Interest Rate Behavior and Lending in Microfinance

An Essay on Interest Rate Behavior and Lending in Microfinance Abstract: This essay analyzes factors which affect interest rate behavior and its subsequent impact on lending in microfinance. Here we have used regression model for our analysis. Furthermore comparison has been drawn among the different sources of loans outside Bangladesh. Here the experience of microfinance outside Bangladesh like India, South and South-East Asia, Latin America has been fully illustrated. This essay conducts analysis on the basis of the existing literatures on Microfinance.Interest Rate Behavior Determinants of interest rate of lending in Micro-finance: * to expand and improve business operation * recruiting personnel , * marketing the services , * improving financial information system, * constructing new offices * Default * Unwillingness to pay * Poor Management * Economic recession * Inability to pay * Staff identifying * Checking creditworthiness * processing loan applications, * disbursing loans, monitoring * collecting repayments, * costs of the space occupied, * communications, transport, * support staff, Grant * Equity * Foundation * Trust * Saving Account We can observe that in MFI lending there is higher interest rate than the commercial bank’s lending rate. The interest rate charged here is higher as cost of funding, processing, cost of risk of loan losses and profit are higher in this case. The graph below shows the different ingredients interest rate. As above-mentioned factors are very much crucial in this sector that is why require extra attention and thereby require the MFI to charge high interest rate. Rosemberg, R. , A. Gonzalez and S.Narain (2009) and Gonzalez (2010), suggest that though small loan provided by the MFI has low default rate but has higher administrative cost that most of the cases cannot be offset by economies of scale. These administrative costs are the single largest contributor to interest rates. Finally, they suggest that, a bigger loa n size may help them to reduce their lending interest rate. Further, they also emphasize if higher loans were received by more experienced borrowers then credit risk would decline and thereby interest rates. Lending in Micro-finance: Accordingly the loan transaction may be described in the following steps.First, the financial firm decides how much to charge and what the optimal loan size to offer must be in order to reach its profitability goal. Once known the value of the lending interest rate and the average loan size the financial institution offers, a potential customer decides whether s/he wants to request a loan. Taking into account the credit history of the potential borrower and its income-expenditure stream, the financial institution builds a risk profile of the individual. With this at hand, they decide where to lend or not. The loan transaction process is given below: P. otler of Groningen university with his vast research wanted to show that profitability will increase w hen lending interest rates and/or productivity and/or the loan size increase or when the funding cost declines . He also showed that The lending interest rate will be negatively correlated with the loan size. So if they wish to achieve a higher profitability it is likely that all else equal they will offer loans of higher size. When microfinance institutions start operations they usually offer loans of small amounts because they do not have much capital or experience and debtors tend to be people without credit history.We find that the lending interest rate is negatively correlated with the productivity of financial institutions and years of operation and positively correlated with the funding costs. What Can Reduce the Interest Rates in Microfinance? P. cotler also shows that probability that financing boosts growth is weakened if interest rates are extremely high. There are two policies to reduce interest rate : * One is to reducing funding cost and * Another is increasing product ivity. How could productivity be raised? Institutional factors such as technology use and management quality and commitment to efficiency should be variables to consider.Further, it should depend on with what capacity loan officers to reach their target clients. Such capacity not only depends on the quality of infrastructure but maybe more important on the geographic and demographic characteristics of the country in which microfinance institutions operate. 1 Effects of Competition over Lending Behavior in Microfinance Competition in a good influencing factor for the markets, consumer protections, efficiency of allocation and incentive for the development of new products. MFI’s enjoyed a monopolistic market in the early years of its inception.Monopolistic market power is associated with allocative inefficiency. Allocative inefficiency refers to the welfare losses as a consequence of high prices a monopolist charge. There is even further loss if the monopolist employs inefficie nt technology (productive inefficiency). Besides, there may not be demands to invest in efficient technology and introduce new products. Therefore, it would be realistic to assume competition can be beneficial in the context of microfinance market as it may result in improved and new financial product designs, better customer services, lower costs and lower interest rates.The other side of the argument is that microfinance market makes use of soft-information and depends on strong MFI-client relationship. MFIs provide financial services for the poor that are considered not creditworthy by the conventional banks. They are often praised for overcoming the problem of information asymmetry and providing loans without collateral requirements. They do so by establishing strong personal relationship with clients. Another tool is the usage of other forms of collateral such as group lending that generates social collateral.Competition and the effort to win clients and expand market share, th erefore, may lead to low screening and lending standards. There are some indications of lose MFI-clients relationship with intense competition. Increased competition is also associated with an increase in information asymmetry, which makes it difficult for MFIs to know about the general debt level of clients. This in turn may lead to manifold borrowing, serious debt burdens, low repayment rates and poor portfolio quality.The effect of competition could go both ways and deserves an empirical investigation. However, very few examine the effect of competition among MFIs and the literature on competition in microfinance is limited. Below is an overview of the few available related works. The focus on making MFIs profitable and financially-sustainable started in the 1980s and 1990s. The essential elements of this approach are competition, regulation and profitability. The essay explores the Latin American microfinance market where the commercial approach to microfinance proceeded rapidly .It describes the market as facing rising competition, which leads to market saturation in some countries. Olivares-Polanco (2005) examines some of the subjective and descriptive evidences. He investigates the effect of competition by mainly focusing on outreach (measured by loan size). His findings show that increased competition results in lower outreach. Navajaset al. (2003) studied competition in the Bolivian microfinance market by focusing on two major MFIs (Casa Los Andes and BancoSol), which collectively have around 40 percent market share.The results suggest that outcome of competition is ambiguous since competition leads to innovation thereby expanding outreach. However, it reduces the ability of lenders to cross-subsidize less profitable smaller loans. In a similar study, Vogelgesang (2003) examines how competition affects loan repayment performance for Caja Los Andes. The analysis indicates competition is related with multiple loan taking and higher levels of borrower ind ebtedness. The probability of default is also shown to be high with higher levels of indebtedness.On the other hand, he argues the probability of timely repayment is high in areas where there is high competition and high supply of microfinance services. Thus, the results seem inconclusive. A theoretical model developed by McIntosh and Wydick (2005) characterizes the effects of competition between MFIs where increased competition leads to increased information asymmetry. As a number of competing MFIs amplify in a market, which makes information sharing between them challenging, borrowers may engage in multiple borrowing which increases the debt level of clients and the probability of default.This in turn can make worse off borrowers with a single lender since this behavior will create an externality by inciting MFIs to respond to multiple borrowing by adjusting interest rates upward. In a Ugandan microfinance market, which McIntosh et al. , (2005) studied, there is a rise multiple bo rrowing and decline in repayment rate as competition intensifies. Other works that do not address the effect of competition among MFIs but present an argument about the possible effects of competition includes Hermes et al. (2009). Their work examines how overall level of financial development in a country affects the efficiency of MFIs.After presenting a balanced argument that the effect of financial development on efficiency could be both negative and positive, they empirically document a positive effect of financial development of efficiency of MFIs. They suggest competition, among other channels, through which financial development could affect efficiency. On a related work, Cull et al. (2009b) investigates how MFIs perform under the pressure of competition from formal banks. Their results show that in a country where there is larger formal bank presence, MFIs tend to deepen their outreach (i. . , extend their outreach to women and also lend in small amounts). However, the effec t on other performance indicators, such as profitability, appears weak. Findings Given significantly large numbers of people in developing countries are financially excluded and the relative success of MFIs in promoting access to finance for the poor, it is not surprising to see MFIs get the attention they are enjoying. With the growth of the microfinance sector and increasingly varied players comes intense competition, which the effects on MFIs outcomes are not clear.In this essay, we take the first approach in measuring competition in a standard way. Interestingly, the measure shows indeed competition is growing in the microfinance market. As a next step, a critical question is addressed, namely what is the effect of increased competition. We consider important dimensions of MFIs’ performance. These are outreach, loan repayment, efficiency and profitability. The results document strong negative effects of competition on performance of MFIs, after controlling for various mac roeconomic and MFI factors.We show competition is negatively related with outreach while it is associated with rising default rates. Furthermore, declining efficiency and deteriorating financial performance is shown to be associated with intense competition. The results might appear rather depressing for microfinance enthusiast, anyone for that matter, who would like to see the sector grow and bring all the positive benefits along. What could be done? These calls for measures that do not put a halt on the growth of the sector rather ensure the (negative) competitive effects are minimized.This may include designing ways that makes sure MFIs do not compromise lower lending standards for increased market share. At the same time, designing ways that promote information sharing between MFIs, so that a borrower that default on one MFI loan could not turn to another MFI in the neighborhood and granted a loan, can contribute to lower delinquency as well as better borrowers’ welfare. In addition, promoting financial literacy among clients may help them in their borrowing decisions, which in turn may limit multiple loan-taking. Finally, as we show in the results, increased competition is negatively associated with efficiency of MFIs.Innovative ways among MFIs that could enhance efficient service provision may also help in ensuring benefits from the growth in the microfinance market. Incentives and Disincentives that Affect Lending Behavior in Microfinance In late 1980s and early 1990s thousands of non-governmental organizations (NGOs) and specialized finance institutions around the world initiated micro enterprise finance programs. Most of these programs are financially supported by the international donor agencies or governments to improve the lives of the poor.Therefore, for NGOs micro enterprise finance appears to be socially motivated. Reasons Why Banks Make Micro and Small Enterprise Loans Frequency of Response* % of total a) Profitability of micro and small loans 72 49% b) Changing market conditions and increasing competition in lending to large/medium enterprises 64 44% c) Regulations imposed by the government 25 17% ————————————————- d) Poverty alleviation / social objectives 29 20%Disincentives for Making Micro and Small Enterprise Loans Frequency of Response % of total a) Higher administrative costs 29 40% b) Risky borrowers 12 17% c) Interest rate controls 21 29% d) Not interested in micro enterprises 5 7% e) Lack of network and personnel to serve this market 23 32% f) Other 18 5% Banks’ Lending Behavior and Loan CharacteristicsBanks Age and Their Portfolio Share in Micro/Small Business Loans Out of 148 banks, 119 banks answered to the question on loan portfolio analysis. When these banks are classified according to the number of years since they were established, it is found that the newly established banks, o n average, have a larger share of loan portfolio delegated to small and micro enterprise loans than the older banks. Loan Terms The findings of this research indicate that, the loan terms provided by these commercial banks for small and micro enterprises ranges between three months to six years.On average, the loan term for micro enterprise loans is 2. 4 years and for small businesses it is 2. 9 years. These loan terms are much longer than the loan terms provided by NGOs, which are generally between one to three months. Average Loan Terms for Micro and Small Enterprise Loans Sample Size Average (years) Median (years) Micro 57 2. 4 1. 75 Small 46 2. 9 3. 00 Loan term: In micro and small business finance, the loan term or the loan repayment schedule can affect the ability of the borrower to pay his/her loan back.The shorter loan terms or frequent payments of installments can make it easier for the borrower to pay his/her loan back, whereas the longer loan terms and infrequent payment s of loan installments can make it difficult for micro/small business owners to pay their loan on time. Therefore, the longer the loan term, or the less frequent are the loan installments it is more likely for banks to have higher arrears which indicates a positive relationship between the length of the loan term and the level of arrears for a bank.Average interest rate on micro/small loans: In the micro finance literature, it has been widely accepted that micro and small enterprises are capable of borrowing at commercial, or market interest rates. Furthermore, it is also argued that, if micro or small enterprise loans are subsidized by governments, loan default or corruption may be encouraged which may result in higher arrears in banks’ loan portfolios. These arguments suggest a negative relationship between loan rates and banks’ arrears.On the other hand, the higher nominal interest rate paid on a loan implies a greater cash flow burden on the enterprise hence increa sing the likelihood of arrears. Due to data limitations, other financial costs, such as fees and commissions associated with the loan could not be taken into account in this research. Findings: The higher the loan interest rate given everything else is held constant; the higher will be the rate of arrears.This finding contradicts with the common argument that the micro and small enterprises are capable of borrowing and paying their loan back with a high rate of interest. It is however important to note that micro and small enterprises may show different characteristics in loan repayment with respect to given interest rates. One of the most important findings of this study is that many banks are using inappropriate lending criteria when making loans and managing their portfolio of small business loans.In the case of small business loans the banks that require collateral have higher than average levels of loan arrears. Hence reliance on collateral tends to cause poor borrower evaluati on and inadequate follow up once the loan have been made. It is also found that the level of interest rate charged on the loans is not a factor affecting the rate of arrears for micro enterprise loans but it is a factor affecting the level of arrears for small business loans. Justification of high interest rate in Micro financeSmall businesses normally struggle to find out the sources of fund due to the small size of business where lenders face difficulties to cover up the loan money. From several evidences it is observed that small businesses are very efficient to utilize the funds and can rapidly realize profits though borrowing at very high interest rate. An author explained this through an example of a fruit seller who takes loan in the morning, buys fruit, sells it and pay lender outrageous rates to repay the money by the end of the day.So, It is very critical that though rates are high that MFIs have, small business can cover the spread. How can interest rate be reduced? Evide nces from Bolivia pursue us that interest rate in micro finance sector can be reduced by great regulation and create a competitive environment among the micro finance institutions. If situation looks like that MFIs are managing huge profits in that case government should take some initiatives that will discourage MFIs to make extra ordinary profit.Government can give licenses to new MFIs to create competition. But it should be remember that regulatory framework is a vital element. So, before giving licenses government should strengthen the monitoring function. Then we can expect thatat least some of that profitability will be passed back to the customer either through lower rates, reduced fees or another way. Should Subsidy Be Provided To Reduce Interest Rate? From the very beginning of the history of Micro finance we see that it has been growing at an exponential rate over the years.Many evidences about the recovery rates convince us that interest rate is almost justified so subsid y may create distortion in this sector. According to Mary Ellen Iskenderian, President and CEO of Women’s World Banking, â€Å"I don’t think a subsidy is the way to go about reducing rates because, in the end, the reason that microfinance has been so successful to-date is that it has always been about sustainability—sustainability of the institutions to recover their costs as well as sustainability of the borrower to make on-time payments. Responsiveness of lending amount to the changes in interest rate: Example from Bangladesh Bangladesh is a poverty-stricken country. It is a great pleasure for marginal people to get loans from MFIs because it is almost impossible for them to manage loan from conventional commercial banks. So, poor people are willing to pay even high interest rate to get loans. Now the question is that how are poor people responsive to increase in interest rate charged by MFIs? SafeSave, a credit cooperative in the slums of Dhaka,Bangladesh, o perate three branches across the city to provide credit.Administrative records kept by this MFI asserts that when interest rate increases suddenly, less wealthy borrowers reduce their demand for loan and they are relatively more sensitive than the wealthy borrowers. Another important thing is that the loan portfolio of this organization shifts from less wealthy borrowers from wealthy borrowers with the increase in interest rate. Influential advocates now argue that poorhouseholds are so insensitive to interest rates so interest rate in micro finance sector should be deregulated.If this is so, microfinance can readily expandto serve the hundreds of millions of currently excluded households, without sacrificingdepth of outreach. This claim is far from clear as a general proposition. First, diminishing marginal returns to capital disregards the possibility of unequal access to non-capital inputs like managerial skillsand human capital by poor borrowers. Moreover, raising interest rates can in principle exacerbate moralhazard and adverse selection, worsening loan repayment rates and screening out the most reliable borrowers.And, while microlenders may still find a pool of customers afterreal interest rates are raised, the customers may not be from the same pool that was reliable, willing and able to pay the lower rates. In addition, Moral perception to keep costs as low as possible for the poor, have compelled thelargermicrolenders in Bangladesh to keep real interest rates below 40 percent per year,even if it means turning to subsidized resources to cover costs (e. g. , Morduch, 1999). The average fees charged by two large lenders in Bangladesh arejust under 30 percent.The Grameen Bank (which is not one of the two) keeps theirinterest rates and fees close to 20 percent per year (nominal) on their main lending products—and they ignore suggestions to raise rates. Experience inside Bangladesh Credit delivery system by Grameen bank Grameen Bank Credit Delivery means taking credit to the very poor in their villages by means of the essential elements of the Grameen credit delivery system. The credit delivery system of this authentic micro-finance is very much well-functioning. The credit delivery is the most productive weapon of Grameen bank to reach the highest number of its beneficiaries.Grameen Bank credit delivery system has the following features: 1 There is an exclusive focus on the poorest of the poor. Exclusivity is ensured by: i) establishing clearly the eligibility criteria for selection of targeted clientele and adopting practical measures to screen out those who do not meet them ii) ii) in delivering credit, priority has been increasingly assigned to women iii) iii) the delivery system is geared to meet the diverse socio-economic development needs of the poor 2   Borrowers are organized into small homogeneous groups. Such characteristics facilitate group solidarity as well as participatory interaction.Organizing the primary gr oups of five members and federating them into centres has been the foundation of Grameen Bank's system. The emphasis from the very outset is to organisationally strengthen the Grameen clientele, so that they can acquire the capacity for planning and implementing micro level development decisions. The Centres are functionally linked to the Grameen Bank, whose field workers have to attend Centre meetings every week. 3 Special loan conditionalities which are particularly suitable for the poor. These include: i) very small loans given without any collateral i) loans repayable in weekly instalments spread over a year    iii) Eligibility for a subsequent loan depends upon repayment of first loan iv)   Individual, self chosen, quick income generating activities which employ the skills that borrowers already posses    v) close supervision of credit by the group as well as the bank staff    vi) stress on credit discipline and collective borrower responsibility or peer pressure    v ii) Special safegaurds through compulsory and voluntary savings to minimise the risks that the poor confront    viii) Transparency in all bank transactions most of which take place at centre meetings Simultaneous undertaking of a social development agenda addressing basic needs of the clientele. This is reflected in the â€Å"sixteen decisions† adopted by Grameen borrowers. This helps to: i) Raise the social and political consciousness of the newly organized groups    ii) Focus increasingly on women from the poorest households, whose urge for survival has a far greater bearing on the development of the family      iii) Encourage their monitoring of social and physical infrastructure projects – housing, sanitation, drinking water, education, family planning, etc. Design and development of organization and management systems capable of delivering programme resources to targeted clientele. The system has evolved gradually through a structured learning process, tha t involves trials, errors and continuous adjustments. A major requirement to operationalize the system is the special training needed for development of a highly motivated staff, so that the decision making and operational authority is gradually decentralized and administrative functions are delegated at the zonal levels downwards. 6| Expansion of loan portfolio to meet diverse development needs of the poor.   |   As the general credit programme gathers momentum and the borrowers become familiar with credit discipline, other loan programmes are introduced to meet growing social and economic development needs of the clientele. Besides housing, such programmes include:|   | i)| Credit for building sanitary latrines| | ii)| Credit for installation of tube wells that supply drinking water and irrigation for kitchen gardens|   | iii)| Credit for seasonal cultivation to buy agricultural inputs|   | iv)| Loan for leasing equipment / machinery, ie. cell phones purchased by Grameen Bank members|   | v)| Finance projects undertaken by the entire family of a seasoned borrower. Three Cs in Credit delivery: Character: means how a person has handled past debt obligations: From credit history and personal background, honesty and reliability of the borrower to pay credit debts is determined. Capacity: means how much debt a borrower can comfortably handle. Income streams are analyzed and any legal obligations looked into, which could interfere in repayment.Capital: means current available assets of the borrower, such as real estate , savings or investment that could be used to repay debt if income should be unavailable. | | The loan disbursement has been robust year after year and profit has also been increasing year after year. The loan disbursement schedule and profit are summarized below: year| Loan disbursement (million Tk)| Profit/loss (million Tk)| 2001| 146538. 20| 58. 45| 2002| 162286. 24| 59. 67| 2003| 183575. 33| 357. 52| 2004| 209166. 76| 422. 13 | 2005| 3248163. 17| 1000. 44| 006| 306368. 63 | 1398. 15| 2007| 356798. 22| 106. 91| 2008| 418903. 07| 1305. 00| 2009| 498311. 47| 371. 57| 2010| 594460. 61| 757. 24| Interest rate charged on different loan on different duration are given below: Description of the loan| EAIR(Old Payment Method)| EAIR(New Payment Method)| 10-Year stable Level Loans @ Tk. 2,000| 350%| 556. 44%| 10-Year Increasing Loans| 18. 48%| 44. 13%| Actual 7-Year Center Loan History| 15. 39%| 35. 57%| The â€Å"Old† Payment System: Under the â€Å"old† system, Grameen borrowers made weekly payments for 50 weeks.Their principal balance was reduced by the full amount of the payment, and no interest payment is credited. The â€Å"New† Payment System: Under the â€Å"new† system, the entire structure of loan payments was altered. The loan payment period is now defined as 46 weeks in length, but factored into the system is the anticipation of 6 official â€Å"national holidays† when the we ek’s payment is suspended. ASA Microfinance in Bangladesh: ASA has been working relentlessly to reduce poverty since its inception in 1978.The formal banking sector in developing countries, like Bangladesh, does not typically provide financial services to the poor. This sector concentrates on large loans to the upper class, thereby completely excluding low income groups. The microfinance movement, however, has shown that there is a thriving market among the poor when financial products cater to their specific needs. The poor are a quite active group in any economy. ASA has shown that their needs can be met while at the same time making the providing institution profitable as well.Up to October 2011 ASA's cumulative Loan disbursement has been BDT 481,381 million (US$ 6,326 million) while loan outstanding (principal) is BDT 44,972 million (US$ 591 million) among 4. 43 million borrowers. At the end of June 2011 ASA's Operational Self Sufficiency(OSS) was 182. 48%, Financial Self -sufficiency (FSS) 118. 82% and rate of loan recovery 99. 83%. The loan disbursement over the years are given below: Year| Disbursement in million Tk. (during the year)| 2008| 61,108,00 | 2009| 61,495,00. | 2010| 68,486,00| 011| 44,835,00| The rate of interest charged by the ASA is given below: Category| Eligible Criteria| Initial Maximum Loan Size| Interest Rate| Loan term| Primary Loan| Economically active poor to undertake or strengthen income generating activities (IGAs). | BDT 8,000-20,000 to maximum BDT 50,000 at first loan cycle. | Maximum 27% declining| 4, 6 or 12 months based on nature of IGAs| Special Loan| Small/micro enterprises or entrepreneurs and traders to promote and scale up production, business activity and employment generation. BDT 51,000-500,000 | Maximum 27% declining| 12, 18, 24 or 30 months based on nature of enterprises| BRAC BRAC, a development organization, was formed in 1972 under the Societies Registration Act 1860. Although it was first set up to reset tle refugees in post-war Bangladesh, BRAC later redesigned its strategies in accordance with its philosophy of poverty alleviation and empowerment of the poor. At present, BRAC has a large number of development programs that cover the areas of health, education, credit, employment and training for the poor people of Bangladesh.BRAC carries out licensed banking activities through the BRAC Bank Ltd. and also earns from various income generating projects such as Aarong Rural Craft Centre, BRAC Printers and Printing Pack, BRAC Dairy and Food project, BRAC Tea Estates, andvarious programme support enterprises such as poultry farms, feedmills, seedmills and prawn hatcheries. Microloans: These loans, which range from USD 50 – 700, are given exclusively to individual women who are serviced in a group setting, namely the VO. The VO acts as an informal guarantor by creating peer pressure to ensure timely repayment.Borrowers repay through weekly or monthly installments and deposit savin gs during the regular VO meetings. These loans are generally used for small operations in poultry, livestock, fruit and vegetable cultivation, handicrafts or rural trade. Microenterprise loans (Progoti): These loans, which range from USD 700 to 10,000 are given to both male and female entrepreneurs to support and help expand existing small enterprises which are too small to qualify for credit from mainstream banks. Borrowers generally use these loans to finance shops and small-scale manufacturing activities.A ladder of opportunity :BRAC have developed a ‘ladder’ of financial services to target different poverty groups because we understand that the financial needs of the poor are diverse. The most vulnerable are the extreme poor who do not benefit from microfinance – for this group BRAC have developed a grant-based programme that incorporates asset transfers with non-financial support; BRAC’s Ultra Poor programme. Similarly, it has launched, with the help of the Government, a specific customised product for marginal farmers, which combines access to finance with technical support.Another specialised microloan scheme aims to financially empower adolescent girls, helping them continue their education, build savings and receive livelihood training to start smaller home-based enterprises. The rate of interest charged by the BRAC Bank SL no. | Types of loan| Annual interest Rate| 1| General micro credit (Rural and Urban)| 25%-33%| 2| Micro Enterprise loan| 26%-40%| 3| Ultra poor loan| 22%| 4| Agriculture loan| 22%-33%| 5| Seasonal loan| 26%-33%| 6| Disaster management loan| 2. 8%-21%| Loan Disbursement over the year is given below: Sl no. | year| Loan disbursement(TK)| | 2009| 75680756900| 2| 2010| 38749653600| 3| 2011| 39554248779| 4| 2012| 42235412000| Experience outside Bangladesh There is a vast array of experience outside Bangladesh as microfinance is now a globalphenomenon. The information below is simply intended to give a snapshot of the differentexperiences in a few countries, and to show how the complex issue of interest rates has beenaddressed, either by inaction or explicit action by governments. Figures on interest rates fromvarious countries in different parts of the world are given below, in particular those nearby inAsia.Countries are also mentioned where the government or parliament (not necessarily thesame) has sought to impose a ceiling on interest rates in the twin belief that poor peoplecannot afford to pay the high interest rates charged by MFIs and that it is indeed immoral thatthose who are poor should pay higher interest rates on loans than those paid by richerindividuals. South and South East Asia The table below (prepared for the Joint Donor Strategy initiative) gives a summary picture ofthe situation in selected countries in the S. nd SE Asia Region, showing data assembled byEDA Rural Systems, with the comparative rates in Bangladesh at the bottom of the table forcomparison: Three importa nt conclusions can be drawn from these figures. 1. First, that the interest rates charged by MFIs are invariably higher than the rates charged by commercial banks, on average approximately 100% higher. 2. Second, that in general the rates charged by informal moneylenders vary much more widely than either the rates charged by the banks or by MFIs, and almost always are substantially higher than the rates charged by the MFIs. . Third, the interest rate charged by almost all NGO-MFIs in Bangladesh, 30% effective annual rate, is by no means out of line with what is being charged elsewhere in South and South East Asia. If any person wants to borrow from traditional banking system he has to fill out application form. He has to go to the bank for many times for the sanctioning of loan that incurs substantial amount of transportation cost for him. In addition to high transportation cost, there are some processing cost and commissions charged by banks.Ultimately, Effective interest rate is q uite higher in case of borrowing from traditional banking system. On the other hand, traditional banks can’t cover up administrative cost by providing small loans. Comparison of Interest Rates of Various Sources of Loans in India Quoted Cost and Cost after Adjustment for Transaction Costs From the table we see that there is no transaction cost in case of borrowing from MFIs loan. From the evidence of India, we have found that MFIs are used to make election engineering.The main motive of MFIs is to provide credit to women and poor. But, politicians are trying to use it as a political tool. Government provides subsidy which are distributed through MFIs. Large number of impoverished people is a big vote bank for politicians. In this process government influences the decisions of the voters in time of election. In Tamil Nadu we see that government passed ordinance that MFIs could not charge more than 12% interest that may ultimately drive out huge number of lenders from the marke t.So, poor people have to rely on nonchalant public sector banks and according to Mahajan and Ramola they will not have no recourse except money lenders for borrowing. Interest rate, Lending ; Microfinance Less Dependence on Money lenders, Mahajon etc More economic activities because of easy funding reduce asymmetry of information, rural development possible. Downward competitive environment in informal market. Rise in income level, Purchasing power, Overall standard of living. Production, consumption level increases. ResultEliminate the practice of charging usury, greater financial leverage, only does it help to reduce poverty, it Scales down inequality as well. Fig: Effect of Interest rate, Lending ; Microfinance On the Perspective of Latin America In Latin America, the leading MFIs all operate under a formal legal framework, usually as specialized MFI banks, under the supervision of the central bank. Figures for five of the best known institutions are given below, all of which ha ve substantial numbers of clients (by the standards of the region) and are currently operating profitably.Probably the most interesting (for Bangladesh) is Comparators which has from its inception deliberately targeted poorer clients, as can be seen from the current average size of loans ($277). Leading Microfinance Institutions Primary Indicators (End Third Quarter 2003) The figures below for the same five MFIs show the average rates of interest which they are receiving on their various loan products. Descriptive Statistics | Mean| Std. Deviation| N| NO. CLIEN No of CLIENTS| 94000. 00| 65490. 457| 5| AVG. LOAN Average Loan| 1002. 0| 501. 657| 5| LOANST Total Loan| 78000000. 00| 42361539. 160| 5| Regression Variables Entered/Removed(b) Model| Variables Entered| Variables Removed| Method| 1| NO. CLIEN No of cLIENTS(a)| . | Enter| a All requested variables entered. b Dependent Variable: LOANST Total Loan Model Summary Model| R| R Square| Adjusted R Square| Std. Error of the Estimate| Change Statistics| | | | | | R Square Change| F Change| df1| df2| Sig. F Change| 1| . 169(a)| . 028| -. 295| 48213878. 375| . 028| . 088| 1| 3| . 786| Predictors: (Constant), NO. CLIEN No of cLIENTS The unstandardized parameters tell you the difference in Y per unit change in X whereas the standardized tells you the difference in Y in standard deviations per standard deviation difference in X. With the exception of BancoSol, these rates are all higher than those charged by the NGO-MFIs in Bangladesh (in the case of Compartamos substantially so), but their operating costs are also higher than the leading NGO-MFIs in Bangladesh due largely to the higher costs of staff.Nonetheless all five institutions are profitable and the high returns achieved by the three most profitable institutions have enabled them to achieve the most rapid rates of growth in client numbers in the 21 months covered by thee figures; almost triple by Banco Solidario; more than double by Compartamos; and over two t hirds by Mibanco. Leading Microfinance Institutions: Costs and Interest Rates (End Third Quarter 2003) As reported by Helms and Reille, when BancoSol in Bolivia began as a bank in 1985, it charged a combination of interest and fees equivalent to 65% effective annual interest rate. Today, BancoSol, operating in a highly ompetitive environment, has brought down its costs and charges interest rates on its products yielding the 24% shown in the table above. According to one of the managers at BancoSol, the banks growth from 4,500 to 55,000 clients in just ten years has been possible by its ability to charge sustainable rates of interest. Further, whilst its return on average assets is a modest 1. 6%, its current return on average equity is over 11% (because of the leverage it has been able to exercise on its equity). Conclusion Obtaining financial information from institutions involved in microfinance is no easy task.In most countries because there is no financial authority that collect s it and makes it available to the public. Furthermore, the absence of governmental or organized market supervision means that these entities can freely decide how to measure – if they want to do it– the variables describing their different sources of income and expenditure. Finally, even if there were an informal consensus on how to measure these variables, that would not necessarily ensure that the information is reliable since it is very likely that accounting deficiencies might exist. 1. David L. Wright, Dewan A. H.Alamgir, Microcredit Interest Rates in Bangladesh ‘Capping v Competition’, Donors’ Local Consultative Group on Finance, March 2004. 2. P. Cotler , What Drives Lending Interest Rates in the Microfinance Sector? , August 4th, 2010, Microfinance Workshop, Groningen University. 3. Esubalew Assefa, Niels Hermes and Aljar Meesters, Competition and Performance of Microfinance Institutions, August 2010. 4. Mahajan, Vijay and Ramola, Bharti Gu pta; (August 2003); ‘Microfinance in India – Banyan Tree or Bonsai’, a Review Paper for the World Bank 5. Donoghue, Kieran et al, (June 2002), unpublished manuscript for AusAID ‘ Interest Rates in Microfinance’ . Porteous, David, of Finmark Trust, South Africa (2003); unpublished paper ‘Is Cinderella Finally Coming to the Ball? † 7. Hatice Jenkins, Commercial Bank Behavior in Micro and Small Enterprise Finance, Development Discussion Paper No. 741, February 2000. 8. Microfinance Institutions Under Interest Rates Ceilings, Denis H. ACCLASSATO, Laboratoired’Economied’Orleans (LEO), Universited’Orleans, Preliminary Version, June 2006. 9. Sinha, Sanjay, (2003); ‘Experience in Selected Countries in South and South East Asia on Regulation and Supervision, and Comparative Interest Rates’

Organic Chemistry Laboratory †Formal Report Essay

Introduction The study is about distillation. Distillation is a process of converting a liquid to a vapor, and then, collecting the distillate in another container. This technique is used to separate components in a liquid mixture which have different boiling points, or to separate a component that is not volatile. It is one of the methods used when purifying liquids. For example, it is used to concentrate alcoholic beverages. The four distillation methods include simple distillation, fractional distillation, vacuum distillation (distillation at a reduced pressure), and steam distillation. The objective of the study is to differentiate simple from fractional distillation, separate the components of the alcohol beverage used, and to calculate the percentage of ethanol in the beverage. Simple and fractional distillation are the methods to be used since it is the most efficient to be used in this experiment. Since the experiment worked only on the two methods, the other two methods will not be studied. Methodology The equipment used are the condenser, boiling stones, beaker, thermometer, distilling flask, alcohol lamp, iron stand, wire gauze, iron clamp and test tubes that were calibrated. Vodka is the substance that was distilled. First, the group put up the distillation set up by assembling the instruments, heating the alcohol lamp, turning the water on and then heating the vodka which was contained in the distilling flask with the boiling stones. Then the group waited for the first drop of the distillate and then recorded it. After heating and getting a lot of distillates, the group stopped when the temperature reached 98 degrees Celsius. The group then tested the first and the last drop of the distillate. It was tested by placing it in an evaporating dish then igniting it with a match. The first drop was proved that it contained ethanol because it was combustible. The last drop however, was inflammable. Results and Discussions During the experiment, the group observed that the first drop of the distillate was collected when the thermometer reached 78 degrees Celsius. This shows that the volatility of ethanol is 78 degrees Celsius. Distillates were collected every time the temperature increased by 1 or 2. The group stopped at 98 degrees Celsius because if it goes beyond that, water, with a volatility of 100 degrees Celsius, will also evaporate. References [1] Bayquen, A., Cruz, C., De Guia, R., Lampa, F., Pena, G., Sarile, A., Torres, P., (2009) Laboratory Manual in Organic Chemistry.

An Introduction To Knowledge Workers Management Essay

An Introduction To Knowledge Workers Management Essay For the main part of the 20th century, the industry was depended on the performance of manual workers in manufacturing. During this time the most important contribution of management was to increase the productivity of these workers to make the organization profitable and to sustain their continuity. (Drucker, 1999) But a shift has taken place. Nowadays, in the 21st century, the economy starts increasingly to depend on the performance and productivity of knowledge workers. Most businesspeople believed in the importance of knowledge workers and saw that knowledge workers are vital to organizational success which includes organizational sustainability and growth. For this reason â€Å"knowledge workers† become essential in nowadays economy (Helton, R 1988, Drucker, 1999). But what does this relatively new term ‘knowledge workers’ means? In the literature there is no common or specific definition found. (Ramirez Frey, 1997). According to their need of autonomy it i s the role of the knowledge worker to learn, constantly updating – and developing new skills, and transfer this knowledge to others in the organization. By doing this, they will make them valuable to the organization ( James, 2002). At last a knowledge worker can be defined from the perspective of an individual activity. In reference to this perspective, the balance between ‘thinking’ and ‘doing’ activities regarding their job is examined (Kelloway & Barling, 2003). However the work of knowledge workers is defined as work with high levels of cognitive activities (Helton, 1988) and where they will work with information to make decisions and create idea’s (Fox, 1990). For this reason knowledge workers tend more to the side where activities are related to ‘thinking’

News Paper Economic issue Article Example | Topics and Well Written Essays - 500 words

News Paper Economic issue - Article Example While discussing the proposed payments and buying of the assets, the article also deals with how the government would like to have control over the banks at a scale â€Å"not seen since the great depression of the 1930’s†. This is significant as they have been questions over the way the government has been bailing out banks without asking for accountability in return. The article is disapproving of the way in which the government is silent on â€Å"specifics† on how and where the money from the stimulus package is going to be spent. From an economic point of view, the government is well within its rights to print more money and flood the economy with liquidity. However, it would be prudent to consider the inflationary effects of such a move. Further, the direct involvement of the government in the running of the banks may be a welcome sign in these times when reckless corporate greed and unethical behavior have undermined the credibility of financial institutions in the United States. The effect of such governmental intervention may not be exactly in the spirit of laissez faire economics but the current situation is that it would not be a bad idea if the rampant speculation and recklessness are reined in. This paper is in response to the article, â€Å"To Fix Detroit, Obama is said to drop plan for ‘Car Czar’â€Å"that appeared in the New York Times on Feb 15, 2009. The article discusses the cancellation of the appointment of an ombudsman to oversee the restructuring of the Big three automakers: GM, Ford and Chrysler. Instead, the article points out that the president himself would like to oversee the restructuring of the troubled automakers and thus there is no need for a â€Å"Car Czar†. The article is economic in nature as it pertains to the rescue of GM and Chrysler from near bankruptcy and their bailout under a federally guaranteed scheme. The article

Role of circulating practitioner in and outside a theatre room Essay

Role of circulating practitioner in and outside a theatre room - Essay Example Through expertise in theatre issues surgeons go as far as seeking assistance from specific scrubs who are well conversant with the procedure to be undertaken hence its adept to train and be able to learn more while on practical theatre situation (Zatlin, 2005, p. 19). This calls for a dedicated person to carry out the roles of circulating practitioner in a theatre. As a second year student, we are obliged to practically face the situation during internship to equip us with the relevant information and skills that shapes our focus and perception of what awaits us after the completion of the studies (Waldie, 2007, p. 39). However, being an scrub does not enable an individual to be certain while handling instruments and disposables within the theatre, this could be confirmed through an incident that happened during a procedure when a scratch pad was misplaced within the theatre hall just to base all blames on me despite being innocent oblivious of the consequences that would follow should I be found guilty of an offence not committed (Wicker, 2010, p. 84). I have to ensure that all the instruments brought to the theatre are sterilized and able to perform the procedure in accordance with the surgeons’ perception being a life saving procedure a lot of care should be taken in order to accomplish the procedure. This includes a confirmation that all the people within the theatre hall are putting on in accordance with the rules and codes of ethics in medics (Wicker, 2010, p. 87).... for the instruments to be brought to the theatre hall, in fact no one is allowed to leave the theatre hall when a procedure is on (Thomson,, 2002, p. 106). I have to ensure that all the instruments brought to the theatre are sterilized and able to perform the procedure in accordance with the surgeons’ perception being a life saving procedure a lot of care should be taken in order to accomplish the procedure. This includes a confirmation that all the people within the theatre hall are putting on in accordance with the rules and codes of ethics in medics (Wicker, 2010, p. 87). Through effective procedure there would be uni-effetive patient recovery and care for instance, the instruments that are supposed to be used only once should not be re used in any way under what come may (Pudner, 2000, p. 53). This is one of the ways through which poor patient handling arises from causing un-expected complications which would be avoided through following procedural implications within the theatre hall (Zatlin, 2005, p. 24). The key function within the practice is that patient care and preoperative environment entirely relies on our practice. It is within the health and safety rules state that accountability and responsibilities under which the duties are to be performed within the theatre. Hence any fault that arises within the theatre must be dealt with beyond reasonable doubt so ascertain that the patient care is maintained within our practice (Waldie, 2007, p. 42). In the process, we have to countercheck the instruments and affirm their states before, within the procedure and afterwards to ensure that the quality of services to deal with both appropriateness and efficiency in reducing harm to the patient under procedure (Thomson,, 2002, p. 123. Disease control and management

The Importance of Accounting Standards Essay Example | Topics and Well Written Essays - 1000 words

The Importance of Accounting Standards - Essay Example They are the ones responsible for listing and analyzing every figure that comes in and out of the company's pocket. The main tool used by company's to determine their financial condition is the financial statement. It aims to supply important information concerning a company's financial position. Accounting practitioners have recognized the need to formulate accounting standards to be followed by every organization. They realized that it is of utmost importance not only to them but to all individuals who are engaged in business Part I Purpose and Significance of Financial Accounting Standards There are three considerations that Accounting Practitioners refer to when asked about the purpose of Accounting Standards. First is that it aids in sustaining the effectiveness of various accounting policies by getting rid of the discrepancies in financial statements. Second, it provides assistance to efficiently present credible and comparable data found in the financial statement of companies . Lastly it functions as an accounting alternative that lessens the notion of subjectivity in financial statements (Chandra, 2011). Accounting practitioners follow a set of guidelines while in the process of gathering financial information. They refer to it as Generally Accepted Accounting Principles (GAAP). In the United States, Generally Accepted Accounting Principles (US GAAP) prepared by the Financial Accounting Standards Board (FASB) serve as the primary basis for entries that are required to be present in financial statements of private companies (Kuppapally, 2008). So that organizations can sustain and expand their operation, internationally accepted accounting standards were formulated, also known as the International Financial Reporting Standards (IFRS). The existence of IFRS in the global market made possible the reduction of incompatibilities in capital flows, leading to an increasing rate of investment in the global market. The International Accounting Standards Board (I ASB) is the body in charge of regulating the standards that are listed under IFRS (Chandra, 2011). Last October 29, 2002, FASB and IASB entered into a covenant known as "The Norwalk Agreement," which has recognized their duty to establish accounting standards that are adaptable to both domestic and international financial reporting. The two standard governing bodies of financial accounting made a deal to finally reconcile their differences in order to attain the objective of the agreement, which is to establish internationally accepted standard suited to the needs of the different companies in nations around the world. The signed memorandum of understanding focused on the convergence of the two. The gradual process of eliminating the differences with the help of joint projects will eventually result to an enhanced comparability of financial statements not only in the US but also in other nations (Financial Accounting Standards Board, 2002). Independent auditors strictly follow the G enerally Accepted Auditing Standards (GAAS). These auditing standards supply the benchmark on the quality of audit that auditors must comply with. The American Institute of Certified Public Accountants (AICPA) made possible the implementation of GAAS in auditing nonpublic companies. Auditors are obliged to know all the statements on auditing standards (SAS) because the basis of making the final decision in auditing financial reports is their judgment on what standard

Ecotourism Essay Example | Topics and Well Written Essays - 2500 words - 1

Ecotourism - Essay Example Particularly, the word â€Å"ecotourism† came into being in the late 1980s due to the world’s reaction and acknowledgement of global ecological practices and sustainable practices (Honey, 2008). This paper will seek to describe the emergence of ecotourism, current approaches to ecotourism, products of ecotourism, and provide a brief reflection on ways in which the provided approaches can ensure that the potential of ecotourism can deliver sustainable tourism development. Emergence of Ecotourism The term â€Å"ecotourism† defines responsible travel by visitors to natural areas, which conserves the environment in addition to improving the welfare of the local people. In many countries, the development of ecotourism was not an exemplified phenomenon (Hingham, 2007). The late 1980s show that ecotourism was an unknown entity which was beginning to gain grip in the popular lexicon (Fennell & Dowling, 2003). The ever-heating debate over tourism and environment spurred t he growth of ecotourism since environmental policymakers were enthusiastic about establishing an ecologically sustained development of ecotourism (Raina, 2005). The potential market base for ecotourism appeared small at first, but as time went by, it indicated large-scale growth. Nevertheless, this niche concept revolutionized ecotourism on the onset of 1990s when the term â€Å"ecotourism† became a basic building block of the tourism industry and other sectors such as travelling public and private agencies responsible for promoting tourism products. After striking a chord with these sectors, ecotourism turned into a travelling buzzword (Goeldner & Ritchie, 2009). When ecotourism secured a place in the minds of many academicians and industry leaders, governments with the aid of the directly involved institutions and agents brought about numerous policies that aimed at increasing growth and developing this sector. As such, they formed conferences that led to the establishment of both national and regional ecotourism associations (Rauschelbach & Forum International, 2002). This was due to the explosion of interests in the ecotourism. Simultaneously, this period is crucial in the ecotourism business as it saw not only an immense explosion of interests in ecotourism but also a rapid growth in the number of people taking ecotourism business to the next level, and the emergence of specialized tour operators, both retailers and wholesalers, who marketed ecotourism products. As of today, the ecotourism sector is still emerging even after a long series of introducing new flavors into the business (Fennel, 2007). Ecotourism has gained favor as an ideal form of sustainable development mainly because of its ability to advocate sustainability measures through its agents. Additionally, ecotourism is so favorable within the sustainable development framework since its ideal goal is to attain a sustained development through tourism activities (Patterson, 2007). Current Approaches to Ecotourism Development Generally, sustainability is not achievable in cases where capital expansion continues to increase the ranks of the poor people and impedes their ability to access resources required for mere survival. In that respect, it is understandable that people need profound changes in order for them to facilitate strategies of sustainable de

History exam Essay Example | Topics and Well Written Essays - 750 words

History exam - Essay Example As Reagan reduced taxes, defense expenditure made it unattainable to have a balanced budget. This enlarged budget, coupled with the anti-Soviet campaign, increased America’s debt, as Americans could not contribute due to their reduced tax contributions. Incurred debt was transferred to the government. This led to many Americans experiencing economic hardship; they had to work harder and longer, as they had limited opportunities to progress professionally. Reagan encouraged growth of clandestine segment initiatives. He anticipated being able to reassign some federal responsibilities to the private sector. This initiative led to many developments domestically. Citizens enhanced their livelihoods and spontaneous services increased; domestic competition created growth in the private sector. On the domestic front, Reagan received much credit; he was productive and future-oriented (Knopf, 200). Although Reagan stopping the Vietnam War helped the U.S. maintain peace, it encouraged fresh new attacks from other territories. The Soviet Union consequently bombed an American aircraft, and the country faced attacks from Iran and Lebanon. Because of this, many Americans military groups felt the need to defend their country. This led to antagonism from each side. Americans had to be careful, as it was no longer considered to be peaceful. The Arabs and Lebanese were waiting for a chance to strike. Reagan did not gain favor nationally due to tax discrepancies in Americans’ incomes. This created a divide; some saw themselves as superior (those with a nine percent reduction in taxes), while others (those with a one percent reduction) saw themselves as inferior. These groups could not compromise because they saw themselves as dissimilar societal classes. Reagan enhanced the gap between the underprivileged and the rich. Reagan’s administration formed a

Development and career Essay Example | Topics and Well Written Essays - 2250 words

Development and career - Essay Example More often in psychology and education, the process that combines cognitive, emotional, and environmental influences and experiences in order to acquire, enhance or to make any kind of changes in an individuals’ knowledge and values all around the world is known as learning. The process of learning focuses on the result of learning and their explanations are known as learning theories. The learning theory describes the way in which the people and the animals learn and it helps us in understanding the complex process of learning. The two main value of learning are mentioned below.1.It provides us with vocabulary that helps us in interpreting the various examples of learning. 2.It also suggests solutions in order to solve practical problems. The learning theory does not actually give theories but they direct us to find solutions.The three categories in which the frameworks of the learning theory falls are behaviorism, cognitivism and constructivism from which behaviorism focuses mainly on the objectivity of learning while the cognitive theories look beyond the behavior of an individual, however, the contructivism sees learning as a practice in which the learner constructs new ideas and concepts. (Huselid, 1995).Many people have also criticized the learning theory because it focuses on the traditional educational practices and the critics have said that there is no such need of this theory and it has created more problems than the solutions.

Devise an online lesson Assignment Example | Topics and Well Written Essays - 500 words

Devise an online lesson - Assignment Example This will greatly assist them in understanding and sharing of newly introduced concepts The plan will try to satisfy all the course objectives by helping students to expand their knowledge and grasp such key terminologies as pronunciation, nouns, verbs, tenses adverbs, vocabularies and many more others. The plan will also help the students appreciate English as a language and demystify any stereotypic beliefs surrounding it. The quote will depend on the topic of the day. Most quotes will be drawn from great thinkers like Aristotle, Hobbes and Rousseau. The quotes will help the students focus on the topic of the day and motivate them to complete their assignments within the provided time frame. Students will be instructed on which online methods to use during teaching. Some classes like pronunciation will require computer conferencing while others like tackling assignments will require World Wide Web. The three media above have been chosen because they will increase the speed at which students will converse with their instructor. They will also give them an opportunity to interact among themselves thus creating room form lively forums. Online communication is good because it helps the students open up and tell the instructor what they would have otherwise never said in an open classroom (Anderson, 2008). It also saves time and resources as students will not be required to appear physically in class. By so doing, they will be able to engage in other activities like spending time with their families and attending their jobs without any worry. The methods have also been chosen because of their ability to help students from different cultures interact and appreciate one another’s

Self-Assessment Essay Example for Free

Self-Assessment Essay This document contains the template you will use to complete this assignment. Save the file by adding your last name to the filename (e.g. Week2_Self_Assessment_Template_Smith.docx). Be sure to proofread and spell check your work before you submit it. A grading rubric is also available at the end of this document. There are FOUR parts to the Self-Assessment. Part 1: Reflect on your results from the self-assessment exercises you’ve done from the textbook, as well as others you might have done in the past, and complete the table below. Review current or past jobs to identify your transferable skills. Develop an inventory of your most marketable career-related skills (minimum 15), instances where you have demonstrated these skills (minimum three), and the core values you want your work to reflect (minimum five). Take into consideration the traits employers are seeking, including technical and transferable skills and general abilities. (30 POINTS) SELF-ASSESSMENT EXERCISES MY RESULTS I completed the following assessments/inventories as part of my self-assessment activities: 1.Marketing Readiness Quiz 2.Self-Awareness Checklist 3.Ability Assessment 4.Personality Check 5.Transferable Skills Checklist 6.Work Environment and Preferences My most marketable career-related skills are . . . (minimum 15) (Remember to include technical and transferable skills on this list!) 1.Microsoft Word proficiency 2.Social Skills 3.Organization 4.Ability to delegate 5. Microsoft Excel proficiency 6.Ability to lead and motivate peers 7.Responsibility 8.Hard working nature and perseverance 9.Technical abilities 10.Fast ability to learn 11.Ability to handle high stress situation 12.Timeliness 13.Efficiency at completing task at hand 14.Neatness 15.Ability to interact positively with many people Examples of instances where I have demonstrated these skills include . . . (minimum 3) 1.past jobs involving computer skills 2.past jobs involving social interactions 3.past jobs in which I have had leadership responsibilities Core values I want my work to reflect are . . . (minimum 5) 1.Honesty 2.Integrity 3.Reliability 4.Dependability 5.Trustworthiness Part 2: Describe your ideal job. (20 POINTS) MY IDEAL JOB In my ideal job, I would be . . . (state what you see yourself doing as part of your ideal job) In a position in which I hold a leadership position so I could use my skills in a positive way to lead and manage other employees to motivate them to produce the best work possible. I am not particular concerned about the specific industry in which I would be working, as long as I have the ability to use all of my technical skills in a productive way. All in all, my ideal job is one in which I feel productive and making a positive difference on the organization because I want my skills and talents to be put to a productive use. Part 3: Identify your one-, two-, and five-year career goals, create a list of possible employers of choice in your career field (minimum 3), possible job titles for your one-, two-, and five-year goals (one for each goal), and current salary ranges for those job  titles. (30 POINTS) CAREER GOALS Career Goals Potential Employers (minimum 3) Possible Job Titles (minimum 3) Current Salary Ranges (for each job title) My one-year career goal is . . . (state your goal here) 1. Cameron 2. Hewlett-Packard 3. HCL Technologies 1.Network Engineer 2.Network Technician 3.Network Administrator 1.$48-70k 2.$40-55k 3.$42-66k My two-year career goal is . . . (state your goal here) 1. Exelon Corporation 2. Rockwell Automation 3. Marathon Oil 1.Network Analyst 2.Electronics Technician 3.Production Engineer 1.$40-90k 2.$31-53k 3.$48-71k My five-year career goal is . . . (state your goal here) 1.FMC Technologies 2.Emerson 3.G.E 1. Electrical Engineer 2. Senior Engineering Technician 3. Controls Engineer 1.$51-100k 2.$47-83k 3.$76-123k Part 4: Provide a summary of what you have learned about yourself and the characteristics of your dream job as a result of the reflection and research you have done as part of this assignment (minimum 100 words). (20 POINTS) MY LEARNINGS I have learned a great deal about myself and the characteristics of my dream job as a result of the reflection and research that I have done as part of this assignment. I have realized that the most important thing to me is the ability to make difference in whatever field I choose to engage. I used to think that I had an interest in a particular industry, but I have realized that my ability to adapt to new situations would make me a viable employee in numerous fields. Therefore, my dream job is not very specific but can be in a variety fields, as long as I can have a positive impact on my employees and the organization. Grading Rubric: Self-Assessment Component Points Part 1: Award full credit if all sections meet minimum requirements. Deduct up to 20 points depending on how incomplete the responses are. No points awarded if the section is not completed. Deduct up to 5 points for spelling and grammatical errors. 30 Part 2: Award full credit if the ideal job is described sufficiently. Deduct up to 10 points for incomplete responses. No points awarded if the section is not completed. Deduct up to 5 points for spelling and grammatical errors. 20 Part 3: Award full credit if all sections meet minimum requirements. Deduct up to 20 points depending on how incomplete the responses are. No points  awarded if the section is not completed. Deduct up to 5 points for spelling and grammatical errors. 30 Part 4: Award full credit if the student has provided a reflective summary of their learnings. Deduct up to 10 points if the response is incomplete. No points awarded if the section is not completed. Deduct up to 5 points for spelling and grammatical errors. 20

Mary Parker Follett Essay Example for Free

Mary Parker Follett Essay The newest addition to the collection of books about Mary Parker Follett is a contribution by Joan C. Tonn entitled Mary P. Follett: Creating Democracy, Transforming Management (BUS stack HN57.T695 2003) The press release for this book is available here. Recently a new book about an older management theorist arrived in the Business Library. Published by the Harvard Business School Press, the contributors included Drucker, Mintzberg, Bennis and Kanter. Perhaps it was because the book was published by that press with comments by those people, that the subject attracted more attention than usual. The title of the book is Mary Parker Follett Prophet of Management: A Celebration of Writings from the 1920s (BUS stack HD31.M334 1995) and the subject is obviously Follett who was a social theorist earlier in this century. A considerable amount has been written about Follett and her theories concerning organizations and management. Since the material is scattered over a long period and across different academic disciplines, this brief introduction and bibliography is designed to help you quickly find material relating to the mother of management theory. Obviously the place to begin is with the new collection of her writings mentioned above. It also contains evaluations of her positions, a useful epilogue by Paul Lawrence and a bibliography of Folletts writings. For a brief biographical sketch see the appendix in Integrative Management: Creating Unity from Diversity, by Pauline Graham (HD 38.G68) as well as the essay by Graham in Mary Parker Follett Prophet of Management (BUS stack HD 31.M334) which she edited. For an earlier biographical piece see Vol. 4 of theInternational Encyclopedia of Social Sciences, Follett, Mary Parker (DBW reference H 41.I58). The University of Western Ontario has a solid collection of material by and about Follett and there have been some works about her that were produced on this campus. In 1992, David Hurst wrote an article for Business Quarterly with the title: Thoroughly Modern Mary Parker Follett (Vol. 56, No.4, Spring). Two masters theses have also originated here and they reflect the inter-disciplinary nature of Folletts work: Science and Service: M.P. Follett and the Profession of Educational Administration by A.M.H. van den Heuvel (EDU stack AS42.L85.V265) and Mary Parker Follett: An Application of Her Management Theories to Educational Administration by Lorraine Vanderkerckhove (EDU stack AS 42.L85.V29). WORKS BY MARY PARKER FOLLETT Creative Experience (BUS stack BF 57.F6 1951; DBW stack BF 408.R67 1970) Dynamic Administration: The Collected Papers of Mary Parker Follett [electronic resource] (BUS stack HF 5547. F6). Weldon has an additional copy of the 1941 edition. Additional copies can be requested from storage, including 1 copy of the 1965 edition. Freedom Co-ordination: Lectures in Business Organization (BUS stack HD 57.7.F66 1987). This work contains 6 lectures: The Illusion of Final Authority; The Giving of Orders; The Basis of Authority; The Essentials of Leadership; Co-ordination and The Process of Control. The last essay is also found in another volume available here at Western: Papers on the Science of Administration, ed. by Gulick and Urwick, p.159 (JF 1351.G8). The New State Group Organization, the Solution for Popular Government (DBW stack JC336.F57 1918). The Speaker of the House of Representatives [electronic resource] (DBW stack JK 1411.F67 1896). For recent samples and discussions of Folletts works see: Management Theory: From Taylorism to Japanization (BUS stack HD31.S22); Writing About Business and Industry (DBW stack HF5718.3.W74 1995);Management and Gender: Issues and Attitudes (BUS stack HD6054.4.U6K37 1994); Management and Organizational Behavior Classics (BUS stack HD31.M2917 1993); Great Writers on Organizations (DBW stack HM131.P74 1993); International Management Handbook (HD62.4.T47) and Classics of Organization Theory (DBW stack HD31.C56 1992). SELECTED WORKS ABOUT MARY PARKER FOLLETT In addition to some of the sources noted above, articles about Follett may be found by searching electronic databases such as Proquest. Articles that pre-date the electronic databases may be found by searching a variety of print indexes; some articles are noted below and others may be found quickly by looking at the M.A. theses noted above. Follett has also been the subject of many doctoral dissertations and they may be quickly located by searching Proquests Dissertations Theses. Two dissertations that can be consulted are: Mary Parker Follett: Pioneer in Organizational Theory by Linda Brown (HD31.F667B76) and Scientific Management and Administrative Reform in Education by Kathleen Schwartz (HD 30.12.S39). Sibyl of a Modern Science, Business Week, Nov. 21, 1964, p.96 Mary Parker Follett, Civic Leader Dies, obituary, New York Times, Dec. 21, 1933, p.21, col.1 (DBWMFM AN 2.N5) Mary Parker Follett: The Enduring Contribution, Public Administration Review,Vol.28, No.6, 1968, p. 520 (DBWPER JK1.P85) No occupation can make a more worthy appeal to the imagination either from the point of view of service it can perform, or from the tremendous interest in the job itself, than business management. MPF. Mary Parker Follett Facts: Known for: pioneering ideas introducing human psychology and human relations into industrial management Occupation: social worker, management theory writer and speaker Dates: 1868-1933 Mary Parker Follett Biography: Modern management theory owes a lot to a nearly-forgotten woman writer, Mary Parker Follett. Mary Parker Follett was born in Quincy, Massachusetts. She studied at the Thayer Academy, Braintree, Massachusetts, where she credited one of her teachers with influencing many of her later ideas. In 1894, she used her inheritance to study at the Society for Collegiate Instruction of Women, sponsored by Harvard, going on to a year at Newnham College, Cambridge, in 1890. She studied on and off at Radcliffe as well, starting in the early 1890s. In 1898, Mary Parker Follett graduated summa cum laude from Radcliffe. Her research at Radcliffe was published in 1896 and again in 1909 as The Speaker of the House of Representatives. Mary Parker Follett began working in Roxbury as a voluntary social worker in 1900. In 1908 she became chair of the Womens Municipal League Committee on Extended Use of School Buildings. In 1911, she and others opened the East Boston High School Social Center. She also helped found other social centers in Boston. In 1917, Mary Parker Follett took on the vice-presidency of the National Community Center Association, and in 1918 published her book on community, democracy, and government, The New State. Mary Parker Follett published another book, Creative Experience, in 1924, with more of her ideas about the creative interaction of people in group process. In 1926, she moved to England to live and work, and to study at Oxford. In 1928, Follett consulted with the League of Nations and with the International Labor Organization in Geneva. She lived in London from 1929 with Dame Katharine Furse of the Red Cross. In her later years, Mary Parker Follett became a popular writer and lecturer in the business world. She was a lecturer at the London School of Economics from 1933. Mary Parker Follett advocated for a human relations emphasis equal to a mechanical or operational empha sis in management. Her work contrasted with the scientific management of Frederick W. Taylor (1856-1915) and evolved by Frank and Lillian Gilbreth, which stressed time and motion studies. Mary Parker Follett stressed the interactions of management and workers. She looks at management and leadership holistically, presaging modern systems approaches; she identifies a leader as someone who sees the whole rather than the particular. Follett was one of the first (and for a long time, one of the few) to integrate the idea of organizational conflict into management theory, and is sometimes considered the mother of conflict resolution. In a 1924 essay, Power, she coined the words power-over and power-with to differentiate coercive power from participative decision-making, showing how power-with can be greater than power-over. Do we not see now, she observed, that while there are many ways of gaining an external, an arbitrary power —- through brute strength, through manipulation, through diplomacy —- genuine power is always that which inheres in the situation? Mary Parker Follett died in 1933 on a visit to Boston. After her death, her papers and speeches were compiled and published in 1942 in Dynamic Administration, and in 1995, Pauline Graham edited a compilation of her writing in Mary Parker Follett: Prophet of Management. The New State was reissued in a new edition in 1998 with helpful additional material. Her work was mostly forgotten in America, and is still largely neglected in studies of the evolution of management theory, despite the accolades of more recent thinkers like Peter Drucker. Peter Drucker called her the prophet of management and his guru.

Cloud Based Customer Relationship Management Marketing plan of Starbucks coffee shop

Cloud Based Customer Relationship Management Marketing plan of Starbucks coffee shop EXECUTIVE SUMMARY This report looks at the Marketing plan of Starbucks coffee shop, and its contribution to the success of company. Formation of successful marketing plan is the key point for a company to gain the competitive advantage over its competitors. The marketing plan evaluates the strategies currently adopting by the company. But the main theme of this report is to focus mainly on company marketing strategies, such as SWOT Analysis, Ansoff Growth Matrix, Boston Consulting Group Matrix, 4s, company short term goals, objectives, and how it can be successful in the future. COMPANYS INTRODUCTION: Starbucks Corporation is a dominant multinational coffee and coffeehouse chain company based in the United States. Starbucks is the largest coffeehouse company in the world with 8,505 company-owned and 6,505 licensed stores in 42 countries, making a total of 15,011 stores worldwide. Starbucks sells drip brewed coffee, espresso-based hot drink, fruit bottled, coupled with sandwiches, pastries, snacks, salads, soups, other hot and cold drink. Core competency of star bucks: To summarize, Starbucks has a high reputation for quality because of the following: The company goes to extreme lengths to buy the very finest Arabica coffees available on world markets, regardless of price. The companys freshness and quality are legendary. Beans that are held in bins for more than a week are donated to charity. Every piece of coffee-brewing equipment that is sold has been tested and evaluated. Each Starbucks employee is extensively trained to ensure that customers receive knowledgeable service. Mission Statement: To establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow. The following six Guideline Principles will help us measure the appropriateness of our decisions: Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standard of excellence to the purchasing roasting and fresh delivery of our customer. Develop enthusiastically satisfied customer all of the time. Contribute positively to our communities and our environment. Recognize that profitability is essential to our future success. Starbucks has the following core values: Provide a great work environment and treat each other with respect and dignity. Embrace diversity as an essential component in the way we do business. Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee. Develop enthusiastically satisfied customers all of the time. Contribute positively to our communities and our environment. Market Demographics: The profile for the starbucks customer consists of the following geographic, demographic, and behavior factors: Geographic: The geographic survey may include the identification of total number of population, in society and total number of target customer in which you are operating (Lanchester, Massingham, Ashford 2002). The immediate geographic target market for starbucks is the total population of the UK which is 60,776,238 approximately. The specific targeted market of Starbucks is mostly the students of schools, colleges, and universities. Demographics: Male and female. Age below 40. This age range draws off a combination of university students and locals within the society. Have (or are getting) a college education and some with graduate degrees. An income over  £457 per week (except the students who earn far less but have a decent amount of disposable income). Non-conventional customers. Psychographic: The people who want to enjoy a totally different coffee experience, they go to starbucks as it is positioned a completely different coffee shop. MARKET NEEDS: Starbucks is providing with a wide range of high quality coffee and snacks options to their customer. Starbucks seeks to fulfill the following benefits that are important to their customers: Selection: A wide range of coffee and snacks options that is unavailable at the larger, dominant coffee chains. Accessibility: Almost all types of coffee are available from starbucks centrally located storefront. Customer service: The patron will be impressed with the level of attention that they receive. Competitive pricing: Prices of all range of coffee and other stuff will be priced competitively relative to the competition. SITUATION ANALYSIS OF STARBUCKS: The company situation analysis is used at the business level to determine the strategic issues and problems that need to be addressed through the next three steps of the strategic planning process. Starbucks has own very good different kinds of strength to dominant in this industry make it to differentiate to others one in this market. This are the strength, those help starbucks to achieve their targets and desire goals. These are the stratbucks some important characteristics or strengths. STRENGHTS: Strong Brand Recognition Large retail distribution system Quality product Extensive product list Good supplier relationship Strong financial history Strong human resources WEAKNESSES: Even though starbucks posses a number of strengths but it also has some weakness too. starbucks needs to overcome on and deal them for remaining the top position in this competitive market. These are the s following list of starbucks weaknesses: Dependence on single source of business income Prices high relative to competition Strong dependence on suppliers Merchandise sales in stores SWOT ANALYSIS FRAMEWORK OPPORTUNITIES: It is a fact that every company who enter in the market must has different kind of opportunities prevail in market. This is the important, how to recognize and make to strategy to acquire them, acquiring these opportunities is called success of company . Starbucks can more successes in market if they will be able to act upon theses opportunities accordingly. The following new opportunities can help starbucks to success more in the future in the way of their business. Expansion into overseas markets Expansion into untapped U.K and worldwide markets Expansion of brand name into new products or business lines THREATS: Nobody knows about tomorrow. Especially for nowadays circumstances, world is changing dramatically. Some new threats are prevailing in the market with full swing of their effectiveness. Despite the fact of strong position of strabucks in the market, he still need to keep eye on these threat get strong positioning and branding. These are the list of some very common internally and externally threats. Economic conditions may make consumers unwilling to pay high prices Political conditions abroad may limit expansion Increasing competition in coffee market May be reaching saturation point in some U.S markets Increase prices of raw material for coffee and other stuff BOSTON CONSULTING GROUP (BCG) MATRIX: The Boston consulting Groups growth-share matrix, developed in the early 1970s, probably became the most popular management technique ever. The vertical dimension is th growth rate of the market, which is used by the BCG as a proxy variable for market attractiveness. High-Growth markets are assumed to be more attractive because, being competitively non zero sum, market share gains are often more easily obtained. Also market share gains in a growth market will be worth more in the future as the market develops. The midpoint between high and low market gtowth is In the BCG matrix, star quadrant is the most dominant place where the companies enjoy the high market growth and high market share. Thats why every company wants to stay in star quadrant. As STARBUCKS coffee shop is the renowned coffee chain in the world, thats why it clearly lies in the (STAR QUADRANT High Growth + High Share) because the annual sales of the company in last financial year 2007 are US $ 9.411 Million, moreover the coffee shop enjoying the highest market share as well in the coffee industry. ANSOFFS GROWTH MATRIX: The product-market matrix proposed by ANSOFF, provides a useful framework for considering the relationship between strategic direction, and marketing strategy (Brassington Pettitt 2006). The four-cell matrix shown in the figure considering various combinations of product-market options. Each cell in the Ansoff Matrix presents distinct opportunities, threats, resources, requirements, return and risks. Market expansions means selling more of the existing products to new markets, which could be based on new geographic segments or could be created by opening up other new segments such as age, product, usage, lifestyle or any other segmentation variables (Brassington Pettitt 2006 p 955). In the ANSOFF growth matrix, the STARBUCKS coffee shop lies in the (MARKET EXPENSION Existing Product + New Market), because company is making very good profit in almost every coffee shop in different location of the world. Expending its coffee market in Middle East, and Asia could be very helpful for the companys profit because there is huge potential for the coffee market as there is no famous coffee shops in that part of the world. Just like recently they have opened their two coffee shops, one in China and other is in Kuwait. MARKETING MIX STRATEGY FOR STARBUCKS: In order to make appropriate strategies for gaining customers preferences and their loyalty, we need to understand as to how STARBUCKS Marketing Mix or 4 Ps have enabled the company to achieve superior customer satisfaction, and also in building a long-term relationship with its customers. The issue is not whether there should be four, six, or ten Ps so much as what framework is most helpful in designing marketing strategy. Just as economics use two principals concepts for their framework of analysis, namely Demand, and Supply. The marketers see the four Ps as a filing cabinet of tools that could guide their marketing planning (Philip Kotler, 1999 p 96). Following are the some recommendations for STARBUCKS in relation with marketing mix: Frame Work of marketing Mix PRODUCT: Typically, the marketing mix stars with product p. the heart of the marketing mix, the starting point is the product offering and product strategy. It is hard to design a place strategy, decide on a promotion campaign, or set a price without knowing the product to be marketed. The product includes not only the physical unit but also its package, warranty, after-sale service, brand name, company image value, and many other factors. A Starbucks coffee has many product elements: the chocolate itself, a fancy gold wrapper, a customer satisfaction guarantee, and the prestige of the Starbucks coffee brand name. We buy things not only for what they do (benefits) but also for what they mean to us (status, quality, or reputation). Products can be tangible goods such as computers, ideas like those offered by a consultant, or services such as medical care. Products should also offer customer value. Decision that address the new product development process(innovation management), licensing strategies with potential partners, intellectual property rights, services provided to augment the revenue stream from base products product name/brand decisions ,development of complementary products by partners, creation of industry standards, packaging, and so forth, the critical need is to develop a stream of products with the right set of features to satisfy customer needs in a compelling yet simple fashion.( jakki j. Mohr, Sanjit Sengupta, Stanley Slater,2000, p7) In Starbucks they made purely their products to satisfying the needs of the customer, and they made coffee with the finest coffee ingredients of the world. The different range of coffee and snacks offered by STARBUCKS are as follow: ESPRESSO: Coffee Latte Cappuccino Vanilla Latte Coffee Americano Espresso COFFEE HOUSE FAVOURITES Caramel Hot Chocolate Coffee Misto Classic Hot Chocolate Signature Hot Chocolate Freshly Brewed coffee FRAPPUCCINO: Cinnamon Dolce Java Chip Espresso Coffee Caramel SPRING FAVOURITES: Cinnamon Dolce Latte Caramel Macchiato PRICE: decisions that establish price points for the company products, and address issues related cost to produce/manufacturer the good, margins along the distribution channel, competitors prices (pricing relative to a specific firm market position), customer value, total cost of ownership for the customer, price for product bundles, and profitability.( .( jakki j. Mohr, Sanjit Sengupta, Stanley Slater,2000, p8 ). Price is the only element of the marketing mix that produces revenue, As such; it serves a tactical as well as an economic role for an organization 9Holloway and Robison 1995). The price charged sends many signals about the likely value of the product being offered and, as such, must be commensurate with the quality of experience, Starbuckss product prices are relative high than others, because they target those people of society who give the preference on quantity. Following are the some prices of STARBUCKS famous products: ESPRESSO: Tall Grande Vent Coffee Latte  £2.05p  £2.40p  £2.65p Cappuccino  £2.05p  £2.40p  £2.65p Vanilla Latte  £2.35  £2.70p  £2.95p Coffee Americano  £1.75p  £1.90p  £2.05p Espresso  £1.20p  £1.40p  £1.55p COFFEE HOUSE FAVOURITES Caramel Hot Chocolate  £2.90p  £3.25p  £3.50p Coffee Misto  £1.95p  £2.35p  £2.55p Classic Hot Chocolate  £2.20p  £2.50p  £2.80p Signature Hot Chocolate  £2.65p  £3.00p  £3.25p Freshly Brewed coffee  £1.65p  £1.75p  £1.90p FRAPPUCCINO: Cinnamon Dolce  £3.05p  £3.25p  £3.45p Java Chip  £3.05p  £3.25p  £3.45p Espresso  £2.65p  £2.85p  £3.05p Coffee  £2.50p  £2.70p  £2.90p Caramel  £3.05p  £3.25p  £3.45p SPRING FAVOURITES: Cinnamon Dolce Latte  £2.70p  £3.05P  £3.30P Caramel Macchiato  £2.70P  £3.05P  £3.30P PLACE: Place, or distribution, strategies are concerned with making products available when and where customers want them. Would you rather buy a kiwi fruit at the 24-hour grocery store within walking distance or fly to Australia to pick your own, which involves all the business activates concerned with storing and transporting raw material or finished product. The goal is to make sure products arrive in usable condition at designated places when needed. For consumer goods the most visible player in the channel of distribution is retailer. Manufacturers and consumer alike have to put a lot of trust in the retailer to do justice to the product, to maintain stock, and to provide a satisfying purchasing experience. Retailer face the many of the same marketing decisions as other type of organization, and use the same marketing mix tools, but with a slightly different respective. They also face unique marketing problems for examples, store location, layout and the creation of store image and atmosphere. Every seller must decide deeply that how to make its products available to the target market with an easy access (Philip Kotler, 1999 p 103). Now in case of Starbucks they mainly build their stores in the prime location of the city where they can easily attracts their desired customers who really want to enjoy the taste of coffee. Just like in UK they build their stores mainly in the shopping malls and town centers. Now it is the need of the time that they should be concentrate to open their stores in Middle East and Asia. PROMOTION: Promotion includes advertising, public relations, sales promotion, and personal selling. Promotions role in the marketing mix is to bring about mutually satisfying exchanges with target markets by informing, education, persuading, and reminding them of the benefits of an organization or a product. A good promotion strategy, like using the Dilbert character in national promotion strategy for office Depot, can dramatically increase sales. Good promotion strategies do not guarantee success, however, despite massive promotional campaigns, the movies, The Alamo and The Lady-killers had disappointing box-office return. Each element of the promotion p is coordinated and managed with the others to create coordinated and managed with others to create a promotional blend or mix. These Starbucks nearly spends  £4.7 million every year for promotions. It is include the cost of print media, electronic media, indoor, outdoor media etc. The companys latest stunning plan is the Starbucks Card. You buy a re-chargeable card in the UK which can be used at coffee bars in the US, Canada, Australia and Thailand. The card will enhance the Starbucks experience for customers allowing them to buy their daily cup of coffee quickly and easily, even when they are not carrying cash. Recently company through an agreement between Starbucks, and T-Mobile the two companies have come up with a way to provide internet access at Starbucks location and high speed broadband for Starbucks customers as well. In addition, T-Mobile hot spot customers get to use the Starbucks stores as they do now. Moreover Starbucks spends millions of dollars internationally to protect the environment and global warming. DIVERCIFICATION: The major reason for a business adopting a strategy of diversification is therefore to allow it to reduce its dependence upon a single market area (W. Stewart Howe 1986 p 153). At a general strategic level Ansoff suggests three reasons why firms diversify. First, their objectives cannot be achieved by continuing to operate in their existing markets. Thus, since continued operation in these markets is not able to diversify the profit, risk or growth objectives of the business, achievement of these must be sought in new market areas. Second, where a business has excess financial resources beyond those necessary to satisfy its expansion plan in its existing markets, then rather than retain these resources in liquid form of business may invest them in new markets areas. Third, if greater opportunities are presented to the firm in new market areas than accrue from its existing activities. Then a diversification program may be undertaken to benefit from these. There are tw o types of diversifications: RELATED DIVERSIFICATION UN-RELATED DIVERSICATION RELATED DIVERSIFICATION: Expending combining with firms in different, but related industry that are Strategic Fits. UNRELATED DIVERSIFICATION: Growing by combining with firms in un-related industries, where higher financial returns are possible. Now, if Starbucks want to diversify its business outside the industry, then the company should start a totally new business that is not from the same industry. For example Starbucks is a coffee shop, if they enter in the manufacturing business and start making cars, bikes etc that will be the perfect example of diversification. But the main focus of the Starbucks should be on their strategic business unit which is coffee shop. If they want to diversify their business within the same industry i.e. related diversification, then the Starbucks should combine their business with their competitors to launch new products. INTERNATIONAL BUSINESS DEVELOPMENT STRATEGIES: The franchiser/licenser remembers to provide a standard package of components, or ingredients together with management and marketing services, and advice. Since franchising involves the transfer of tangible, it can enable greater control of the operation for the originating manufacturer than licensing (Lancaster Massingham Ashford 2002 p 437). Starbucks currently use three strategies for business in overseas. These strategies are as follow: 1: Joint ventures 2: Licenses 3: Company-Owned Operations. Mainly the company uses the company-owned shops for the business in other countries. RECOMMENDATION FOR FUTURE MARKETING PLAN OF STARBUCKS (3 YEARS): By analyzing the above whole information such as Swot analysis, Ansoff analysis, BCG matrix, marketing mix, following should be the primary objectives of the marketing plan of Starbucks coffee shop for next 3 years: GOALS OR OBJECTIVES: Sales should be increased by 15 to 20% at least. In order to get increased sales, they should increase Gross Profit margin by 25%. Find more new markets especially in Middle East, and Asia. More strengthen their position as a worldwide coffee shop leader. Increase marketing budget by 15% In order to achieve the above future objectives, the Starbucks coffee shop should follow instructions: MAINTAIN SUSTAINABLE COMPETITIVE ADVANTAGE: The Starbucks coffee shop should maintain the competitive advantage that it has got over other coffee shops. In order to maintain leading position in the coffee market, the Starbucks should introduce innovative products after good intervals. NEW TARGER MARKETS: To maintain the top position in the coffee market, Starbucks should go and find some new coffee potential market. Just like there is great potential of new coffee shop especially in Asia, and Middle East, as there is no famous coffee shop. Where they can capture in new market, and got some handsome profit as well. INTRODUCE SOME NEW PROMOTIONS: As Starbucks introduced a stunning promotion plan that is Starbucks re-chargeable card for purchasing coffee whether you have money or not at that time. Just like that company should develop a membership card especially for the students. Some discount should be offer to regular customer, and student to increase the retainment. INTRODUCE SOME INNOVATIVE PRODUCTS: To maintain the dominant position in the coffee market, it is necessary for the Starbucks that, they should introduce some really innovative products after good intervals. The induction of new products creates the brand loyalty among the customers. INCREASE MARKETING BUDGET: Marketing department is the one of the most important part of every company. This department is responsible for increasing sales. So in order to get more revenues, the company should increase the budget of marketing. Moreover they should include some world famous celebrities, conducting promotions events, seminars things like that for promotions their products. DIVERCIFY THE BUSINESS: To maintain the leading position in the coffee market, the Starbucks should go for diversification. Diversify the business in product-related items, or unrelated items to increase their revenues. IMPROVE THE PRODUCT QUALITY: To maintain the superb quality and taste of different products in Starbucks, the company should adopt the Total Quality Management tool, which means improve the products quality until the perfection, and there is no defect on product or zero defect products. EMPLOYEES MOTIVATIONS: Employees motivation is very important for every organization to get good profit, and in order to maintain its position in the market. Good pay, and reward system is the best tool to motivate the employees. So Starbucks should try to give good pay and benefits to their employees during the job. EMPLOYEES TRAINING AND DEVELOPMENT: Training and development of employees is an important task for the management in order to enhance the progress of company, and increase the sales, and produce the error free services.