Different strategies Essay

Using guidelines on viewing, interpreting, and evaluating visual imagery, examine a visual image for its meaning. Develop a written analysis and evaluation of the image. The image viewed is that of a building plan of the library. The image contains lines and boxes and labels of the different sections of the building. The image is presented as a whole and viewing it as separate sections would likely destroy the meaning of the image. The image also communicates to the viewer the whole structure of the building and one viewing it can identify his/her spatial location in the building. The image is able to tell the viewer that the building is large, has several entrances and exits, it also tells one the nearest comfort room, librarian’s desk and where a specific book, journal or material is located. Generally, the image is simple and straightforward and is able to communicate to the viewer important information about the library. Explore how different texts require different reading strategies. Select a novel chapter, a textbook chapter, a magazine article and a web page, and engage each text and take appropriate notes. Then, reflect on how the different texts call for similar and different strategies. Taking notes when reading a chapter from a novel is difficult to do, it’s that we have been trained to read a novel as a complete story, and the notes I had were incomplete and did not really tell me what the story is about, it was just a set of conversations I found interesting. Reading a textbook chapter is different because it contains a lot of information and the text is arranged to focus on one topic, hence my notes were many and upon reading it, it was actually a summary of the textbook chapter. A magazine article calls for light reading, and unless one is really looking for specific information, nothing is there for me to take notes. Most of the information in magazine articles is commonsense and opinionated and one is moved to argue against the article or agree with it. Reading a web page is similar to the magazine article, however, one notices that the message is incomplete or there are more articles related to it that taking notes is impossible but one web page leads to another. Reread one of your recent essays. How does the writing show that you thoroughly understood your subject, met the needs of your audience, and achieved your writing purpose? I believe that my essay was able to communicate that I had a good understanding of my topic because the thesis statement was focused and enabled the reader to identify the direction of the essay. Moreover, the essay provided a brief but information-rich discussion of the topic and its background. Then it proceeded to present my arguments and it was backed by existing information from reliable sources. I also was able to provide an alternative argument so that the reader would be given the opportunity to agree or disagree with my arguments. I then finished it with a short summary and conclusion and an invitation to the reader to engage in the same. Review the wording of a recent writing assignment. What are the key words, restrictions, and options? What does the description tell you about the purpose, audience, form, and assessment of the writing? What strategies from this chapter would you use to get started? A recent writing assignment I completed was the personal essay about the most influential person in my life. The key words for the assignment were influential person, inspiration and learning. Since it was a personal essay the only restrictions was that names should not be used, although one could identify the relationship of the person to the writer. The option given was that in the event that one could not identify a person, then it could be a personal experience. The writing assignment implied that it was going to be a personal essay that the use of first person is allowed and that it was casual and emotional and the purpose is to share with readers a very personal part of my life. I would be able to use the brainstorming exercise, as well as the dialogue writing and how to convey emotions in what we write.

Department of Social Work Essay

The objective of this paper is to show or define theories in the field of social work specifically in handling and working with emotionally disturbed youth and which theory or theories will best help guide this practice. This paper will also talk about areas I feel most confident and strongest in as well as the areas I feel least confident in. It will also show the reasons and factors that contribute to both my strengths and weaknesses. Social Work Defined â€Å"Social Work is the professional activity of helping individuals, groups, or communities enhance or restore their capacity for social functioning and creating societal conditions favorable to this goal ( as cited, Department of Social Work). † Because of the their objective is to help people and communities, the practice is made up of principles, applications of values. â€Å"Social Work is concerned and involved with the interactions between people and the institutions of society that affect the ability of people to accomplish life tasks, realize aspirations and values, and alleviate distress ( Baer and Frederico; Department of Social Work). † According to Baer and Frederico, the purposes of social work may be broken down into 3: enhance the problem-solving; promote effective humane operations; and link people with a system that give them services, resources and opportunities (Department of Social Work). Trauma Informed Care Trauma informed care pertains to organization or programs that services individuals who have survived a traumatic experience. These individuals or survivors are those who have been physically and/or sexually abuse and other experiences that leads to trauma. Often times, these experiences may direct an individual to mental health and some other type of disorder. Organizations that help people with this condition, alters and adjusts in order to keep an understanding on how trauma affects the individual seeking for help (SAMHSA National Mental Health Information Center). Theories in Social Work â€Å"Theories have been developed since it became clear that there were similar patterns or repeating cycles of behaviour both in an individual’s life and in the lives of lots of different people (Towland, 2010). † There are a lot of theories or ideas on how to go about social work and how to do the practice for both professionals and students taking up this course. According to Towland in his essay on â€Å"Social Work Theory and Practice – Making the Links† a theory is seen to help describe what is happening, explain why it is happening and predict what will happen next. Towland has also mentioned in his essay that he urges to consider the following theories: 1. ) Recognise that no single theory can explain everything; 2. ) Recognise that some theoretical approaches just don’t work with some people; 3. ) Take a critical approach to theory; 4. ) Always apply the value base to theory; 5. ) Never be intimidated by theory. In relation to the second and third theories that Towland has enumerated, people are made and created differently. What might have worked with one client may not work on the other. As a social worker who works with emotionally disturbed youth, taking note on why a certain approach is not working with a particular patient is important as well as thinking and finding other ways and means to help and understand the individual. Theories in general help practitioners get a grasp and a clear picture of what is happening and why it is happening. It enables practitioners and workers validate their actions and treatment, give a more accurate bearing on how to deal and work with these individuals and are able to give a precise rationalization on the consequences of a particular treatment or action done. †The aim is that this will lead to social work becoming more widely accountable and ultimately more respected (Towland, 2010). † Working with rural mental health programs â€Å"Establishing ongoing trauma-informed services is one of the most difficult challenges facing rural mental health programs. Schools, community groups, and natural helpers try to meet needs but often go unsupported (Children’s Voice, 2007). † Working with the youth in rural places is much more of a challenge because these people mostly live in small towns and places that medical financial help are in dire or is not greatly extended to the families, helping and treating the youth who are emotionally disturb becomes a bit more difficult and gives more work to the practitioners. They work harder and in longer hours with lesser pays and days off. Working with the developmentally disabled is a challenging task for me and this may not be my strongest area and point because of my lack of patience and experience on this particular field. But although this maybe the case, being able help children and being able to understand the reasons of their trauma and finding ways to help them grow out of their trauma is gratify in to me because I know I am able to give aide to these people. Explaining to the family and being able to give them light and understanding of their child’s or children’s situation and what might be the good and bad consequences of the treatment fulfills me as a social worker. My professional philosophy is shaped by not just what was passed on to me by my parents and mentors, but is and was shaped by my experiences and what I have seen in life. My personal beliefs and concepts in life that may contribute to my profession are: being a role model to not just my family but with the people I work with as well, the value I have for myself, thus, valuing my profession and what it stand for, its aims and objectives, and most importantly is my ability to reach out and help others. By doing this, I am not just able to share myself to others but be able to contribute to society as well. References Department of Social Work. (2008). â€Å"Definition of Social Work. † Retrieved on May 30, 2010 from http://www. wright. edu/cola/Dept/social_work/sw_definition. htm SAMHSA National Mental Health Information Center. (n. d). â€Å"What is Trauma-Informed Care? † Retrieved on May 30, 2010 from http://mentalhealth. samhsa. gov/nctic/trauma. asp#care Ohio Department of Mental Health. (n. d. ). â€Å"Trauma Informed Care† Retrieved on May 30, 2010 from http://mentalhealth. ohio. gov/what-we-do/provide/trauma-informed-care/index. shtml Towland, C. (2010). â€Å"Social Work Theory and Practice – Making the Links. † Retrieved on May 30, 2010 from http://ezinearticles. com/? Social-Work-Theory-and-Practice—Making-the-Links&id=1956566 Children’s Voice. (2007). â€Å"Nctsn Center Supports Rural Trauma-informed Care. † Volume: 16. Issue: 5. Child Welfare League of America, Inc. Retrieved on May 30, 2010 from www. questia. com

Team Values Essay Example | Topics and Well Written Essays - 250 words

Team Values - Essay Example te his own philosophy, collect information from the subordinates, changes the situation and communicate the same with the members within the organization (Zwikael & Smyrk, 2011). Personal values are important for understanding the overall organizational behavior because the way in which person behaves have a radical influence on the overall working environment of the organization. I firmly reckon that trust, respect and ethical practice are the major component of any individual. In addition, strong adherence to these values make an individual responsible person, whether in professional life or in personal life. I firmly believe that there lays significant alignment between my personal values and the organizational value (RÃ ¸nnow-Rasmussen, 2011). Credibility is the process of clarifying the roles of different individuals within an organization. Credibility allows improving the performance of the staff and also assists in building effective relationships with subordinates. To build a strong credibility, a leader should be honest, detractor, competence, action oriented, focused, loyal, and trustful and most importantly, he should respect the principles and values of other (Ulrich et al., 2013). The overall organizational values along with the effective leadership are vital for attaining the ultimate credibility in the organization. My organizational leadership model is based on the two underlying approaches. Firstly, my organization continually clarifies what is important to it and secondly, it focuses on creating a learning environment wherein every individual is provided with an opportunity to present their views and ideas freely. Moreover, it can be recommended that the leader within the organization should motivate subordinates to express their thoughts and ideas to promote innovation as well as the leader should be honest and unbiased towards his

The U.S. Involvement with Haiti Essay Example | Topics and Well Written Essays - 500 words

The U.S. Involvement with Haiti - Essay Example cial and residential building were severely or totally collapsed, including thousands of schools, hundreds of hospitals, university building, factories, telephone networks, roads etc were all totally destroyed. Infrastructure necessary to respond to the disaster was also severely damaged including all the hospitals in the northwest including air, sea and land transport facilities and all the communication systems. Haiti is one of the poorest countries in America and it was totally impossible for Haitian government to cope with the damage of such scale. United States was the biggest and most powerful country in that region and being the most powerful nation on earth they have the responsibility of taking the leading role in helping Haiti to come over that disaster. Luckily United States government knows this responsibility well enough and they were the first ones to came forward and respond to this disaster. United States government and United States civil organizations provided millions of dollars to help the people of Haiti right after the disaster took place and they planned to give much more in the coming days. United States immediately send search and rescue teams to give help to those who need them immediately. But the damage being done by earthquake was so huge that it is going to take several months or even years to rebuild the infrastructure and make things normal again and this is wh at US government exactly understood, the US government said that they were in it for the long haul as it is going to take years to bring things on the normal course again. United States government had signed an agreement with UN to formalize the help process, it give United States responsibility and control over ports, roads, airports. They also have been given responsibility to make Haitian authorities responsible for law and order. There are thousands of US troops in Haiti to take part in rescue and rebuild process. US is also controlling Haiti’s collapsed president

Islam vs. Christianity Essay Example | Topics and Well Written Essays - 750 words

Islam vs. Christianity - Essay Example Nonetheless, this essay will address the comparison between Islam and Christianity from the historical perspective, as well as how the significance of these religions in society, especially with regard to the influence these might have on rulers in society. The rise of Christianity can be traced from the early Byzantine and Justinian Empires. Emperor Justinian I championed the Christian culture, which is evident in various levels of the Byzantine culture. Justinian is heralded for shaping church policies. He therefore, got rid of the former religious practices, including the practice of paganism. For instance, Justinian declared an expulsion for pagan teachers for the academy of Athens (The Metropolitan Museum of Art web). Overall, it is during the early Benzatium that Christianity spread, and replaced the gods of antiquity. On the other hand, the spread of Islamic religion can be traced to the Abbasid dynasty. The Abbasid dynasty is highly associated with the rise of civilization. T his later spread to other parts of the empire. In addition to various aspects of civilization in this dynasty, there was progress in science and this led to the development of Islamic sciences, which fell under the category of religious sciences. Nonetheless, this comprised branches such as Hadith, Fiqh, and Tafsir. The dominant religion in Abbasid dynasty was, therefore, Islam. However, there was religious tolerance in the dynasty. There is a relationship between religion and power, especially, when focus is on the past civilizations. The rulers in past societies drew considerably on religion to rule their subjects (Brisch Web). An example of this is the aspect of divine kingship in Mesopotamia. Basing the notion of religion, Naram-Sin of Akkad, who was the first ruler of Mesopotamia, declared himself a divine king. This aspect is also called self-deification. Other rulers that took up self-deification include Shulgi (2095–2049 BCE) of the Third Dynasty of Urm, Rim-Sin of La rsa (1822–1763 BCE) and Hammurabi of Babylon (1792–1750 BCE) (Brisch Web). Nonetheless, in self-deification, the kings compared themselves gods, who needed to be worshipped, like the one divine God. Nonetheless, a major reason for this was to prove that they were powerful, and to expand their area influence, as well as legitimize their powers. Rulers in some of the past civilizations also used religion to guide people. Nonetheless, the laws of some civilizations in the past were drawn from religion. However, the relationship between law and religion is changing throughout history (Barzilai Web). The use of natural law in past societies can be closely associated with religion. Nonetheless, among the Israelites, the Mosaic Law, including the Ten Commandments was used. These were considered as laws from God himself. In the epic of Gilgamesh, the rulers had a different perception of the gods. Mainly, the rulers feared and revered the gods, as they considered the gods dange rous. Therefore, in this case, self-deification as in the case of Mesopotamia was impossible, as the gods would possibly destroy any ruler that would attempt this (Carnahan Web). In addition, the gods in the epic of Gilgamesh were considered dangerous for humans. For instance, unlike in the Mosaic Law and Abrahamic covenant, the gods in the

Gucci case Essay Example | Topics and Well Written Essays - 500 words

Gucci case - Essay Example To enable Gucci regain its position in the market, Domencio De Sole – Gucci’s president and CEO lead and Tom Ford – Gucci’s creative director combined their individual talents. Eventually, the company started selling its shares to the public market. Since Gucci was financially performing well at the time the company announced its initial public offering; well-known companies such as: LVMH and PPR were fighting over who gets the biggest share in Gucci. The problem with selling the company’s shares to the public market is the fact that shareholders who have the highest percentage of Another problem with going into public market is related to its vulnerability to the U.S. economic performance including financial crisis that may occur around the world. Once the economy becomes unstable, there is a huge possibility that the stock value of company shares will go down. Throughout Gucci’s success in the global market, the company heavily relied on Ford without training other designers with regards to Gucci’s fashion ideas and its target market. The absence of having well-trained and competitive designers could place the company in danger as soon as Ford decided to leave the company. Aggressively selling Gucci’s shares in the stock market without controlling the number of shares issued in the public market may cause the company-owner(s) to lose their power to manage the business operations of the company. In order to become a conglomerate multi-branded global company, Gucci should have entered into a business partnership or joint-venture with other related company instead of heavily relying on the selling of the company’s shares. competitive young designers. Through this type of competition, the company can identify the unique talents of each young designer. To win a long-term commitment from selected designers, Gucci could negotiate the packages and benefits which will be given to them in exchange for their service. With

Assingment for Law Enforcement Research Design class Assignment

Assingment for Law Enforcement Research Design class - Assignment Example The nine argument questions are also very important in qualitative, quantitative, and mixed methods of research (Marian, 2006). The fundamental roles of research design components are an important aspect of every research design. They include; introduction which has :statement of problem, study purpose, theoretical perspective, research questions or hypothesis, definition of terms, delimitations and limitations, literature review which has type of design, sample population and participants, data collection instruments variables and materials, data analysis procedures, Anticipated ethical issues in the study, preliminary studies or plot tests, and significance of the study. Last month I had the pleasure of briefing a large group of local and state  law enforcement  officials on the Islamic extremist threat in their area. My interaction with these professionals reminded me that they are THE  frontlinedefenders in the War on Terror and play an indispensable role in our Homeland Security. Joining me in speaking at this event was my friend and occasionalAmerican Thinker  contributor,  LTC Joseph C. Myers.  Ã‚  Ã‚  What struck us both is how quickly they "got it" when presented with the right amount of actionable information about what Islamic extremist groups were already operating in their communities. It was also impressive to see some of these agencies and departments who were doing very high-quality counterterror investigations even with limited personnel and financial resources. And in this case, those departments were working together to share that knowledge. Having been raised in a police family (both my father and brother are retired from the job), Im familiar with the unique instincts developed by police officers day-by-day as they go about their beat. Recognizing something or someone out of place and a natural curiosity are necessary tools to being a good

Strategic Reward Key Models and Practices Essay

Strategic Reward Key Models and Practices - Essay Example For example, it is possible to create a plan for performance related pay using different strategies such as the following: (1) merit-based pay plan; (2) job- or skill-based pay plan; (3) competency-based plan; and/or (3) job-evaluation-based pay (Heneman and Werner, 2005, p. 45; Baldwin, 2003, p. 45, 70). After examining the potential impact of introducing a performance related pay in a German public service, Shmidt, Trittel and Muller (2011) found out that the use of different types of performance related pay schemes can lead to different effects in terms of public sector employees’ work motivation and performance and that a highly selective performance related pay will never work in government offices. It simply means that depending on the type of performance-based appraisal used by each government office, there will always be the risk wherein the public sector employees would perceive the type of assessment and evaluation process used within the government office to be inef fective, inconsistent, and unfair to some government employees (Shmidt, Trittel and Muller, 2011; Rayson, 2013). Another possible reason behind the reluctance of the public sector employees in integrating performance related pay is the fact that most of the non-performing government employees would fear that their superiors would be closely monitoring their overall work performance. Because of the on-going tight government budget, Weiner (2013) reported that the public sector employees may no longer have the opportunity to enjoy so much of work-related flexibility options. Since there is a need for the government to cut down their unnecessary fixed operating costs, some of the underperforming public sector employees may think that they can be one of the candidates in case... It is the duty and responsibility of the public HR managers to design and implement the performance related pay effectively within the UK government offices. As a common knowledge, the public sector employees will be affected by the new pay and reward scheme. Therefore, the reservations made by the public sector employees should be considered legitimate. The use of performance related pay is a good form of pay and reward strategy particularly in terms of increasing the quality service provided by the public sector employees. For this reason, the public HR managers should exert more effort to effectively address all reservations made by the public sector employees. It is also necessary to create a S.M.A.R.T performance-based criteria that could guide the public sector employees on what they are expected to do. In the process of removing the reservations of each public sector employee, the HR professionals can easily win the support of all affected individuals.

Climate change reflection (2 pages) Assignment Example | Topics and Well Written Essays - 500 words

Climate change reflection (2 pages) - Assignment Example The technologies available to reduce carbon emissions include the use of carbon capture technology that is well known from their use in oil recovery. Here, carbon dioxide is separated from other gases that exist in a power plant. Alternatively, it may be captured in its early stage before the energy is generated. This is also referred to as pre-combustion. Pre-combustion share technologies with solid fuels like coal and coke. In addition, the technologies use to remove impurities from syngas is the same as the technology used to remove carbon dioxide from a mixture of carbon dioxide and water. Moreover, the use of nuclear power to reduce carbon is another technology to be used. This is because it displaces electricity from coal as well as replaces electricity from natural gas (Oosterhuis, 2014). Some of the policies that can be used to regulate carbon include the use of cap-and-trade system whereby the system constraints the emissions of regulated sources by coming up with a limited of emission allowances. In addition, most prefer surrendering an allowance to cover up the emission. This is because it reflects the cost of the emission reduction. Moreover, in countries that are developing, it is the role of the policy makers to decide on the allowances to issue as well as the sources covered by the cap. Additionally, an emission-reduction-credit reduces the production of carbon by awarding tradable credits for certified reductions. The use of the clean energy standards is also vital as it establishes a technology-oriented goal that is implemented cost effectively. Lastly eliminating fossil fuel subsidies helps in getting the carbon price right to deliver incentives for efficiency (Jennings, 2007). The role of various countries in the reduction of carbon is by the use of strategic mechanisms for example, the use of clean development mechanism to

How to Become a Successful Entrepreneur Essay Example for Free

How to Become a Successful Entrepreneur Essay Regardless of your definition of success, there are, oddly enough, a great number of common characteristics that are shared by successful businesspeople. You can place a check beside each characteristic that you feel that you possess. This way, you can see how you stack up. Even if you dont have all of these characteristics, dont fret. Most can be learned with practice and by developing a winning attitude, especially if you set goals and apply yourself, through strategic planning, to reach those goals in incremental and measurable stages. The Home Business Musts Like any activity you pursue, there are certain musts that are required to be successful in a chosen activity. To legally operate a vehicle on public roadways, one must have a drivers license; to excel in sports, one must train and practice; to retire comfortably, one must become an informed investor and actively invest for retirement. If your goal is success in business, then the formula is no different. There are certain musts that have to be fully developed, implemented and managed for your business to succeed. There are many business musts, but this article contains I believe to be some of the more important musts that are required to start, operate and grow a profitable home business. 1. Do what you enjoy. What you get out of your business in the form of personal satisfaction, financial gain, stability and enjoyment will be the sum of what you put into your business. So if you dont enjoy what youre doing, in all likelihood its safe to assume that will be reflected in the success of your businessor subsequent lack of success. In fact, if you dont enjoy what youre doing, chances are you wont succeed. 2. Take what you do seriously. You cannot expect to be effective and successful in business unless you truly believe in your business and in the goods and services that you sell. Far too many home business owners fail to take their own businesses seriously enough, getting easily sidetracked and not staying motivated and keeping their noses to the grindstone. They also fall prey to naysayers who dont ake them seriously because they dont work from an office building, office park, storefront, or factory. Little do these skeptics, who rain on the home business owners parade, know is that the number of people working from home, and making very good annual incomes, has grown by leaps and bounds in recent years. 3. Plan everything. Planning every aspect of your home business is not only a must, but also builds habits that every home business owner should develop, implement, and maintain. The act of business planning is so important because it requires you to analyze each business situation, research and compile data, and make conclusions based mainly on the facts as revealed through the research. Business planning also serves a second function, which is having your goals and how you will achieve them, on paper. You can use the plan that you create both as map to take you from point A to Z and as a yardstick to measure the success of each individual plan or segment within the plan. 4. Manage money wisely. The lifeblood of any business enterprise is cash flow. You need it to buy inventory, pay for services, promote and market your business, repair and replace tools and equipment, and pay yourself so that you can continue to work. Therefore, all home business owners must become wise money managers to ensure that the cash keeps flowing and the bills get paid. There are two aspects to wise money management. The money you receive from clients in exchange for your goods and services you provide (income) The money you spend on inventory, supplies, wages and other items required to keep your business operating. (expenses) 5. Ask for the sale. A home business entrepreneur must always remember that marketing, advertising, or promotional activities are completely worthless, regardless of how clever, expensive, or perfectly targeted they are, unless one simple thing is accomplishedask for the sale. This is not to say that being a great salesperson, advertising copywriting whiz or a public relations specialist isnt a tremendous asset to your business. However, all of these skills will be for naught if you do not actively ask people to buy what you are selling. 6. Remember its all about the customer. Your home business is not about the products or services that you sell. Your home business is not about the prices that you charge for your goods and services. Your home business is not about your competition and how to beat them. Your business is all about your customers, or clients, period. After all, your customers are the people that will ultimately decide if your business goes boom or bust. Everything you do in business must be customer focused, including your policies, warranties, payment options, operating hours, presentations, advertising and promotional campaigns and website. In addition, you must know who your customers are inside out and upside down. Become a shameless self-promoter (without becoming obnoxious). One of the greatest myths about personal or business success is that eventually your business, personal abilities, products or services will get discovered and be embraced by the masses that will beat a path to your door to buy what you are selling. But how can this happen if no one knows who you are, what you sell and why they should be buying? Self-promotion is one of the most beneficial, yet most underutilized, marketing tools that the majority of home business owners have at their immediate disposal. 8. Project a positive business image. You have but a passing moment to make a positive and memorable impression on people with whom you intend to do business. Home business owners must go out of their way and make a conscious effort to always project the most professional business image possible. The majority of home business owners do not have the advantage of elaborate offices or elegant storefronts and showrooms to wow prospects and impress customers. Instead, they must rely on imagination, creativity and attention to the smallest detail when creating and maintaining a professional image for their home business.

Negotiation styles

Negotiation styles Summary: First of all we will know what was the meaning of Negotiation Styles. The negotiation styles are nothing but the way of culture,behavior,skills of th people of different organizations. The negotiation styles are different for different people in different regions the negotiation styles of the people vary from one region to another region. In a international business organization If we go to another country and if we make decisions on our own we may able to give a bad decision in that country because the decision taken by our own was not more reliable than the decision of the people of that country hence the negotiation styles plays a key role in making in a better decision in international business organization. For example let us compare the negotiation styles of two countries in a international business organization. An England clothes manufacturer Peter England has found by researching that the the manufacturing of formals would save them up to 80 % on their cost of production of the same items produced in India.The company decided to send the England negotiators to india to make an agreement to make a best deal with Indians The planning and production manager hired me to give a advice to give a advice to his team to make a best deal with the Indians. I made a PEST and SWOT analysis of Indias macro and micro environments. This analysis shows me that Indian culture has unequal distribution of wealth and power. A personal relationship with Indians would help the team to run negotiation process easily and profitably. 1.1 Clients Description: My client of peter England is a clothes manufacturer who was one of the famous manufacturer in manufacturing the formal clothes. 1.2 Clients Description of Problem: The client has has arised a problem for me tthat â€Å"Our planning and production department had a research and found that if Peter England outsources the production of formal clothes in India to a third partywe can save upto 80% of the current costs of production of the this items. These savings include with the human resources cost and equipment maintenance, insurance of plant production and material, employees, transport etc. A negotiators team to be sent to India to make a discussion and negotiate on the cost of production of formal wears. It was necessary for the team of negotiators to fully understand the Indian culture. since the production margin of peter England in manufacturing the formal wear was been saved. The margin of the production of the product depends on the negotiators and the skills bring up by them. 1.3 What the Client requires of Me: The manager of the planning and production , Mc Farland approached me and asked me to give a suggestion to the team of negotiators to increase the margin of production of the product making a deal with the negotiators of India.The client also asked me to give a detailed information about the cultural differences between the England and India.He also asked me about the detailed description of the negotiation styles in India and how it is carried on the culture of India.So that it would help the team of negotiators in achieving their targets. 1.0 Overview of the situation The client had made a research and had had decided that he had a potential to save up to 80 % in manufacturing the formal clothes of his company Peter England. However the potential of savings in manufacturing the product depends on the team of negotiators who are being sent ot India. It is very important that they understand the Indian culture and market to get the best possible results.They should understand the values, interests, goals, ethical principles and assumptions of the Indian culture.Hence the success of the project depends up on the team of negotiators who must understand the ethics,culture of the Indians an their ability to compete with them for the best. The team of negotiators should have a SWOT analysis to understand the depth. I is also essential for the team to to have a PEST analysis in terms of its political, economic, social and technological issues and conditions in the Indian environment. 2.0 Analysis of the situation According to Moran and Stripp (1991), negotiation takes place when two or more parties have both common and conflicting interests and interact with one another for the purpose of reaching a mutually beneficial agreement. 3.1 PEST analysis: PEST is the acronyms for Political, Economic, Social and Technological. This analytical tool is used by companies to analyse the overall environment or the macro environment of a country and industry before entering into business with them. 1. Political The political environment of India is quite safe. It is the policy of Indian government to facilitate western companies to invest and outsource their operation to India. The negotiators must have an in depth knowledge of Indian laws and regulation regarding foreign investors. 2. Economic Indias economic condition is also good. It is rapidly becoming the hub for investment from western world in south Asia. Indian Rupee has gained strength in the recent times which shows that the market is growing and gaining strength. Also the difference between the US dollar and Indian rupee will enable the client to pay handsomely to the manufacturers in India and yet keep their costs low because 1 US dollar is worth 50 Indian Rupees (approximately). This would help in getting the loyalty of India manufacturers. 3. Social The Indians are highly inspired and influenced by the Americans. The Indian society is quite acceptable of western cultures. There is also a tendency of psychological inferiority on part of the Indians as the Indian sub continent has been ruled by the westerners (British) for a hundred years. The negotiators might like to take advantage of these facts and talk the Indian team into their required results. However, they need to remember that in order to make best use of their visit, the team must get in friendly terms with the Indians. This can only be achieved through socialising outside office hours. These social events might include going to restaurants, bars, clubs etc together. Also, the negotiators should be able to see beyond the role of Indian negotiators and should be able to find out the hidden interests and priorities of their counterparts. 4. Technology Indian is on its way to becoming the main technology hub of the east. High quality and latest technology of all sorts is available in India. Any machinery required for the production plant can be obtained from India or otherwise can be imported from China at low cost. 3.2 SWOT analysis SWOT is an acronym for strengths, weakness, opportunities and threats. Here, SWOT analysis is used to analyse the micro environment in India. 1. Strengths The Indian society is open and friendly towards the westerners. The government has made laws to support foreign investors The negotiators being westerners will have a psychological edge over their Indian counterparts. Beauty Expressed Inc. will be able to pay attractive amounts to the Indian manufacturers and yet keep their cost low due to the difference in the two currencies. Also India is famous for its high quality fabric and low cost productions. 2. Weakness The Indian culture is very different from the US culture and therefore their negotiating styles and ways are much different from each other and work on entirely different variables from each other. For example, in the Indian culture, it is more important to secure a good relationship with the other partyeven if you have to losesomething. Whereas, in the US culture, getting the most out of the deal is more important than keeping the other party happy. 3. Opportunities The client would be able to save huge amounts due to the availability of low cost labour in India. 4. Threats There can be potential delivery issues as deadlines are considered flexible in the Indian culture where as they are considered absolute in the US culture. In addition to this, the US negotiators might not be able to achieve their targets if they fail to understand the variables working behind the attitudes of Indian negotiators. 3.3 Overall Analysis: In order to understand the Indian culture so that the appropriate negotiation style and technique can be adopted, we would use Hofstedes Five Cultural Dimensions. Hofstede calculated the cultural dimensions of many countries which can be accessed on his website in the form of graphs. We will use these to analyse the Indian culture. 1. Power Distance Index Hofstedes Power distance Index measures the extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally.(www.clearlycultural.com) As the figure 1 shows that PDI for India is 77 against a world average of 56.5 (Fig 2) and that of US which is only 40. This indicates a high level of discrimination in Indian society with regard to power and wealth. 2. Individualism Individualism means the degree to which individuals are integrated into groups. (www.clearlycultural.com). Figure 1 one shows that the IDV for India is at 55 against that of US at 91 and a world average at 50. This shows that the Indian culture is inclined more towards collectivism rather than individualism. 3. Masculinity Masculinityrefers to the distribution of roles between the genders in a culture. (www.clearlycultural.com)India has Masculinity as the third highest ranking Hofstede Dimension at 56, with the world average just slightly lower at 51(Fig 2) 4. Uncertainty Avoidance Index Uncertainty avoidance deals with a societys tolerance for uncertainty and ambiguity. (www.clearlycultural.com) UAI for India is 40(Fig 1) as compared to a world average of 65 (Fig 2). This shows that the Indian culture is open to new and unknown vistas. (Greet Hofstede Cultural dimensions, 2009) 5. Long-term Orientation Long-term Orientation deals with Virtue regardless of Truth. Values associated with Long Term Orientation are thrift and perseverance. Indias Long Term Orientation (LTO) Dimension ranks 61 against that of USA at 29 (Fig 1) in the graph, while the worlds average is at 48(Fig 2). This huge difference must be note as it shows how differently the two cultures operate. The Indians would concentrate more on building a long term relationship while doing business with another party whereas, the Americans would focus just on getting the job at hand done. The LTO score indicates that the culture is perseverant and parsimonious. ( http://www.geert-hofstede.com/) 4.0 Solutions and Recommendations A thorough analysis of the Indian culture, its comparison with the American culture and its SWOT and PEST analyses reveal that the Indian market is very suitable for outsourcing the manufacturing of T-shirts and trousers. In order to achieve their target, the team of negotiators must keep in mind the following. Choose the appropriate strategy by developing a personal relationship with their Indian counterparts. As we have seen that the Indians are more prone to concentrate on building a long term relationship, the negotiators should try to cash this attribute and ask for their required targets. Project the correct personal and organisational images. Study and understand the basic cultural differences and intelligently use this information. Ask the most relevant questions. These might be outside the business area but will help in making the process of negotiation smooth. Offer and request the appropriate types of concessions at the right time. Here the tendency of the Indian culture to develop long term relations again plays a vital role. Indian manufacturers can be very loyal and giving if they are promised a long term partnership ie, the negotiators should capitalise on the long term orientation of the Indian culture. Remain focused on their targets but show flexibility in order to achieve them. This would ensure a smooth and fruitful negotiation. The team should try to impress and keep in hand the leader of the Indian negotiation team. This means that they should capitalise on the tendency of the Indian culture to respect and accept difference in power. Beauty Expressed Inc.s team should focus on a people oriented negotiation rather than a task oriented discussion. They should give more importance to the team lead of the Indian team. The negotiators should not adopt a sequential style of negotiation in fact they should adopt the holistic style of negotiation and deal with the problem as a whole. This implies that they should not try splitting the problem into parts. The negotiators should try to use a collaborative style and create a win-win situation. This would not only help them achieve their goals but would also help them create a long term relation with their Indian counterparts. 5.0 Forecasts and Outcomes The project of outsourcing manufacturing of T-shirts and trousers to an Indian company is feasible. However, the positive outcome of this project depends entirely on the success of negotiation between the team from Beauty Expressed Inc. and their Indian counterparts. This is possible if the team follows the above mentioned recommendations and be sensitive to Indian culture, its demands, dimensions and variables upon which it works.

Teaching Children about Animal Rights Essay -- Personal Narrative, Com

The issue of animal rights is often overlooked in this society, and I've wanted that to change for as long as I can remember.   My original idea was to start a Society for the Prevention of Cruelty to Animals at my high school, but I was afraid I wouldn't be able to raise enough interest and the project would be a flop. For quite a while, I had a very difficult time coming up with another idea, until I started thinking of all the horrible stories of animal cruelty that I'd heard and read. Teenagers and adults who had neglected, starved, beaten and abused innocent, defenseless creatures. What was the source of all this? Obviously these people had never experienced the joy an animal can bring to your life. Perhaps I could find some children with whom to share that joy. Perhaps I could teach them a little bit about how to care for and respect animals as everyone should. I started searching for a church youth group to whom I could talk. I called several churches and got several answering machines. After playing phone tag with voice mail and secretaries for a couple of weeks, I finally got in touch wi... ...y are not the children who need education. They're already involved in something that is going to teach them these kinds of lessons - they're not the neglected, inactive children who grow up to be abusive towards animals and people. That is why I've decided that my work with children is far from over.   The children who truly need my help cannot be found in a youth group or a Cub Scout pack. How I am going to reach these children, I do not yet know. I am fortunate to have the drive, vision and experience I've gained so far to help me along the way.

Internet Addiction :: Expository Essays

Internet addiction is a growing problem with more and more people. The internet is much more accessible to people now than it was just a few years ago. The internet provides people with entertainment, loads of information, and an escape from everyday life, but like anything else, too much a good thing can be addictive. This paper will cover what internet addiction is, warning signs of internet addiction, problems caused by internet addiction, who develops internet addiction, preventing and treating internet addiction, and safety guidelines for internet users. In the modern world internet access is a vital part of everyday life. It is important for education, and is a necessary skill for those entering the job markets of today. The internet is highly entertaining and informative. These qualities make the internet an attractive escape from the stress of everyday life. People can enter a different world and make the problems of the real world disappear. Anything is possible on the internet. Internet addiction has the same symptoms as an addition to drugs, alcohol, cigarettes, or caffeine. When someone becomes addicted to the internet they will have increasing tolerance to the amount of time they spend online, withdrawal, mood changes between when online and off, and there will be an interruption of social relationships and activities. People with an addiction will need more time online to be happy. When access to the internet is not available people will show signs of anxiety, depression, irritability, trembling hands, a nd restlessness. There are five types of internet addiction. The first is Net-Gaming. People with this addiction participate in online games, Multi User Dungeon Games (MUDs), will visit virtual casinos, and my become obsessed with e-auctions and online trading and shopping. Another type of internet addiction is Cyber-Relational Addiction. People with this tend to make chat room relationships more important than their relationships with family or friends. They may even try to meet someone personally after meeting him or her online. The third type of internet addiction is Information Overload. People become obsessed with tracking down certain information and organizing it.

Alcohol And The Fetus Essay -- essays research papers

Know When to Say When   Ã‚  Ã‚  Ã‚  Ã‚  Drinking during pregnancy is often thought of as no big deal. However, drinking during pregnancy is a very big deal. An unborn baby’s life is in the hands of the mother. If she decides to drink, she is risking the unborn’s chances of being as smart and healthy as it can be. Drinking during pregnancy opens the doors to a variety of harmful effects on the mother and her unborn baby, and until this is brought out in the open with honesty, it cannot be prevented. There are many stereotypes about the women that drink while they are pregnant. One stereotype believed by professional doctors is that women that are college-educated and wealthy are going to drink less or not at all during pregnancy, and the poorer and uneducated women are going to drink more during pregnancy. However, just as stereotypes usually turn out, the complete opposite is true. Women who receive college degrees are four times more likely to drink during pregnancy than women who only receive a high school diploma. Some statistics show that mothers who go to community and rural health centers to receive care are counseled more than mothers who go to private doctors’ offices. People should not make assumptions about something so important especially if it concerns a person’s health (Walsh 2-3).   Ã‚  Ã‚  Ã‚  Ã‚  Those assumptions may go beyond stereotyping of individuals and carry over to what is a safe level of alcohol. Some people believe that drinking a little amount of alcohol will not harm the fetus. However, in reality, â€Å"there is no known safe level of alcohol consumption for pregnant women† (Walsh 2). A woman runs the risk of having a child with defects if she drinks regularly (Orenberg 167). â€Å"Binge drinking, or heavy alcohol consumption at one sitting, is particularly hazardous to the fetus because very high levels of alcohol enter the mother’s blood stream† (â€Å"Fetal Alcohol†). High levels of alcohol consumption can leave the fetus exposed longer making birth defects more severe (â€Å"Fetal Alcohol†). The fetus is exposed longer because its organs are still developing, therefore, taking the fetus twice as long to break down the alcohol (Walsh 2). As a result of this, the fetus’ blood-alcohol level is much hi gher than the mother’s, thus meaning that at the moment the mother starts to feel the effects of the alcohol, the unborn bab... ...aired (Bunch 3:87). As for the rest of the defects that come with fetal alcohol syndrome, there is not much hope for improvement.   Ã‚  Ã‚  Ã‚  Ã‚  Despite the knowledge about potential effects on the fetus, births of babies born with fetal alcohol syndrome occur often. â€Å"In industrialized Western countries about one in every hundred babies is affected† (Bunch 3:87). In fact, â€Å"eight out of every hundred pregnant women go into labor sometime after the 15th week of pregnancy, but before the pregnancy has reached its full term roughly 40 weeks. If birth occurs before the 36th week, or 9th month, the baby might be too small to survive on its own outside the womb† (Orenberg 159). Even if there is one occurrence of a baby born with fetal alcohol syndrome that is one occurrence too many.   Ã‚  Ã‚  Ã‚  Ã‚  Drinking during pregnancy opens the doors to a variety of harmful effects on the mother and her unborn baby, and until this is brought out in the open with honesty, it cannot be prevented. It is sad to hear about women that do not quit drinking when they find out that they are pregnant. It is a moral obligation not to jeopardize the well being of the unborn child.

Excellence in Financial Management

Excellence in Financial Management Course 7: Mergers & Acquisitions (Part 2) Prepared by: Matt H. Evans, CPA, CMA, CFM Part 2 of this course continues with an overview of the merger and acquisition process, including the valuation process, post merger integration and anti-takeover defenses. The purpose of this course is to give the user a solid understanding of how mergers and acquisitions work. This course deals with advanced concepts in valuation. Therefore, the user should have an understanding of cost of capital, forecasting, and value based management before taking this course. This course is recommended for 2 hours of Continuing Professional Education. In order to receive credit, you will need to pass a multiple choice exam which is administered over the internet at www. exinfm. com/training Published June 2000 Chapter 4 Valuation Concepts & Standards As indicated in Part 1 of this Short Course, a major challenge within the merger and acquisition process is due diligence. One of the more critical elements within due diligence is valuation of the Target Company. We need to assign a value or more specifically a range of values to the Target Company so that we can guide the merger and acquisition process. We need answers to several questions: How much should we pay for the target company, how much is the target worth, how does this compare to the current market value of the target company, etc.? It should be noted that the valuation process is not intended to establish a selling price for the Target Company. In the end, the price paid is whatever the buyer and the seller agree to. The valuation decision is treated as a capital budgeting decision using the Discounted Cash Flow (DCF) Model. The reason why we use the DCF Model for valuation is because: Discounted Cash Flow captures all of the elements important to valuation. ? Discounted Cash Flow is based on the concept that investments add value when returns exceed the cost of capital. ? Discounted Cash Flow has support from both research and within the marketplace. The valuation computation includes the following steps: 1. Discounting the future expected cash flows over a forecast period. 2. Adding a terminal value to cover the period beyond the forecast period. 3. Adding investment income, excess cash, and other non-operating assets at their present values. . Subtracting out the fair market values of debt so that we can arrive at the value of equity. Before we get into the valuation computation, we need to ask: What are we trying to value? Do we want to assign value to the equity of the target? Do we value the Target Company on a long-term basis or a short-term basis? For example, the valuation of a company expected to be liquidated is different from the valuation of a going concern. Most mergers and acquisitions are directed at acquiring the equity of the Target Company. However, when you acquire ownership (equity) of the Target Company, you will assume the outstanding liabilities of the target. This will increase the purchase price of the Target Company. Example 1 – Determine Purchase Price of Target Company Ettco has agreed to acquire 100% ownership (equity) of Fulton for $ 100 million. Fulton has $ 35 million of liabilities outstanding. Amount Paid to Acquire Fulton$ 100 million Outstanding Liabilities Assumed 35 million Total Purchase Price$ 135 million Key Point ( Ettco has acquired Fulton based on the assumption that Fulton's business will generate a Net Present Value of $ 135 million. For publicly traded companies, we can get some idea of the economic value of a company by looking at the stock market price. The value of the equity plus the value of the debt is the total market value of the Target Company. Example 2 – Total Market Value of Target Company Referring back to Example 1, assume Fulton has 2,500,000 shares of stock outstanding. Fulton's stock is selling for $ 60. 00 per share and the fair market value of Fulton's debt is $ 40 million. Market Value of Stock (2,500,000 x $ 60. 00) $ 150 million Market Value of Debt 40 million Total Market Value of Fulton$ 190 million A word of caution about relying on market values within the stock market; stocks rarely trade in large blocks similar to merger and acquisition transactions. Consequently, if the publicly traded target has low trading volumes, then prevailing market prices are not a reliable indicator of value. Income Streams One of the dilemmas within the merger and acquisition process is selection of income streams for discounting. Income streams include Earnings, Earnings Before Interest & Taxes (EBIT), Earnings Before Interest Taxes Depreciation & Amortization (EBITDA), Operating Cash Flow, Free Cash Flow, Economic Value Added (EVA), etc. In financial management, we recognize that value occurs when there is a positive gap between return on invested capital less cost of capital. Additionally, we recognize that earnings can be judgmental, subject to accounting rules and distortions. Valuations need to be rooted in â€Å"hard numbers. † Therefore, valuations tend to focus on cash flows, such as operating cash flows and free cash flows over a projected forecast period. Free Cash Flow One of the more reliable cash flows for valuations is Free Cash Flow (FCF). FCF accounts for future investments that must be made to sustain cash flow. Compare this to EBITDA, which ignores any and all future required investments. Consequently, FCF is considerably more reliable than EBITDA and other earnings-based income streams. The basic formula for calculating Free Cash Flow (FCF) is: FCF = EBIT (1 – t ) + Depreciation – Capital Expenditures + or – Net Working Capital ( 1 – t ) is the after tax percent, used to convert EBIT to after taxes. Depreciation is added back since this is a non-cash flow item within EBIT Capital Expenditures represent investments that must be made to replenish assets and generate future revenues and cash flows. Net Working Capital requirements may be involved when we make capital investments. At the end of a capital project, the change to working capital may get reversed. Example 3 – Calculation of Free Cash Flow EBIT$ 400 Less Cash Taxes (130) Operating Profits after taxes 270 Add Back Depreciation 75 Gross Cash Flow 345 Change in Working Capital 42 Capital Expenditures (270) Operating Free Cash Flow 117 Cash from Non Operating Assets * 10 Free Cash Flow$ 127 * Investments in Marketable Securities In addition to paying out cash for capital investments, we may find that we have some fixed obligations. A different approach to calculating Free Cash Flow is: FCF = After Tax Operating Tax Cash Flow – Interest ( 1 – t ) – PD – RP – RD – E PD: Preferred Stock Dividends RP: Expected Redemption of Preferred Stock RD: Expected Redemption of Debt E: Expenditures required to sustain cash flows Example 4 – Calculation of Free Cash Flow The following projections have been made for the year 2005: ? Operating Cash Flow after taxes are estimated as $ 190,000 ? Interest payments on debt are expected to be $ 10,000 ? Redemption payments on debt are expected to be $ 40,000 ? New investments are expected to be $ 20,000 The marginal tax rate is expected to be 30% After Tax Operating Cash Flow$ 190,000 Less After Tax Depreciation ($10,000 x (1 – . 30)) ( 7,000) Debt Redemption Payment (40,000) New Investments (20,000) Free Cash Flow$ 123,000 Discount Rate Now that we have some idea of our income stream for valuing the Target Company, we need to de termine the discount rate for calculating present values. The discount rate used should match the risk associated with the free cash flows. If the expected free cash flows are highly uncertain, this increases risk and increases the discount rate. The riskier the investment, the higher the discount rate and vice versa. Another way of looking at this is to ask yourself – What rate of return do investors require for a similar type of investment? Since valuation of the target's equity is often the objective within the valuation process, it is useful to focus our attention on the â€Å"targeted† capital structure of the Target Company. A review of comparable firms in the marketplace can help ascertain targeted capital structures. Based on this capital structure, we can calculate an overall weighted average cost of capital (WACC). The WACC will serve as our base for discounting the free cash flows of the Target Company. Basic Applications Valuing a target company is more or less an extension of what we know from capital budgeting. If the Net Present Value of the investment is positive, we add value through a merger and acquisition. Example 5 – Calculate Net Present Value Shannon Corporation is considering acquiring Dalton Company for $ 100,000 in cash. Dalton's cost of capital is 16%. Based on market analysis, a targeted cost of capital for Dalton is 12%. Shannon has estimated that Dalton can generate $ 9,000 of free cash flows over the next 12 years. Using Net Present Value, should Shannon acquire Dalton? Initial Cash Outlay$ (100,000) FCF of $ 9,000 x 6. 1944 * 55,750 Net Present Value $ ( 44,250) * present value factor of annuity at 12%, 12 years. Based on NPV, Shannon should not acquire Dalton since there is a negative NPV for this investment. We also need to remember that some acquisitions are related to physical assets and some assets may be sold after the merger. Example 6 – Calculate Net Present Value Bishop Company has decided to sell its business for a sales price of $ 50,000. Bishop's Balance Sheet discloses the following: Cash$ 3,000 Accounts Receivable 7,000 Inventory 12,000 Equipment – Dye 115,000 Equipment – Cutting 35,000 Equipment – Packing 30,000 Total Assets$ 202,000 Liabilities 80,000 Equity 122,000 Total Liab & Equity$ 202,000 Allman Company is interested in acquiring two assets – Dye and Cutting Equipment. Allman intends to sell all remaining assets for $ 35,000. Allman estimates that total future free cash flows from the dye and cutting equipment will be $ 26,000 per year over the next 8 years. The cost of capital is 10% for the associated free cash flows. Ignoring taxes, should Allman acquire Bishop for $ 50,000? Amount Paid to Bishop$ (50,000) Amount Due Creditors (80,000) Less Cash on Hand 3,000 Less Cash from Sale of Assets 35,000 Total Initial Cash Outlay$ (92,000) Present Value of FCF's for 8 years at 10% – $ 26,000 x 5. 3349 138,707 Net Present Value (NPV)$ 46,707 Based on NPV, Allman should acquire Bishop for $ 50,000 since there is a positive NPV of $ 46,707. A solid estimation of incremental changes to cash flow is critical to the valuation process. Because of the variability of what can happen in the future, it is useful to run cash flow estimates through sensitivity analysis, using different variables to assess â€Å"what if† type analysis. Probability distributions are used to assign values to various variables. Simulation analysis can be used to evaluate estimates that are more complicated. Valuation Standards Before we get into the valuation calculation, we should recognize valuation standards. Most of us are reasonably aware that Generally Accepted Accounting Principles (GAAP) are used as standards to guide the preparation of financial statements. When we calculate the value (appraisal) of a company, there is a set of standards known as â€Å"Uniform Standards of Professional Appraisal Practice† or USAAP. USAAP's are issued by the Appraisals Standards Board. Here are some examples: To avoid misuse or misunderstanding when Discounted Cash Flow (DCF) analysis is used in an appraisal assignment to estimate market value, it is the responsibility of the appraiser to ensure that the controlling input is consistent with market evidence and prevailing attitudes. Market value DCF analysis should be supported by market derived data, and the assumptions should be both market and property specific. Market value DCF analysis is intended to reflect the expectations and perceptions of market participants along with available factual data. In developing a real property appraisal, an appraiser must: (a) be aware of, understand, and correctly employ those recognized methods and techniques that are necessary to produce a creditable appraisal; (b) not commit a substantial error of omission or co-omission that significantly affects an appraisal; (c) not render appraisal services in a careless or negligent manner, such as a series of errors that considered individually may not significantly affect the result of an appraisal, but which when considered in aggregate would be misleading. Another area that can create some confusion is the definition of market value. This is particularly important where the Target Company is private (no market exists). People involved in the valuation process sometimes refer to IRS Revenue Ruling 59-60 which defines market value as: The price at which the property could change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. A final point about valuation standards concerns professional certification. Two programs directly related to valuations are Certified Valuation Analyst (CVA) and Accredited in Business Valuations (ABV). The CVA is administered by the National Association of CVA's (www. nacva. com) and the ABV is administered by the American Institute of Certified Public Accountants (AICPA – www. aicpa. org). Enlisting people who carry these professional designations is highly recommended. Chapter 5 The Valuation Process We have set the stage for valuing the Target Company. The overall process is centered around free cash flows and the Discounted Cash Flow (DCF) Model. We will now focus on the finer points in calculating the valuation. In the book Valuation: Measuring and Managing the Value of Companies, the authors Tom Copland, Tim Koller, and Jack Murrin outline five steps for valuing a company: 1. Historical Analysis: A detail analysis of past performance, including a determination of what drives performance. Several financial calculations need to be made, such as free cash flows, return on capital, etc. Ratio analysis and benchmarking are also used to identify trends that will carry forward into the future. 2. Performance Forecast: It will be necessary to estimate the future financial performance of the target company. This requires a clear understanding of what drives performance and what synergies are expected from the merger. 3. Estimate Cost of Capital: We need to determine a weighed average cost of capital for discounting the free cash flows. 4. Estimate Terminal Value: We will add a terminal value to our forecast period to account for the time beyond the forecast period. 5. Test & Interpret Results: Finally, once the valuation is calculated, the results should be tested against independent sources, revised, finalized, and presented to senior management. Financial Analysis We start the valuation process with a complete analysis of historical erformance. The valuation process must be rooted in factual evidence. This historical evidence includes at least the last five years (preferably the last ten years) of financial statements for the Target Company. By analyzing past performance, we can develop a synopsis or conclusion about the Target Company's future expected performance. It is also importa nt to gain an understanding of how the Target Company generates and invests its cash flows. One obvious place to start is to assess how the merger will affect earnings. P / E Ratios (price to earnings per share) can be used as a rough indicator for assessing the impact on earnings. The higher the P / E Ratio of the acquiring firm compared to the target company, the greater the increase in Earnings per Share (EPS) to the acquiring firm. Dilution of EPS occurs when the P / E Ratio Paid for the target exceeds the P / E Ratio of the acquiring company. The size of the target's earnings is also important; the larger the target's earnings are relative to the acquirer, the greater the increase to EPS for the combined company. The following examples will illustrate these points. Example 7 – Calculate Combined EPS Greer Company has plans to acquire Holt Company by exchanging stock. Greer will issue 1. shares of its stock for each share of Holt. Financial information for the two companies is as follows: Greer Holt Net Income$ 400,000 $ 100,000 Shares Outstanding 200,000 25,000 Earnings per Share$ 2. 00$ 4. 00 Market Price of Stock$ 40. 00$ 48. 00 Greer expects the P / E Ratio for the combined company to be 15. Combined EPS = ($ 400,000 + $ 100,000) / (200,000 share s + (25,000 x 1. 5)) = $ 500,000 / 237,500 = $ 2. 11 Expected P / E Ratio x 15 Expected Price of Stock$ 31. 65 Before we move to our next example, we should explain exchange ratios. The exchange ratio is the number of shares offered by the acquiring company in relation to each share of the Target Company. We can calculate the exchange ratio as: Price Offered by Acquiring Firm / Market Price of Acquiring Firm Example 8 – Determine Dilution of EPS Romer Company will acquire all of the outstanding stock of Dayton Company through an exchange of stock. Romer is offering $ 65. 00 per share for Dayton. Financial information for the two companies is as follows: Romer Dayton Net Income$ 50,000 $ 10,000 Shares Outstanding 5,000 2,000 Earnings per Share$ 10. 00$ 5. 00 Market Price of Stock$ 150. 00 P / E Ratio 15 1) Calculate shares to be issued by Romer: $ 65 / $ 150 x 2,000 shares = 867 shares to be issued. 2) Calculate Combined EPS: ($ 50,000 + $ 10,000) / (5,000 + 867) = $ 10. 23 3) Calculate P / E Ratio Paid: Price Offered / EPS of Target or $ 65. 00 / $ 5. 00 = 13 4) Compare P / E Ratio Paid to current P / E Ratio: Since 13 is less than the current ratio of 15, there should be no dilution of EPS for the combined company. 5) Calculate maximum price before dilution of EPS: 15 = price / $ 5. 0 or $ 75. 00 per share. $ 75. 00 is the maximum price that Romer should pay before EPS are diluted. It is important to note that we do not want to get overly pre-occupied with earnings when it comes to financial analysis. Most of our attention should be directed at drivers of value, such as return on capital. For example, free cash flow and economic value added are much more important drivers of value than EPS and P / E Ra tios. Therefore, our financial analysis should determine how does the target company create value – does it come from equity, what capital structure is used, etc.? In order to answer these questions, we need to: 1. Calculate value drivers, such as free cash flow. 2. Analyze the results, looking for trends and comparing the results to other companies. 3. Looking back historically in order to ascertain a â€Å"normal† level of performance. 4. Analyzing the details to uncover how the Target Company creates value and noting what changes have taken place. Value Drivers Three core financial drivers of value are: 1. Return on Invested Capital (NOPAT / Invested Capital) 2. Free Cash Flows 3. Economic Value Added (NOPAT – Cost of Capital) NOPAT: Net Operating Profits After Taxes A value driver can represent any variable that affects the value of the company, ranging from great customer service to innovative products. Once we have identified these value drivers, we gain a solid understanding about how the company functions. The key is to have these value drivers fit between the Target Company and the Acquiring Company. When we have a good fit or alignment, management will have the ability to influence these drivers and generate higher values. In the book Valuation: Measuring and Managing the Value of Companies, the authors break down value drivers into three categories: Type of Value DriverManagement's Ability to Influence Level 1 – GenericLow Level 2 – Business UnitsModerate Level 3 – OperatingHigh For example, sales revenue is a generic value driver (level 1), customer mix would be a business unit value driver (level 2), and customers retained would be an operating value driver (level 3). Since value drivers are inter-related and since management will have more influence over level 3 drivers, the key is to ascertain if the merger will give management more or less influence over the operating value driver. If yes, then a merger and acquisition could lead to revenue or expense synergies. Be advised that you should not work in reverse order; i. e. from level 1 down to level 3. For example, an increase in sales pricing will add more value to level 1, but in the long-run you will hurt customers retained (level 3) and thus, you may end-up destroying value. Once we have identified value drivers, we can develop a strategic view of the Target Company. This strategic view along with drivers of value must be considered in making a performance forecast of the Target Company. We want to know how will the Target Company perform in the future. In order to answer this question, we must have a clear understanding of the advantages that the Target Company has in relation to the competition. These competitive advantages can include things like customer mix, brand names, market share, business processes, barriers to competition, etc. An understanding of competitive advantages will give us insights into future expected growth for the Target Company. Forecasting Performance Now that we have some insights into future growth, we can develop a set of performance scenarios. Since no-one can accurately predict the future, we should develop at least three performance scenarios: . Conservative Scenario: Future growth will be slow and decline over time. 2. General Industry Scenario: Continued moderate growth similar to the overall industry. 3. Improved Growth Scenario: Management has the ability to influence level 1 value drivers and we can expect above average growth. Keep in mind that performance scenarios have a lot of assumptions and many of these assumptions are based on things like future competition, new technologies, changes in the economy, changes in consumer behavior, etc. The end-result is to arrive at a â€Å"most likely† value between the different scenarios. Example 9 – Overall Value per Three Scenarios You have calculated three Net Present Value's (NPV) over a 12 year forecast period. Based on your analysis of value drivers, strategies, competition, and other variables, you have assigned the following values to each scenario: ScenarioProbability xNet Present Value =Expected Value Conservative 20% $ 180,000$ 36,000 Normal 65% 460,000 299,000 M & A Growth 15% 590,000 88,500 Overall Value of Target Company$ 423,500 The Valuation Model should include a complete set of forecasted financial statements. Usually a set of forecasted financial statements will start with the Sales Forecast since sales is a driver behind many account balances. A good sales forecast will reflect future expected changes in sales prices, volumes, and other variables. NOTE: For more information about preparing forecasted financial statements, refer to Short Course 2 – Financial Planning & Forecasting. Two important points when preparing your forecast are: Historical Perspective: Make sure the pieces of your forecast fit together and flow from historical performance. Historical values are very important for predicting the future. You can gain an historical perspective by simply plotting financial trends (see Example 10). Forecast Period: Your forecast period should cover a long enough period for the target company to reach a stable and consistent performance level. For example, a company has reached a stable point when it can earn a constant rate of return on capital for an indefinite period and the company has the ability to reinvest a constant proportion of earnings back into the business. Rarely is the forecast period less than seven years. When in doubt, use a longer forecast than a shorter forecast. The final step in forecasting the financials is to estimate the value drivers and verify the value drivers against historical facts. As we indicated, three core drivers are return on capital, free cash flow, and economic value added. Make sure you test your results; are key drivers consistent with what has happened in the past, what are the trends for future growth, what are the competitive trends, how will this impact performance, etc.? Example 10 – Plotting Historical Trends to help with preparing forecasted financial statements 1990 1991 1992 1993 1994 Operations: Growth in Revenues 14% 12% 11% 11% 10% Growth in Margins 7% 7% 6% 5% 5% Working Capital: Cash 2% 2% 2% 3% 3% Accts Rec 12% 13% 13% 13% 14% Accts Payable 4% 4% 5% 5% 5% Investments: Assets to Sales 30% 31% 28% 29% 28% Return on Capital 14% 12% 13% 13% 12% When we have completed the Valuation Model, we will have a set of forecasted financial statements supporting each of our scenarios: Forecasted Income Statement – 3 Scenarios ? Forecasted Balance Sheet – 3 Scenarios ? Forecasted Free Cash Flows – 3 Scenarios ? Forecasted Return on Capital – 3 Scenarios ? Forecasted Performance Ratios – 3 Scenarios Example 11 – Forecasted Income Statement for Scenario 2 – Moderate ($ million) 2001 2002 2003 2004 2005 2006 2007 Revenues $ 6. 50$ 6. 70 $ 6. 85 $6. 95 $7. 05 $7. 09 $7. 12 Less Operating 3. 20 3. 30 3. 41 3. 53 3. 65 3. 72 3. 78 Less Depreciation . 56 . 54 . 2 . 85 . 80 . 77 . 72 EBIT 2. 74 2. 86 2. 92 2. 57 2. 60 2. 60 2. 62 Less Interest . 405 . 380 . 365 . 450 . 440 . 410 . 390 Earnings Before Tax 2. 335 2. 480 2. 555 2. 12 2. 16 2. 19 2. 23 Less Taxes . 780 . 810 . 870 . 650 . 660 . 71 . 73 Net Income 1. 555 1. 670 1. 685 1. 470 1. 500 1. 48 1. 50 Terminal Values It is quite possible that free cash flows will be generated well beyond our forecast period. Therefore, many valuations will add a terminal value to the valuation forecast. The terminal value represents the total present value that we will receive after the forecast period. Example 12 – Adding Terminal Value to Valuation Forecast Net Present Value for forecast period (Example 9) $ 423,500 Terminal Value for beyond forecast period 183,600 Total NPV of Target Company$ 607,100 There are several approaches to calculating the terminal value: Dividend Growth: Simply take the free cash flow in the final year of the forecast, add a nominal growth rate to this flow and discount the free cash flow as a perpetuity. Terminal value is calculated as: Terminal Value = FCF ( t + 1 ) / wacc – g ( t + 1 ) refers to the first year beyond the forecast period wacc: weighted average cost of capital g: growth rate, usually a very nominal rate similar to the overall economy It should be noted that FCF used for calculating terminal values is a normalized free cash flow (FCF) representative of the forecast period. Example 13 – Calculate Terminal Value Using Dividend Growth You have prepared a forecast for ten years and the normalized free cash flow is $ 45,000. The growth rate expected after the forecast period is 3%. The wacc for the Target Company is 12%. ($ 45,000 x 1. 03) / (. 12 – . 03) = $ 46,350 / . 09 = $ 515,000 If we wanted to exclude the growth rate in Example 13, we would calculate terminal value as $ 46,350 / . 12 = $ 386,250. This gives us a much more conservative estimate. Adjusted Growth: Growth is included to the extent that we can generate returns higher than our cost of capital. As a company grows, you must reinvest back into the business and thus free cash flows will fall. Therefore, the Adjusted Growth approach is one of the more appropriate models for calculating terminal values. Terminal Value = EBIT ( 1 – tr) ( 1 – g / r ) / wacc – g tr: tax rateg: growth rater: rate of return on new investments Example 14 – Calculate Terminal Value Using Adjusted Growth Normalized EBIT is $ 60,000 and the expected normal tax rate is 30%. The overall long-term growth rate is 3% and the weighted average cost of capital is 12%. We expect to obtain a rate of return on new investments of 15%. $ 61,800 ( 1 – . 30 ) ( 1 – . 03 / . 15 ) / (. 12 – . 03) = $ 43,260 ( . 80 ) / . 09 = $ 384,533 If we use Free Cash Flows, we would have the following type of calculation: Earnings Before Interest Taxes (EBIT)$ 60,000 Remove taxes (1 – tr ) x . 70 Operating Income After Taxes 42,000 Depreciation (non cash item) 12,000 Less Capital Expenditures ( 9,000) Less Changes to Working Capital ( 1,000) Free Cash Flow 44,000 Growth Rate @ 3% x 1. 03 Free Cash Flow ( t + 1 ) 45,320 Adjust Growth > Return on Capital x . 80 Adjusted FCF ( t + 1 ) 36,256 Divided by wacc – g or . 12 – . 03 . 09 Terminal Value$ 402,844 EVA Approach: If your valuation is based on economic value added (EVA), then you should extend this concept to your terminal value calculation: Terminal Value = NOPAT ( t + 1 ) x ( 1 – g / rc ) / wacc – g NOPAT: Net Operating Profits After Taxesrc: return on invested capital Terminal values should be calculated using the same basic model you used within the forecast period. You should not use P / E multiples to calculate terminal values since the price paid for a target company is not derived from earnings, but from free cash flows or EVA. Finally, terminal values are appropriate when two conditions exist: 1. The Target Company has consistent profitability and turnover of capital for generating a constant return on capital. . The Target Company is able to reinvest a constant level of cash flow because of consistency in growth. If these two criteria do not exist, you may need to consider a more conservative approach to calculating terminal value or simply exclude the terminal value altogether. Example 15 – Summarize Valuation Calculation Based on Expected Values under Three Scenarios Present Value of FCF' s for 10 year forecast period$ 62,500 Terminal Value based on Perpetuity 87,200 Present Value of Non Operating Assets 8,600 Total Value of Target Company 158,300 Less Outstanding Debt at Fair Market Value: Short-Term Notes Payable ( 6,850) Long-Term Bonds (25 year Grade BB) ( 26,450) Long-Term Bonds (10 year Grade AAA) ( 31,900) Long-Term Bonds ( 5 year Grade BBB) ( 22,700) Present Value of Lease Obligations ( 17,880) Total Value Assigned to Equity 52,520 Outstanding Shares of Stock 7,000 Value per Share ($ 52,520 / 7,000)$ 7. 50 Example 16 – Calculate Value per Share You have completed the following forecast of free cash flows for an eight year period, capturing the normal business cycle of Arbor Company: Year FCF 2001$ 1,550 002 1,573 2003. 1,598 2004. 1,626 2005. 1,656 2006. 1,680 2007. 1,703 2008. 1,725 Arbor has non-operating assets of $ 150. These assets have an estimated present value of $ 500. Based on the present value of future payments, the present value of debt is $ 2,800. Terminal value is calculated using the dividend growth model. A nominal growth rate of 2% will be used. Arbor's targeted cost of capital is 14%. Arbor ha s 3,000 shares of stock outstanding. What is Arbor's Value per Share? Year FCF x P. V. @ 14%Present Value 2001$ 1,550. 8772$ 1,360 2002 1,573. 7695 1,210 003. 1,598. 6750 1,079 2004. 1,626. 5921 963 2005. 1,656. 5194 860 2006. 1,680. 4556 765 2007. 1,703. 3996 681 2008. 1,725. 3506 605 Total Present Value for Forecast Period $ 7,523 Terminal Value = ($ 1,725 x 1. 02) / (. 14 – . 02) = 14,663 Value of Non Operating Assets 500 Total Value of Arbor 22,686 Less Value of Debt( 2,800) Value of Equity 19,886 Shares Outstanding 3,000 Value per Share$ 6. 63 Special Problems Before we leave valuations, we should note some special problems that can influence the valuation calculation. Private Companies: When valuing a private company, there is no marketplace for the private company. This can make comparisons and other analysis very difficult. Additionally, complete historical information may not be available. Consequently, it is common practice to add to the discount rate when valuing a private company since there is much more uncertainty and risk. Foreign Companies: If the target company is a foreign company, you will need to consider several additional variables, including translation of foreign currencies, differences in regulations and taxes, lack of good information, and political risk. Your forecast should be consistent with the inflation rates in the foreign country. Also, look for hidden assets since foreign assets can have significant differences between book values and market values. Complete Control: If the target company agrees to relinquish complete and total control over to the acquiring firm, this can increase the value of the target. The value assigned to control is expressed as: CV = C + M CV: Controlling Value C: Maximum price the buyer is willing to pay for control of the target company M: Minority Value or the present value of cash flows to minority shareholders. If the merger is not expected to result in enhanced values (synergies), then the acquiring firm cannot justify paying a price above the minority value. Minority value is sometimes referred to as stand-alone value. Chapter 6 Post Merger Integration We have now reached the fifth and final phase within the merger and acquisition process, integration of the two companies. Up to this point, the process has focused on putting a deal together. Now comes the hard part, making the merger and acquisition work. If we did a good job with due diligence, we should have the foundation for post merger integration. However, despite due diligence, we will need to address a multitude of issues, such as: ? Finalizing a common strategy for the new organization. We need to be careful not to impose one strategy onto the other company since it may not fit. ? Consolidating duplicative services, such as human resources, finance, legal, etc. ? Consolidating compensation plans, corporate policies, and other operating procedures. ? Deciding on what level of integration should take place. ? Deciding on who will govern the new organization, what authority people will have, etc. It is ironic that in many cases, senior management is actively involved in putting the merger together, but once everything has been finalized, the job of integrating the two companies is dumped on middle level management. Therefore, one of the first things that should happen within post merger integration is for senior management to: ? Develop an overall plan for integrating the two companies, including a time frame since synergy values need to be recovered quickly. If synergy values are dependent upon the target's customers, markets, assets, etc. , then a fast integration process should be planned. If expected synergies come from strategies and intellectual capital of the target, a more cautious approach to integration may be appropriate. ? Directing and guiding the integration process, establishing governance, and assigning project managers to integration projects. ? Leading change through great communication, bringing people together, resolving issues before they magnify, establishing expectations, etc. Once the two companies announce their merger, an entire set of dynamics goes into motion. Uncertainty and change suddenly impact both companies. Several issues need to be managed to prevent the escape of synergy values. Managing the Process The integration of two companies is managed within a single, centralized structure in order to reduce duplication and minimize confusion. A centralized structure is also needed to pull everything together since the integration process tends to create a lot of divergent forces. A Senior Project Team will be responsible for managing post merger integration (PMI). This includes things like coordination of projects, assigning task, providing support, etc. As previously indicated, it is important for both senior management and middle management to share in the integration process: Senior ManagementSenior Project Team Cultural & Social IntegrationFunctional Integration Strategic Fit between the CompaniesSelection of Best Practices CommunicationSet up Task Forces Identify Critical Issues Problem Solving The Senior Project Team will consist of representatives from both companies, covering several functional areas (human resources, marketing, operations, finance, etc. ). Team members should have a very strong understanding of the business since they are trying to capture synergy values throughout PMI. Special task forces will be established by the Senior Project Team to integrate various functions (finance, information technology, human resources, etc. ). Task forces are also used to address specific issues, such as customer retention, non-disruption of operations, retention of key personnel, etc. Task forces can create sub-teams to split an issue by geographic area, product line, etc. All of these teams must have a clear understanding of the reasons behind the merger since it is everybody's job to capture synergies. There is no way senior management can fully identify all of the expected synergies from a merger and acquisition. It is not unusual for some task forces to begin meeting before the merger is announced. If integration begins before announcement of the merger, team members will have to act in a confidential manner, exercising care on who they share information with. The best approach is to act as though a merger will not take place. Example 17 – Timeline leading up to Post Merger Integration (PMI) June 21, 1998: Officers from both companies plan post merger integration. July 17, 1998: Orientation meeting for key management personnel from both companies. July 30, 1998: Project Managers are assigned to Task Forces. August 16, 1998: Launch Task Forces. August 27, 1998: Critical Issues are identified by Task Forces. Set goals and time frames. October 26, 1998: Task Force develops detail plan for PMI. October 30, 1998: Reach consensus on final plan. November 6, 1998: Officers from both companies approve detail integration plans. November 11, 1998: Operating (action steps) are outlined for implementing the PMI Plan. January 17, 1999: Begin Post Merger Integration Example 18 – Outline for Post Merger Integration (PMI) by Senior Task Force or Senior Project Team 1. Assess current situation – where do we stand? 2. Collect information and identify critical issues for integration. 3. Develop plans to resolve critical issues. 4. Obtain consensus and agree on PMI Plan. 5. Train personnel, prepare for integration, work out logistics, map out the process, etc. 6. Implement PMI Plan – conduct meetings, setup teams, provide direction, make key decisions, etc. 7. Revise the PMI Plan – measure and monitor progress, make adjustments, issue progress reports to executive management, etc. . Delegate – Move the integration process down into lower levels of the organization, allow staff personnel to control certain integration decisions, etc. 9. Complete – Move aggressively into full integration, coordinate and communicate progress until integration is complete. Decision Making Post merger integration (PMI) will require very quick decision-making. This is due in part to the fact that fast integration's work better than slow integration's. The new organization has to be established quickly so people can get back to servicing customers, designing products, etc. The more time people spend thinking about the merger, the less likely they will perform at high levels. Many decisions within PMI will be difficult, such as establishing the new organizational structure, re-assigning personnel, selling-off assets, etc. However, it is necessary to get these decisions behind you as quickly as possible since the synergy meter is running. In addition, failure to act will leave the impression of indecisiveness and inability to manage PMI. In order to make decisions, it is necessary to define roles; people need to know who is in charge. People who are responsible for integration should be highly skilled in coordinating projects, leading people, and thinking on their feet while staying focused on the strategies behind the merger and acquisition. People Issues Productivity and performance will usually drop once a merger is announced. The reason is simple; people are concerned about what will happen. In the book The Complete Guide to Mergers and Acquisitions, the authors note that â€Å"at least 360,000 hours of lost productivity can be lost during an acquisition of just a thousand person operation. † Quick and open communication is essential for managing people issues. Constant communication is required for addressing the rumors and questions that arise within PMI. People must know what is going on if they are expected to remain focused on their jobs. Communication should be deep and broad, reaching out to as many people as possible. Face to face communication works best since there is an opportunity for feedback. Even cursory communication is better than no communication at all. â€Å"Get all the facts out. Give people the rationale for change, laying it out in the clearest, most dramatic terms. When everybody gets the same facts, they'll generally come to the same conclusion. Only after everyone agrees on the reality and resistance is lowered can you get buy-in to the needed changes. † – Jack Welch, CEO, General Electric It is also a good idea to train people in change management. Most people will lack the knowledge and skills required for PMI. Immediately after the merger is announced, key personnel should receive training in how to manage change and make quick decisions. People must feel competent about their abilities to pull off the integration. Managing Resistance The failure to manage resistance is a major reason for failed mergers. Resistance is natural and not necessarily indicative of something wrong. However, it cannot be ignored. Four important tools for managing resistance are: Communicate: As we just indicated, you have to make sure people know what is going on if you expect to minimize resistance. Rumors should not be the main form of communication. The following quote from a middle level manager at a meeting with executive management says it all: â€Å"How can I tell my people what needs to be done to integrate the two companies, when I have heard nothing about what is going on. † Training: As we just noted, people must possess the necessary skills to manage PMI. Investing in people through training can help achieve â€Å"buy-in† and thus, lower resistance. Involvement: Resistance can be reduced by including people in the decision making process. Active engagement can also help identify problem areas. Alignment: One way to buffer against resistance is to align yourself with those people who have accepted the merger. Ultimately, it will be the non-resistors who bring about the integration. Do not waste excessive resources on detractors; they will never come around. Closing the Cultural Gap One of the biggest challenges within PMI is to close the cultural divide between the two companies. Cultural differences should have been identified within Phase II Due Diligence. One way of closing the cultural gap is to invent a third, new corporate culture as opposed to forcing one culture onto another company. A re-design approach can include: ? Reducing the number of rules and policies that control people. In today's empowered world, it has become important to unleash the human capacities within the organization. ? Create a set of corporate policies centered around the strategic goals and objectives of the new organization. ? Implement new innovative approaches to human resource management, such as the 360-degree evaluation. Eliminate various forms of communication that continue with the â€Å"old way† of doing things. ? Re-enforce the new ways with incentive programs, rewards, recognition, special events, etc. Specific Areas of Integration As we move forward with the integration process, a new organizational structure will unfold. There will be new reporting structures based on the needs of the new company. Structures are built around workflows. For best results, collaboration should take place between the two companies; mixing people, combining offices, sharing facilities, etc. This collaboration helps pull the new organization together. As noted earlier, a centralized organization will experience less difficulty with PMI than a decentralized organization. Collaboration is also enhanced when there are: ? Shared Goals – The more common the goals and objectives of the two companies, the easier it is to integrate the two companies. ? Shared Cultures – The more common the cultures of the two companies, the easier the integration. ? Shared Services – The closer both company's can come to developing a set of shared services (human resource management, finance, etc. ), the more likely synergies can be realized through elimination of duplicative services. Many functional areas will have to be integrated. Each will have its own integration plan, led by a Task Force. Two areas of concern are compensation and technologies. Compensation Plans: It is important to make compensation plans between the two companies as uniform as possible. Failure to close the compensation gap can lead to division within the workforce. Compensation plans should be designed based on a balance between past practices and future needs of the company. Since lost productivity is a major issue, compensation based on performance should be a major focus. Technologies: When deciding which information system to keep between the two companies, make sure you ask yourself the following questions: ? Do we really need this information? ? Is the information timely? ? Is the information accurate? ? Is the information accessible? One of the misconceptions that may emerge is to retain the most current, leading-edge technology. This may be a mistake since older legacy systems may be well tested and reliable for future needs of the organization. If both systems between the two companies are outdated, a whole new system may be required. Retaining Key Personnel Mergers often result in the loss of key (essential) personnel. Since synergies are highly dependent upon quality personnel, it will be important to take steps for retaining the high performers of the Target Company. The first step is to identify key personnel. Ask yourself, if these people were to leave, what impact would it have on the company? For example, suppose a Marketing Manager decided to resign, resulting in the loss of critical customers. Other people may be critical to strategic thinking and innovation. Once you have a list of key personnel, the next step is to determine what motivates essential personnel. Some people are motivated by their work while others are interested in climbing the corporate ladder. Retention programs are designed around these motivating factors. The third step is to implement your retention programs. Personally communicate with key personnel; let them know what their position will be in the new company. If compensation is a motivating factor, offer key personnel a â€Å"stay† bonus. If people are motivated by career advancement, invite them to important management meetings and have them participate in decision making. Don't forget to reinforce retention by recognizing the contributions made by key personnel. It is also a good idea to recruit key personnel just as if you would recruit any other key management position. This solidifies the retention process. Finally, you will need to evaluate and modify retention programs. For example, if key people continue to resign, then conduct an exit interview and find out why they are leaving. Use this information to change your retention programs; otherwise, more people will be defecting. Retaining Customers Mergers will obviously create some disruptions. One area where disruptions must be minimized is customer service. Once a merger is announced, communicate to your customers, informing them that products and services will not deteriorate due to the merger. Additionally, employees directly involved with customer service cannot be distracted by the merger. If customers are expected to defect, consider offering special deals and programs to reinforce customer retention. As a minimum, consider setting up a customer hotline to answer questions. Finally, do not forget to communicate with vendors, suppliers, and others involved in the value chain. They too are your customers. Measuring PMI The last area we want to touch on is measurement of post merger integration (PMI). Results of the integration process need to be captured and measured so that you can identify problem areas and make corrections. For example, are we able to retain key personnel? How effective is our communication? We need answers to these types of questions if we expect success in PMI. One way of ensuring feedback is to retain the current measurement systems that are in place; especially those involved with critical areas like customer service and financial reporting. Day to day operations will need to be monitored for sudden changes in customer complaints, return merchandise, cancelled orders, production stoppages, etc. New measurements for PMI will have to be simple and easy to deploy since there is little time for formal design. For example, in one case the PMI relied on a web site log to capture critical data, identify synergy projects, and report PMI progress. On-line survey forms were used to solicit input and identify problem areas. A clean and simple approach works best. A measurement system starts with a list of critical success factors (CSF) related to PMI. These CSF's will reflect the strategic outcomes associated with the merger. For example, combining two overlapping business units might represent a CSF for a merger. From these CSF's, we can develop key performance indicators. Collectively, a complete system known as the Balanced Scorecard can be used to monitor PMI. Process leaders are assigned to each perspective within the scorecard, collecting the necessary data for measurement. Example 19 – Balanced Scorecard for Post Merger Integration (PMI) PerspectiveKey Performance Indicator Customers- Retention of Existing Customers – Efficiency in Delivering Services Financial- Synergy Components Captured to Date â€Å"- Timely Financial Reporting â€Å"- Timely Cash Flow Management Operational- Completion of Systems Analysis â€Å"- Reassignments to all Operating Units â€Å"- Resources Allocated for Workloads Human Resource- Percentage of Personnel Defections â€Å"- Change Management Training â€Å"- Communication Fe edbacks Organizational- Cultural Gaps between company's â€Å"- Number of Critical Processes Defined â€Å"- Lower level involvement in integration Chapter 7 Anti-Takeover Defenses Throughout this entire short course (parts 1 & 2), we have focused our attention on making the merger and acquisition process work. In this final chapter, we will do just the opposite; we will look at ways of discouraging the merger and acquisition process. If a company is concerned about being acquired by another company, several anti-takeover defenses can be implemented. As a minimum, most companies concerned about takeovers will closely monitor the trading of their stock for large volume changes. Poison Pills One of the most popular anti-takeover defenses is the poison pill. Poison pills represent rights or options issued to shareholders and bondholders. These rights trade in conjunction with other securities and they usually have an expiration date. When a merger occurs, the rights are detached from the security and exercised, giving the holder an opportunity to buy more securities at a deep discount. For example, stock rights are issued to shareholders, giving them an opportunity to buy stock in the acquiring company at an extremely low price. The rights cannot be exercised unless a tender offer of 20% or more is made by another company. This type of issue is designed to reduce the value of the Target Company. Flip-over rights provide for purchase of the Acquiring Company while flip-in rights give the shareholder the right to acquire more stock in the Target Company. Put options are used with bondholders, allowing them to sell-off bonds in the event that an unfriendly takeover occurs. By selling off the bonds, large principal payments come due and this lowers the value of the Target Company. Golden Parachutes Another popular anti-takeover defense is the Golden Parachute. Golden parachutes are large compensation payments to executive management, payable if they depart unexpectedly. Lump sum payments are made upon termination of employment. The amount of compensation is usually based on annual compensation and years of service. Golden parachutes are narrowly applied to only the most elite executives and thus, they are sometimes viewed negatively by shareholders and others. In relation to other types of takeover defenses, golden parachutes are not very effective. Changes to the Corporate Charter If management can obtain shareholder approval, several changes can be made to the Corporate Charter for discouraging mergers. These changes include: Staggered Terms for Board Members: Only a few board members are elected each year. When an acquiring firm gains control of the Target Company, important decisions are more difficult since the acquirer lacks full board membership. A staggered board usually provides that one-third are elected each year for a 3 year term. Since acquiring firms often gain control directly from shareholders, staggered boards are not a major anti-takeover defense. Super-majority Requirement: Typically, simple majorities of shareholders are required for various actions. However, the corporate charter can be amended, requiring that a super-majority (such as 80%) is required for approval of a merger. Usually an â€Å"escape clause† is added to the charter, not requiring a super-majority for mergers that have been approved by the Board of Directors. In cases where a partial tender offer has been made, the super-majority requirement can discourage the merger. Fair Pricing Provision: In the event that a partial tender offer is made, the charter can require that minority shareholders receive a fair price for their stock. Since many states have adopted fair pricing laws, inclusion of a fair pricing provision in the corporate charter may be a moot point. However, in the case of a two-tiered offer where there is no fair pricing law, the acquiring firm will be forced to pay a â€Å"blended† price for the stock. Dual Capitalization: Instead of having one class of equity stock, the company has a dual equity structure. One class of stock, held by management, will have much stronger voting rights than the other publicly traded stock. Since management holds superior voting power, management has increased control over the company. A word of caution: The SEC no longer allows dual capitalization's; although existing plans can remain in effect. Recapitalizations One way for a company to avoid a merger is to make a major change in its capital structure. For example, the company can issue large volumes of debt and initiate a self-offer or buy back of its own stock. If the company seeks to buy-back all of its stock, it can go private through a leveraged buy out (LBO). However, leveraged recapitalizations require stable earnings and cash flows for servicing the high debt loads. And the company should not have plans for major capital investments in the near future. Therefore, leveraged recaps should stand on their own merits and offer additional values to shareholders. Maintaining high debt levels can make it more difficult for the acquiring company since a low debt level allows the acquiring company to borrow easily against the assets of the Target Company. Instead of issuing more debt, the Target Company can issue more stock. In many cases, the Target Company will have a friendly investor known as a â€Å"white squire† which seeks a quality investment and does not seek control of the Target Company. Once the additional shares have been issued to the white squire, it now takes more shares to obtain control over the Target Company. Finally, the Target Company can do things to boost valuations, such as stock buy-backs and spinning off parts of the company. In some cases, the target company may want to consider liquidation, selling-off assets and paying out a liquidating dividend to shareholders. It is important to emphasize that all restructurings should be directed at increasing shareholder value and not at trying to stop a merger. Other Anti Takeover Defenses Finally, if an unfriendly takeover does occur, the company does have some defenses to discourage the proposed merger: 1. Stand Still Agreement: The acquiring company and the target company can reach agreement whereby the acquiring company ceases to acquire stock in the target for a specified period of time. This stand still period gives the Target Company time to explore its options. However, most stand still agreements will require compensation to the acquiring firm since the acquirer is running the risk of losing synergy values. 2. Green Mail: If the acquirer is an investor or group of investors, it might be possible to buy back their stock at a special offering price. The two parties hold private negotiations and settle for a price. However, this type of targeted repurchase of stock runs contrary to fair and equal treatment for all shareholders. Therefore, green mail is not a widely accepted anti-takeover defense. 3. White Knight: If the target company wants to avoid a hostile merger, one option is to seek out another company for a more suitable merger. Usually, the Target Company will enlist the services of an investment banker to locate a â€Å"white knight. † The White Knight Company comes in and rescues the Target Company from the hostile takeover attempt. In order to stop the hostile merger, the White Knight will pay a price more favorable than the price offered by the hostile bidder. 4. Litigation: One of the more common approaches to stopping a merger is to legally challenge the merger. The Target Company will seek an injunction to stop the takeover from proceeding. This gives the target company time to mount a defense. For example, the Target Company will routinely challenge the acquiring company as failing to give proper notice of the merger and failing to disclose all relevant information to shareholders. 5. Pac Man Defense: As a last resort, the target company can make a tender offer to acquire the stock of the hostile bidder. This is a very extreme type of anti-takeover defense and usually signals desperation. One very important issue about anti-takeover defenses is valuations. Many anti-takeover defenses (such as poison pills, golden parachutes, etc. ) have a tendency to protect management as opposed to the shareholder. Consequently, companies with anti-takeover defenses usually have less upside potential with valuations as opposed to companies that lack anti-takeover defenses. Additionally, most studies show that anti-takeover defenses are not successful in preventing mergers. They simply add to the premiums that acquiring companies must pay for target companies. Proxy Fights One last point to make about changes in ownership concerns the fact that shareholders can sometimes initiate a takeover attempt. Since shareholders have voting rights, they can attempt to make changes within a company. Proxy fights usually attempt to remove management by filling new positions within the Board of Directors. The insurgent shareholder(s) will cast votes to replace the current board. Proxy fights begin when shareholders request a change in the board. The next step is to solicit all shareholders and allow them to vote by â€Å"proxy. † Shareholders will send in a card to a designated collector (usually a broker) where votes are tallied. Some important factors that will influence the success of a proxy fight are: 1. The degree of support for management from shareholders not directly involved in the proxy fight. If other shareholders are satisfied with management, then a proxy fight will be difficult. 2. The historical performance of the company. If the company is starting to fail, then shareholders will be much more receptive to a change in management. 3. A specific plan to turn the company around. If the shareholders who are leading the proxy fight have a plan for improving performance and increasing shareholder value, then other shareholders will probably support the proxy fight. Proxy fights are less costly than tender offers in changing control within a company. However, most proxy fights fail to remove management. The upside of a proxy fight is that it usually brings about a boost in shareholder value since management is forced to act on poor performance. It is worth noting that proxy fights are sometimes led by former managers with the Target Company who recognize what needs to be done to turn the company around. In any event, studies clearly show that changes in management are much more likely to occur externally (tender offers) as opposed to internally (proxy fights). Course Summary A merger is like a marriage; the two partners must be compatible. Each side should add value so that together the two are much stronger. Unfortunately, many mergers fail to work. Overpaying for the acquisition is a common mistake because of an incomplete valuation model. Therefore, it is essential to develop a complete valuation model, including analysis under different scenarios with recognition of value drivers. A good starting point for determining value is to extend the Discounted Cash Flow Model since it corresponds well to market values. Core value drivers (such as free cash flows) should be emphasized over traditional type earnings (such as EBITDA). Some key points to remember in the valuation process include: 1. Most valuations will focus on valuing the equity of the Target Company. 2. The discount rate used should match-up with the associated risk of cash flows. . The forecast should focus on long-term cash flows over a period of time that captures a normal operating cycle for the company. 4. The forecast should be realistic by fitting with historical facts. 5. A comprehensive model is required based on an understanding of what drives value for the company. 6. The final forecast should be tested against independent sources. If pre merger pha ses are complete, we can move forward to integrate the two companies. This will require the conversion of information systems, combining of workforces, and other projects. Many failures can be traced to people problems, such as cultural differences between the companies, which can lead to resistance. Additionally, if you fail to retain key personnel, the integration process will be much more difficult. The best defense against personnel defections is to have a great place to work. If the company has a bad reputation as an employer, then defections will surely occur. Some of the risk factors associated with post merger integration are: 1. What level of integration do we implement? 2. What can we do to retain key personnel? 3. How serious are the cultural differences between the companies? . What kinds of conflicts and competition can we expect during integration? 5. To what extent do the people of both company's understand the merger? 6. Who will govern and control the new company? Success with post merger integration is improved when: 1. The two companies have a history of effective planning and strategizing. 2. The two companies have a history of succ essful change management. 3. The merger will improve the strategies