Market Analysis of a specific commodity Essay Example | Topics and Well Written Essays - 2250 words

Market Analysis of a specific commodity - Essay Example The class of commodity goods includes products with high market demand, but that are supplied to the market without qualitative differentiation e.g. from the taste of coffee, one cannot easily differentiate that it is from Brazil or Ethiopian highlands or if the coffee is a product of Nestle or Sara Lee companies without careful study of the brand. However, even though the commodity products are considered equal to one another, they are not exchangeable if they do not meet the market standards. For example, sugar as a commodity product, there is no company that has a higher chance of controlling its market supply or price level than other companies since to a consumer it is difficult to differentiate the taste of sugar (Holihan 2008). Based on the economic perspectives and arguments of commodity markets and commodity products, this research paper aims to analyze the market of coffee (as a commodity product): and the players in the coffee market. The analysis will encompass descriptio n of the coffee market structure, companies or players involved, market share, market size, major players, coffee demand and supply, competition and market dominance. Commodity market: Coffee Market The product coffee Often, people depict coffee as a homogenous product. However, this is not right because there are different types and forms of coffee in the market. According to ICO (2002), the two main types of coffee are Robusta and Arabic: Arabica is the largest, covers almost over 70% of the worldwide coffee trade, and exports while Robusta constitutes the remaining percentage of lower than 30% of the world market. ICO (1995) listed 70 coffee producing countries worldwide with Brazil and Colombia leading in coffee production. The Coffee Market Coverage In reference to Fridell (2007), coffee is not just a drink to enjoy; it is a global commodity and influences world economy. The commodity coffee has a global market and occupies a higher position in the world commodity markets. Frid ell (2007) explains that the product has been an important international commodity for trade since 1800s. Coffee is the world’s most widely traded agricultural commodity. Research shows that many, including the world’s renowned historian Mark Pendergrast, have describe coffee as the second most legally traded world commodity after oil. Coffee has cemented its position in most world stock and securities exchange as an essential exchange commodity (Kirsten 2009). As a global product, Fridell (2007) notes that coffee follows a long market chain before its final consumption. On one, hand, the market of coffee constitutes net producers and net consumers while, on the other hand; there are net exporters and net importers in the world. Research shows that most producer countries are net exporters and not net consumers (Kirsten 2009). In addition, large multinational corporations that roast and retail the coffee to final consumers dominate the coffee market. Holihan (2008) say s that the international trade has essential significance in global marketing and distribution of coffee. In the global market, international dealers, traders or international trade houses purchase coffee from the exporting countries. Roasters in Europe tend to purchase their coffee from international trade houses or specialized import agents with contracts of exporters in producing countries. While large roasters-corporations prefer ex-doxy purchase of coffee, small roasters prefer purchase of small lots

American Films and the Chinese Culture Research Proposal

American Films and the Chinese Culture - Research Proposal Example The research "American Films and the Chinese Culture" is meant to critically explore and exhaust the influence that films, especially those in the US have on the perceptions of people for the Chinese culture. This research is very important because everybody belongs to a culture. Furthermore, we are living in a globalized environment that values a cultural and racial diversity. To efficiently and effectively work together, it is important to understand the culture and values of other people. This would play a positive role in helping people to interact efficiently and effectively with each other. Having a wrong perception and the one which is negative concerning a particular culture may lead to stigmatization, discrimination, social labeling to the culture that is portrayed negatively. This would affect the development and growth of diversity in the international system. This research is therefore important because it would play a role in correcting the negative perceptions that people may have towards the Chinese culture. The culture under consideration is that the Chinese people are violent, majorly because of their Kung Fu cultural value. There is a considerable debate on the importance of Kung Fu amongst the Chinese people. However, controversy arises on the role of Kung Fu amongst the Chinese people. One side of the debate argues that Kung Fu is a violent cultural practice of the Chinese people. This is majorly because it promotes the use of martial arts, for purposes of killing the opponents of an individual.

The Story of an Hour (1894) by Kate Chopin Essay

The Story of an Hour (1894) by Kate Chopin - Essay Example When she first hears the news of her husband's death, she is excited. Although she cried when she first heard the information, she was happy about it at the same time. The narrative states, "She said it over and over under the breath: "free, free, free!" (1). She was at that moment beginning to realize that she was free of the challenges with her husband. As a widow, she would be able to live her life as she wanted, and the property and wealth would go to her. She was beginning to enjoy the idea of freedom. As an example, when she looked out into the open square from the opened window, she saw the treetops "that were all aquiver with the new spring life" (1). It was interesting that she noticed this because it symbolized her "new life" without her husband. As she imagined her husband in his casket, she knew that she would weep again, but it would not be out of grief; instead it would be from relief. She understood her freedom as the narrative states, "†¦a long profession of year s to come that would belong to her absolutely," "There would be no one to live for in those coming years", and "there would be no powerful will bending hers †¦" (2).

Financial Reporting and Analysis for Decision Making Essay

Financial Reporting and Analysis for Decision Making - Essay Example There appears no true definition under the ordinance or the HKAS.  Most cases require the knowledge of the accountant discretion. When companies comply with the Company’s Ordinance the HKAS depicts the situation as true and fair. The moment there appears a problem; the term comes straight from the legislative or the investment discretion (Oporowski, 2005). Hong Kong citizens tend to analyze the connection found among corporate operation reporting releases. Basing the argument to the results of a, certain company in, Hong Kong years 2011 shows that, Firms experiencing a high earning level, rarely releases the information to the yearly press disclosure. Companies that end up releasing their press disclosures display a heightened impression management. The implication here proves that managers who handle their practices engage in it at varied levels related to the firms’ communications. The ultimate information found in such communications proves that the corporations re lease information that lures the outsiders to view the firm’s performance in a way that they desire (Chartered Institute of Management Accountants, 2011). Analysis of the Topic Issue Using Financial Theory The issues on manipulation The manipulation of data by the managers creates a wrong impression of the company, which later affects the issuance, and the content of the yearly results press releases. The manipulation of the financial reports leaves the public with numerous questions. The questions range from; whether the firm is trying to run away from legal implications, or it just wants to limit the information about the firm that can be viewed by the members of the public. Managers utilize the secretive nature presented by the members of the press release in facilitating manipulating figure to lure the customers and potential investors of the credibility of their corporate bodies. Another possible reason for the act comes from, or excluding the amount of individuals to re duce impression operations in the Hong Kong Accounting Standard (HKAS) 1 or entirely shun the release practice. Some researchers such as Godfrey et al argue that; earning management directly relates to graphical perception management coupled with explanatory impression management (Agarwal, 2002) Disclosures relating to noteworthy events, balances and transactions The impression can be traced at a glance by critical close look at the earning managements and impression management that are released earlier. Most managers tend to release the organization financial information by the use of the third quarter earnings of the organizational report. The study induces more literature as it constantly deals with the releases of Hong Kong Accounting Standard (HKAS) 1 (Revised). Previous analyses prove the application of manipulation practices in the press release data. The results this ends up affecting the stock markets shares prices (Financial Management Association, 1972) Auditors’ r emuneration The disclosure requirement where the issuers are expected by the line 2(h) in the Board’s main rules to give full information on the auditors and non auditors salary included in the corporate government report. The issuers’ failure to disclose the characteristics of non-audit assignments

Bob Knowlton Case Study Essay Example for Free

Bob Knowlton Case Study Essay Attribution process in chapter 4 is referred to as the ways in which people come to understand the causes of their own or others’ behavior. Knowlton felt that Fester was brought in to take his position as project head. With all the questions and research analysis that Fester completed on his own, Knowlton felt betrayed since his friend and mentor Jerrod never took the time to explain to him what was happening. When Knowlton did approach Jerrod to question why Fester was there, Jerrod replied, â€Å"We’re taking him on [. ]†Jerrod also replied that, â€Å"I don’t know yet where he will finally land †¦I thought he might spend a little time with you by way of getting started. † I believe that Knowlton should have gone back to talked to Jerrod again. Knowlton should have got his point across about the way that he and his team was feeling about Fester questions the work that he and his team had completed over the last six months and how calling his home at 2 o’clock explaining how Link’s patterning problem could be solved among other things. Jerrod could have then explained that Fester was brought in to be the project head for another department. In 1996, my husband and I were transferred to Korea for one year by the Army and our two kids that were 15 months old and 3 ? months old stayed with my mother-in-law. Once we returned a year later, our kids had grown so much. However much importantly to me, my kids were calling my mother-in-law mommy and I had not prepared myself for that. In the beginning, I was very hurt as well as confused as to why my kids was calling their grandmother â€Å" mommy†, but I came to the realization that they were at that stage in life where they were just starting to talk and mommy and daddy were their first words. After about a week, I asked my mother-in-law if she wanted the kids to call her grandma or nana so they would get use to calling my husband and I mommy and daddy. Finding of Facts 2: Self-Esteem The letter that Knowlton wrote explained that he would be glad to come back later (he would only be 40 miles away) to assist if there was any problems with the past work. Recommendation/Justification Self-Esteem is defined as the extent to which an individual believes that he or she is a worthwhile and deserving individual. In Knowlton’s situation he felt that he deserved the promotion to project head because he had the knowledge, skills and ability to perform the job. However, when Fester came and started challenging the result that he and his team had determined, he lost his self-esteem as well as his self-confidence and felt as if he was worthless to Mr. Jerrod and most importantly to his team and that allowed him to make a hasty decision to leave the organization. I recommend that Knowlton fight for his position, his team and most importantly his self-esteem. I recommend that Knowlton think about the achievements and contributions that he has made to the team as well as the organization. Once Knowlton builds his self-esteem back up, I recommend that he talks with his supervisor Mr. Jerrod and express his true feeling regarding how Fester approach toward his team is being very disruptive. In the military, we are usually transferred to different duty stations every three to five years. This one particular time, I was transferred to Ft Bragg, NC and they were not aware that I was coming to be assigned to the unit. Since they were not aware that I was coming, they did not have a place for me to work so I was consider a â€Å"floater† going from section to section to help out where ever needed until they found a permanent slot for me. The first section that I worked in was the processing section. The section was running smoothly, and I was there for observation purposes only. However, the leader that I am, I could not stand by and allow the soldiers to continue to work long hours without giving suggestions that would allow them to work smarter. I saw the hesitation that they were giving so I called a meeting and explained my purpose of being in the section and also let the soldiers know that I was just there to assist. Once they realized that I was not there to take anyone’s job, and that I was there to help the section run more efficiently, the soldiers began to gravitate toward me for more suggests. After about a week, the soldiers saw the results of my suggestions and incorporated those suggestions into their daily routines in the office. The soldiers also requested that I be assigned to their section permanently without my knowledge and when it was brought to my attention I was very impressed and decided to stay in that section. Findings of Facts: Team Empowerment Bob always prided himself on the fact that the work of the lab was guided and evaluated by the group as a whole and he was fond of repeating that it was not a waste of time to include secretaries in such meetings. Recommendations/Justification: Team empowerment refers to the degree to which its members perceive the group as (1) being competent and able to accomplish work-related tasks (potency), (2) performing important and valuable tasks (meaningfulness), (3) having choice (autonomy) in how they carry out their task, and (4) experiencing a sense of importance and significance (impact) in the work performed and goals achieved. Bob was proud of the members of his team. No one thought that they were smarter than anyone else on the team; they respected each other and valued each other’s opinion. However, from the very first day that Fester arrived, he made it clear that he was not a team player. He thought that everyone should work individually on their portion of the project, come together to complete the project and that be it. Bob also stated that he valued everyone’s opinion including the secretaries. Every member of the team know that if they did not pull their weight on their particular part of the project they could depend on their team mates for assistance and again Fester was not a fan of that. I believe that Bob should have stepped in and expressed his feelings as to how he and his team worked together on everything. He should have expressed how he valued everyone’s opinion and that he was not going to let him or ever Jerrold tear them apart. If Fester still had concerns he should have taken that up with Jerrold however, it should have been a dead issue to Jerrold since Fester was not going to be in charge of the department that Bob was currently heading. At my last unit, I was the section chief for the Personnel Section. I had just completed my training about three weeks prior when another sergeant came to the section that out ranked me. When the other sergeant came, after one week of watching how my section and I conducted business she wanted to make changes. One day she just came in the office and started making changes without consulting me or our commander. When I arrived to the office and saw the changes that she had made, I asked to speak with her separately, and I respectfully told her that I didn’t appreciate her coming in and changing my section around. She began to say that the changes that she was making was how she had her section set up at her last unit and the section ran smooth once all the changes were complete. Since she outranked me, I had to tell her again, respectfully that this was not her section, and the commander had not approved any of her changes nor did he have any knowledge of any of her changes. We then went and talked with the commander and he had agreed with me that first he would make the final decision if she was going to be in charge of the section or if I was going to continue to run the section. Also, if he was going to put her in charge of the section any changes that she wanted to make still had to be approved by him first. So needless to say, she was not happy with me, however, about a month or so later we had a talk. She stated that she admired me for standing up for myself as well as my section. She then went on to apologize for trying to use her rank to intimidate me. After our discussion, we were able to work together in the section as equals.

Honey Markets in the Nilgiris Biosphere Reserve (NBR)

Honey Markets in the Nilgiris Biosphere Reserve (NBR) p>A STUDY ON THE HONEY MARKETS OF NILGIRIS BIOSPHERE RESERVE INSTITUTE OF RURAL MANAGEMENT ANAND EXECUTIVE SUMMARY The project that we have worked on is Honey markets in the Nilgiris Biosphere Reserve (NBR). In this study we have traced the flow of honey from the honey hunters of NBR to the end consumers. This study is a part of a larger study, Darwin Initiative, aimed at studying the underlying linkages between Bees, Biodiversity and Livelihood in the NBR, undertaken by Keystone foundation along with University of East Anglia and Bees for Development. For the study on Honey markets in the NBR, six sites were chosen from the sixteen sites chosen for Darwin Initiative, based on the accessibility of the site, the predominant trade channels present (based on previously available information, the sites were divided as formal and informal markets), the number of honey hunters in the site (used as a proxy to determine amount of honey collected in the sites to ensure presence of high and low honey collecting areas) and also ensuring that all the three states (Tamil Nadu, Kerala and Andhra Pradesh) were represented. Three sites with formal trade channels and three sites with informal trade channels were selected. In the selected sites, a few honey hunters, all the traders and institutional buyers and forest officials were interviewed to compose the value chain of honey. The impact of Price, Credit, State regulation, Volume of honey collected in the site, presence of an accessible institutional buyer at the site, presence of a powerful leader and direct access of consumers to the honey hunters on the sale of honey by the honey hunter was studied and analyzed across the six sites. Of the factors considered, price, presence of an institutional buyer and the presence of a powerful leader had a significant impact on the flow of honey. Based on the above obtained information, the value chain of honey was drawn for all the six sites. 1. INTRODUCTION The project that we had to work is Honey flow in the Nilgiri Biosphere Reserve. In this study we have analyzed the flow of honey from the native indigenous honey hunters in the forest to the end consumers in the area of Nilgiri Biosphere Reserve. According to the Codex Alimentarius the definition of honey is as follows: Honey is the unfermented, natural sweet substance produced by honeybees from the nectar of blossoms or from secretions of living parts of plants or excretions of plant-sucking insects on the living parts of plants, which honeybees collect, transform and combine with specific substances of their own, store and leave in the honey comb to ripen and mature. Honey shall not have any objectionable flavour, aroma or taint absorbed from foreign matter during its production, harvesting, processing and storage and shall not contain natural plant toxins in an amount that may constitute hazard to health. The honey collected in Nilgiri Biosphere Reserve is from four different sources depending on the type of honey bees collecting them i.e. Apis cerana, Apis dorsata, Apis florea and Apis dammer. Nilgiri Biosphere Reserve is the first internationally designated Biosphere Reserve of India. It was established in the year 1986 under the proposition of UNESCO. It comprises the three states of Kerala, Karnataka and Tamil Nadu. It covers 0.15% of Indias land area i.e. an area of 5520 sq. km and is home to a wide variety of flora and fauna. The NBR has six protected areas and more than five different types of forests. The major honey zones in the area include Kotagiri and Coonoor areas of Nilgiris, Sigur, Mukkurthi, Mudumalai, Bandipur, Nagarhole, Wynad, Silent Valley, Nilambur, and New Amarambalam Reserve Forest, Attapadi Valley, Pillur Valley, Anaikatti, Boluvampatti and Sathyamangalam Hills. It also home to a large number of indigenous communities, most of them forest dwellers and hunter gatherers. There around eighteen ethnic groups living in the area each of these having small populations and living in geographical concentrations. Not all the ethnic groups engage in honey hunti ng, the main honey hunters are Sholigas, Kattunaickens, Kurumbas, Cholanaickens and Irulas. Todas generally collect honey for home consumption and minor sales. The dorsata honey which is generally obtained from combs that are built in cliffs and not all the tribals engage in cliff honey hunting. Kurumbas are the experts in cliff hunting of honey whereas Irulas collect it from giant trees. The cerana honey is generally collected from tree cavities whereas florea and dammer honey is collected in small quantities from twigs and cavities in walls. The dammer honey is highly priced and used for medicinal purposes. Each of this ethnic group specializes in different ways and methods to collect honey which has given rise to specific techniques and traditions. Honey hunting is a seasonal activity for them; it starts in March and extends up to June. Thus the activity happens only for a period of three to four months in a year. Honey forms a component of the Non Timber Forest Produce which is commonly known as Minor Forest Produce. In this study we have tried to capture the existing market for honey operating in the major honey zones of the Nilgiris Biosphere Reserve. We met the different native honey hunters engaged in this vocation and enquired about the various selling options that they have. This study looks at how markets function work in these areas and identifies and analyses the factors affecting the honey market. The study tries to explore the various channels through which honey reaches the consumer from the hunter. It also analyzes the major factors affecting the emergence and establishment of particular channel in an area. The study also tries to explain how each channel function in an area, the intermediaries involved, their roles in the channel. The study also describes the value chain of honey with the prices at which different intermediaries purchase honey and wax. For the purpose of study specific sites were selected in the NBR to study the honey market and track the honey flow. This report begins by giving a brief idea about the context in which these markets are operating followed by the methodology adopted for the selection of sites. The market existing in these sites are then described followed by an analysis of all the sites. 2. POLICIES AND STATE REGULATIONS There is neither any policy on NTFP in the state of Karnataka or any laws that have direct consequences on NTFP its collection, processing and marketing. Several legal documents have some rules regarding the extraction of certain NTFPs such as the Karnataka Forest Manual, The Karnataka Forest Act 1963 etc but by far it does not restrict the collection of honey. The state of Karnataka has defined MFP through its Karnataka Forest Act, 1963 as forest produce other than timber, sandal wood, firewood, charcoals, bamboos and minerals, and includes forest produce such as myrobolans, barks, fibres, flosses, gums, resin, dyes, grass, leaves, roots, fruits, seeds, creepers, reeds, moss, lichens, wood-oil, honey, wax, lac, wild animals, wild birds, horns, hides, bones, tusks etc. The Karnataka Forest department has allowed the collection of 45 items from the leased forest areas. The price fixation of these MFPs is done by Karnataka LAMPS. The Tamilnadu Forest department allowed 23 items for collection from the leased forest areas. There is no proper definition for MFP in the state. The price fixation mechanism operating for these products is through the Tamil Nadu Forest Department. Honey does not figure in the list of allowable items for collection. In the state of Kerala, forest department permitted 100 items to Tribal Services Cooperative Societies(TSCS) for extraction from the leased forest areas. The price fixation mechanism operating here is through Kerala Minor Forest Products committee. Honey and wax collection in the state is not banned but it is regulated through Cooperative Societies. In these states for several years the trade of NTFP had been in favour of private contractors. Recently the government guideline for constitution of Village Forest Committee has, to some extent, kept the private traders away but the NTFP market is still with the hand of those traders. With the absence of any legal documents, the states like Tamil Nadu have complicated the NTFP management. The Tamil Nadu state Act has not defined NTFP and there are no transit rules for movement of produces outside the states. 3. METHODOLOGY The study was carried out in a sample of six sites out of the total sixteen Darwin sites. The sampling which was suggested earlier on societies may not give a uniform analysis as these function only in Kerala and parts of Karnataka. Hence we have chosen six Darwin sites for the purpose of study. The six sites chosen to study the value chain of honey under the Darwin Initiative were selected on the basis of the following criteria. Type of trade (formal or informal trade). Number of honey hunters in the site. Representation of all the three states Research Sites Region , State Indigenous Community No of hhlds No. Hhlds inter-viewed No.of Honey hunting Hhlds Trade Aspects 1 Bedaguli Chamraj Nagar Karnataka Sholiga, Kannadiga 55 55 25 Collection is banned. 2 Kannur Sathy Tamil Nadu Sholiga 96 48 30 Collection is banned in Tamil Nadu, but the Village Forest Council (VFC) collects honey from harvesters along with other NTFPs. 3 Kalidimbam Sathy Tamil Nadu Irula 55 55 20 Collection is banned in Tamil Nadu, but the Village Forest Council (VFC) collects honey from harvesters along with other NTFPs. 4 Athoor Chamraj Nagar Karnataka Sholigas, Kannadiga2 Badaga3 103 52 14 Collection is banned. 5 Comop Coonoor Tamil Nadu Kurumba 7 7 4 Honey is sold to green shop Keystone in Coonoor both honey as well as beeswax. Occasionally sold to other local shops as well. 6 Pudukadu Coonoor Tamil Nadu Kurumba 34 34 4 The Honey is sold to shops on the Coonoor- Mettupalayam highway 7 Situkunni Coonoor Tamil Nadu Irula 10 10 1-2 Sold to local traders, tourists and occasionally to Keystones centre. 8 Kobo Kotagiri Tamil Nadu Toda 9 9 3-4 Honey is collected mostly for personal consumption. 9 Koduthen mund Kotagiri Tamil Nadu Toda, Others 4 8 8 1-2 Cerana honey collected for consumption but not regularly. 10 Tunieri Kotagiri Tamil Nadu Badaga, Others 320 51 None None of the households are engaged in HH. 11 Perur Sigur Tamil Nadu Kattunaicken 51 51 18 The product is sold within the village, tourists and local customers or to Kallur cooperative society in Kerala. 12 Chemmanatham Sigur Tamil Nadu Kasava/Irula 44 44 5-10 Honey collection is banned. It is collected and sold to local traders or the numerous resorts adjacent to the Mudumalai sanctuary. 13 Siriyoor Sigur Tamil Nadu Kasava/Irula/Jenu Kurumba 52 52 7-10 Honey collection is banned. It is collected and sold to local traders or the numerous resorts adjacent to the Mudumalai sanctuary. 14 Nala Nilambur Kerala Kattunaicken, Paniyas 54 54 15-20 Honey is sold to the cooperative society. Society has a captive market as selling outside is illegal. 15 Mancheri Nilambur Kerala Cholanaicken 145* All caves have Honey Hunters Honey is sold to the society Bees wax is also sold to the society. Society has a captive market as selling outside is illegal. 16 Mundakadavu Nilambur Kerala Padinaickens, Paniyas 29 29 6 Honey is sold to the society and to the local traders. Bees wax is also sold to the society for Rs.120/kg. Society has a captive market as selling outside is illegal. Table 1: Information about honey trade across Darwin sites As mentioned above the criteria used for selection of site for the study of value chain of honey from the Darwin sites were the type of trade (formal or informal trade), number of honey hunters in the site and the representation of all the three states. These criteria were applied to the sites in the above mentioned order. The Darwin sites were initially categorized into one of the three trade types prevalent by large. Throughout our study, we have used the terms formal, informal trade to describe the trade channels existing in the different sites. Informal trade includes the honey collection and trade in the area where it is banned by law and is not allowed by the forest officials. This kind of a trade can be seen on the Karnataka part of NBR. By Informal trade we refer to honey trade with private traders and the flow through informal channels of trade. Here there is no organizational set up for buying honey. The honey traded here is unbilled. Honey trade in Tamil Nadu is not allowed by law but it is permitted by the forest officials. This is also included under informal trade. Honey collection and trade in this area happen with the knowledge of the forest officials. The above mentioned are considered as permitted trade. The permit ted trade, can again be formal and informal trade. By formal trade, we refer to honey trade with organizations like keystone (in Tamil Nadu) or cooperative societies (in Kerala). In this, the honey traded is billed. Honey collection and trade in Kerala is permitted by law. The following table shows the classification of Darwin sites according to the type of trade Table 2: Classification of Darwin sites based on the type of trade INFORMAL TRADE FORMAL TRADE ATHOOR MANCHERI BEDAGULI KANNUR PERUR KALIDIMBAM SIRIYUR NALA CHEMMANATHAM MUNDAKADAVU PUTHUKADU COMOP KOBO KODUTHENMUNDU SITUKUNNI Tuneri has not been included in the table because no honey collection takes place there. In the next step, the sites were ranked based on the number of honey hunting households present in the village. The following table shows the sites ranked in descending order of honey hunters present in a village. Table 3: Sites selected for the study INFORMAL TRADE FORMAL TRADE NAME HH NAME HH BEDAGULI (KARNATAKA) 25 MANCHERI (KERALA) 36 PERUR (TN) 18 KANNUR (TN) 30 ATHOOR (KARNATAKA) 14 KALIDIMBAM (TN) 20 SIRIYUR (TN) 7 NALA (KERALA) 15 CHEMMANATHAM (TN) 5 MUNDAKADAVU (TN) 6 PUTHUKADU (TN) 4 COMOP (TN) 4 KOBO (TN) 3 KODUTHENMUNDU (TN) 1 SITUKUNNI (TN) 1 After the sites were ranked, they were selected based on the number of honey hunters and other factors as mentioned below Athoor and Bedaguli are the two Darwin sites in Karnataka. In these sites, honey hunting is banned as per the state regulation and is also not permitted by the forest officials. In spite of it, honey is being collected there. Athoor was chosen over Bedaguli in the state of Karnataka because of the following reasons Easy accessibility. Athoor is located on a highway (Sathyamangalam Mysore highway). Athoor is the only site that is located on a highway and has the possibility of sale to travelers on the road. It has the potential for retail trade by honey hunters. There are nine sites that fall under the informal trade category including the two sites in Karnataka. Of these seven sites, Perur had the highest number of honey hunters (more than twice the number of the second highest) and was selected. Koduthenmundu and Situkunni were not selected for low honey flow areas even though they had only one honey hunting house hold each because the hunters here do not go for honey hunting every year. So Kobo with three honey hunting house holds was selected as the site for low honey flow area under the informal trade category. In the formal trade category, Mancheri (even though it has the highest number of honey hunting house holds) was not selected because of accessibility problems. Kannur with thirty house holds was selected as the site for high honey flow and Comop with the least number of honey hunting house holds in the category was selected. Then the selected

Market strategy and recommendations to enhance the USP

Market strategy and recommendations to enhance the USP Air Asia share price has been volatile, with the possible reasons for this volatility. Marketing: Discuss the Market Strategy and recommendations to enhance the USP by using Models and diagrams. Operation Management: Analysis of prioritise operations issues which are of strategic nature for the company and possible solutions. Module Code: MGTM IM 002 Submitted to: Programme Administration Team (Kaplan Financial) Submitted by: Group 11 Group members Name: Student ID No. Chanakya C0346816 Buddha C0364220 Musharaf C0361333 Saif C0360683 Submission Date: Friday 23rd April, 2010 Table of Contents Table of Contents 2 1. Introduction: 3 2. Company Background 3 3. Meaning of Share Price Volatility: 3 3.2. Possible reasons for this volatility: 4 4.2. Mareketing Strategy of Air Asia: 8 4.3. Environmental Analysis of Air Asia on the basis of Porters Five Forces (Chart-3) 9 5.1. Air Asia Business Process 11 5.2. Air Asia prioritises issues: 12 5.3. Possible solutions 13 6. Conclusion 14 7. References: 14 1. Introduction: The company chosen for this report is Air Asia assigned by Kaplan Financial and assignment requirements as follow: A report of no more than 3500 words Possible reasons for the share volatility Market strategy to enhance USP Operational issues and possible solutions 2. Company Background Air Asia was initially established in 1996 as a full-service regional airline offering slightly cheaper fares than its competitors. It was not performing well and its turning point was 2001 when it was bought by Tony Fernandes. Tony Fernandes restructured the company and re-established in Malaysia by enrolling some low cost airline expert like Connor McCarthy (formal director of successful European LCC Ryan air) in late 2001 as first no -frills, low cost carrier(LCC) in Asia, then it got huge success and become awards winner and largest low fare airlines in the Asia. Now Air Asia flies to over 61 domestic and international destinations with 108 routes with its own 72 aircrafts and operates over 400 flights daily. Air Asia believes in the no-frills, hassle free, low fare business concept and feels that keeping costs low requires high efficiency in every part of the business. Through its unique selling point (USP), NOW EVERYONE CAN FLY, Air Asia gained a revolution in airline business with more and more people choosing as their preferred choice of transport. 3. Meaning of Share Price Volatility: Many of us use the word volatility in a loose sense, in a way that belies the accuracy with, which it can be calculated. In fact, volatility is a statistical measure of the scale of fluctuations in the price of a share, a commodity or a stock market index in the recent past. It is generally taken to be a good measure for the relative riskiness of an asset the higher the volatility, the greater the risk of losing money. Volatility, however, is not a static thing. It fluctuates sometimes quite sharply over time. (Peter Temple 02.08.2007) 3.1 Air Asia Share Price Volatility: As per Air Asia case study the share price of Air Asia has been volatile. Exhibit 5: Case Study Airline Price on 3Dec 2007 US$ Price on 11 Jan 2008 US$ Share Price Change Air Asia 0.52 0.43 -16% Period of Change in Share Price: In a very short term of a period share price of Air Asia goes down by -16% in a period of 1 month and 1 week this is extreme change in share price so this is the sign of high volatility in share price. Air Asia Volatility from 2005-2009 (Chart -1) 3.2. Possible reasons for this volatility: There are lots of reasons for share volatility here in our case study of Air Asia. We have calculated on the basis of each year that volatility graph of Air Asia shown above. Latest Information in Stock Market: Investing on share price needs lots of information about companys present situation. Investor always invests their money if they saw the potential of getting good return from that investment. So information plays vital role to attract the investors. |Market adjusts the prices up or down depending on the way the market interprets that the information will affect the companys future earnings ability. In Air Asia case study in November 2004 they listed in Malaysia Stock Exchange that air Asia is going to purchase 175-aircrft airbus A320-200 to replace Boeing 737-300s because A320-200 more fuel efficient. This information attracts the investors to invest their money because market interprets that this will affect the companys future earnings ability. We can see in chart-1 in 2005 how share price go up by +0.63% so it shows the latest information has direct impact on share price volatility. Uncertainty: Future is always uncertain some decision is made on the basis of future predictions. Investors are always keen on the past experience, current performance and future expectations of the company. Uncertainty is a major barrier for investor to make their mind to invest in share market. What exactly had happened in the Air Asia, in 2006 they choose to enter in to a domestic-route rationalising arrangement with MAS. Under this contract Air Asia took over more than two-thirds of MASs loss making routes assuming they can make profit from it as they are the LCC but this decision turns wrong because of uncertainty which is clear in chrat-1 that companys share price goes down by -5.03% . Psychological Issues on Stock Prices: Human behaviour is one of the important factor that affect the share price of the company how investor think about the company will determine whether to invest in it or not. Entering the British tycoon, founder and chairman of the Virgin Group Sir Richard Branson with 20% stake in Air Asia X in 2007. Expansion of business with Sir Richard Branson attracts the large numbers of investors in the company because psychology of people believes the successful image of Richard Branson which as a result there is hike of share price by +6.62% in the year 2007. Inflation: The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. Over time, as the cost of goods and services increase, the value of money is going to fall because a person wont be able to purchase as much with that money as they previously could. Inflation is also one of the factors that affects the share price and leads to share volatility. As from the case study fuel cost had a significant impact on Air Asia, as it was the recession time occurs during the year 2008 were the international oil price reached at the high of about US $150 per barrel. So it was very costly for the airlines to purchase fuel at that high price which leads to increase the price of the tickets. As it was the recession time customers also could not afford the increased price plane fare so they used the alternatives way. Where there is less numbers of customers airline industries had lost Billions of dollars due to that occurrence. So inflation affected the share prices a lot. Although Air Asia tried to cover its operational cost by hedging, buying fuel-efficient airbus A320-200 and cutting fuel consumption by nearly and doubled the number of landing that we get from the tyre. They were not able to sustain on the same price of tickets. As per exhibit 6: case study. Following are the calculation: Fuel and oil ratio = fuel and oil cost à · Revenue (2008) Fuel and oil ratio= 74164.88à ·146731.5 (2008) Fuel and oil ratio= 50.5% (2007) Fuel and oil ratio= 44488.62à ·111346.3 (2007) Fuel and oil ratio= 40.0% Ά% = Current year ratio-base year ratio à · Base year ratio Ά% = 50.5-40.0 à · 40.0 Ά% = 26.25% So cost of the fuel increased by 26.25% due to hike in oil price in 2008 the cause of inflation has direct impact on companys net profit ratio if net profit is going to decrease so investor dont want to invest their money in non profit company. See chart-1 due to inflation the share price decreased by-45.34% in 2008. Demand and Supply: It is another important factor that affects the share price. Demand is willingness and ability to pay where as supply depends on the market demand and suppliers ability. When demand is high supply is less and vice versa and when demand is high price of the product is also high and is low. In case of AirAsia recession caused its demand per share down in 2008, entering of British tycoon Richard Branson increased the demand of share because of investors psychological beliefs. Restructuring of the no-frills, low cost in Asia increased the numbers of customers travelling with Air Asia which gives the US$6 million of profit December 2002 which obviously rise of demand of share which leads to increased in share price. Economic Strength of Market and Peers: Doing business in current market everyone should know the market strengthens and the competitors of the business without considering these things it is impossible to do business. The economic strength of the peers heavily affected the share price of the company. The strong competitor of the Air Asia is MAS, as it is national carrier of Malaysia. To promote healthy competition in 2006 Malaysian government brought MAS and AIRASIA together then government starts with route rationalisation of MAS where Air Asia took 96 loss making routes of MAS while these routes were operated by MAS government used to provide subsidies for the fuel cost. This is totally unfair competition which leads share price down of Air Asia in 2006 you can see in chart 1. In 2008 MAS come up with the unaccepted everyday low fare Campion .It received an over whelming response which was funded by the government it was totally win-win position for MAS and that caused negative impact on Air Asia in 2008 which is clear from chart-1. 4. Definition of Marketing Strategy: A marketing strategy is a process or model to allow a company or organization to focus limited resources on the best opportunities to increase sales and thereby achieve a sustainable competitive advantage. 4.1. Porter generic strategies: Strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firms sustainable competitive advantage. The generic strategy framework (porter 1984) comprises two alternatives each with two alternative scopes. These are Differentiation and low-cost leadership each with a dimension of Focus-broad or narrow. Product differentiation (broad) Cost leadership (broad) Market segmentation (narrow) (Chart-2) 4.2. Mareketing Strategy of Air Asia: After the restructured of the airline, the foundation is based on Low Cost and Strong Cash Flow,strategy is based on Low fare and service so goal is obviousely on high margin and sustainable growth and vision is continue to be LOWEST cost. So you can see they are totaly focusing on the Low cost Low Pricing so they getting strong cash flow sustainable growth. So they are following porters generic strategy. Their strategic scope is referring to market penetration and while strategic strength refers to the firms sustainable competitive advantage. (On the basis of chart-2) Product differentiation: Air Asia was the first airline operator in Asia to adopt with the low-fare, no-frills concept. It also becomes the regions first airline to introduce fully ticketless travel and implements free seating policy. Thats Product differentiations makes It a successful airline in the market. Cost leadership: Air Asia become the businesses that fully adopted cost leadership through operational effectiveness and efficiency. The cost advantages were enabled Air Asia to offered airfares 40% to 60% lower than those of its rivals. Some even cost less than bus fare. Even in 2008 when oil prices gone up they controlled over the cost by layered-hedge strategy to pay for fuel in advance and qualify for low price its pilots have cut fuel consumption by nearly 20%. Market Segmentation: Air Asia changes the human psychology in Asia by offering low fare and targeting middle class society. Earlier people think that only rich people can fly but then come with the No Frills, Low Cost Carrier under the tagline Now Everyone Can Fly. This whole idea captured the middle class and now no one is felling faired to fly. 4.3. Environmental Analysis of Air Asia on the basis of Porters Five Forces (Chart-3) The threat of the entry of new competitors: Air Asia is using penetration strategy under this there is always threat of the new entry exist because Air Asia is get success in the field of LCCs so now everyone want to do same business with same strategy. The intensity of competitive rivalry: Competition rivalry is currently in Air Asias favour. With price being the main battlefield of competition, Air Asia leads the way due to its low operating costs. However, there are more competitors entering the market that have major carriers as backers or owners which may lead to an unrealistic price war in the future. The threat of substitute products or services: Air Asia is domestic carrier so there is existence of substitute services are high customer can go for Bus services either for Railways or for their own transport facilities because of low distance if their services and prices are not effective. The bargaining power of customer: Today is world of Information Technology and communication everyone can find the world easily so easy availability of information and knowledge can make the bargaining power of consumer strong. E.g. customer can easily switch to other airlines by comparing the fares of different airlines. Even there are now lots competitors in LCCs so customer can easily move. The bargaining power of suppliers: For Air Asia bargaining of suppliers is major factor. In the airline industry basically there are only two major aircraft provider Boeing and Airbus. Although Air Asia is major customer of Airbus even than the bargaining power of suppliers is high due to expertise and few substitutes. 4.4. Unique Selling Proposition of Air Asia: Fernandes restructured Air Asia in 2001 , with the No Frills, Low Cost Carrier under the tagline Now Everyone Can Fly this unique selling point for Air Asia. This new business model was huge success. With this new unique selling point the company gained impressive profit. Then they come with Easy to Book, Easy to Pay Easy to Fly to encourage sale through online booking, telephone booking and through co-partner local banks and post offices. 4.5. Recommendation: Some modification in current market strategy on the bases of Marketing Mix (7Ps) to enhance Unique Selling Point. Product (service): There is a huge opportunity for Air Asia to expand its route and service and numbers of flights, they also lacking in good service in terms of flight delay. Because of it they get lots of complaints they should work on that to enhance good service Price: They are working on penetration price strategy and under this they are providing the cheapest price in the market and that is a strengths but if you see the margins per seat is very low it makes turn over high but not the net profit so they should control the operating cost to cover up that margin. So they should go with penetration. Place: Presently Air Asias putting more stress on Malaysia. Singapore, Thailand and Indonesia wherever Air Asia X only on Australia but low cost concept can also capture the market of India, China, Pakistan and Bangladesh and for long haul they can go for Europe and US. Promotions: As LCCs they are moreover targeting the middle class so to keep up the sale and to enhance USP they should come up with the new promotions scheme after a certain period of time because middle class is major customer, they should know they like changes and savings in their purchasing. People: From the starting they are only providing standard-class service on board its seems they are not targeting business class so if they come up with some of its more business concerned routs with business class they must get positive response. Process: Refers to the systems used to assist the organisation in delivering the service. Process must be very easy so that customer feels comfortable and convenient and preferred again and again. Physical Evidence: Where the service is provided. Physical Evidence is factor which makes customer to make judgement on the company or service. E.g. Customer accept what he/she spent so from the starting Air Asias tag line is No Frill airline but if you provide the frills even in the low cost it makes everyone happy. My meaning for frills is good service with the outstanding staff presentation and an unexpected interior of the craft. 5. Operation Management: The collection of people knowledge, technology, and systems within an organisation that has primary responsibility for producing and providing the organizations products or services is referred to as operations. Operations management is the planning, scheduling, control and co-ordination of the activities that transform inputs into finished goods and services. It is important because it can reduce costs, differentiate the organizations products and services and impact upon quality and therefore may increase revenue through increased customer satisfaction. (Phil Kelly 2009). This section is a process analysis to identify and prioritise current strategic operation issues and possible solution for Air Asia. 5.1. Air Asia Business Process Air Asias Operations management is focusing carefully on managing the processes to produce and distribute its services. These processes include:- Procurement:- buying various materials from suppliers and vendors Management control and coordinating functions to ensure goals are being met. Product (service):- managing the service- creation, development, distribution and sales. Quality management: important to effective operations management by continuous improvement. Inventory management:-Method like JUST-IN-TIME inventory control saves costs and improves on quicker delivery to end customers. Logistics management: focuses on the flow of services from Air Asia to its customer prioritizing on efficiency and cost effectiveness. Distribution channels. 8) Booking by mobiles is also available. 5.2. Air Asia prioritises issues: 1. Air Asia always focused on how to reduce inefficiency and make it low possible fare in the airline business: As we know they are operating penetration on market strategy to reduced costs, they even reducing the salaries and incentives of the employees, cutting down the staffs and even cutting down this facilities given to staffs and implementing the new efficient system like YMS, CRS AND ERP, which were helpful to reduced the cost but not to that extent. 2. Higher fuel cost around the world: Frequent fluctuation in fuel cost is one of the major problem for Air Asia as its emphasis on low cost their profit margin per ticket is low as price of fuel goes up they have to charge tickets price which creates negative effects in customers eyes. 3. Complain: Its because of delay in flight and even cancellation is one of the major current issues in Air Asia. 4. No maintenance, repair and overhaul: As we know they dont have their own maintenance, repair and overhaul so they have to spend on maintenance, repair and overhaul. 5. Incresing competition: At present competition in the airline industries growing day by day many full service airlines start cut costs to compete and new entry of LCC. 6. Aviation regulation and government policy: Changing rules and regulation in aviation industry and government policies is also one of the issues that Air Asia facing today. 7. Easy to buy, easy pay and easy to fly: In Malaysia Air Asia company was the first internet ticket seller airlines company. They are offering Easy to Book, Easy to Pay Easy to Fly system for their customers. So customers are easily paying and booking their ticket by online 5.3. Possible solutions 1. Cost control: As we know cost is one of the main possible solutions that can save any organisation from loss and compete in the competitive market. Air Asia can save their cost by starting their own maintenance and repair wing and overhaul routes. 2. Implementing the APS system: Implementation of APS system will provide several new functions to Air Asia. The followings are several APS functions that can help Air Asia in increasing its performance: APS system will help Air Asia in assessing suppliers performance and providing the capability to streamline monitoring process. (Aberdeen Group, 2004). Supplier portal will provide information hub for airlines and their suppliers to prevent errors happened during operational activities such as order processing (Aberdeen Group, 2004) These functions enable airlines and aircraft manufacturers and other suppliers to have collaboration strategy in managing inventory (e.g. spare parts), maintenance schedule, and design collaboration. Route profitability analysis tools enable airline companies to conduct analysis for planning efficient routes. 3. Outsourcing: Air Asia can use outsourcing strategy to be a lowest carrier in airline industry. If they can implement outsourcing strategy then they will get some benefits like, Cost benefits It will reduce risk. Outsourcing can give competitive advantage in Air Asia. Air Asia can reduce cost for IT. 4. Expansion of Air Asia business: As Air Asia is focusing on middle class people its expansion towards Indian and China has potential to gather the huge success. We know the population of Asian middle class are rising very fast. So it is a great opportunity for LCC cost airlines including Air Asia to expand their business in Asia. 6. Conclusion As we know Air Asia is a leading low fare airline in Asia. Its low cost attracts more and more customers and its market value and has increased its revenue. But knowing it from near its share price is volatile so management should focused on sustainable development with utilising marketing mix as we discussed above and should focused on customers as customers are key point for the companys success. Only low cost will not sufficient to survive in the competitive market. Providing good services like as they are saying easy to book, easy to buy and easy to fly but it is not always the facts as they are getting complains of delaying flight and even cancellation which makes bad reputation in the eyes of customers. Thats why they need to operates APS systems to overcome such a problems.