The Sub Prime Crisis In The United States Finance Essay - Free Essay Example

The sub-prime crisis was said to have sprung up when mortgage lenders in the United States began giving out creatively well-crafted loans to provide money to high-risk borrowers so as to purchase homes during the economic and housing boom of 2004. Sub-prime mortgage loans are loans which in essence are offered to people who comprise of possessing a greater level of risk than those borrowers who were eligible for traditional loans from banking institutions. Borrowers labeled as high risk are usually denied access to loans at standard rates and are thus are forced to look towards sub-prime lenders. In many cases, accepting a sub-prime loan is the borrowers only access to credit. These high-risk borrowers, it is usually seen have high debt to income ratio, little to no credit history and poor credit  [1]  . The expansion of the sub-prime market was due to a number of factors, such as the constant strengthening of the housing market; relatively low interest rates; and deregulation by the federal government which no sooner than later led to innovations in mortgage products making loans available with lesser down payments, and fewer documentation requirements. The increase of securitization of sub-prime mortgage products also turned out to be a contributing factor to this development of sub-prime loans as it transformed future income influxes into immediate liquid funds  [2]  . Also, the funds made available by securitization were utilized in such a fashion so to contribute as capital to fund more home finance. Thus, through securitization, increase in loans originate d meant greater finance being accessible for future home finance. The existence of sub-prime loans as a percentage of all mortgages which were present in a given year saw an increase of nearly 8% in 2003 to 20% in 2006. And also, it is to be noted that most of this expansion was funded by securitization; approximately 75% of the $ 600 billion of all mortgages which emerge in a given year are now securitized  [3]  . What Is Sub-Prime Market? Home mortgage lending in the United States is divided into two market segments prime and sub-prime. The prime market can be availed of only by individuals with solid credit histories whereas the sub-prime market offers financial services to potential homeowners with sketchy credit histories. Borrowers in the sub-prime market in contrast to the prime market present an increased risk of default, which the sub-prime lenders in turn take advantage of by offering only higher interest rates and fees  [4]  . What Is Sub-Prime Mortgage? In testimony before the Senate Committee on Banking, Housing and Urban Affairs, Roger T. Cole, Director of the Federal Reserves Division of Banking Supervision and Regulation generalized the usage of the term à ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ'†¹Ãƒâ€¦Ã¢â‚¬Å"sub-prime borrowerà ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢ by stating that those who do not qualify for prime interest rates because they exhibit one or more of the following characteristics: weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments or bankruptcies; low credit scores; high debt-burden ratios; or high loan-to-value ratios.  [5]   Apart from these above-mentioned properties of sub-prime borrowers, the loans usually considered as sub-prime have higher upfront costs, as far as fees associated with closing the loan (eg. Application fees and appraisal fees) and continuing costs, a resultant of higher interest rates. They are often identifiable by such other hybrid characteristics as an initial, low initial interest rate (sometimes called a teaser rate) that is in effect for one or two years (at times even for just a few months), that then changes to an adjustable rate which is much greater than the teaser rate for the remaining life of the loan. Sub-prime mortgages can usually be identified by just gauging the distinctiveness of the borrowers as well as by the terms of the loans that are made to them  [6]  . The Process of Securitization After the mortgage agreement is concluded, the mortgage is usually sold on the secondary mortgage market, where financial institutions purchase the creditors interest in the loan i.e. the right to collect the payments and the right to terminate and foreclose should the borrower default on his/her payment requirements. When the creditor plans to securitize the mortgage the interest in the mortgage will be transferred to a Special Purpose Vehicle (SPV), generally a trust, which comprises multiple mortgages in its portfolio, creating a cluster of loans. The assets of the SPV (for the most part, the income that flows from the mortgagors obligations under the mortgages held by the SPV)be it is the right to discharge of payment of interest on the loans in the pool, or the payment of principal, or some other rightare classified into tranches, and such tranches are then bundled up as securities to be sold to investors  [7]  . Coordinating with an underwriter and rating agency, the v arious tranches are scrutinized for the risk related to the assets (the various income streams, as illustrated above) that back them. Usually, the bond rating agency depends on information given by the lender, especially the various representations and warranties made which in turn ensure that the loans in the pool were in compatibility with applicable law when they initially came into existence. It also considers information in the aggregate with pertinence to the loans in a particular pool, gauging information such as credit scores, the equity which the borrowers have in their homes, and documentation of income and assets. Simultaneously, an assessment is also made of the lender itself, assessing the underwriting standards along with lending and performance history  [8]  . Credit enhancements are also utilized by the creditors so as to make investment in the securities seem more viable by lowering the risk related with the investment. Such enhancements can consist of loan g uarantees from a particular insurance company or similar guarantor, and the creation of a chain of tranches whereby particular tranches are more exposed to risk than others. Investors which comprise of hedge funds, mutual funds, pensions, brokerage houses, and individualsthen buy the securities created and backed by the assets in the SPV. An independent agent, the servicer, handles the daily management of the individual mortgages which back the securities. That servicer is duty- bound to collect the monthly payments of interest and principal, monitor loans in default and pursue foreclosures wherever they may be necessary  [9]  . Types of Sub-Prime Loans Sub-prime borrowers usually do not choose to amortize the loan for fifteen or thirty years with a typical twenty percent down payment, as lenders of traditional mortgages would require. Sub-prime borrowers generally look for methods to afford a home which would be beyond their price range under typical lending guidelines.  [10]  Lenders taking this fact into consideration are creative in constructing schemes that would seem attractive to consumers and profitable to the lenders, at times without any regard to the future effect. The two most popular products, which vary immensely in their terms, are the interest-only loan and the payment-option adjustable rate mortgage (ARM) loan which the researcher shall now discuss  [11]  . 1. Interest Only Mortgage Loan With the interest-only mortgage loan, the borrower pays only the interest on the loan for a certain period of time. The loan balance does not decrease as no payments are diverged to the principal during this period. After the interest-only time period expires, which may be as much as five to ten years, the borrower must pay both principal and interest. As a result of the interest accumulated during the interest-only period, the monthly payments on the loan gradually increase when the interest-only period ends  [12]  . 2. Payment Option Adjustable Rate Mortgage The second popular option of sub-prime lenders is a payment option known as the Adjustable Rate Mortgage (ARM). As the name implies, this loan has terms that allow flexibility to the borrower. In order to better manage the borrowers cash flow, there are several possible payments on the mortgage each month  [13]  : (A) The borrower may make a minimum payment based on a very low, introductory interest rate, (B) The borrower may make an interest-only payment, or (C) The borrower can make a fully amortizing payment as if it were a traditional loan With the minimum payment option, using the low introductory rate the m onthly payment for the first few months sets the interest due at the teaser rate. After this period, the interest rate increases, and is restructured according to a fixed time. With this option, if only the minimum monthly payment is made, it will not be enough to pay off all of the interest charged on that loan for that time period and the unpaid interest will be attached to the principal balance owed. This is again a case negative amortization, resulting in the borrower owing much more on the loan at the time the payment option period expires  [14] Cause of the Sub-Prime Crisis With the prospects in the home mortgage market becoming fragile, the drive to persist in issuing mortgage-backed securities resulted in many lenders loosening their underwriting criteria and give out riskier loans. The incentive structure in the market, combined with a deficiency of accountability in the system, has resulted in the present scenario of the sub prime mortgage market: a greater number of de-faults, bankrupt lenders, and devalued securities  [15]  . Another reason for the growth in sub-prime was some of the federally enacted statutes which will be discussed in the next chapter. II: The Role of Federal Law In Fuelling Sub-Prime Crisis Sub-prime lending become much more widespread by statutory changes to banking legislation in the 1980s, and the introduction of creative implements in the method that mortgages were financed. State interest rate caps on mortgages were precluded by federal legislation in 1980 via the Depository Institutions Deregulation and Monetary Control Act (DIDMCA). In 1982, lenders were allowed to offer adjustable rate mortgages through the Alternative Mortgage Transaction Parity Act of 1982 (AMTPA). In the end, deregulation was crucial to the increase in sub-prime lending  [16]  . In the 1980s, the federal government passed several legislations that made sub-prime lending prevalent, even when such practices were made illegal in many states. The Depository Institutions Deregulation and Monetary Control Act (DIDMCA)  [17]  deregulated interest rates on loans. This act preempted state caps on interest rates for residential loans  [18]  . The DIDMCA allows lenders to charge high er interest rates to borrowers with lower credit scores, i.e, the sub- prime borrower. By precluding state ceilings on mortgage loan rates, the law provided for interest rates on mortgage loans as high as usury laws tolerated. The DIDMCA gave lenders the option to charge increased interest rates to risky borrowers. Accordingly, lenders could validate taking risks on borrowers with a bad credit history as a higher interest rate guarantees a higher payoff  [19]  . The Alternative Mortgage Transaction Parity Act (AMTPA)  [20]  was created to make mortgage loans available to a larger pool of individuals by offering alternative mortgage transactions  [21]  . Such transactions were comprised of variable-rate transactions, consisting of variations usually construed as uncommon to traditional fixed-rate, fixed-term transactions. The Act allowed non-federally chartered housing lenders to provide for alternative mortgages in accordance with federal regulations. This ensured tha t such lenders were in conformity with federally chartered institutions. The consequence of this law was to provide for non-federally chartered lenders to grant a loan either under state law, which was highly regulated upto this point of time.  [22] The AMTPA brought about variable-rate loans and balloon payments to the market of mortgages. This act seeked to do away with the discriminatory impact past regulations placed on non-federally chartered housing creditors and to place the creditors on equal footing with federally chartered institutions.  [23]  It gives all housing creditors the authority to purchase, make, and enforce alter-native mortgage transactions and thus served to act as a legislation which proved to be a major contributor as far as the sub-prime crisis was concerned.  [24]  . The Tax Reform Act, 1986 encouraged homeowners to obtain mortgage loans by doing away with the interest deductions for consumer loans but at the same time permitting mortgage i nterest deductions. Because of the tax incentive, homeowners were provided incentive to acquire loans secured by their homes instead of acquiring consumer loans  [25]  . These three acts had opened the floodgates for sub-prime lending. The DIDMCA increases ceilings on state mortgage interest rates; the AMTPA gives non-federally chartered institutions the same alternative mortgage rights as federally chartered institutions; and the TRA provides borrowers incentive to borrow money on their home from bankers and other financial institutions. III : Damage Control By the United States Federal Government On December 18, 2007, legislation was enacted so as to assist sub-prime borrowers obtain tax relief. The Mortgage Forgiveness Debt Relief Act of 2007 created a three-year period for homeowners to refinance their mortgages and pay no taxes on any debt forgiveness that they received. This changed current law, where the tax code construed any monetary sum forgiven by lenders as taxable income. The rationale was that this would preclude potential foreclosures  [26]  . In addition, the Department of Treasury and the Department of Housing and Urban Development encouraged the formation of a private-sector alliance to help sub-prime borrowers. The program, entitled the HOPE NOW alliance, comprised of efforts at encouraging lenders and mortgage servicers to provide workouts to borrowers, which may include lowering an interest rate on a loan, or spreading out the interest payments over a longer time period on the loan  [27]  . In August, 2007, the Bush administration came to the c onclusion that the market alone would not be able to solve the problems created by the sub-prime lending industry, and introduced FHA Secure. Under this plan the Federal Housing Administration (FHA), which provided mortgage insurance to borrowers through private lenders, provided for sub-prime borrowers an option to refinance into loans it insured.  [28]  The Federal Reserve Board also introduced a new rule under the Home Ownership and Equity Protection Act. The motive of this rule was to protect consumers from predatory lending and advertising practices. Specifically, as it was applicable to sub-prime loans, creditors would be prohibited from extending credit without considering the borrowers ability to repay the loan, it would be a pre-requisite for creditors to corroborate income and assets, prepayment penalties would only be issued in certain instances, and escrow accounts would have to be established for taxes and insurance. With regard to advertising, certain deceptive adv ertising practices would be banned, including making representations that if a rate is fixed, it can change  [29]  . Iv: The Spill-Over Effect of the Sub-Prime Crisis in the Indian Market The impact of the sub-prime crisis was felt in a number of growing economies as well. As far as India, which was riding on an economic boom at that point of time, the economic growth rate tumbled from 9% in 2007-2008 to around 6.5% in 2008-2009. However, the impact of the recession on India, was not as bad as other countries, since India did not posses great exposure to foreign markets.  [30] However, due to the foreign institutional investors, selling off their assets in the Indian market, the stock exchange in India, suffered a blow, and its dreary situation reflected it. The stock market tumbled from nearly 20000 points to a situation of 8000 points. The tumble was attributed to three factors namely: the drying up of finance from abroad for Indian banks and corporates, the constraints of raising funds in the domestic capital market as a result of the situation world-wide and also because of the decrease in the accruals of the corporate in India.  [31] As far as liquidi ty is concerned, there was a drying up because of the pulling out by the foreign institutional investors, and thus this led to a fall in reserves. The influx of investments in the IT Sector was a result of the multitude of investment in it, as Indian IT firms derived 75% of their revenue from the United States. The inability of Indian firms in raising funds abroad in light of the crisis led to the RBI, providing for an expanse in liquidity by reduction of the cash reserve ratio (CRR), the repo and the reverse rates.  [32] As far as exports were concerned they suffered a sharp hit as well. This was because of the fall in purchasing power of consumers. This fact can be illustrated by the inflows in 2007-2008, which were nearly 100 billion dollars as compared to just 10 billion dollars in the following year.  [33] As far as the banking system in concerned, the Committee for Financial Sector Assessment (CFAS) set up by the Government of India and the Reserve Bank of India has assured that the financial system is essentially sound and stable, and there is no cause for fear with regard to the vulnerabilities which other banking systems were facing. Despite the strength of the assets of the banks across the country, the call money rate escalated by nearly 20% after the collapse of Lehmann Brothers and the daily liquidity adjustment facility overshot nearly 50,000 crores, under the tight liquidity situation. The Reserve bank of India in this scenario took various steps to ensure that there was credit flow to various productive sectors of the economy, despite the liquidity crunch. Liquidity was infused by controlling the interest rate management, risk management and the credit management.  [34] For example, The CRR was reduced by nearly 400 points from around 9% in August, 2008 to 5% in January, 2009 Reduction in the repor rate (the rate which RBI lends to banks) from 9% to 4.75% in order to improve the flow of credit. The reverse repo rate w as also reduced to around 3.25% by nearly 2775 points. As far as fluctuation in the exchange rate was concerned, the rupee became stronger to the dollar, and this led to exporters pushing for government intervention and rate cuts. However, it is to be noted that the government took note of the reduction in the import bill and thereby narrow the wide trade deficit. V: The sub-prime crisis in retrospect The major cause for the sub-prime crisis in the United States could be attributed to the deregulation procedures followed by the government, and giving the private financial sector, more or less unlimited freedom. In stark contrast, is the Indian financial scenario, where due to the conservative practices of the banking sector and the Reserve Bank of India having a strong foot-hold in the functioning of banks throughout our country, the country was able to withstand a global melt-down of such a great scale. Apparent is the idea, in light of how adeptly the RBI handled the liquidity crunch by regulating the interest rate management, the risk management and the credit management systems, always ensuring that the productive sectors of our economy do not disintegrate. The argument in favor of deregulation has always been capitalism, however, this crisis teaches us that leaving the hands of the economy in the private sector, would only lead to short-term gains and long-term pains. In a way, it could be said that we should be thankful for the nationalization of banks in the 1970à ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢s or we might have been facing a situation, being a developing country at that , a crisis worse than the one which is plaguing the United States of America.

College Athletes And Scholarship - Free Essay Example

Sample details Pages: 2 Words: 564 Downloads: 3 Date added: 2019/05/30 Category Career Essay Level High school Tags: Should College Athletes Be Paid Essay Did you like this example? Kids develop loving to play sports in their free time. They never get paid to play once they are at a young age. they are doing it for the love of the sport and for the requirement for competition. Don’t waste time! Our writers will create an original "College Athletes And Scholarship" essay for you Create order this can be the method that its in school without delay. school athletes compete with all their hearts to be the simplest they will for his or her faculties. They dont get paid a cent. its been a standard discussion if thats the correct thanks to get laid. ought to or not its that school athletes dont need to get purchased taking part in a sport? It mustnt be this manner. school athletes definitely should get paid to play. This passion, that they place into the sport, brings in a very lot of cash for people nevertheless they cant see any of the cash that theyre creating for people. a number of these athletes have the scholarship to play, however these scholarships dont cover everything thats required to survive and thrive in a very school atmosphere. Everyday College athletes put their bodies on the line each game they play. There have been instances of players becoming paralyzed by hits or tackles on football fields or other injuries that have ended playerrs careers before they even get started. They push past their limits constantly. Sometimes, it leads to career-ending injuries and even fatality. Many athletes have given their lives for the sport they love, and thatrs really something to think about. So, college athletes should get paid. The NCAA does not want to pay the athletes beyond scholarships, and it would be tough to work a new compensation program into their budget and the budgets of the universities. College athletes should be compensated in some form because they put in so much time and effort, and they generate huge amounts of revenue. Playing a sport in college is equivalent to working a full-time job. There are rules that allow major-college football coaches to only demand 20 hours of the players time each week. Studies show that those athletes are doubling those hours per week during the season. Other sports say they are putting in the equivalent of a full-time work week. Some NCAA officials are concerned with the amount of time spent and that beyond 40 hours is inhumane. Most of the athletes compete and do whatever it takes to succeed, so they enjoy spending s o much time on sports. Many athletes even have struggled in the classroom because they do not have enough time to study. Student-athletes at top Division I schools think of themselves as athletes more than students. Less than one percent of college athletes actually make it professionally. That means these kids should focus more on their education than on athletics. college athletes should get paid for the time that they put into their respective sports. The time that they dedicate to their sport is equivalent to the time someone has to put into a job, if not more. Only one-third of college athletes receive a scholarship, the majority of those are partial, and only one percent of all college athletes make it to the pros. Since the majority of college athletes does not receive a full ride and does not go pro, colleges should pay the athlete as if there sport was their job to help them pay off college and other expenses.

Marketing Plan Billabong - 7614 Words

Executive Summary In the world there are 194 countries and Billabong has sold their product over 100 countries, the major regions are the North America, Australasia and Europe. There are several smaller regions that are selling products of Billabong, such as Australia, New Zealand, Singapore and more (Billabong n.d.). Billabong has been recognised in Australian and most in European countries for more than 10 years in the boardsports industry, yet Billabong has a limited consumer in a limited area with the high competitors. In order to survive with the limited consumer spending observed in 2007, Billabong must adopt a strategy that is not necessarily focused on cutting costs and monitoring pricing. Also a brand â€Å"Billabong† should contain†¦show more content†¦This will add additional cost on suppliers and this may lead to loss in revenues as Billabong has many suppliers around the world include Australia, China, Japan, Korea, Indonesia, Fiji, India, Myanmar, Mexico, and Vietnam. Bec ause of the rising of petrol price, so this will affect the competitors as well, so if billabong can find a cheaper alternative for its products it will be able to gain more customers instead of losing them and this will give billabong competitive advantage of its competitors. 2.1.2 Media publics The use of various media channels may apply to the international countries which may present different of Billabong campaign. However, Billabong may need to consider the availability of the channels they are using in other countries (Czinkota Ronkainen 2004, p. 541). The channels may be available in the domestic market and be really successful but may not be visible in some countries, particularly, in the developing and undeveloped countries. The use of advanced media, such as internet, in present the new campaign program may not be implemented in the countries where the level of internet usage is low. 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Terry Schiavo Must Die Essay Example For Students

Terry Schiavo Must Die Essay The time had come for the inevitable end of this story, this miserable lot of the last fifteen years for Terry Schiavo. Brain-damaged and rubber-boned, barely human anymore, Schiavo had the indignity of having her nerve-reflex smile paraded out every time the moment came close for her to have to sink or swim, to learn quickly to feed herself or starve. She was the unfortunate child of narcisstic parents who have pathetically deluded themselves into believing that, at some point, the rock that rolled around in her head would have became a brain once again. Terry Schiavo was brain damaged. There was no hope of recovery nor was she able to breath on her own though had to be fed through a tube. So when is it okay to take a loved one off life support, or to keep them alive by machine? We are not a merciful nation, for we believe that suffering is a gift from God or some such bullshit, and if you are chosen to suffer, and then suffer you must. Despite the fact that virtually every competent medical person who has walked into Schiavos room and smelled the shit-scent of death has declared Schiavo a cabbage or, on a good day, a pea pod, the right smells opportunity to distract people from the gutting of programs that actually do good for the living . Other experts who have witnessed Schiavos eyes follow a balloon on videotape are nonsensical idiots. I have heard on the radio that Terry was so near to death, that even if the feeding tube wouldve been reinserted she wouldve probably died of a shock. So my question is, if her parents somehow would have gotten there way, and the feeding tube would have been reinserted, and if she would have died from it, would it be still considered that we the humans are murderer, and Terrys death was not part of Gods plan. There are some people who claims that their thought regarding Terrys death is that, is was a murder. Murder is what the law says it is, not what you think it is. The only comfort in any of this is that Schiavo did not know a thing that was going on. She was an object, not a subject. Her death was the only caring solution. This essay is only for research purposes. If used, be sure to cite it properly!

Texoil Negotiation Essay Example

Texoil Negotiation Paper Value based pricing was going to be the key, I thought, from the moment I looked at the Texoil case as the service station owner. From my perspective, the owners not only owned the station, but had acquired a loyal customer base. They had knowledge of the regional environment. They themselves were part of the reason the station was successful. My contention was that if Texoil built a station without them, it would be both risky and potentially unsuccessful. Based on the above value analysis, my partner and I decided that the total value of the station was: the cost of a new building for Texoil plus lost revenues during construction plus the lifetime value of previously acquired customers plus the risk reduction of a failed venture – a total of two million dollars. We knew that the above figure was quite high, and we planned to come out quickly and anchor the discussion there with our supporting evidence. [1] Since the preliminary analysis showed it would cost Texoil 650k to build and 553k was our minimum desired selling price, our goal was to walk away with any deal above 650k. We will write a custom essay sample on Texoil Negotiation specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Texoil Negotiation specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Texoil Negotiation specifically for you FOR ONLY $16.38 $13.9/page Hire Writer I was open to thinking creatively about a deal that was not all-cash. [2] We recognized quickly that our BATNA so-so. If we sold for 400k it might be enough to pay for the sailboat, but it would not be enough to live on later. However, we realized that even in this worst case scenario, the boat could be sold upon returning in order to finance subsequent expenses. It wasn’t perfect but it was palatable. Ultimately, a deal that beat 400k would also work, but it would be leaving value on the table. Looking forward to the negotiation, we knew the Texoil rep would remark on the fact that we had been running ads in the newspaper. We felt that this was a disadvantage as it made us look desperate to sell. We wanted Texoil to think our BATNA was not only another offer but also continuing to enjoy running the station. The concocted story was: we started running the ads after we got an ‘out of the blue’ offer by a large competitor. We were SO surprised by this generous offer that we decided to go fishing to see what other interest was out there, though we had by no means decided that we wanted to sell. Process My partner and I as well as the Texoil rep spent some time getting acquainted and exchanging pleasantries. Relationship building before a negotiation is a key to successful outcomes. [3] He asked us why we were selling, and we trotted out our planned back story. A silence came over the discussion, and my partner proceeded to share our estimated two-million-dollar valuation. The Texoil rep’s brow furrowed, he scribbled on his paper, and said that based on his analysis he could offer us 200k! I was taken aback. My first instinct was that he was re-anchoring low. For most of the subsequent negotiation I felt he was playing hard ball. I countered by returning to the value discussion. I elaborated once again about how starting a gas station in a tough region with plenty of competitors was not a slam dunk; that there was a risk of failing, and that was the reason to pay a premium. The Texoil rep nodded his head and said, I still don’t understand how you’re getting to two million. At this point, I realized we had been doing too much talking, and potentially giving up too much information. We hadn’t asked why Texoil was interested, what their assumptions were, what they were looking at? Not letting the opposition speak was a blunder. Unfortunately, however, the rep didn’t give much information away. I redirected the conversation. I said, â€Å"our data shows it would cost you at least 650k to build, plus the customer base. † So how in the world are you getting somewhere between 200k and 300k. This was a smart move, because it got him to acknowledge that indeed the price to build was 650k, but that was for a new facility, potentially with the convenience store. I said sure, but then you’re going to be competing against me, and you’ll lose. Clearly existing relationships matter. He said price matters more. We went back and forth a little. At this point, I introduced the idea of us having a partial stake in the gas station. The Texoil rep seemed to be more ok with that idea, but the percent was still low. We appealed to his honest side. â€Å"Look,† we said, â€Å"We started at two million, we’ve gone way down. Do you want a deal or not? † He admitted that he had a cap on his spend. He offered $450k. I said at that level we’ll need a 20% stake. We went back and forth and landed on $450k, 15% stake, and 40 hours of work between the two of us upon returning from the vacation. Learning About Self I believe I showed a couple key strengths in this negotiation. First, by continuing to re-center the discussion about value, we earned a higher ending agreement. [I believe we had one of the most favorable agreements in the class for the gas station proprietors. ] We were able to sell the Texoil rep on the concept that he needed us and the skillset we brought. When we got down to a number that worked for him, he was open to non-cash solutions. One of the challenges in this case was information asymmetry. Not knowing the opponents’ information, limitations, and whether they were just pulling our leg. After the rep brought up that $650k was the price including an entirely new station with a convenience store, plus new pumps, I realized we had to be willing to pivot down. We acknowledged that taking into account the store and new pumps, the number was at least 500k to build, and they still needed us or it wouldn’t be a successful business. Knowing when your value proposition is different than originally stated is another key to getting the deal made. At one point my partner said, â€Å"Do you want a deal or not? You approached us to buy the station, but it seems like you’re not actually interested. Are you? † That did elicit the reaction of, â€Å"well yeah. † I think this shows that sometimes, when you’re stuck, zooming out to the 10,000 ft level can be beneficial. The mistake I made during this negotiation was that I let my mouth run wild for too long at certain points. I need to be more conscious, and actively listen. One thing I’m proud of is that we were open to a lot of creative solutions that were non-cash based. This gets at my own decision making criteria, where I land somewhere between a â€Å"charismatic† and a â€Å"thinker. †[4] I like seeing both the big picture and seeing the data. The thinker side that relishes the data feed, in some ways is very challenged by the ambiguity of negotiation. In some ways you don’t always know if you got the best deal you could get. That’s hard as a thinker who wants to win. Having that â€Å"charismatic† side, however, helps in terms of creating the grand strategy; coming up with the value proposition. Maybe I don’t get the most perfect deal, but at least the conceptual thinking and game-plan is on solid footing. What would you do differently? I have two regrets. First, my partner and I should have listened more to the rep at the start of the conversation. He was great at letting us talk. It turned out he didn’t actually know much about the situation, so we played right into his hands. The second mistake was not creating some sort of hierarchy of who was chief negotiator or roles. We discussed our overall plan, and that we were setting our initial value at two million, but after he re-anchored at 200k, we were off our game. There were a few times when my partner said something that I wasn’t completely in agreement with, and probably vice versa. We ended up taking a break a little more than half way through to resettle and to discuss where we were at. This was partially due to frustration. In retrospect, this was a shrewd decision and could have been taken early. I think the lesson is, if the opponent is doing something unexpected, stop and think deeply or take a break. It doesn’t seem to hurt.

Have you ever been to a country Essays

Have you ever been to a country Essays Have you ever been to a country Essay Have you ever been to a country Essay Have you ever been to a country where our past is in the present and our present is going to be in the future? Nepal is an undeveloped country and it is one of the â€Å"ten unprosperous countries† (Tessa Feller) in the world. Nepal is one of the most religious countries and is the only official Hindu state in the world. Nepal was only introduced to the world in 1951. Before that, Nepal was under the rule of the Rana’s, who did not allow any tourist to enter. Now, Nepal is once again a monarchy. Since then, Nepal is being introduced to many modern equipment and settlements. It is very depressing for Nepal, having to face this situation when it has many tourist attractions, and many people would like to visit a society completely different from their own. The poor economy of Nepal is holding its true potential from shining. By donating, the economy can grow and children can have a proper education. Since, tourists live in poor conditions when in Nepal, companies can invest to make hotels and make a large profit from it.Tourism is Nepal’s most important industry, although it has â€Å"suffered from the Maoist conflict† (Tessa Feller). Nepal’s tourists range from two-hundred thousand to four-hundred thousand every year. The main reason why people visit Nepal is because it is a completely different society than their own. Since Nepal was only introduced to the world in 1951, many people don’t know about it. It is a society under the progression of modernizing, but is still in the past. Also, Nepal has many attractions such as the Himalayas containing eight of the ten highest mountains in the world. The Himalayas are not just high mountains which are climbed to prove someone’s ability; they are mountains sacred to gods. Many people visit to catch a glimpse of the world’s highest mountain, Mount Everest. These mountains bring publicity and money to Nepal.TV’s and computers give happiness and entertainment to people all across the world, but in countries like Nepal this type of entertainment cannot be afforded by the country. Nepal is one of the ten poorest countries in the world. There are no TV’s, no internet and there only â€Å"public washrooms where everyone can see you† (Tessa Feller). The â€Å"GDP per capita income for Nepal is only $1000† (CIA World Factbook). In Canada, families spend around $1000 in one month. How can people expect Nepalese to spend $1000 in a year?This is why most people in a family, including children work and this can cause many illnesses. â€Å"Nepal exports carpets, clothing, leather goods, jute goods, grains for $830million (does not include unrecorded trades with India), and they import gold, machinery equipment, petroleum products and fertilizer for $2.389billion.† Nepal’s import is three times more than there export, which is why they had a â€Å"debt of 3.07 billion in March 2006† (CIA World Factbook) and the debt, is still increasing. Until the debt is paid off, it is going to be hard for Nepal to modernize and our present can only be seen in Nepal’s future.Waking up in the morning wet and cold. In Nepal many people live in poor conditions. It is very â€Å"cool up north and subtropical in the south† (Let’s Visit Nepal). Since, the economy is poor the living conditions are also poor. Many children and adults suffer from these conditions. â€Å"There a re around seven major infectious diseases in Nepal including HIV/AIDS. There are around sixty-one thousand people living with HIV/AIDS and around three thousand one-hundred people died because of it. Around sixty-two out of one thousand babies die.† (CIA World Factbook) Also Nepal lacks in education. Only children over fifteen can read and write (48.6 % of population can read and write). The donations of people are needed to save many lives in Nepal. Remember, a baby shouldn’t be blamed for something it didn’t do.Tourism brings money and publicity, but it lacks quality. The economy is very poor causing the country to be undeveloped. Also, there are poor living conditions, which affect children in many ways. Donation and investment of companies and others can increase the economy and help develop it. Also, it can save many lives! Be a friend to those people who suffer from these poor conditions. A friend in need is a friend indeed. :

Sony Essay Example | Topics and Well Written Essays - 1500 words

Sony - Essay Example To be the most competitive and outstanding market player, it is desirable for Sony Company to practice both online and off-line marketing. Sony on the Web Marketers at Sony Corp are looking for alternative marketing and social networks marketing is the most preferable in the modern context. They connect with their customers online. They can promote their goods globally. The most effective strategy of Sony online is online tutorial, where they located the information about digital photography. The name of the company is Sony 101, where four special "campuses" for online visitors are developed: personal computing, entertainment for home, digital photography, and finding different business solutions for the small businesses (Bearman and Bruckner). Online visitors can be enlisted to any course they like in these campuses (Grasby, 2004). For example, one of the most popular campuses is the digital photography campus. Different relevant Sony products are advertised in the process of study of this course. Barbara L. Miller, director of corporate marketing Web services with the Tokyo-based company of Sony claims that they intended to talk about different changes in technology and were not merely focused on promotion of Sony products. Sony launches internal marketing, where their customers can advertise Sony products and tell about them to each other. In accordance with Social Vibe, it is claimed that some of the Company's ads reached up to a 40% share rate. Further on the Company was focused on advertising in the Facebook. The effectiveness of these types of ads is evident: 91% of people looked for the company's ads and paid attention to brand messages. They developed a new advertising campaign to appeal for different types of customers: from families to women and men. A well-known name of the advertising company is: "It only does everything, because the company wants to shift the accents from being a seller of hardcore games and Xboxes to an entertainment center" (). Sony united its power with Deutsch LA, which helped the company to be on the move. Sony makes an emphasis on online ads and decreases the number of printed sources of advertising. Dille underlines: "The ability to have that one-to-one relationship with consumers, monitoring the effective messages, and changing things on the fly gives us a closer relationship with consumers" (Super Facebook Marketing Case Study). They are more interested in mothers, who can take the PlayStation 3 message to their social network friends. Thus, the potential customers advertise products of the company themselves, as well as looking for alternative means of advertising. On the Facebook page Sony has a chance to communicate with more than 1 million fans and Twitter comprises more than 323,000 followers (Super Facebook Marketing Case Study). To measure success of the company online, it is relevant to pay attention for click-through rates. It is of high importance for the company to find out the real reaso n of the customers for being interested in one or another product. The first positive changes are evident: Sony sales increased up to 35% and Microsoft sales decreased up to13%. In accordance with the modern prognosis, it is possible to predict that video game advertising could increase from $24 million in 2009 to $47 million in 2014, which comprises a 14.4% compound annual growth rate (CAGR) (Super Facebook M