SWOT Analysis | What is SWOT Analysis? | Examples of SWOT Analysis

SWOT Analysis | What is SWOT Analysis? | Examples of SWOT Analysis SWOT analysis was originally conceived and developed in the 1960s and its basic organising principles have remained largely unchanged in the field of strategic management since that time (Kotler et al., 2013). It is, as Ghazinoory, Abdi and Azadegan-Mehr (2011) comment, a systematic framework which helps managers to develop their business strategies by appraising the internal and external determinants of their organisation’s performance. Internal environmental factors include leadership talent, human resource capabilities, the company’s culture as well as the effectiveness of its policies and procedures. In contrast, external factors include competition, government legislation, changing trends, and social expectations (Johnson, Scholes and Whittington, 2008). The SWOT analysis framework involves analysing the strengths (S) and weaknesses (W) of the business’s internal factors, and the opportunities (O) and threats (T) of its external factors of performance (Ghazinoory, Abdi and Azadegan-Mehr, 2011). Through this analysis, the weaknesses and strengths within a company can correspond to the opportunities and threats in the business environment so that effective strategies can be developed (Helms and Nixon, 2010). It follows from this, therefore, that an organisation can derive an effective strategy by taking advantage of its opportunities by using its strengths and neutralise its threats by minimising the impact of its weaknesses. Moreover, SWOT analysis can be applied to both a whole company as well as a specific project within a company in order to identify new company strategies and appraise project feasibility. Hollensen (2010) asserts that the strengths and weaknesses of a company relate to its internal elements such as resources, operational programmes and departments such as sales, marketing and distribution. More specifically, a strength is an advantageous – or even unique – skill, competency, product, or service that a business or project possesses that allows it to create competitive advantages. This may include abstract concepts, such as its possession of strong research and development capabilities. A weakness on the other hand is a strategic disadvantage, such as a skill that the business or project lacks which limits it and creates potential risks in negative economic conditions. Achieving a balance between such positives and negatives is therefore a necessary pre-requisite for any company and it is also imperative that a company continues to review its strengths and weaknesses to take account for changes in its internal environment (Kotler et al., 2013). An opportunity is, as Henry (2011) comments, a desirable condition which can be exploited to consolidate and strengthen a strategic position. Examples of this phenomenon would include growing demand for a trendy new product which it could consider selling, such as that announced by Burger King relating to the introduction of a black cheeseburger (Molloy, 2014). A threat on the other hand, is a condition that creates uncertainties which could potentially damage an organisation’s performance or market share (Henry, 2011). Threats include the introduction of new competing products or services, foreign competition, technological advancements, and new regulations. Examples of the fear of such external factors can be noted in the comments of companies planning to relocate their headquarters and registration bases from Scotland to England in the event of a ‘yes’ vote in the Scottish referendum in September 2014 (Wright, Titcombe and Spence, 2014). Therefore, a company needs to develop strategies to overcome these threats in order to prevent the loss of its market share, reputation, or profit. It must be noted, however, that opportunities and threats exist in the environment and therefore are often beyond the control of the organisation – but they do offer suggestions for strategic direction. SWOT analysis, as a result, demands a great deal of research into an organisation’s present and future position (Johnson, Scholes and Whittington, 2008). The results of SWOT analysis provide a useful source of information from which an organisation can go on to develop policies and practices which allow it to build upon its strengths, diminish its weaknesses, seize its opportunities, and make contingency plans or measures to eradicate or curtail threats, as Kotler et al. (2013) observe. SWOT analysis is widely used by managers because of its simplicity (Hollensen, 2010). It is used as a planning tool that can be adapted to a range of situations and projects. Whilst it is not the only technique available to managers, it can often be the most effective if used properly (Henry, 2011). The basis for a SWOT analysis is usually drawn from an audit review as well as from independently carried out interviews with staff and customers. Data is then analysed to arrive at a list of issues which can be categorised into strengths, weaknesses, opportunities, and threats. The key issues and company activities are then reassessed through protracted discussions between managers and reduced further to identify the most important issues and the potential impact that they could have on the organisation. If too many issues are included in the analysis, there will be a lack of focus in the development of a new company strategy and thus it is important to ensure that such discussions focus on a limited number of factors (Ghazinoory, Abdi and Azadegan-Mehr, 2011). Additionally, the issues considered should be made in view of customer opinions and perceptions, which would therefore require objectivity. Ideally, a company should carry out a SWOT analysis on a regular basis in order to assess its situation against its competitors in a constantly evolving market environment (Fernie and Moore, 2013). According to Stalk, Evans and Schulman (1992, p. 62), â€Å"the essence of strategy is not the structure of a company’s products and markets but the dynamics of its behaviour†. It is also recommended that an organisation should develop and undertake SWOT analysis on its competitors so that it is able to take into account consumer perceptions and determinants of their buying behaviour. This is particularly the case with issues such as quality, in which perceptions may be more powerful than reality (Kaplan and Norton, 2008). In today’s highly competitive and fast changing market environment, managers may make a grave error when evaluating their company’s resources; that is, not to assess them relative to the competition (Kotler et al., 2013). A competitive analysis as part of the SWOT framework is always necessary in order to determine an organisation’s position in the wider market. Thus, for example, if a project or business strength is the amount of capital it has to invest in improved IT functionality, this may not be the case if its competitor is investing double this amount to improve its own IT functionality. Thus, it is no longer a strength but rather a weakness for the company. The same competitive analysis should also be taken into account when assessing opportunities and threats, as it depends on the relative situation of the competing businesses (Johnson, Scholes and Whittington, 2008). McDonald (1989, p. 16) states that the â€Å"SWOT device†¦ whilst potentially a very powerful, analytical device, is rarely used effectively†, and recommends using a summary from a marketing audit to arrive at a sound SWOT analysis; the analysis must be conducted rigorously so that it prioritises the issues of paramount importance. Further, McDonald suggests keeping it focused on critical factors only and to maintain a list of differential strengths and weaknesses in comparison to competitors, concentrating mainly on competitive advantages. Additionally, only critical external opportunities and threats should be listed with a focus on the real issues. Finally, according to McDonald (1989), the reader of the SWOT analysis should be left with the main issues encompassing the business to the extent that they are able to derive and develop marketing objectives from them. At the end of the analysis, the organisation is left with reasons behind their choices as well as their potential impacts, which provides them with a stronger basis from which to form future strategic decisions. Example of a SWOT analysis of the McDonald’s Corporation Strengths Open door policy to the press Ceres guidance and co-ordination and active CSR Selective supply chain strategy Rigorous food safety standards Affordable prices and high quality products Nutritional information on packaging Decentralised yet connected system Innovative excellence programme Promoting ethical conduct Profitable Weaknesses Inflexible to changes in market trends Difficult to find and retain employees Drive for achieving shareholder value may counter CSR Promote unhealthy food Promoted CSR meat imports in error Opportunities Attractive and flexible employment Positive environmental commitments Higher standards demanded from suppliers Corporate responsibility committee Honest and real brand image Threats Fabricated stories about the quality of chicken Unhealthy foods for children Health concerns surrounding beef, poultry, and fish Labour exploitation in China CSR at the risk of profit loss Contributor to global warming Local fast food restaurants Political instability (e.g. Russia) Strengths Open door policy to the press At times of wider national food scandals, for instance those related to BSE, McDonald’s operated an open door policy, allowing the press into a limited number its restaurants and suppliers (Vrontis and Pavlou, 2008). This was done as a deliberate measure to reassure the public of the safety of McDonald’s. Ceres guidance and co-ordination, and active CSR McDonald’s, as Valax (2012) notes, co-ordinates with employees, investors, environmental and corporate social responsibility (CSR) organisations, such as Ceres, to improve its social and environmental programmes. As a result of such policies, McDonald’s can be seen to be continually updating its profile to take account of changes in consumer preferences – keeping the firm relevant and allied to the desires of its customers. Selective supply chain strategy McDonald’s works to ensure that its suppliers meet or exceed safety and quality standards as well as complying with best practice with reference to a sustainable food supply and animal welfare (Deng, 2009). Indeed, its recent advertisement campaigns have laid a premium on the traceability of products used. Rigorous food safety standards McDonald’s, as Vrontis and Pavlou (2008) observe, works hard to ensure that high food safety standards are met through training, food, safety and quality and menu development in each restaurant. This filters through to its partners, ensuring that they operate ethically and meet social responsibility standards. The high training required can also be noted by reference to its endorsement of specific qualifications and training for staff – thereby adding value to its workforce (Valax, 2012). Affordable prices and high quality products McDonald’s is an efficient provider of high quality foodstuffs and always seeks to offer the best value to its customers, as noted by its 99p ‘value’ range (Harnack et al., 2008). Nutritional information available on packaging McDonald’s was one of the first fast food restaurants to disclose nutritional information on its packaging and continues to seek new ways in which it can provide nutrition and balanced active lifestyles for its customers (Harnack et al., 2008). Indeed, there are sections of the corporate website specifically tailored to this data. Decentralised yet connected system McDonald’s provides a core system of values, principles and standards which managers adhere to in combination with its â€Å"Freedom within the Framework† programme, which provides them with the flexibility to respond to the diversity of its customers and local markets (McDonald’s Corporation, 2013). Innovative excellence programme McDonald’s employs an array of mystery shoppers who visit premises pretending to be customers. They inspect the premises as customers and rate them accordingly. Many restaurants provide customer comment contact numbers and employee satisfaction surveys. It may also be noted, though anecdotally, that the firm responds quickly to mistakes and problems raised with area managers. Promoting ethical conduct McDonald’s works hard to maintain its integrity with its shareholders through open channels of communication (McDonald’s, 2013). Profitable McDonald’s is profitable, as Wallop (2014) comments, with sufficient capital. This allows it to grow and realise gains on its investments. Thus, McDonald’s is able to offer help to charities as well as itself when in need. Weaknesses Inflexible to changes in market trends If customer trends move towards eating in a more eco-friendly or organically-oriented manner, McDonald’s would be unable to follow this trend without changing suppliers and incurring significant financial losses (Wallop, 2014). McDonald’s could consider the introduction of new products with the aid of market research, in coming years, to prepare them for such potential change. Difficult to find and retain employees McDonald’s has had hostile relationships with unions and, although this has been controlled, the company does find it difficult to find and retain good employees (Valax, 2012). The company can build on its reputation for developing top level managers by further increasing its graduate recruitment portfolio. Drive for achieving shareholder value may counter CSR When McDonald’s profits fall, its stock price often falls as well; as a consequence, it is often forced to take drastic action to resolve the problem. (Wallop, 2014) This often relates to issues of social and environmental responsibility. McDonald’s could be more proactive in finding more long-term CSR suppliers and processes that provide lower costs and higher profit margins, rather than being reactive. Promotion of unhealthy food Despite providing healthier product varieties, McDonald’s continues to sell burgers that have 850 calories in them. . This could continue to harm its reputation as an unhealthy fast food provider. McDonald’s could research ways to reduce the calories in its products whilst still maintaining their taste, or at the least provide low calorie burger options. Much progress has been made in this arena – but it is suggested that more needs to be done (Harnack et al., 2008). Promoted CSR meat imports in error McDonald’s claimed to provide meat from socially and environmentally responsible sources, but a court case found that meat had been imported from Latin America, where rainforests were cleared to create green fields for cattle (Deng, 2009). Where McDonald’s carries out CSR processes or investments, it may wish to consider carrying out random checks to ensure their standards are continually met, to minimise embarrassing press. Opportunities Attractive and flexible employment McDonald’s offers a variety of job opportunities and is proud to say that 42% of its top managers first started by serving customers (McDonalds, 2013). That the company offers a selection of different shift patterns as well as employee benefits can be seen as further reasons as to why McDonald’s attracts employees. Positive environmental commitments McDonald’s incorporates environmental commitments in its daily operations, from the use of environmentally friendly products in maintaining daily ‘drive-thru’ cleaning, to providing sustainable fish sources, to using recycled packaging (McDonald’s, 2013). It was also a pioneer of using bio-diesel and recycling fat from its fryers into a form of fuel. Higher standards demanded from suppliers McDonald’s sets the standards it demands from suppliers for low cost high quality, socially responsible supplies, in return for a long-term business commitment (Yuece, 2012). Corporate Responsibility Committee McDonald’s has a standing Corporate Responsibility Committee that acts as an advisor to its Board of Directors (McDonald’s, 2013). Honest and real brand image McDonald’s has built and maintains a trusting relationship with its shareholders and customers through truthful marketing and communications (Harnack et al., 2008). Threats Fabricated stories about the quality of chicken Emails and websites have published fabricated information that McDonald’s is using ‘monster-chickens’ in its products. McDonald’s could build on its open door policy with the press and apply it to the web, to combat false distribution of information (Kaplan and Norton, 2008). Unhealthy foods for children If competitors begin to offer premium healthy alternatives for children with small gifts to encourage them to eat healthy, this would be a significant threat to McDonald’s (Kotler et al., 2013). McDonald’s positive strategy to provide a range of healthy products could include further healthy products for children in addition to its present offering of carrot sticks. Health concerns surrounding beef, poultry, and fish There are various initiatives working against hormone induced cows and other issues such as bird flu epidemics and heavy metal levels in fish that could reduce McDonald’s sales and cause profits and its share price to fall (Johnson, Scholes and Whittington, 2008). McDonald’s could use its purchasing power to its advantage to source supplies that have proven health benefits. McDonald’s greater work with local farmers in the UK with regard to the sourcing of beef and eggs can be seen as a step in the right direction in this regard. Labour exploitation in China Chinese manufacturers exploit labour in their production of ‘Happy Meal’ toys (Valax, 2012). McDonald’s could use its purchasing power to its advantage to demand that manufacturers provide toys without exploiting labour. CSR at the risk of profit loss If share prices and profitability are under pressure, managers will inevitably seek to resolve it at the risk of a CSR issue (Ceres, n.d.). Contributor to global warming McDonald’s is the largest consumer of beef in the world. Greenfields used to supply this beef comes at the expense of rainforests, heavy use of chemicals, fertilisers and pesticides (Ceres, n.d.). McDonald’s could use its purchasing power to its advantage to source CSR suppliers. Local fast food restaurants Local restaurants which are less environmentally threatening than McDonald’s and have less purchasing power may have better reputations with local suppliers and customers (Wallop, 2014). Political instability Political instability can be a threat to the secure and continued operation of a business. Even if local staff are employed, a tense political situation can cause areas of operation to be closed, in the short- or long-term. An example of this relates to McDonald’s in the Crimea and in Russia; for the foreseeable future, McDonald’s restaurants are closed in the Crimea as a result of the Russian invasion. In retaliation, Russia has temporarily closed a number of McDonald’s restaurants in Russia (Wallop, 2014). From the above SWOT of McDonald’s and the summary that follows it, it can be seen how, by highlighting its position, an organisation can identify areas that could be strengthened, seize opportunities, minimise threats and diminish or eliminate weaknesses. In summary, a SWOT analysis provides a systematic framework for appraising an organisation’s internal and external position. It is a useful tool but it must be constantly updated to enable the company to keep abreast of developments and change its strategies accordingly. Whilst it may be difficult for management to resolve all of the weaknesses and threats highlighted, the company is at least made aware of them through the conducting of a SWOT analysis and can refer to them when implementing future strategies. The McDonald’s SWOT analysis case study highlighted several CSR threats and weaknesses whilst simultaneously highlighting strengths, such as its strong purchasing power which could potentially be used to demand more socially responsible production techniques from its Chinese manufacturers and meat suppliers. It also showed how a more proactive and longer-term approach to its strategies can help it to anticipate changing consumer tastes and demands (Yuece, 2012). Bibliography Ceres (n.d.). Mobilizing business leadership for a sustainable world. Boston, MA: Ceres. Collins, R. (2010). A graphical method for exploring the business environment. Oxford University Working Paper 956. Coman, A. and Ronen, B. (2009). Focused SWOT: Diagnosing critical strengths and weaknesses. International Journal of Production Research, 47(20), pp. 5677-5689. Deng, T. (2009). McDonald’s new communication strategy on changing attitudes and lifestyle. International Journal of Marketing Studies, 1(1), pp. 37-39. Fernie, S. and Moore, C. (2013). Principles of retailing. Abingdon: Routledge. Ghazinoory, S., Abdi, M. and Azadegan-Mehr, M. (2011). SWOT methodology: A state-of-the-art review for the past, a framework for the future. Journal of Business Economics and Management, 12(1), pp. 24-48. Harnack, L.J., French, S.A., Oakes, J.M., Story, M.T., Jeffery, R.W. and Rydell, S.A. (2008). Effects of calorie labelling and value size pricing on fast food meal choices: Results from an experimental trial. International Journal of Behavioral Nutrition and Physical Activity, 5(1), 63-81. Helms, M.M. and Nixon, J. (2010). Exploring SWOT analysis – Where are we now?: A review of academic research from the last decade. Journal of Strategy and Management, 3(3), pp. 215-251. Henry, A. (2011). Understanding strategic management. Oxford: Oxford University Press. Hollensen, S. (2010). Marketing management: A relationship approach. Harlow: Pearson Education. Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring corporate strategy: Text cases (8th edn). Harlow: Pearson Education. Kaplan, R.S. and Norton, D.P. (2008). The execution premium: Linking strategy to operations for competitive advantage. Cambridge, MA: Harvard Business Press. Koen, P.A., Bertels, H.M. and Elsum, I.R. (2011). The three faces of business model innovation: challenges for established firms. Research-Technology Management, 54(3), 52-59. Kotler, P., Armstrong, G., Harris, L.C. and Piercy, N.F. (2013). Principles of marketing (6th edn). Harlow: Pearson. McDonald, M.H. (1989). Ten barriers to marketing planning. Journal of Marketing Management, 5(1), 1-18. McDonald’s Corporation (2013). Annual report, 2013. Oak Brook, IL: McDonald’s Corporation. Molloy, M. (2014). Burger King introduces black burger with charcoal cheese in Japan. The Telegraph, 11th September. Stalk, G., Evans, P. and Schulman, L.E. (1992). Competing on capabilities: The new rules of corporate strategy. Harvard Business Review, 70(2), pp. 57-69. Valax, M. (2012). Beyond McDonalds CSR in China: Corporation perspective and report from case studies on a damaged employment reputation. Asian Business Management, 11(3), 347-366. Vrontis, D. and Pavlou, P. (2008). The external environment and its effect on strategic marketing planning: A case study for McDonalds. Journal for International Business and Entrepreneurship Development, 3(3), pp. 289-307. Wallop, H. (2014). Has the world fallen out of love with McDonald’s? Daily Telegraph, 23rd July. Wright, B., Titcombe, J. and Spence, P. (2014). Scotland’s biggest companies reveal ‘Yes’ exodus plans. The Telegraph, 11 th September. Yuece, I. (2012). SWOT analysis of McDonald’s and derivation of appropriate strategies. Munich: GRIN-Verlag.

Graduation Speech: In Memory of Those Who Did Not Make It :: Graduation Speech, Commencement Address

Good evening and welcome parents, family, community members, friends, the School Board, faculty, and seniors to the County High School Class of 2012 commencement ceremony. It is a great honor to be able to welcome you here today. Class of 2012, you have worked hard for 12 years; tonight we celebrate your achievements - this night is yours. Congratulations! I have heard that some faculty members have coined the term "survivors" with reference to our graduating class. Indeed, we are survivors and I cannot think of a better term to describe us. Throughout the past year, our class has been subjected to several devastating tragedies. The deaths of three of our family members at County High: Joy M., Serik P., and George F. These three members of our family at County High School were each amazing and loving individuals. Their spirit of love lives on and was clearly exhibited by the manner in which the students and faculty pulled together to comfort each other and mourn their deaths. Their families will remain in our thoughts and prayers. As you graduate tonight, I would ask you to remember their love and strive to make it an integral part of your lives. The great Mahatma Gandhi called the love that I believe these three held in their hearts "all embracing ... [a love that] transforms all it touches ... [with] no limit to its power." And, most definitely, their love transformed people's lives. They certainly have inspired me. A wise man simply known to us as Paul wrote of this love as the "most excellent way." Paul wrote, "Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It is not rude, it is not self-seeking, it is not easily angered, it keeps no record of wrongs.

Marriott Corporation: The Cost of Capital

In April 1988, Dan Cohrs, vice president of project finance at the Marriott Corporation, was preparing his annual recommendations for the hurdle rates at each of the firm's three divisions. Investment projects at Marriott were selected by discounting the appropriate cash flows by the appropriate hurdle rate for each division. In 1987, Marriott's sales grew by 24% and its return on equity stood at 22%. Sales and earnings per share had doubled over the previous four years, and the operating strategy was aimed at continuing this trend. Marriott's 1987 annual report stated: We intend to remain a premier growth company. This means aggressively developing appropriate opportunities within our chosen lines of business—lodging, contract services, and related businesses. In each of these areas our goal is to be the preferred employer, the preferred provider, and the most profitable company. Mr. Cohrs recognized that the divisional hurdle rates at Marriott would have a significant effect on the firm's financial and operating strategies. As a rule of thumb, increasing the hurdle rate by 1% (for example, from 12% to 12. 12%), decreases the present value of project inflows by 1%. Because costs remained roughly fixed, these changes in the value of inflows translated into changes in the net present value of projects . Figure A shows the substantial effect of hurdle rates on the anticipated net present value of projects. If hurdle rates were to increase, Marriott's growth would be reduced as once profitable projects no longer met the hurdle rates. Alternatively, if hurdle rates decreased, Marriott's growth would accelerate. Marriott also considered using the hurdle rates to determine incentive compensation. Annual incentive compensation constituted a significant portion of total compensation, ranging from 30% to 50% of base pay. Criteria for bonus awards depended on specific job responsibilities but often included the earnings level, the ability of managers to meet budgets, and overall corporate performance. There was some interest, however, in basing the incentive compensation, in part, on a comparison of the divisional return on net assets and the market-based divisional hurdle rate. The compensation plan would then reflect hurdle rates, making managers more sensitive to Marriott's financial strategy and capital market conditions. Professor Richard Ruback prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright  © 1998 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www. hbsp. harvard. edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permi ssion of Harvard Business School. Marriott Corporation: the Cost of Capital 1. How does Marriott use its estimate of its cost of capital? Does this make sense? Marriott has defined a clear financial strategy containing four elements. To determine the cost of capital, which also acted as hurdle rate for investment decision, cost of capital estimates were generated from each of the three business divisions; lodging, contract services and restaurants. Each division estimates its cost of capital based on: Debt Capacity Cost of Debt Cost of EquityAll of the above are calculated individually for each of the three divisions, and this is a critical aspect due to the varying cost of debt in particular for each division. Marriott then calculate company wide cost of capital using weighted average of the individual divisions cost of capital. This is a very clever approach, particularly as we see that for example the lodging unit, has a 74% debt percentage in the capital structure, and the fact that Marriott use long term cost of debt for lodging (which in this case is c lose to Government debt 110 bps margin) demonstrates the low risk investors perceive this side of the business to haveWe believe this approach is sound due to the difference in the cost of capital between the divisions being a function of the risk associated with the investments considered so this approach incorporates the fact that risk between the divisions varies. Given this we believe the method chosen by Marriott is compliant with the â€Å"Marriott Financial Strategy† as the capital costing approach is due diligent and reflect the single entity risk (bottom-up) rather than an estimated top-down.We believe this approach enables Marriott to optimize the financial performance and in turn increase the shareholder value. 2. If Marriott used a single corporate hurdle rate for evaluating investment opportunities in each of its lines of business, what would happen to the company over time? Marriott's three divisions are very different in terms of business area, business risk an d capital structure (debt capacity). The result is varying capital costs between the divisions. For instance Lodging has a significant lower cost of capital (WACC) than the Restaurant and even than the company as a whole.Using a single company-wide hurdle rate would create an uneven process in assessing investment opportunities across the divisions. In practical terms the accept/reject decision would not reflect the inherent business risk of the division, which could lead to investments being accepted, while they should have been rejected. Given the WACC calculations in the following questions, we see there is a significant difference in the cost of capital between the different divisions varying from 8. 85% (Lodging) to 12. 11% (Restaurants)Therefore, if we were to use one single corporate hurdle rate, we would assume in this instance that we would use the Marriott WACC of 10. 01%, then we may reject an investment in ‘Lodging’ which would yield a positive NPV and vice versa, we may accept an investment opportunities in ‘Restaurants’ which potentially would yield a negative NPV. Going back to the brief, we know that typically an increase in hurdle rate of 1% will decrease present value of project inflows by 1%. If we were to then use one hurdle rate (10. 1%) and take the lodging hurdle rate (8. 85%) this would be an increase in WACC of 13. 10% (lodging) and would therefore decrease PV of project inflows by the same 13. 10% – so the effect of using a single rate is compounded, firstly it impacts the decision, and the PV due to the discount impact. Over time a single hurdle rate (if consistently higher than the existing approach) would significantly hurt the performance of company as the approach could lead Marriott to reject (or accept) investment opportunities which should have been accepted (or rejected).This would destroy shareholder value. 3. What is Marriott’s Weighted Average Cost of Capital? What types of investmen ts would you value using Marriott’s WACC? To calculate Marriott’s WACC, we need to assess three factors 1) Capital structure, 2) Cost of debt, 3) Cost of Equity. As the corporate tax rate is given we will not manually calculate it. If required we would have used the financial statement in appendix 1 to do so.After having calculated the three factors mentioned above we employ the following formula to find WACC: WACC = (1-t)*rD*(D/V) + rE*(E/V) where Re = After tax cost of equity, Rd = pre tax cost of debt, E = market value of the firm's equity, D = market value of the firm's debt, V = E + D = firm value, E/V = percentage of financing that is equity, D/V = percentage of financing that is debt and t = corporate tax rate. 1) Capital Structure We find the capital structure in Table A on page 4 in the case. As the â€Å"debt percentage in capital† – D/V in the WACC formula – is given we find the equity percentage in capital (E/V) as: E/V= 1 – D/V. Using this we see Marriott is funded using 60% debt and 40% equity. We do realize the data in Table A is the target-leverage ratio, but we are comfortable using the target capital structure for this purpose instead of the current capital structure. 2) Cost of Debt The cost of debt is mathematically defined as Cost of Debt = (1-t) rD, where rD is the rate for pretax cost of debt and (1-t) represents the tax shield via the corporate tax rate. In the following rD is calculated, while the tax shield is not included until the final WACC calculation.Marriott’s debt was divided into two different segments; floating rate and fixed rate. 40% of Marriott’s debt was floating rate where the interest rate payment changes with changes in the market interest rates, while 60% was fixed rate. The case gives a â€Å"debt rate premium above government†, but information about term structure or other features of the floating debt are limited. We believe the correct way to estimate t he cost of debt is to estimate the cost per debt type/segment and then in a second step weigh the costs using the debt structure.To do this we estimate that the floating debt rate is best estimated using the 1yr government rate in Table B – for the reason that we do not have any shorter term data or average, and this most closely would represent floating. While for the fixed debt portion we have selected the 10yr government rate. Again, this is due to a mix of long term and shorter term fixed debit. This is the best assumption we can take using the data provided. Given the above the cost of debt of Marriott is: [Average((1yr Gov. ate)*(Floating debt fraction) + (10yr Gov. rate)*(Fixed Debt Fraction)) + â€Å"Debt Rate Premium Above Government†] [Average((6. 90%)(40%) + (8. 72%)(60%)) +1. 30%] = 9. 29% 3) Cost of Equity Cost of Equity is found using the Capital Asset Pricing Model (CAPM) or rE = RF+ ? i(E[RM] – RF), Where rF is the risk free rate we estimated ear lier, ? is the systematic risk or the overall risk factor and (E[RM] – RF) is the ‘price of risk’ or ‘market risk premium’ (MRP) investors expect over and above what the risk free securities yield.To be consistent in selecting expected market return and the risk free rate, we have selected to use the same time period for both estimates. Using Exhibit 4 and 5 we find the appropriate data. We take the longest time period available as we believe this is the conservative method as outliers in the data is crowded out due to the law of large numbers, which increases the empirical probability of accuracy. Given this we have selected 1926-87 average returns of the long-term U. S government bond as the risk free rate (RF) thus RF is 4. 58%. (Exhibit 4).The MRP is estimated using Exhibit 5, where we use the S excess return over the long term U. S government bond over the same time period as the risk premium (E[RM] – RF) = MRP = 7. 43%. S is chosen as th e â€Å"market return† as the stock index represents a wide and diversified range of equity across different sectors and industries. Given this we believe it is fair to use the S excess return over the risk free rate as the market risk premium (MRP) To find the ? we need to adjust the equity ? given in Exhibit 3 as it reflects the current capital structure and not the target structure.To re-calculate in order for the ? to reflect the Marriott target capital structure, we first calculate the unleveraged ? and then re-leverage it with the target capital structure. The unleveraged ? is calculated using: Unlevered ? = Equity ? / (1 + (1 – t) x (Debt/Equity)). As all data is given in Exhibit 3, we find unleveraged ? = 0. 7610. (See detailed calculations in excel sheet under tab â€Å"Exhibit 3†). To re-leverage the data we re-write the formula: Equity ? = Unlevered ? * (1 + (1 – Tc) x (Debt/Equity)) = 0. 7610 *(1+(1-34%)*(60%/(1-60%)) = 1. 514.We now have all the data need to calculate the cost of equity: rE = RF + ? (E[RM] – RF ) 4. 58%+ 1. 514(7. 43) =15. 83%. Finally we find WACC by employing the formula: WACC = E/V ? rE + D/V ? rD ? (1 – t) 40%*15. 83% + 60% *(9. 29%(1-34%)) = 10. 01%. Please find all detailed calculations in the attracted excel sheet under tab â€Å"Table A†. We would value an investment of similar risk, which would offer us a return higher than the WACC of 10. 01%, as anything over and above this in terms of return would be adding value as the present value of the future cash flows in that case would be positive.In otherwords, we could use WACC as our discount rate and hurdle rate to calculate NPV of potential investment projects of physical asset, where it is expected the financing will be similar to the financing of the company conducting the investment. 4. What is the cost of capital for the lodging and restaurant divisions? The WACC calculation methodology is the same for the divisions as t he calculations under question 3. However the inputs are changed to mirror the attributes and characteristics of the divisions.Please also see excel spreadsheet included within this submission for breakdown of the calculations. Lodging: Cost of debt: For the calculations of the fixed rate debt, we are using the 30 year government bond rate instead of the 10 year. This is a reflection of the comments in the case about the longer durability of the asset and longer financing. For the floating leg of the debt, we continue to use the 1 year government bond rate. rD = Average((1year US (Table B)*Fraction of Floating Debt + 30 Year US*Fraction of Fixed Debt) + 1. 10% rD = Average((6. 90%*50% + 8. 5%*50%) + 1. 10% = 9. 03% Cost of equity: To be consistent we opt for the long-term securities and long-dated data just as we did when calculation the cost of equity in question 3. As for the ? we use the peer group as presented in Exhibit 3. Hence to find the unleveraged beta, we take the average of the equity ? s of the peer group the average debt/equity ratio. After having calculated the unleveraged ? , we re-leverage using the target capital structure of the lodging division. We realize the limitations of using comparable companies to estimate the ? nd understand the criticality of defining the right peer group of comparable companies. We could most likely have increased the accuracy of our calculations by being more due diligent in the selection to find companies that were a closer match to the Lodging (and restaurant) division. However, for the purpose of the calculations in this case, we use the peer group defined in the exhibit. Restaurants: Cost of debt: For the calculations of the fixed rate debt the 10 year government bond is used. rD = Average((1year US (Table B)*Fraction of Floating Debt + 10 Year US*Fraction of Fixed Debt) + 1. 10% D = Average((6. 90%*25% + 8. 72%*75%) + 1. 10% = 10. 07% Cost of equity: To reflect the shorter nature of the assets in the restaur ant business division, we use short-term securities to estimate the risk free rate and the risk premium. We use the same method for estimating ? as we did for the Lodging calculations. Using the data described above, we find WACCLodging to be 8. 85% and WACCRestaurants to be 12. 11%. These findings support the notion that incorporating debt will lower the cost of capital due to the tax shield. Lodging has a debt/equity ratio of 74/26 against the 42/58 in the restaurant division. See detailed calculations in the attached excel sheet) We would also like to point out that of the restaurants given in the brief, many of these would in essence not necessarily be our peer group per se and we would be more selective over the restaurants we would selected to more closely mirror Marriott’s restaurants. With our aim to ensure we have the closest peer group possible for comparison. 5. What is the cost of capital for Marriott’s contract services division? How can you estimate its e quity cost without publicly traded comparable companies?We use the same framework as for the WACC calculations under Q3 and Q4. However, as we do not have a defined ? for the Contract Service division or an adequate peer group, we will estimate the ? using the existing data for Marriott and the two divisions. We know from the literature that a (holding) company’s ? is the weighted ? ’s of the individual business divisions. We use the revenue as the catalyst for the weighing of the ?. For the purpose of the calculations we use the unleveraged ? ’s. Mathematical this can be expressed as: ?(Marriott) = Revenue Weight (Lodging)* ? Lodging) + Revenue Weight (Contract Division)* ? (Contract Division) + Revenue Weight (Restaurants)*? (Restaurants). To find the ? (Contract Division) we re-write the formula to: ?(Contract Division) = [? (Marriott) – Revenue Weight (Lodging)* ? (Lodging) – Revenue Weight (Restaurants)*? (Restaurants)]/ Revenue Weight (Contra ct Division) ?(Contract Division) = [0. 7610 – 40. 99%*0. 5841 – 13. 49%*1. 0014]/45. 52% = 0. 8490 Adjusting for the target capital structure we find ? (Contract Division) equals 1. 223 Using this data, we find WACC for the Contract Service division to be 10. 82%.

Diversity Quotes

Diversity Quotes When the news reports cover ethnic wars and cultural domination on a regular basis, it is easy to miss out on one important lesson: diversity is a positive thing, in the world, in business, and in education. In the U.S., diverse cultures will soon be in the majority. Public conversations on the challenges of a diverse nation make the nation stronger. In business, diversity in an organization increases its responsiveness to its diverse clients and customers. As businesses become  ever more globalized, diversity becomes more important. In education, diversity provides a range of experiences in a class that would otherwise not exist and prepares students for life in a diverse world. Read what leaders, activists, and writers have said about the importance of diversity. Diversity Quotes Maya AngelouIt is time for parents to teach young people early on that in diversity there is beauty and there is strength.Cesar ChavezWe need to help students and parents cherish and preserve the ethnic and cultural diversity that nourishes and strengthens this community and this nation.James T. EllisonThe real death of America will come when everyone is alike.Catherine PulsiferWe are all different, which is great because we are all unique. Without diversity, life would be very boring.Mikhail GorbachevPeace is not unity in similarity but unity in diversity, in the comparison and conciliation of differences.Mahatma GandhiI do not want my house to be walled in on all sides and my windows to be stifled. I want all the cultures of all lands to be blown about my house as freely as possible. But I refuse to be blown off my feet by any.Hillary ClintonWhat we have to do... is to find a way to celebrate our diversity and debate our differences without fracturing our communities.Anne FrankWe a ll live with the objective of being happy; our lives are all different and yet the same. John F. KennedyIf we cannot end now our differences, at least we can help make the world safe for diversity.Mark TwainIt were not best that we should all think alike; it is difference of opinion that makes horse races.William Sloane Coffin Jr.Diversity may be the hardest thing for a society to live with, and perhaps the most dangerous thing for a society to be without.John HumeDifference is of the essence of humanity. Difference is an accident of birth, and it should therefore never be the source of hatred or conflict. The answer to difference is to respect it. Therein lies a most fundamental principle of peace: respect for diversity.Rene DubosHuman diversity makes tolerance more than a virtue; it makes it a requirement for survival.Jimmy CarterWe have become not a melting pot but a beautiful mosaic. Different people, different beliefs, different yearnings, different hopes, different dreams.Jerome NathansonThe price of the democratic way of life is a growing appreciation of peoples d ifferences, not merely as tolerable, but as the essence of a rich and rewarding human experience.

Google Earth and Archaeology

Google Earth and Archaeology Google Earth, software that uses high resolution satellite images of the entire planet to allow the user to get an incredible moving aerial view of our world, has stimulated some serious applications in archaeologyand seriously good fun for fans of archaeology.One of the reasons I love flying in airplanes is the view you get from the window. Soaring over vast tracks of land and getting a glimpse of large archaeological sites (if you know what to look for, and the weather is right, and youre on the right side of the plane), is one of the great modern pleasures of the world today. Sadly, security issues and rising costs have sucked most of the fun out of airline trips these days. And, lets face it, even when all the climatological forces are right, there just arent any labels on the ground to tell you what youre looking at anyway. Google Earth Placemarks and Archaeology But, using Google Earth and capitalizing on the talent and time of people like JQ Jacobs, you can see high resolution satellite photographs of the world, and easily find and investigate archaeological wonders like Machu Picchu, slowly floating down the mountains or racing through the narrow valley of the Inca trail like a Jedi knight, all without leaving your computer.Essentially, Google Earth (or just GE) is an extremely detailed, high resolution map of the world. Its users add labels called placemarkers to the map, indicating cities and restaurants and sports arenas and geocaching sites, all using a fairly sophisticated Geographic Information System client. After theyve created the placemarkers, the users post a link to them on one of the bulletin boards at Google Earth. But dont let the GIS connection scare you off! After installation and a little fussing with the interface, you too can zoom along the narrow steep-sided Inca trail in Peru or poke around the landscape at Stonehenge or take a visual tour of castles in Europe. Or if youve got the time to study up, you too can add placemarkers of your own.JQ Jacobs has long been a contributor of quality content about archaeology on the Internet. With a wink, he warns would-be users, Im glimpsing a possible forthcoming chronic disorder, Google Earth Addiction. In February of 2006, Jacobs began posting placemark files on his website, marking several archaeological sites with a concentration on Hopewellian earthworks of the American northeast. Another user on Google Earth is simply known as H21, who has assembled placemarkers for castles in France, and Roman and Greek amphitheatres. Some of the site placemarkers on Google Earth are simple location points, but others have lots of information attachedso be careful, like anywhere else on the Internet, there be dragons, er, inaccuracies. Survey Techniques and Google Earth On a more serious but downright exciting note, GE has also been used successfully to survey for archaeological sites. Searching for crop marks on aerial photos is a time-tested way to identify possible archaeological sites, so it seems reasonable that high resolution satellite imagery would be a fruitful source of identification. Sure enough, researcher Scott Madry, who is leading one of the oldest large-scale remote sensing projects on the planet called GIS and Remote Sensing for Archaeology: Burgundy, France, has had great success identifying archaeological sites using Google Earth. Sitting in his office at Chapel Hill, Madry used Google Earth to identify over 100 possible sites in France; fully 25% of those were previously unrecorded. Find the Archaeology Game Find the Archaeology is a game on the Google Earth community bulletin board where people post an aerial photograph of an archaeological site and players must figure out where in the world it is or what in the world it is. The answerif its been discoveredwill be in postings at the bottom of the page; sometimes printed in white lettering so if you see the words in white click and drag your mouse over the area. There simply isnt yet a very good structure to the bulletin board, so Ive collected several of the game entries in Find the Archaeology.  Sign in to Google Earth to play; you dont need to have Google Earth installed to guess. There is a bit of a process to trying Google Earth; but its well worth the effort. First, make sure you have the recommended hardware to use Google Earth without driving you and your computer crazy. Then, download and install Google Earth to your computer. Once it has been installed, go to JQs site and click on one of the links where hes created placemarks, follow another link in my collection, or simply search the Illustrated History bulletin board at Google Earth.After youve clicked on a placemark link, Google Earth will open and a marvelous image of the planet will spin to find the site and zoom in. Before flying in Google Earth, turn on the GE Community and Terrain layers; youll find a series of layers in the left hand menu. Use your mouse wheel to zoom in closer or farther away. Click and drag to move the map east or west, north or south. Tilt the image or spin the globe by using the cross-compass in the upper right hand corner.Placemarkers added by Google Earth users are indica ted by an icon such as a yellow thumbtack. Click on an i icon for detailed information, ground-level photos or further links for information. A blue-and-white cross indicates a ground level photograph. Some of the links take you to part of a Wikipedia entry. Users can also integrate data and media with geographic location in GE. For some Eastern Woodlands mound groups, Jacobs utilized his own GPS readings, linking online photography in the appropriate placemarks, and adding overlay placemarks with old Squier and Davis survey maps to display mounds now destroyed in their place.If you really get ambitious, sign up for a Google Earth Community account and read their guidelines. Placemarks you contribute will appear on Google Earth when they update. There is a fairly steep learning curve to understanding how to add placemarks, but it can be done. More details on how to use Google Earth can be found at Google Earth on About, from Abouts guide to Google Marziah Karch, or JQs Ancient Placemarkers page, or Abouts Space guide Nick Gr eenes Google Earth page. Flying and Google Earth Flying may not be an option for many of us these days, but this latest option from Google allows us to get much of the joy of flying without the hassle of going through security. And what a great way to learn about archaeology!

Discuss the impact on your learners of your professional skills (for Essay

Discuss the impact on your learners of your professional skills (for example in my development of literacy numeracy and ICT skills) and of my interpersonal skills - Essay Example The student is able to make a judgment about the relevance and adequacy of information available online. This requires the use of digital literacy skills that are gotten from the expertise from the expertise of the teacher. The professional skills of the teacher impact communication skills to the students. Through the teacher’s skills the students to transmit the information faster and to a wider audience hence improving the relations of the students. Integration is another skill impacted to the student by the teacher through his professional skills. This involves the student interpretation and representation of information using different ICT tools. The student is able to summarize, compare and contrast information. Teachers make students to have self confidence they require in handling of ICT issues and other matters of life. A teacher should encourage a student and correct the student’s mistakes. This will encourage the student to be confident in his/her

REading Response of NAECY Read and Write article Essay

REading Response of NAECY Read and Write article - Essay Example Teachers for children are required to undergo a comprehensive training to be equipped with the requirements of early literacy and the best teaching practices for early childhood education. The desirable features of children’s classrooms include manageable class sizes, low children to teacher ratios and varieties of learning materials. Additional policies meant to enhance children’s learning include promoting proper methods of assessing children, access to proper healthcare, and rallying for the public to assume collective responsibility in investing in high quality education for children. This article has really changed my mindset towards children’s learning. The paper has made me realize that children demonstrate their desire to learn when they are at early stages through grasping and gazing at objects. I have also realized that children’s teachers are not supposed to be anyone who knows how to read and write; however, teachers need training in order to understand the psychology behind developmental stages of children so that they can effectively care for them. I also learnt that we all have the responsibility of ensuring high quality education for our children through cost sharing to hire enough teachers and buy the required resources to boost children’s learning. The first teachers who handle children largely determine their future life and academic success (Herr & Libby-Larson, 2009). Teachers are required to remain attentive to children’s needs of learning and handle them in the best way they can. Teachers should expose children to a variety of learning objects and allow them to manipulate these objects in their quest to understand the world. Traditionally, people believed that children’s learning requirements are not demanding and can be met with any adult. This perception has changed since teachers must understand the requirements of children at each age and satisfy