything else, such as AA meetings, a garage sale, etc. Advertising is used mainly to influence specific audience or all audiences to buy the product. For example, my product is advertising Reebok and is concentrating on people who play American Football. The advertisement is using the testimonial* method to advertise Reebok. The purpose for advertising is to commercialize a product or anything else to a certain audience or to any audiences. Another purpose for advertising is to persuade people to buy the product so that you'll get more money. A third purpose is to make the company a bigger name by getting more buyers. For example, the purpose of my advertisement is to persuade any American Football players to buy Reebok. I think advertising is necessary in the point of view of a company owner. Because for his company to prosper, he needs buyers, and without advertising he'll have less buyers which will slow down his company's growth. But in my opinion, I don't think advertising is necessary because we can live with less products. It might even be better with no advertisements because T.V shows and basketball games would be on continuously without any commercial interruptions. For example, my advertisement is advertising Reebok, but I don't need it, I can live with slippers or nothing at all; nevertheless, wearing a pair of Reebok shoe would be more comfortable. I think advertising is the right to choose. When something is advertised, it does not mean that you have to buy it, but it is giving you a choice. For example, my advertisement is trying to persuade me to buy Reebok, but it is just giving me one choice of my several choices of sportswear.

The Deaths of Antigone and Creon :: Free Essay Writer

The Deaths of Antigone and Creon Antigone and Creon are the main characters of the play Antigone written by Sophocles. Antigone is the daughter of Oedipus, who was a major figure of ancient Greek myth. Oedipus accidentally killed his father and married his mother. Because of that act, Oedipus ended up cursing his family and died a horrible death. After his death, his sons inherited his kingdom and in a power struggle ended up killing each other. One of the sons, Polynices attacked the city to try and claim power from his brother. But since both of the brothers died and the city was not taken Polynices was labeled as a traitor whereas the other brother who died defending the city was celebrated as a hero. Creon decreed at the beginning of the play Antigone that no one was to bury the body of traitorous Polynices. Antigone felt that it was here responsibility to bury the body because he was still a member of her family. This led to a huge argument with Creon who felt he shouldn’t be crossed because he was the leader of the state. Eventually both Creon and Antigone are destroyed by the gods (and by each other) through their own actions. Antigone is a powerful character, strong-willed, determined and at times self-righteous. She is contrasted by her sister Ismene, who is weak and powerless. Though Antigone is a powerful character, she has no real political power and is dominated by one man, Creon. Creon is both the ruler of the state as well as the patriarch of her family. Antigone was raised by Creon’s house after her own father went in to exile. Antigone is betrothed to Creon’s son, Haemon, further cementing Creon’s power over her. There is one aspect of life that Antigone does have legitimate power in and that is her family, especially her blood line. In ancient-Greek culture the women’s place was in the home, she was responsible for household things and often wasn’t even allowed to leave the house. It is because of this responsibility that Antigone needed to bury her brother Polynices even though it went against the decree of Creon. Antigone also had the gods on her side. It was an unwritten rule of ancient Greek society that the dead must be buried, otherwise bad things may happen. This rule, because it was unwritten and therefore innate, was protected by the gods, specifically Hades, the god of the underworld and family. The Deaths of Antigone and Creon :: Free Essay Writer The Deaths of Antigone and Creon Antigone and Creon are the main characters of the play Antigone written by Sophocles. Antigone is the daughter of Oedipus, who was a major figure of ancient Greek myth. Oedipus accidentally killed his father and married his mother. Because of that act, Oedipus ended up cursing his family and died a horrible death. After his death, his sons inherited his kingdom and in a power struggle ended up killing each other. One of the sons, Polynices attacked the city to try and claim power from his brother. But since both of the brothers died and the city was not taken Polynices was labeled as a traitor whereas the other brother who died defending the city was celebrated as a hero. Creon decreed at the beginning of the play Antigone that no one was to bury the body of traitorous Polynices. Antigone felt that it was here responsibility to bury the body because he was still a member of her family. This led to a huge argument with Creon who felt he shouldn’t be crossed because he was the leader of the state. Eventually both Creon and Antigone are destroyed by the gods (and by each other) through their own actions. Antigone is a powerful character, strong-willed, determined and at times self-righteous. She is contrasted by her sister Ismene, who is weak and powerless. Though Antigone is a powerful character, she has no real political power and is dominated by one man, Creon. Creon is both the ruler of the state as well as the patriarch of her family. Antigone was raised by Creon’s house after her own father went in to exile. Antigone is betrothed to Creon’s son, Haemon, further cementing Creon’s power over her. There is one aspect of life that Antigone does have legitimate power in and that is her family, especially her blood line. In ancient-Greek culture the women’s place was in the home, she was responsible for household things and often wasn’t even allowed to leave the house. It is because of this responsibility that Antigone needed to bury her brother Polynices even though it went against the decree of Creon. Antigone also had the gods on her side. It was an unwritten rule of ancient Greek society that the dead must be buried, otherwise bad things may happen. This rule, because it was unwritten and therefore innate, was protected by the gods, specifically Hades, the god of the underworld and family.

The Integrity and Strength of Mark Twains The Adventures of Huckleberr

The Integrity and Strength of Huckleberry Finn  Ã‚     Ã‚  Ã‚  Ã‚   When one is young they must learn from their parents how to behave. A child's parents impose society's unspoken rules in hope that one day their child will inuitivly decerne wrong from right and make decisions based on their own judgment. These moral and ethical decisions will affect one for their entire life. In Mark Twains, Adventures of Huckleberry Finn, Huck is faced with the decision of choosing to regard all he has been taught to save a friend, or listen and obey the morals that he has been raised with. In making his decision he is able to look at the situation maturely and grow to understand the moral imbalances society has. Hucks' decisions show his integrity and strength as a person to choose what his heart tells him to do, over his head.   Ã‚  Ã‚  Ã‚  Ã‚   Huck has been raised in a high-class society where rules and morals are taught and enforced. He lives a very strict and proper life where honesty and adequacy is imposed. Huck being young minded and immature, often goes against these standards set for him, but are still very much a part of his decision-making ability and conscience. When faced to make a decision, Hucks head constantly runs through the morals he was taught. One of the major decisions Huck is faced with is keeping his word to Jim and accepting that Jim is a runaway. The society part of Hucks head automatically looks down upon it. Because Huck is shocked and surprised that Jim is a runaway and he is in his presence, reveals Hucks prejudice attitude that society has imposed on him. Huck is worried about what people will think of him and how society would react if they heard that Huck helped save a runaway slave. The unspoken rules th... ... Ed. Paul Lauter, et al. 2nd ed. Vol. 2.   Lexington:   Heath, 1994.   236-419.   Hoffman, Daniel.   "Black Magic--and White--in Huckleberry Finn."   Adventures of Huckleberry Finn:   An Authoritative Text Backgrounds and Sources Criticism.   Ed. Sculley Bradley, et al.   2nd ed.   New York:   Norton, 1977.   423-436.   Jones, Rhett S.   "Nigger and Knowledge.   White Double-Consciousness in Adventures of Huckleberry Finn."   Satire or Evasion?   Black Perspectives on Huckleberry Finn. Ed. James Leonard, et al.   Durham:   Duke UP, 1992.   173-194.   Kaplan, Justin.   "Born to Trouble:   One Hundred Years of Huckleberry Finn."   Mark Twain Adventures of Huckleberry Finn:   A Case Study in Critical Controversy.   Eds. Gerald Graff and James Phelan.   Boston:   St. Martin's, 1995.   348-359.     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  

Leadership Style: Sam Palmisano, Former IBM Chief Operating Officer Essay

1.0 About Sam Palmisano He began his career with IBM in 1973 as a salesman in Baltimore Maryland, Since then, Palmisano has held a series of leadership positions during his IBM career, including senior vice president for the Enterprise Systems and Personal Systems groups. Mr. Palmisano also played a key role in creating and leading IBM’s Global Services, rising to senior vice president, and building the largest and most diversified information technology services organization in the industry. He also served as senior managing director of operations for IBM Japan. He became president and Chief Operating Officer (CEO) in 2000. Sam Palmisano is a graduate of The Johns Hopkins University. In recognition of his leadership role as co-chair of the Council on Competitiveness’ National Innovation Initiative, as well as his many business accomplishments, Palmisano was awarded an Honorary Degree of Doctor of Humane Letters from Rensselaer Polytechnic Institute in 2005. In 2006, he was awarded an Honorary Fellowship from the London Business School. He has received a number of business awards including the Atlantic Council’s Distinguished Business Leadership Award in 2009 and the inaugural Deming Cup, presented in 2010 by the W. Edwards Deming Centre for Quality, Productivity and Competitiveness at Columbia Business School. He is also an elected member of the American Academy of Arts and Sciences. 2.0 IBM company background As late as 1960 IBM was still primarily a punched-card machine supplier. It was not until 1962 that computer sales equaled those of its traditional punched-card products. But by the end of the decade, its punched-card machine sales were essentially vestigial. While IBM was making this transformation in its product line in the 1960s, it was also growing at the rapid rate of 15 to 20 percent a year and soon achieved a domination of the computer market that was historically unparalleled in any other major industry. IBM’s success was creating a difficult environment for its competitors. By 1960 the mainframe computer industry had already been whittled down to just IBM and seven others. Of all the mainframe suppliers, Sperry Rand had suffered the biggest reverse, consolidating a decline that had begun well before the launch of the 1401. Despite being the pioneer of the industry, it had never made a profit in computers and was gaining a reputation bordering on derision. For many years IBM’s domination of the computer industry was attributed to a variety of factors like managerial competence, technological excellence, formidable marketing organization, monopolistic, antitrust business practices and the leadership exerted by the Watsons. A key difference between IBM and its competitors persisted right into the computer age. Thus, when company used equipment from one of IBM’s office machine competitors, it was all too likely to acquire a problem rather than a solution. Often the computer and its software were no more than a set of tools with which to fashion a solution, instead of the solution itself. Only IBM guaranteed a complete solution to business problems, and an IBM salesman was all too likely to remind a data processing manager that no one ever got fired by hiring from IBM. This was a patronizing attitude that came close to condescension, and often resulted in a love-hate relationship between IBM and its customers. 3.0 What was Sam Palmisano trying to achieve with his style of leading? While there are many factors that drive a leader’s success, style plays a key role in effectiveness. No matter what style a leader embodies, they all provide value to the organization. From the case studies, we found that there are several factors that have made IBM’s grown successfully year by year under Palmisano style of leading. 1-Major player in the Industry. Palmisano is leading IBM back to greatness. He chose to shift IBM from being a company that produced commodities to one focused on services to clients. He wants to purchase computing power directly from provider that manages and distributes it. The company will no longer own and house its own computing system. To make this become a reality, IBM plans to manage and distribute computing power which includes more open source tools and different kinds of ownership. 2-Business efficiency. During Palmisano time as a CEO, he introduces a very brave idea which is to outsource IBM computer technology operation to India. Making India the nerve centre for servicing local markets through its global delivery network, Palmisano found an enviable head start in one of the fastest growing emerging markets. IBM wants to shift its focus from pure technology to embrace outsourcing and other services as part of the business model. 3-Create more participation from employee. Palmisano created teams of people from all levels in the company and put them in charge of operations, strategy and technology. He also asked the top management team to join him in coming up with an idea that would be the major breakthrough that IBM made when it developed its new business model. One of Palmisano action was that he abolishes the bureaucratic corporate executive committees that decide every strategic initiative in the company. He stresses that effective communication to be utilized in his team to ensure that there is healthy team dynamics within and without the team. To do this he organizes training or ‘simulation exercises’ among team members divided into sub-groups to stimulate healthy rivalry and for the purpose of team-building. He also delegate tasks to breed trust among team members by elaborating the project objectives so that each team member will be aware of what to do to achieve team goals with little or no interference. 4-Develop talent. In spite of the grand scale of Palmisano’s strategy, he kept his staff small, preferring to do without the executive assistant that other CEOs had employed. He surprised many in his company when he disbanded the 12-member Executive Management Committee on January 23, 2003. The committee had been in existence for 92 years and had served as a filter for high-level planning, but was much too slow for the new century. Palmisano replaced the committee with a new system of three teams, one focusing on operations, the second on strategy, and the third on technology. Palmisano ensure participation of all team members in formulation of strategic plan, ploy, action and style for the team. Strategic plan is what will act as guide for the operation of the team. He has shown that an effective team is artificially built and not naturally born. Instead of filling each team with top-level executives, he drew members from all divisions of the company and all levels of employment. One immediate effect of this restructuring was to draw a new generation of young men and women into the heart of IBM’s operations. He had been careful to groom a generation of leaders to follow his time and to create and develop their talent. 5-Create creativity. Palmisano planned to create a single integrated system of computers, software, and other electronic devices that would allow anyone to purchase any part of IBM’s services and use it with any other part. IBM created open-source software that altered a company’s need for servers dedicated to only one task. For example, a server dedicated to computing accounts might become overloaded, causing delays of hours or even days. IBM’s new software was designed to recognize when a server had reached its capacity and automatically redirect the excess work to other servers with available space. A key part of this strategy was that if the servers at the client’s company had no excess space, the overflow workload would be sent to IBM’s own computers, which would recognize any program that accessed them and silently perform the client’s work. Palmisano hoped to take this service to the next level, which would allow IBM’s computers to check the client’s computers for flaws automatically and fix them before anyone could notice them. 6-Develop direct rapport with customer. Palmisano was very good at engaging customers, because he has a reputation for making customers feel involved. He has a good understanding of IBM’s software, services and hardware business enabling faster responsiveness, creating better customer experiences, speeding office or mobile interactions, and dramatically reducing existing communications barriers. Palmisano announced his intention to make IBM a computer services-on-demand company. IBM would function like a utility, charging its customers for the use of data-centered web sites. IBM would create software capable of fixing clients’ software problems automatically online. The clients would pay only for the amount of services they used, in the same way they presently paid for utilities bills. Palmisano mounted his own personal campaign to make sure it was a success. He toured software companies and met designers to persuade them to devise new applications that would give it a competitive edge. When he became head of global services back in the ’90s, he blocked off 70% of his calendar for customer meetings, and he still speaks to at least one customer every single day. 4.0 Was it necessary to depart from the established way of doing things at IBM? Yes, it necessary for Sam Palmisano to shift from the established way to a new leadership style. The reason is simply because IBM has already been part of his life, so he wants to make sure that the company will prosper in the long run. Although IBM was stable at that time, Sam Palmisano believes that the traditional way was not enough to drive the company into more challenging business ahead. Furthermore, most of the top management including him will not around in few years and new successor should be discovered. Before the new leadership era, all the decisions tended to be made at the top, communicated downward and then implemented by the followers. Most of the time employees did not get change to involve in the decision making. Their responsibilities were just to execute all the decision instructed although they think it was not the most appropriate one. It was all about â€Å"one man show†. Immediately after in-charge, he delegated some of the decision making responsibilities downward. Sam Palmisano created teams made up of people from all levels in the company and put them in charge of operations, strategy and technology. He believes this teams that will drive and determine the destiny of IBM. This new leadership style will benefit the company in few ways. First, the company can get more brilliant ideas from the employees that cannot be seen by top management. It is important to gather as much as perspective possible because it would assist easier and better decision making. Indirectly, it will enhance creativity of the staffs which should not come for only an individual. Second, employees will be more motivated since they feel that all of their ideas are important and they can decide their own destiny. So, there will be no more bureaucratic corporate executive committee that decided almost everything previously. Then, IBM also can develop more new talent in the company that will guide the direction of the company in future which the old leadership way hardly to offer. Sam Palmisano believes that the best way in scouting good talent was by giving them some room to make own decision. All the success and mistakes will make them better and mature. Sam Palmisano also decided to shift from a centralized system to a decentralized system. His idea is that a company will no longer own and house its own computing system. It should include more open-source tools and different kind of ownership. His leadership created an outsourcing story in many places especially India. By making India the nerve centre servicing local markets through its global delivery network, it achieved the biggest ever non-linear growth. 5.0 Was it necessary for him to reach to the bottom of IBM? Definitely yes, because Sam Palmisano wants each teams from all levels in the company to take part to bring IBM back to greatness. This strategy has given each of them to participate directly or indirectly to revolutionize Big Blue to be a great company. It is important for him to understand the function of each level. With this understanding he can drive those departments to certain level which will improve the efficiency and effectiveness of each department. The advantages of this approach are to find a root cause of each problem. He can advise and manage his team how to overcome the problem very well so that they will able to manage it in the future. Sam Palmisano needs to delegate the responsibility to his top management. This style his top management will collaborate across organizational boundaries. He believes that more ideas would come out and shared rather than only top management decision if everyone participating. Sam Palmisano wants his subordinates to show their particip ant in decision making. He believes teams will be the engines of creativity. 6.0 Is this the case of a leader who is micro managing and interfering with operation? No, Sam Palmisano is not micro managing. Micro managing is â€Å"Closely observed or controls the work of an employee with less rooms for creativity, HRD, trust, responsibility and teamwork†. In this case, we can see that Sam Palmisano do questioned a lot deep into the organization. But his intention is to understand the situation better and not to decide on his own. He wants the top management involvement in contributing new idea in reshaping the IBM. It clearly shows that he need support and valued others opinion to make a better result in his decision making. It is a room of creativity in each decision he make to suit current situation. Once did says that â€Å"Two head is always better than one† For a classic example Orville and Wilbur Wright aka the Wright Brothers maybe cannot fly the first Flight in history if they did not joined their creative idea. Sam Palmisano also do rely in his executives to run IBM. He had abolish the Bureaucratic Corporate Executives Committee that held monthly meeting and overseas every strategic initiatives. It shows that Palmisano do want his executive to cooperate but not to details in making decision. Enough for them to understand the situation and control it. So it just make the decision more efficient and more fast at each level required. Palmisano had created a teams made up of people from all levels in the company and put them in charge in operations, strategy and technology. It shows that Palmisano really serious to make his subordinate to contribute their creativity and decision in each levels. He believes team will be the engine of creativity in IBM. This will definitely create efficiency and cut all the bureaucratic. It clearly exist from team work, responsibility, trust, human resource development and combined creativity. Palmisano strongly believes that creativity in large organization not coming from the celebrity CEO alone, it is from collaboration of team works. For instant the Toyota is strongly believes in their Toyota Production System (TPS) element, one of it is KAIZEN, a Continuous Improvement as our understanding. This Kaizen is happen in each level in Toyota. Where every each of their workers can contribute the continuous improvement in their process. Same goes to Palmisano where he try to create his team to go creative at each level in their own process and decision is more efficient without Bureaucratic Corporate Executives Committee interfere in their way. Another example GENBA in TPS is† Comedown to the location and understand the problem firsthand†. Genba encourage the management especially to understand the current situation at site or workplace. Not for them to jump to conclusion instead but for them to understand further about the situation or problem occur so that they can brainstorm to come out with brilliant idea. Same goes to Palmisano where he him selves go further in the organization to understand the situation first hand and then decide. Yet we never classify the Toyota Production System (TPS) as micro manage. So this strongly revealed that San Palmisano also is not micro managing IBM. 7.0 Conclusion Sam Palmisano had proved that he is an Effective Leaders where he successfully balances this three element of Mastery of Strategy, Ability to Execute Strategy and Develop Talent. With that element he had pulled back IBM back to greatness. With the clear vision Palmisano managed to turn IBM from a profit losing company to a middleware and enterprise software and solutions giant. He had turn the Autocratic way of leadership to Deligative type of leadership, where efficient is the key of success to the current demand market. There is no more Bureaucratic Executive committee involve in decision making. Thus he is not micromanaging his company but to understand it better and drive it back to success. For the past five years (2002-2011) Palmisano had become a great leader to IBM, he really shows high value (self-sacrifice) and high expectancy (self-confidence) in his organization. Before he retired he manages to portray a new vision â€Å"Smarter Planet† for IBM. He laid down what services and products would be needed; the company since then has built hundreds of reference customers around it. Despite of his greatness in portraying his vision to reality lie a true leader that manage to pull his downstream together to works towards the vision that they build together for the sake of IBM. He really shows a high structured and consideration in making IBM leading forward in their own field.

Cost of Capital Essay

LEI’s expected net income this year is $34,285.72, its established dividend payout ratio is 30 percents, its federal-plus-state tax rate is 40 percent, and investors expect earnings and dividends to grow at a constant rate of 9 percent in the future. LEI paid a dividend of $3.60 per share last year, and its stock currently sells at a price of $54 per share. LEI can obtain new capital in the following ways: Preferred: New preferred stock with a dividend of $11 can be sold to the public at a price of $95 per share. Debt: Debt can be sold at an interest rate of 12 percent. a. Determine the cost of each capital structure component. b. Calculate the WACC. c. LEI has the following investment opportunities that are typical average-risk projects for the firm: Project Cost at t = 0 Which projects should LEI accept? Why? [2(382)] 2. The Heuser Company’s currently outstanding 10 percent coupon bonds have a yield to maturity of 12 percent. Heuser believes it could issue at par new bonds that would provide a similar yield to maturity. If its marginal tax rate is 35 percent, what is Heuser’s aftert-tax cost of debt? [2(383)] 3. Trivoli Industries plans to issue some $100 par preferred stock with an 11 percent dividend. The stock is selling on the market for $97.00, but Trivoli must pay flotation costs of 5 percent of the market price, so the net price that firm will receive is $92.15 per share. What is Trivoli’s cost of preferred stock with flotation considered? [2(383)] 4. Zwing-Zook Enterprises has a beta of 1.45. The risk-free rate is 6 percent and the expected return on the market portfolio is 10 percent. The company presently pays a dividend of $2 a share and investors expect it to experience a growth in dividends of 7 percent per annum for many years to come. a. What is the stock’s required rate of return according to CAPM? b. What is the stock’s present market price per share, assuming this required return? [1(77)]

Master of Business Administration Essay

Pricing policy refers to the policy of setting the price of the product or products and services by the management after taking into account of various internal and external factors, forces and its own business objectives. Pricing Policy basically depends on price theory that is the corner stone of economic theory. Pricing is considered as one of the basic and central problems of economic theory in a modern economy. Fixing prices are the most important aspect of managerial decision making because market price charged by the company affects the present and future production plans, pattern of distribution, nature of marketing etc. Generally speaking, in economic theory, we take into account of only two parties, i. e. , buyers and sellers while fixing the prices. However, in practice many parties are associated with pricing of a product. They are rival competitors, potential rivals, middlemen, wholesalers, retailers, commission agents and above all the Govt. Hence, we should give due consideration to the influence exerted by these parties in the process of price determination. Broadly speaking, the various factors and forces that affect the price are divided into two categories. They are as follows: I External Factors (Outside factors) 1. Demand, supply and their determinants. 2. Elasticity of demand and supply. 3. Degree of competition in the market. 4. Size of the market. 5. Good will, name, fame and reputation of a firm in the market. 6. Trends in the market. 7. Purchasing power of the buyers. 8. Bargaining power of customers 9. Buyers behavior in respect of particular product II. Internal Factors (Inside Factors) 1. Objectives of the firm. 2. Production Costs. 3. Quality of the product and its characteristics. 4. Scale of production. 5. Efficient management of resources. 6. Policy towards percentage of profits and dividend distribution. 7. Advertising and sales promotion policies. 8. Wage policy and sales turn over policy etc. 9. The stages of the product on the product life cycle. 10. Use pattern of the product. Objectives of the Price Policy: A firm has multiple objectives today. In spite of several objectives, the ultimate aim of every business concern is to maximize its profits. This is possible when the returns exceed costs. In this context, setting an ideal price for a product assumes greater importance. Pricing objectives has to be established by top management to ensure not only that the company’s profitability is adequate but also that pricing is complementary to the total strategy of the organization. While formulating the pricing policy, a firm has to consider various economic, social, political and other factors. The Following objectives are to be considered while fixing the prices of the product. 1. Profit maximization in the short term The primary objective of the firm is to maximize its profits. Pricing policy as an instrument to achieve this objective should be formulated in such a way as to maximize the sales revenue and profit. Maximum profit refers to the highest possible of profit. In the short run, a firm not only should be able to recover its total costs, but also should get excess revenue over costs. This will build the morale of the firm and instill the spirit of confidence in its operations. 2. Profit optimization in the long run The traditional profit maximization hypothesis may not prove beneficial in the long run. With the sole motive of profit making a firm may resort to several kinds of unethical practices like charging exorbitant prices, follow Monopoly Trade Practices (MTP), Restrictive Trade Practices (RTP) and Unfair Trade Practices (UTP) etc. This may lead to opposition from the people. In order to over- come these evils, a firm instead of profit maximization, and aims at profit optimization. Optimum profit refers to the most ideal or desirable level of profit. Hence, earning the most reasonable or optimum profit has become a part and parcel of a sound pricing policy of a firm in recent years. 3. Price Stabilization Price stabilization over a period of time is another objective. The prices as far as possible should not fluctuate too often. Price instability creates uncertain atmosphere in business circles. Sales plan becomes difficult under such circumstances. Hence, price stability is one of the pre requisite conditions for steady and persistent growth of a firm. A stable price policy only can win the confidence of customers and may add to the good will of the concern. It builds up the reputation and image of the firm. 4. Facing competitive situation One of the objectives of the pricing policy is to face the competitive situations in the market. In many cases, this policy has been merely influenced by the market share psychology. Wherever companies are aware of specific competitive products, they try to match the prices of their products with those of their rivals to expand the volume of their business. Most of the firms are not merely interested in meeting competition but are keen to prevent it. Hence, a firm is always busy with its counter business strategy. 5. Maintenance of market share Market share refers to the share of a firm’s sales of a particular product in the total sales of all firms in the market. The economic strength and success of a firm is measured in terms of its market share. In a competitive world, each firm makes a successful attempt to expand its market share. If it is impossible, it has to maintain its existing market share. Any decline in market share is a symptom of the poor performance of a firm. Hence, the pricing policy has to assist a firm to maintain its market share at any cost. Ques2. Explain the important features of long run AC curve. Ans: Long run AC curves Long run is defined as a period of time where adjustments to changed conditions are complete. It is actually a period during which the quantities of all factors, variable as well as fixed factors can be adjusted. Hence, there are no fixed costs in the long run. In the short run, a firm has to carry on its production within the existing plant capacity, but in the long run it is not tied up to a particular plant capacity. If demand for the product increases, it can expand output by enlarging its plant capacity. It can construct new buildings or hire them, install new machines, employ administrative and other permanent staff. It can make use of the existing as well as new staff in the most efficient way and there is lot of scope for making indivisible factors to become divisible factors. On the other hand, if demand for the product declines, a firm can cut down its production permanently. The size of the plant can also be reduced and other expenditure can be minimized. Hence, production cost comes down to a greater extent in the long run. As all costs are variable in the long run, the total of these costs is total cost of production. Hence, the distinction between fixed and variables costs in the total cost of production will disappear in the long run. In the long run only the average total cost is important and considered in taking long term output decisions. Important features of long run AC curve 1. Tangent curve Different SAC curves represent different operational capacities of different plants in the short run. LAC curve is locus of all these points of tangency. The SAC curve can never cut a LAC curve though they are tangential to each other. This implies that for any given level of output, no SAC curve can ever be below the LAC curve. Hence, SAC cannot be lower than the LAC in the ling run. Thus, LAC curve is tangential to various SAC curves. 2. Envelope curve It is known as Envelope curve because it envelopes a group of SAC curves appropriate to different levels of output. 3. Flatter Unshaped or dish-shaped curve. The LAC curve is also U shaped or dish shaped cost curve. But It is less pronounced and much flatter in nature. LAC gradually falls and rises due to economies and diseconomies of scale. 4. Planning curve. The LAC cure is described as the Planning Curve of the firm because it represents the least cost of producing each possible level of output. This helps in producing optimum level of output at the minimum LAC. This is possible when the entrepreneur is selecting the optimum scale plant. Optimum scale plant is that size where the minimum point of SAC is tangent to the minimum point of LAC. . Minimum point of LAC curve should be always lower than the minimum point of SAC curve. This is because LAC can never be higher than SAC or SAC can never be lower than LAC. The LAC curve will touch the optimum plant SAC curve at its minimum point. A rational entrepreneur would select the optimum scale plant. Optimum scale plant is that size at which SAC is tangent to LAC, such that both the curves h ave the minimum point of tangency. In the diagram, OM2 is regarded as the optimum scale of output, as it has the least per unit cost. At OM2 output LAC = SAC.

Problems facing india Essay

THE rupee’s tumble continues to grip India. On August 29th Duvvuri Subbarao, the departing boss of the central bank, told an audience in Mumbai of the widespread â€Å"dismay about the ferocity of the depreciation†. Today, on August 30th, I spoke to the boss of a big hotel in the city who says he is preparing to dollarise his business. The rupee is too flaky to operate in, he said. â€Å"It’s just like Russia and Indonesia in the 1990s.† Shortly after this, Manmohan Singh, the prime minister, addressed parliament on the matter. While part of the currency slump is a â€Å"natural† correction to reflect high inflation, he said, â€Å"foreign exchange markets have a notorious history of overshooting. Unfortunately this is what is happening†. That statement looks correct on a three-day time horizon. The rupee almost breached 69 per dollar earlier this week. On August 30th it bounced back to 65.7, making it the best-performing big currency worldwide that day, though still leaving it down 16% year-to-date. The vote by Britain’s parliament against military action in Syria has helped push down oil prices. That is helpful for India, a big energy importer. And some of the Reserve Bank of India’s tweaks have calmed nerves. On August 28th the central bank said it would provide dollars directly to India’s big oil-importing firms. That will stop them having to sell rupees in the spot market. It is an indirect way for the RBI to use its reserves to support the exchange rate. Whether India’s currency has stabilised is another matter. There is plenty to worry about. The prospect of the Federal Reserve ending its purchases of bonds draws ever closer, especially with good news from the American economy this week. That means the â€Å"Great Exit† of money from emerging markets may continue. Both Indonesia and Brazil raised interest rates this week to protect their currencies, making India relatively less attractive. A foreign  investor in town told me at he would not invest in India until it raised its rates. He had arrived in India expecting to allocate more funds to it now prices have fallen, but after several days he felt more pessimistic and reckoned that the slump had further to go. As if to confirm that view, GDP figures were released on August 30th for the quarter to June. Growth slowed to 4.4%, from 4.8% in the preceding quarter. Manufacturing contracted. These figures do not yet reflect the credit crunch that has taken place over the last two months, so it seems likely that GDP growth will slow even further. A good monsoon may boost farming, but the formal, industrial bit of the economy is in dire condition. On August 27th Palaniappan Chidambaram, the finance minister, said that the government had fast-tracked $27 billion of power and other projects stuck in red tape. But I have yet to find a full account of these proposals. In the past such announcements have contained far more hype than substance, as we explained in an article in June. That credit crunch is still pronounced, even if the rupee has recovered a little. Most measures of stress in the financial system are still flashing red, reflecting Indian banks’ bad debt problem. Credit default swaps on State Bank of India, which measure its risk, have soared. Short-term market interest rates have not come down. The government has yet to show much desire to clean up banks’ dud loans and is instead putting more pressure on them to â€Å"extend and pretend†. Even as mayhem stalks the currency market, the election campaign is ramping up. India’s legislators may be lousy at making decisions about economic reform, but they are remarkably decisive at passing more populist measures. Early this week a new programme to increase food subsidies was agreed. Moody’s, a credit rating agency, warned that this will put more pressure on the public finances. Then the lower house of parliament approved a new law on land reform. It replaces a decrepit act that is over a century old. But businesses say the new rules will make it even harder to buy land to set up factories, with long delays becoming the norm. If the rupee still looks vulnerable, India has three options, none very palatable. One is to let the currency fall further. In most countries a cheaper currency would boost exports and help close the current-account deficit. But India’s manufacturing industry is too small and too bound in red tape to ramp up quickly. So a turn-around in the balance of payments may take time during which investors could panic. Meanwhile the weaker currency may  destabilise the domestic economy by adding to inflation and increasing the government’s subsidies on fuel and thus its borrowing. The second option is to do the opposite and increase interest rates to attract more foreign money in, following the path of Indonesia and Brazil. But this would further hammer Indian industry, which is already in poor shape, and probably increase bad debts at banks too. If the economy slowed further as a result, equity investors might begin to worry about corporate earnings declining and pull out their roughly $200 billion of investments in listed shares. Inducing a credit crunch in India might make things even worse. The last option is to lower government borrowing. It is running at 7% of GDP (including India’s states) and has stoked excess demand in the last few years, widening the current-account deficit. The populist political mood doesn’t make big spending cuts easy, though, and while it is often accused of epic profligacy, India’s central government has pretty low expenditure relative to GDP—about 15%. There is simply no way it can cut its way to a balanced budget. What India really needs is more tax revenues. But with a narrow tax base—only 3% of Indians pay income tax—this might mean concentrating tax rises on the formal economy, which is already reeling. For now my sense is that the authorities’ plan is to let the rupee trade freely but hold out the threat of an interest rate rise or direct intervention in the currency market to try to scare off speculators. At the same time they will squeeze borrowing as much as is possible during an election and use administrative measures, such as highe r duties, to try to cap imports. It is a bet that the economy will pick up soon and that growth will make India’s problems fade away. The trouble is that the economy is still decelerating.