Hunger and Poverty Essay - 806 Words

Hunger and Poverty Hunger and Poverty During the course of this particular essay, I will prove to you many points. Maybe not to the extreme that it will change one’s thought processes on the subject of hunger and world poverty, but enough to form a distinction between moral obligation and moral capacity. What I will not mention is the fact that Peter Singer’s outdated material (1971), though thorough in the sense of supporting his view on hunger and world poverty as well as examining this school of thought, is unconvincing to say the least. As our recent past has shown us, using Somalia and Rwanda as models, no amount of money or time on earth can come between a civil war. Terrible things happen, innocent people are slain in the names of†¦show more content†¦He does not attempt to provide if, ands, or exceptions to this rule, which I find, at the least, â€Å"morally unconstitutional.† Granted this is only a school of thought, that type of thought is considerably dangerous in the sense that it eliminates the right of individual happiness. This thought, which Singer attributes to the fact that we are all part of the â€Å"global community,† provides little reasoning to make a person honestly consider the act of help. Who is to say what is considered to be of comparable moral significance? Does Singer honestly believe that the typical American citizen, after reading one of his manifestos, will turn down the 57† projection television and opt for the 13† one, and then send the money they saved to the African War Baby Relief Fund? Hell no. For all we know, Singer may argue that a television is not a comparably moral significant item. And in today’s society and culture, that is not a reasonable end. Singer uses St. Thomas Aquinas (12th century Italian theologian and philosopher) as a reference to his philosophical view, and although Aquinas was one of the foremost experts on religion and humanism, he is not living in the 21st cent ury. Singer’s views border a utopian society, and although they sound good, they prove impossible. John Arthur, who’s essay â€Å"Rights and the Duty to Bring Aid,† looks to disprove Singer’s theory and, at the least, provide an alternative that wouldShow MoreRelatedPoverty And Hunger : Hunger1542 Words   |  7 PagesHardy Social Problems SOC S-163-Sect. 29531 08 April 2016 Poverty and Hunger Hunger impacts 48.1 million Americans; 46.7 million of them live in poverty. According to Feeding America, seventy percent of their clients are at one hundred percent below the federal poverty line (â€Å"Hunger and Poverty Facts†, 2016). Poverty is the social factor, which creates and sustains hunger. You may be wondering that if poverty creates hunger, what creates poverty? Economics, politics, and capitalism all keep the impoverishedRead MorePoverty And Hunger Of Poverty1211 Words   |  5 PagesMost people know that world poverty and hunger exist. Many countries are experiencing poverty and hunger, because they have insufficient resources. Most people have different approaches about helping people in need. Some donate and try to do their part, while others ignore the situation. However, ignoring the issue will not cause poverty and hunger to disappear. The only way world poverty and hunger will reduce if people are willing to contribute more to help prevent this global is sues that has beenRead MoreHunger, Poverty, And Poverty887 Words   |  4 Pagespeople were living in poverty in the United States (â€Å"Hunger and Poverty,† n.d). That is 14.8 percent of the people living in the United States. Majority of those people were under the age of 18 years old, that’s 15.5 million children (â€Å"Hunger and Poverty,† n.d). Most of the people who are living in poverty don’t have the job to support himself or herself or a family. Providing food for these people and working hard to lower the number of people living in poverty, which leads to hunger, would benefit manyRead MoreHunger, Poverty, And Poverty1300 Words   |  6 Pagesnearly 1 billion people suffer from hunger while others are obese. Every day, millions of people in the world; particularly in poor countries, suffer from hunger, the scarcity of food. Many of them die because they struggle a lot to fulfill this need. However, governments, organizations and citizens try hard to find solutions to eradicate this problem. Poverty is factor associated with food insecurity. To eliminate hunger organizations and government should fight poverty above all. For most people in theRead MorePoverty, Hunger, And Hunger1815 Words   |  8 Pages Haley De Stefano Zero Hunger U.S.A. Position Paper Part 1: History of Zero Hunger, and hunger around the world The Zero Hunger project was launched in 2012 by Ban Ki-Moon, to fulfill his aspiration to live in a world where nobody would be hungry and everyone would be healthy, and in the past few months and years the world has made big progress towards ending world hunger. Zero Hunger isn’t just a dream that theRead MoreHunger, Poverty, And Poverty1290 Words   |  6 Pages Hunger play a crucial role in everyone’s lives. Many people in third world countries do not always have the luxury to go to bed on a full stomach. Certain people face these obstacles that they could overcome on their own. However, certain adversities are much greater than one individual. Striving to end hunger inspires unity for those struggling and those who want to find a solution for the problem. Working together to improve life on land is one of the most important aspects in life. The globalRead MoreThe Hunger Of Poverty And Poverty1029 Words   |  5 Pagessoon. The kids, extremely hungry, stomachs rumbling and growling, still trying not to make their parents lose even more. The family was struggling and they felt like giving up right away, yet, they still had a sliver of hope to end the terror of poverty. It turns out this story is one of the many events of which many families have struggled in earning jobs and money, not being able to buy any food or water. Many people, while they are walking on the streets, have seen the people, sitting on the groundRead MoreHunger, Poverty, And Poverty2119 Words   |  9 Pages Hunger and poverty are two concepts that seem to be deeply entwined. More often than not, these two terms tend to bring up images of starving young children in third-world developing countries. People seem to believe that hunger and poverty is a distant concept that does not affect their everyday life and decisions. Hunger and poverty, however, might not be as distant as some would want it. Although the United States is considered to be a developed first world country, hunger and poverty still existsRead MoreHunger, Poverty, And Poverty3258 Words   |  14 Pagesnext meal or paycheck will come, and there is no one to turn to for help. Hope is gone. Stabbing hunger pains ar e usually associated with starving children in Africa, but hunger is also related to poverty. What people do not realize is that poverty is also a concern in the United States. To many Americans, poverty does not seem problematic, but the issue exists and is very real. Since severe poverty leads to homelessness, the next step is children being put in foster care because their parents doRead MorePoverty Of Extreme Poverty And Hunger1606 Words   |  7 PagesMDG Paper ( 1. Eradicate Extreme Poverty and Hunger (â€Å"Extreme poverty rates have been cut by more than half since 1990†) a. Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day i. Goal was met by 2010 ii. Since 1990, over 1 billion people have been lifted from extreme poverty iii. In 1990, almost 50% of people in developing nations lived on less than $1.25 a day. In 2015, it is only 14%. b. Achieve full and productive employment and decent work for all, including

I Hate Violence And Violence - 2205 Words

I Hate Violence Violence is defined as exertion of a physical force so as to injure or abuse. It is an intense turbulent and furious and often destructive action or physical force used to harm someone. Strong angry passion and acting hastily, in a hateful manner to the detriment of another, is simply unacceptable. We, and I mean each individual human being, has to be their filter. Yes, I recognize that we are of many, many different shapes, sizes, colors personalities and abilities, but we always were, yet as we went from extremely simple living, (small communities of people who relied on one another for daily survival) to large industrial computerized nations, our reliance on each other has diminished significantly. Society has shaped and become oblivious to varying degrees of violence, and way to many excuses, pardon me, reasons are given as to why an individual acts in a certain way. To me, we as a species are condoning some pretty horrific actions in this ignorant world and we are not being respectful of each other’s rights. Violence is one of those acts I strongly detest and oppose. There are so many facets of violence, such as violence against women, children, races, religions, cultures, elders, bisexuals, homosexuals, nationalities and transgender people that I could get on a platform here but I will lead the focus to one area of violence, transgender violence. Degrees of violence has been condoned and justified by society against all people, men and womenShow MoreRelatedViolence in Romeo and Juliet, Shakespeare.1683 Words   |  7 Pagesamongst others. In Romeo and Juliet, violence is one of the key ideas that link every incident together. It pushes the story forward and makes things happen. Shakespeare produces visions of violence in nearly every scene, every moment of the play. The violence affects every character, changing their nature and influencing their decisions. It troubles them and brings them difficulty, stress and even death. Shakespeare writes in the prologue the reasons of the violence and fights in the play. He uses 5Read MoreThe Importance Of Socratic Dialogue1114 Words   |  5 Pagesthat a person should be open to accepting any view differing from their own, which would do more harm than good. Violence has always been prevalent in our world, from the American revolution in the 1700s to the neo-Nazis rallying in our streets as we live and breath. While one might think that accepting everyone’s differing views will bring people together, and lessen the amount of violence in the world, I’m inclined to disagree. In resetting our society, it is essential to acknowledge and respect differingRead MoreWhy should the internet have more restrictions?700 Words   |  3 Pages38% reported exposure to violence online and off-line were associated with violent crimes. (Ybarra 929) Tested websites included news related websites that showed terrorism, war, and death. As a teenage female living in a v irtual world, I know for a fact that anyone has access to view pornography or violence at the click of their finger. Even relaxing on social media websites have become a danger to the minds of youth from all the inappropriate ads that pop up to the side. I believe the governmentRead MoreThe Misconception Of Hate Groups902 Words   |  4 Pages The Misconception of Hate Groups Introduction-Did you know that the Ku Klux Klan (a white supremacist hate group) resides in about 22 states and counting. There are many hate groups all over the U.S. that cause a lot of violence which may lead to death and many injuries. And when these hate groups get out of hand, this can lead to property damage to. If an incident like Charlottesville, is big enough, this cause a lot of tension between political officials and parties. With these recent eventsRead MoreMartin Luther King Jr. Violence Essay1205 Words   |  5 PagesViolence â€Å"The practice of violence, like all action, changes the world, but the most probable change is to a more violent world† (Arendt pg 80). Violence is contagious, like a disease, which will destroy nations and our morals as human beings. Each individual has his or her own definition of violence and when it is acceptable or ethical to use it. Martin Luther King Jr., Walter Benjamin, and Hannah Arendt are among the many that wrote about the different facets of violence, in what cases it isRead MoreHate Crime upon the Homeless1526 Words   |  6 PagesI chose to write my paper on hate crimes about violence and hate towards members of our society who are homeless. People who happen to be homeless, by the nature of not having a home are more vulnerable to attacks both verbally and physically. I believe that violence upon homeless individuals is a hate crime because they are targeted specifically because they are homeless, and seen as less important than â€Å"regular† pe ople with homes. These incidents usually involve a younger man or teenager. MostRead MoreFree Speech And Hate Speech1000 Words   |  4 Pagesdifference between hate and free speech is, and what the first amendment does to control them both. The first amendment states that congress shall make no law that abridges the freedom of speech. But to what extent should language be protected? The rights of one man should reach until they shadow over another’s. Meaning free speech is protected until it violates the rights of another. Hate speech is the line where free speech becomes unconstitutional. The contrast between free speech and hate speech is aRead MoreViolence On The Rise Of Contemporary Society1275 Words   |  6 PagesViolence on the Rise Contemporary society has evolved around materialism due to an incessant rise of scientific and technological innovations. While some may argue man is living in the most peaceful era in American history, the incline of man’s tendency to value material possessions above spiritualism has effectively caused an erosion of general morality, a revision of social normalization, and an increase in violent actions. Children are the leading advocates in this societal evolution. PatentlyRead More Hate Crime Laws Essay1378 Words   |  6 Pagessicken me. I believe that the people that are responsible for these horrific crimes should be prosecuted to the full extent of the law. That is why I strongly support hate crime laws. Now, before I dive into this very controversial subject, I should probably define what hate crime laws are so you will have a better understanding of what I am talking about. As I have understood it, hate crime laws are laws that protect certain minorities or groups from bias motivated violence and harassmentRead MoreLove The Way You Lie by Robyn Rihanna Essay1270 Words   |  6 Pagesregardless of their age or social status. This song talks about a love and hate relationship between a man and a woman. Therefore, it talks about the paradox of lifes nature. There are no simple and single meanings. Each concept and idea exist in the form of dualism, and this is the exact piece of knowledge that the song takes for granted. All the verses of the song highlight this constant and non-stop fight between love and hate and give the portrait of the two people, representatives of both sexes

Coastal and waterway transport contracts in India Free Essays

The Bill of Lading governs the documented aspect, the insurance is as a support, the merchant shipping act governs the rights and liabilities of the parties and the Carriage of goods act governs the disputes in matter of the marine Contracts and the carriage of goods. Objective of the study . The objective of making this project is to study and research on Coastal and Waterway Transport contracts in India which is very important from the point of law of contracts. We will write a custom essay sample on Coastal and waterway transport contracts in India or any similar topic only for you Order Now 2. The main objective of my study is to deduce and find out the procedure of how the contracts are formed during a shipping agreement and the rights and liabilities of efferent people during a same contract 3. All these concepts are different and various cases have given different Judgments upon different situations. 4. Also I came to know about how these concepts are varied in different nations like United States of America and United Kingdom. Research questions – The research is mainly based on these questions:l . How did the coastal and waterway transport contracts evolve in India? . Which acts and statutes have been set up for these types of contracts? 3. Explain the procedure of how does the coastal contracts work and the documents needed for the same. 4. What is the importance of the Bill of Lading in these types of contracts? 31 Page 5. How does insurance play an important role in these contracts? 6. Mention the Comparative study of India with US and I-J in these types of contracts. 7. Please give needful suggestion for the topic and how to improve the position of coastal and waterway transport contract in India. Limitation of the project:l . In addition in all contracts of carriage of goods by sea, there were implied undertakings by the carrier that the carrying vessel was seaworthy and that the ship would commence and carry cut the contractual voyage with reasonable diligence without unjustifiable deviation. The Bill of lading was the basic shipping document, evidencing the contractual relationship between carrier and shipper and forming the basis of all claims arising from the transportation of goods by sea. It was originally a non-negotiable document but with the growth of commerce the need was felt for transferring the property in the goods before the arrival of the goods at the destination by endorsing the bill of lading to the buyer and the practice came to be established of issuing â€Å"negotiable† bill of lading. The early bills of lading contained only the common law exception. As time passed, however, ship-owners began generally to amend their bills of lading by introducing exemption clauses and thereby limit contractually the strict liability imposed upon them by maritime law. As and when court decision went against the carriers, they introduced more and more protective or pardoning clauses in the bill of lading and depending upon their bargaining position at a time when the volume of world trade exceeded the carrying capacity of shipping, there sought to exempt themselves from practically every liability of ocean carriage. This resulted in growing satisfaction among shippers, bankers and underwriters who demanded legislation to remove the abuse produced by unlimited freedom of contract enjoyed by the http://www. Livening. Mom/Opinion/hkC9ZcvCbqlWbB141 Lends/After-years-of-neglect- India-wakes-up-toccatas-inland-WA. HTML, last accessed on 27th July 1 up. M. 5 Page carriers, the results was that several countries enacted legislation on the subject. The Harpers Act was enacted by USA in 1893 followed by the Australian Carriage of goods by Sea Act in 1904, The New Zealand Shipping and Seaman Act in 1908 and the Canadian Water Carriage Act in 1910. The Harder Act aimed at protection of cargo interests, prohibited clauses exonerating the carrier or his agents from liability for faults in the care and custody of the cargo but at the same time. The Act provided that the carrier was not to be held liable for results of newsworthiness if he had exercised due diligence to make the ship seaworthy and if the damage caused to the cargo resulted from faults and errors in the navigation or management of the vessel. The Harpers Act thus established an important principle in that it settled the problem f the carriers liability by making a distinction between faults in the management and navigation of the vessel and faults in the care and custody of cargo. How to cite Coastal and waterway transport contracts in India, Papers

The Alien Tort Statute

Question: Write a summary of the case under The Alien Tort Statute perspective? Answer: In the year 1992, Myanmar oil gave license to Total S A (French corporation) to produce, transport and sell natural gas from Yadana fields in Myanmar. The project involved extraction and transportation of natural gas from interiors of Myanmar to Thailand. Unocal Corporation, which was a wholly owned subsidiary of Union Oil Company of California, entered into joint venture with 28% stake in the gas production. The production and transportation of the natural gas was assisted by the Myanmar military known as the State Law and Order Restoration Council (SLORC), which was responsible for protecting the pipeline. Despite being aware of the history of human rights violation of SLORC, Unocal and Total entered into an agreement with SLORC for clearing the pipeline route and ensuring security of the pipeline. SLORC soldiers forced relocation of the natives, confiscated their property and forced them to act as laborers and even tortured and murdered. Villagers lost their homes and were dispossessed of their crops and livestock. They had no means to earn their livelihood and were forced to work for SLORC. The SLORC officials also raped the village females, while imposing forced labor in relation to the pipeline, on the male members of the family. Villagers filed a suit under the Alien Tort Claims Act (ATCA), against Unocal against the atrocities committed by the military, in the process of providing security to the pipeline. There are three basic requirements for a claim under the ATCA (i) claim by an alien; (ii) allegation of tort ; and (iii) violation of international law. The third requirement was under dispute before the court and it was held that actions of forced labour, torture, murder are jus cogens violations and hence violative of law of nations as was also observed in the case of United States v. Matta-Ballesteros, (1995). Barrington (2002) suggested that forced labor has been included in the definition of slavery by the 13th amendment of the constitution and is also prohibited under the law of nations, wherein individual liability is attributed and it does not require state action. In Doe v. Unocal Corporation, (1997), the District court had concluded that Unocal knew that tort of forced labor was conducted and benefitted by the joint venture. The Court of Appeals for 9th Circuit relied on the principle propounded in the case of Siderman de Blake v. Republic of Argentina, (1992) that in ATCA cases, domestic law is not to be applied because violations of the international law are alleged, which are binding on the nations even if they do not agree to them. It was also held that practical assistance to the Myanmar Military for torts was provided by Unocal and there was no requirement to prove that Unocal controlled the military. Accordingly, mens rea and actus reus for imposing liability under ATCA to ai d and abet forced labour, murder and rape could be attributed to Unocal. The matter was referred to en banc panel of 11 judges at 9th Circuit Court and trial was to begin from June 2005. In the interim, Unocal settled the matter in March 2005 and agreed to pay compensation to the plaintiffs. References United States v. Matta-Ballesteros (1995) 71 F.3d 754, 764 n.5 (9th Circuit). Barrington T (2002) The Thirteenth Amendment and Slavery in the Global Economy. Columbia Law Review, 102, 973-1050. Doe v. Unocal Corporation ( 1997) 963 F. Supp. 880 (C.D. Cal.). Siderman de Blake v. Republic of Argentina (1992) 965 F.2d 699, 714-15 (9th Circuit).

Chipotle External Analysis Essay Example

Chipotle External Analysis Essay Restaurant Industry: Chipotle Mexican Grille, Inc. TABLE OF CONTENTS Chipotle Overview3 Industry Overview3 Key Macro External Forces4 Five Competitive Forces4 Major Factors Causing Fundamental Changes4 External Analysis4 Key (or Critical) Success Factors4 APPENDIX – 14 APPENDIX – 24 External Factor Evaluation (EFE) Matrix4 APPENDIX – 34 Competitive Profile Matrix (CPM)4 APPENDIX – 44 APPENDIX – 54 Content Topics4 Bibliography18 Chipotle Overview Chipotle Mexican Grill, Inc. is a â€Å"fast-food service restaurant† under limited service category. It was formed in 1993 and went public in 2006. It has the largest market share in the Mexican-type food segment with a net income of more than $126M in 2009 (Mergent online, 2010). The company spans over 35 states and has over 1000 restaurants across the U. S. and in parts of Columbia district, Canada and England. Chipotle’s menu consists of burritos, tacos, burrito bowls (a burrito without the tortilla), salads, and a variety of extras such as guacamole, salsas and tortilla chips seasoned with lime and kosher salt, cheese, lettuce. The company claims that with its varieties of extras, it’s able to expand its menu offerings to over 65,000 choices (Hoover, 2010). Industry Overview The U. S. fast-food industry is expected to generate total revenues of $184. 0 billion in 2010, which is equal to a 0. 32% share of the economy. Over the next five years (2010 to 2015), the revenue for the industry is expected to grow at a rate of 2. 5% per year to $208. 2 billion (Appendix 1 – Table 1). Due to the projected improvement of the domestic economy, the number of establishments and the number of enterprises are forecasted to increase at a rate of 1. % and 1. 3% per year, respectively. This means that new entrants will enter the market at a slower rate than the existing fast-food chains increase their branches (IBISWorld, 2010). The industry concentration, which is the combined market share of the top four chains, is low. The major players are McDonald’s Corporation (12. 7% of market share), Yum! Brands, Inc. (9. 7% of market share), Wendy’s/Arby’s Group, Inc. (6. 6% of market share), and Starbucks Corporation (5. 9% of market share) (Appendix 3 – Figure 1). The combined market share of these four firms is 34. 9%. We will write a custom essay sample on Chipotle External Analysis specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Chipotle External Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Chipotle External Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Since the industry life cycle is very close to a mature stage in the domestic market, many operators are looking to expand to unsaturated markets such as Asia and the Middle East. As a result, the trend toward globalization is high and is expected to increase over the coming years (IBISWorld, 2010). A study done by IBISWorld Industry Report found that â€Å"Households that make less than $50,000 per year spend 36. 6% of their food budget on dining out. Households that make between $50,000 and $75,000 per year spend 42. 4% of their food budget on dining out, while households that pull in more than $75,000 per year spend 45. % of their food budget on dining out† (2010). The same study found that almost half of the food budget is spent on eating out by people who are 18-25 years of age. People who are 25-30 years old spend 44. 8%, and those who are 35-50 years old spend 42. 3%. The 50-65 years of age category spends 42. 8%, and those who are 65 or older spend 37. 0% of their food budget dining out. It is true to say that â€Å"every age group and income level eats fast-food† (IBISWorld, 2010). (Appendix 4 – Figure 2) Since the domestic fast-food market is almost saturated, the competition has ecome intense. Operators are competing based on price, food quality, style/presentation, variety of foods, and quality of service. Moreover, the barriers to entry in this industry are low. This is because new operators can enter the market with low startup cost. Capital outlays can be minimized by leasing premises and equipment rather than buying outright. Franchising is another mechanism that allows new entrants to keep startup costs to a minimum (IBISWorld, 2010). Some operators opt for a multi-branding strategy to obtain economies of scale. For example, Yum! Brands, Inc. owns three of the world’s best known fast-food franchises, which are Kentucky Fried Chicken (KFC), Taco Bell, and Pizza Hut. With a multi-branding strategy, a firm can combine its brands into the same location in order to increase sales and improve operating efficiency. In terms of industry profitability, it appears that profit margins have a tendency to fall. This is because competition is high and customers tend to buy low-priced high-value items. The average gross margin and net profit margin is 37. 1% and 14. 3%, respectively (MSN Money, 2010). Key Macro External Forces Socio-cultural Today’s society is becoming increasingly more health conscious. Consumers are aware of calories, obesity, sodium content and fatty food intake issues. Many restaurants have responded to the healthy eating trend by expanding the number of healthy food choices on their menus. A study found that American fast-food chains increased their healthy menu items by 65% during the second quarter of 2009 to the second quarter of 2010 (Midday, 2010). Another important social factor is the desire to be socially responsible. More restaurants are going green by choosing local ingredients, meats, and vegetables over those shipped from thousands of miles away. A study reports that around 80% of Americans consider themselves to be environmentally conscious. The same study found that over 60% of Americans prefer to eat at eco-friendly or green restaurants (Hubpages, 2010). This is why some restaurants incorporate green business in their marketing strategies. Economic According to IBISWorld Industry Report, the revenue for the fast-food restaurant industry in the next five years (2010 to 2015) is projected to grow at a rate of 2. % per year to $208. 2 billion (2010). Although this industry is expected to grow; a change in aggregate disposable income could negatively affect its revenues. During the recession, consumers tend to be more selective about how they spend their disposable income. Some are cutting back on eating out and electing to save money by eating in. Those who still eat out during the recession t end to choose lower-priced, value items. This trend has led to an intense competition between restaurants in order to convince customers that they can get the most bang for their buck at their establishment. Legal-political-regulatory There are many regulations involved in the food industry. One in particular is the food safety law. In California, this law requires all employees who handle food in a restaurant to earn a California Food Handler Card. Under the law, employees are required to take a training course followed by a test, at a cost of $15 per course (CRA, 2010). The extra time spent training the staff and the fee for the test itself certainly increases the cost of doing business for restaurateurs. The new nutrition-labeling law also plays a significant role in the food industry. According to the Association of Corporate Counsel, the law requires â€Å"nutrition labeling for standard menu items sold by chain restaurants with 20 or more locations doing business under the same name and offering substantially the same menu items† (2010). In addition to having each food item tested, menus may have to be reprinted to include the required nutritional data. The cost of complying with this new regulation could prove quite costly for some companies. Technological Many in the food service industry have incorporated a Point-of-Sale (POS) system. This system typically uses a touch-screen display to allow kitchen staff to view orders that are placed at the front counter or drive through in real time. The POS system can also be used to manage inventory and collect relevant data on consumer purchasing habits. Some restaurants have adopted an online ordering system that allows customers to place and pay for orders online. While others have joined the wave of mobile applications, giving consumers the ability to place and pay for an order from virtually anywhere at any time. Five Competitive Forces Bargaining Power of Suppliers: Low Suppliers in the fast-food industry have low bargaining power. This is because most of the larger fast-food chains such as McDonald’s and Yum! Brands, Inc. get their ingredients from a number of various suppliers. These companies have dominance over their relationship with suppliers. For instance, Chipotle has set specific standards for raw materials and ingredients and will only deal with a select few quality suppliers. However, the company has been trying to increase the number of suppliers to mitigate price volatility and shortages of supply (ISBISWorld, 2010). Potential Entry of New Competitors: High Barriers to entry in fast-food service segment are relatively low. As previously noted in the Industry Overview, start-up costs can be kept to a minimum by taking advantage of franchising opportunities and opting to lease space/equipment in lieu of buying. Hence, the industry has seen an increase in the number of new entrants. However, it is somewhat difficult to enter and compete on a large scale, mostly because of market saturation. A new operator would have to invest heavily in forging relationships with suppliers and gain access to valuable raw materials, which could pose a significant barrier to entry (IBISWorld, 2010). Potential Development of Substitutes: High There’s been a consistent decrease in the fast-food industry’s revenue stream as today’s health conscious consumer is seeking out healthier dining-out options. They’re looking for quicker snack options at beverage outlets (non-alcoholic) or choosing prepared foods from grocery stores. Consequently, the threat of substitutes is high (IBISWorld, 2010). Bargaining Power of Consumers: High As noted in the Industry Overview, the fast-food industry is virtually saturated. There are numerous existing restaurateurs and new ones entering the market frequently. Consumers have lots of choices when determining where to spend their dinging-out dollars. Today’s diners have the option to switch between restaurants as their preferences change and their budgets dictate. Rivalry Among Competing Firms: High The scope of competitive rivalry for Chipotle is in the domestic Mexican fast-food segment. Other players in the quick-service non-Mexican category include international chains like McDonalds, Yum! Brands, Wendys and Burger King. Direct competitors include Qdoba Mexican Grill, Taco Bell, El Pollo Loco and Baja Fresh (Yahoo Finance, 2010). These are mainly privately-held companies. In order to stay competitive firms must continuously seek to differentiate themselves from their rivals in order to attract and retain customers. Major Factors Causing Fundamental Changes Change in Consumer Attitudes The limited-service restaurant segment accounts for a large part of the fast-food service industry in the U. S. Despite its major contribution to overall industry revenue, this segment has experienced a decline in the last few years. This can be partially attributed to the fact that consumers are becoming more concerned with convenience and value for their money. They are also focusing more on making healthier lifestyle choices. Hence, their inclination has been more towards non-alcoholic beverage outlets or prepared foods from grocery stores in lieu of fast-food (IBISWorld, 2010). Economy/ Recession According to IBISWorld, baby boomers, a group that constitutes a major percentage of earnings for fast-food businesses, are looking for more convenient dining-out options. Those with less disposable income, such as homeowners facing foreclosure and/or unemployment, are seeking out establishments that offer more value for their money. Therefore, it’s important for restaurants to be reasonable in terms of pricing. The fast-food industry is also highly dependent on labor. The industry has experienced a rise in its labor costs such as wage, benefits, compensation and last but not the least, granting unemployment compensation. There has been an increase in the level of regulation for minimum wage by Federal and State Governments and also nutritional content of meals by Food and Drug Administration (IBIS, 2010). Industry Saturation/ Globalization As noted in the Industry Overview, the industry life cycle is nearing maturity in the domestic market. Many operators are being forced to expand to unsaturated markets such as Asia and the Middle East. As a result, the trend toward globalization is expected to increase over the coming years (IBISWorld, 2010). External Analysis Economic Forces Struggling Economy Threat In the last two years the U. S. economy has experienced the worst downward spiral since the Great Depression. The unemployment rate rose from just under 6% in 2008 to more than 9% in 2009 (CountryWatch, 2010). Tough economic times forced many consumers to embrace penny-wise spending habits. Some speculate that even if the economy makes a strong recovery, the trend toward frugality will be difficult to reverse (ProgressiveGrocer. com, 2010). Appendix 1 – Table 2) In an effort to stretch their dollar further, some diners are choosing a fast-food value menu over the slightly more expensive casual-dining experience. This is highlighted in Charles’ 2008 article which explores why McDonald’s introduced a premium value menu. The fast-food giant’s senior vice president and chief marketing officer for the UK and Northern Europe declared, â€Å"As people fall out of the casual-dining sector, we hope to catch them with our premium offerings† (p. 3). Social, Cultural, Demographic, and Natural Environmental Forces Aging Population Opportunity According to a recent article in Restaurant News, the baby boomer generation will be critical to the restaurant industry’s growth in the next 10 years. (Appendix 4 – Figure 3) The article cites a statistic from the Bureau of Labor Statistics Consumer Expenditure Survey which indicates $2 of every $5 spent dining out can be credited to baby boomers (Francese, 2010). While most other age groups are shying away from dining out during the recession, baby boomers have actually shown an increased propensity for dining out (Glazer, 2009) Social Responsibility Opportunity The weak economy is causing consumers to think more intently about their purchasing decisions. In addition to analyzing the quality of a product or service, customers are considering what type of social statement the purchase will make. There’s a growing trend toward supporting businesses that are socially responsible. In the summer of 2009 Time Magazine conducted a poll which included 1003 participants. Almost 40% responded that they bought a product or service based on the company’s social or political values (Stengel, 2009). Environmentally Friendly Opportunity Restaurant owners are also taking note that consumers are concerned about the affect the products they buy have on the environment. KFC, one of the major players in the fast-food industry, is undertaking a â€Å"Renew, Reuse, Rejoice† initiative. The company is replacing foam and paper products with reusable plastic products. KFC hopes this new packaging will give customers more control over how the containers are reused and eventually disposed of (QSR, 2010). Health/Government – Opportunity Threat In addition to being good corporate citizens and environmentally friendly, restaurateurs must also address the public’s increasing awareness of the correlation between dining out and obesity. Many chain restaurants are now creating low-calorie menu items to appease the health conscious consumer and address new federal regulation requiring calorie count information on menus (Sasso, 2010). After facing criticism from public-health advocacy groups, Darden Restaurants, parent company of well known chains such as Red Lobster and Olive Garden, has introduced lower-calorie choices at many of its establishments (Pedicini, 2010). Competitive Forces Major Competitors Strengths/ Weaknesses In her article, â€Å"Fast –casual catches on†, Kelly Liyakasa contends that the fast-casual dining segment is experiencing the greatest growth in the restaurant industry (2010). According to IBISWorld, an online industry report database, major players must compete on the basis of price, location, dining experience, and customer service (2010). The top ten competitors in the casual-dining arena include Darden Restaurants, Pantry Inc. , Cheesecake Factory, Inc. and Chipotle Mexican Grill, Inc. (Mergent Online, 2010). Appendix 2 – Table 3) (This section intentionally left blank) Key (or Critical) Success Factors There are over 250 key success factors for the restaurant industry. Below is a summary of some of the most important as identified by IBISWorld (2010): Customer Loyalty: Ability to attract new customers and keep the current ones. Customer loyalty is critical if a restaurant is to succeed in today’s economy. Customer loyalty can boost sales and profits. A study shows that a 5% increase in customer loyalty can boost lifetime profits per customer by as much as 95%. Omega Management Group Corp, 2010). Global Expansion: Global expansion is considered a growth strategy for the food industry, especially because the domestic segment is saturated. Labor: This industry is labor intensive. Labor input is used in all areas of the business, from order-taking to delivery. Therefore, access to a well trained and versatile staff is important. Technology: Capacity to implement new technology in order to increase productivity and decrease the cost of labor. Atmosphere: Ability to create a pleasant environment and an enjoyable dining experience Location, location, location: Prime locations near key markets Inventory Control: Ability to keep excess supply orders and food/stock wastage to a minimum Pricing: Pricing model aligned with portion control process in order to minimize costs and maximize profit margins on menu items Government Regulations: Ability to comply with changing government regulations related to food safety and handling Customer Service: A knack for knowing what the customer wants and providing it

Policies of Deterrence and the Mental Health of Asylum Seekers essays

Policies of Deterrence and the Mental Health of Asylum Seekers essays Policies of Deterrence and the Mental Health of Asylum Seekers Derrick Silove, MD, FRANZCP; Zachary Steel, MPsychol; Charles Watters, PhD In the past, most refugees who permanently resettled in the traditional recipient countries of North America, Europe, and Australasia were screened prior to arrival in a host country. In the last decade, increasing numbers of unauthorized refugees or asylum seekers, those who formally lodge application for refugee status in the country in which they are residing, have applied for protection after crossing the borders of these countries. Concerns about uncontrolled migration have encouraged host countries to adopt policies of deterrence in which increasingly restrictive measures are being imposed on persons seeking asylum. These measures include, variously, confinement in detention centers, enforced dispersal within the community, the implementation of more stringent refugee determination procedures, and temporary forms of asylum. In several countries, asylum seekers living in the community face restricted access to work, education, housing, welfare, and, in some situations, to basic health care services. Allegations of abuse, untreated medical and psychiatric illnesses, suicidal behavior, hunger strikes, and outbreaks of violence among asylum seekers in detention centers have been reported. Although systematic research into the mental health of asylum seekers is in its infancy, and methods are limited by sampling difficulties, there is growing evidence that salient postmigration stress facing asylum seekers adds to the effect of previous trauma in creating risk of ongoing posttraumatic stress disorder and other psychiatric symptoms. The medical profession has a role in educating governments and the public about the potential risks of imposing excessively harsh policies of deterrence on the mental health of asylum seekers. The escape followed riots involving about 150 detainees at the facilit...

Credit risk management of CDSs, case from AIG Essay

Credit risk management of CDSs, case from AIG - Essay Example In regard to the bailout, AIG was presented with access to a $85 billion credit facility. In exchange, the United States government was presented with warrants for a 79.9% equity stake in AIG and the power to expel dividend payments to shareholders. AIG’s misfortunes started in a unit known as AIG Financial Products, which traded in credit default swap (CDS). A CDS acts as a safeguard against a default on assets that are connected to corporate debt and mortgage securities. The losses to AIG’s portfolio of CDSs were prompted by the disintegration of the subprime mortgage1 market. A groundbreaking amount of defaults by subprime borrowers with adjustable rate mortgages initiated the current catastrophe in the global financial markets in 2008. Most of these began in 2005 and 2006 when lenders remarkably loosened up on underwriting standards. Figure 4.2: Subprime mortgage originations Source: Bradford (2008) ‘The Subprime Mortgage Meltdown, the Global CreditCrisis and the D&O Market.’ Advisen : Productivity&insight for insurance professionals. The assumption was that homeowners would refinance prior to the monthly payments being readjusted, but decreasing real estate prices made it inaccessible for the majority of subprime borrowers who had hardly any or no equity in their houses to refinance. As they were incapable of paying the increased monthly payments, many borrowers had no choice but to default. Defaults in U.S. mortgages rose beyond record levels in the second quarter of 2007, and the fallout rapidly expanded all through the financial markets. The subprime mortgage debacle immediately brought forth the worldwide credit crisis. AIG is one of the financial institutions with credit default swaps business that was also affected during these circumstances. From then on, many CDSs were sold as insurance to cover those exotic financial instruments that created and spread the subprime housing crisis. As those mortgage-backed securities2 and collateralized debt obligations3 became more or less valueless, abruptly that reputedly low risk event saw an actual bond default occurring on a daily basis. AIG sold CDSs were no longer taking in free cash. It had to pay out a large amount of money. The crisis at AIG is a â€Å"question of liquidity, not of capital†, according to ROB Schimek, EVP and CFO of AIG Property Casualty Group. Despite the fact that there have been a small amount of losses paid under the CDSs, contract provisions demand of AIG to post collateral in cash if the value of the assets underlying a CDS declines. At the parent level, AIG has approximately $80 billion in shareholder equity, though the majority of that is secured in the company’s insurance operations and cannot be converted to meet the collateral calls of the financial products unit. Since it did not have enough cash to meet the collateral demands, the company faced a liquidity crisis and bankruptcy protection. 4.3 What AIG actual did leaded the company go down 4.3.1 The undoing of AIG liquidity crisis AIG reported â€Å"an unrealized market valuation loss of $11.5 billion on [the] super senior credit default swap (CDS) portfolio† held by its subsidiary, AIG Financial Products in the annual report for 2007. The definition of CDSs was discussed in chapter 2.2. This initiated a drastic downfall and ended AIG’

Money Landry Research Proposal Example | Topics and Well Written Essays - 750 words

Money Landry - Research Proposal Example The only paper trials available to the financial institution used to be the records of bank accounts if which the deposition was made. The banks did not feel the need to report currency transactions. Bank Secrecy Act (BSA) was enacted by the Congress in 1970 which was followed by (the introduction of the Currency Transaction Report (CTR, Form 4789), Report of International Transportation of Currency or Monetary Instruments (CMIR, Form 4790) and Report of Foreign Bank and Financial Accounts (FBAR, Form TD F 90-22.1)) (IRS.gov, 2010). Enactment of BSA proved a big step in the way of hindering the money laundering in that it developed the paper trial which was required by the law enforcement in order to trace the dollars that went untaxed as well as others that were laundered by the financial institutions. IRS has evaluated the performance of BSA and has reached the conclusion that BSA has done a lot to dismantle the prime money and drug laundering organizations in the country through p rudent investigation and forfeiture of their assets. Besides, three directives have been issued by the European Union (EU) that are directed at eliminating the use of financial system for money laundering (Hopton, 2009, p. 9). Regulations and laws in the whole EU against money laundering are influenced by the very directives. In the sub-region of West Africa, participants of a seven page communique which was issued at a course’s termination noticed a remarkable increase in the dangers associated with financial crimes including money laundering. â€Å"With globalization, participants added, crime transcends national boundaries so easily that the fight against the scourge calls for absolute collaboration at the...Money Landry: Research Proposal Money laundering is not just the outcome of the legal framework of a country, but is a result of the socioeconomic conditions as well as culture prevailing in it. This research tends to identify the specific factors that are responsible for the growth and strengthening up of the money laundering in a country. Moreover, this research aims at determining the most cost effective and useful way of controlling money laundering in a country. The research will compare the differences in the causal and restraining factors determined between a developed and a developing country to analyze the influence of economic strength on money laundering. Research objectives: This research has three primary objectives: 1. To study the effects of money laundering on a nation’s economy. 2. To study the factors promoting the growth of money laundering in a nation. 3. To identify the most useful and cost effective way of restraining the growth of money laundering Literature Review: â€Å"Money laundering has traditionally been considered to be a process by which criminals attempt to hide the origins and ownership of the proceeds of their criminal activities [so that they] retain control over the proceeds†. Banks are the fundamental facilitators of money laundering. The factor analysis will be conducted to identify common variables whose relation with money laundering will be evaluated through regression analysis. The dependent variable will be money laundering and there will be a multitude of independent variables including law, bank policy, and governmental taxes.

Analysis the China Eastern Airlines Corporation Limited Essay

Analysis the China Eastern Airlines Corporation Limited - Essay Example The investor will get appropriate information on whether to invest on the company or not (Finance.yahoo.com). The Company has maintained a good gross profit margin over the five-year period. It had 38.57% in 2010, 39.67% in 2011, 38.98% in 2012, 37.85% in 2013, and 40.35%. The constant figure of gross profit margin, which the company maintained on the earlier periods, indicates that the prices were of their products and services, and purchases matched in increase and decrease (Barrow and Barrow, 2008). The fall in 2013 shows that there was a fall in prices but this was compensated by the sudden increase of the ratio in 2014 showing that the company is making profits from its sales. The Company’s operating profit margin was 4.78% in 2010, 4.88% in 2011, 5% in 2012, 1.73% in 2013, and 6.45% in 2014. This margin increased steadily over the five-year period with the exception of the sudden fall in 2013. The fall in operations was a result of operational difficulties, which the company experienced. The company had to incur extra costs to bring the situation back to normal (Berman, Knight and Case, 2006). The larger increase in the margin in 2014 shows the managements effort in correcting the problem experienced in 2013. The increase of the ratio over the five years indicates the management’s efficiency in generating profits from the operations of the company. China Eastern Airlines Corporation Limited’s net profit margin was 3.29% in 2010, 3.42% in 2011, 3.36% in 2012, 2.35% in 2013, and 0.38% in 2014. The company maintained a fair margin the earlier three years of the five-year period. The performance during those years was desirable as it indicated that the management’s efficiency in generating sufficient net profit from the sales of the company (Berman, Knight and Case, 2013). The fall of the margin in 2013 and 2014 put the managements’ efficiency into

Impact of Bank Mergers and Acquisitions on Pakistan Banks

Impact of Bank Mergers and Acquisitions on Pakistan Banks 1. INTRODUCTION 1.1 Background of the Study The Pakistani banking sector has undergone extraordinary transformation over the years, in provisions of number of organizations, ownership constitution, as well as the deepness of operations. These modifications have been prejudiced mostly by challenges pretended by deregulation in policies of financial sector, globalization of procedures, technical innovations and embracing of managerial and prudential necessities that kowtow to international principles. The wave of merger and acquisitions that currently swept through the banking sector started after the announcement by the state bank of Pakistan, that banks in Pakistan should beef up their minimum capital adequacy ratio should according to bank risk weighted assets or set by SBP. Mergers and Acquisitions are commonplace in developing countries of the world but are just becoming prominent in Pakistan. Merger and acquisition is simply another way of saying survival of the fittest that is to say a bigger, more efficient, better-capitalized, more skilled industry. Is part of the natural evolution of industries? It is primary driven by Business motives or market forces and Regulatory interventions. The issues therefore , which this study intend to address are whether merger and acquisition will bring about efficient reliable and sound capital base for the bank that fully embraced mergers and to what extend can bank merge boost the confidence of the customers , the investors , the shareholders and ability to finance the real time sector . 1.2 Problem statement The recent sudden increase of bank mergers in Pakistan is attracting much attention, partly because of keen interest in what motivates companies to merge and how mergers affect efficiency. A view holds that companys merger not just to obtain superior but also to be well-organized. It is argued that mergers allow the banking industry to take improvement of new occasions created by transformation in the technical and authoritarian surroundings. A dispute of this is the reduction in the number of banks countrywide but the concentration of power in local banking markets has not increased. The problems of under-capitalization, mismanagement and poor corporate governance have continued to be sources of instability and corruption in successive Pakistani banking crises up till now. Hence, mergers are singing a useful role in restructuring the banking industry with no risk and lack of opposition though, it collide on competence be worthy of attention. This research will consider this inspection by probing the effect of the merger as well acquisition that had taken place in the banking sector of Pakistan on the performance of a selected bank. 1.3 Objectives of the study The reason of this project is to examine the overall impact of Banks mergers and acquisitions in the Pakistani Banking sector. This research also focuses on some issues: To explore the collision of merger as well as acquisition on bank effectiveness, profitability, enlargement and endurance. To observe the impact of the merger as well as acquisition on the stage of competitiveness in the Pakistani Banking Sector. To classify those which will give advantage and be defeated in the merger and acquisition procedures? Does merger boost the capital base of banks? Does merger improve customers service delivery in the area of information technology, innovation and boosting customers confidence? 1.4 Hypothesis The hypothesis with the intention of testing in this research is stated below as: H0: Merger and acquisition has not impact on the banks performance in Pakistan h3: Merger and acquisition has an impact on the banks performance in Pakistan 1.5 Significance of the study The requirement for having a jingle economy and most especially disinfecting the banking sector; It is anticipated that this work will hold out a solution to the importance and recompense of merger and acquisition as a policy tool for the survival of our banking sector. It will equally be of a tremendous significance to those outside the financial sector, who do not know much about some of the benefit of bank merger and acquisition. 1.6 The scope and limitation of the study The study will not in any way inhabit on the technical issues connecting to merger and acquisition or in the locale of work out figures, slightly, it will attempt to examine the impact of merger and acquisition in the Banking industry of Pakistan. The study will be carried out in Islamabad/Rawalpindi. For this reason the result cannot be generalized. Also, the study has nothing to do with other banks even though a number of them have experienced mergers too. CHAPTER 2 2.0 LITERATURE REVIEW There are many companies that coming together to originate another company and companies taking over the currently existing companies to expand their business (Altunbas, 2005). Due to recession many Pakistani companies are facing the feeling of uncertainty rising which become reason to alarmed to businessmen, it is not astonishing when we listen to about the enormous corporate restructurings comes into being, particularly in the previous couple of years. Some companies have been taken over and numerous have going to take internal restructuring, while confident companies in same area of trade have consider it valuable to merge with each other to form one company. There are many gears of merger and acquisitions, offshoot, tender proposal, and many other forms of corporate restructuring in our daily news paper. Thus significant matters both for company decision and policy making and public image have been elevated. No company is considered secure from a conquest risk. On the encouraging elevation Mergers may be dangerous for the strong expansion and enlargement of the company. Victorious entry into innovative product and services and ecological markets may necessitate Mergers at some stage in the companys development. Flourishing contest in international markets may focus on abilities gain in a timely and proficient fashion in the course of Mergers. Most disputed that mergers boost value and competence and move capital to their uppermost and best uses, thus mounting shareholder value (Kruse, 2002). To decide on a merger or not is a complex issue, particularly in provisos of the technicalities concerned. We encompass almost all issues that the management must focus before taking final decision for merger. A lot of brainstorming would be necessary through the managements to attain conclusion. Judgment has to be fulfilled after discussing the advantages and disadvantages of the planned merger and the impact of that merger on the business, administrative benefits, on shareholders value, tax implications including stamp duty. 2.1 MERGER Meaning â€Å"A merger is a combining two companies in one corporation which is completely absorbed by another company. The less significant company loses its name and operates with more important company, which exists with its identity.† (Chawla, 2008) What Mergers actually mean: A merger is a combining two companies in one corporation which is completely absorbed by another company. It may entail absorption or consolidation. In absorption one company acquires another company. For example, Telenor and Tameer Microfinance Bank (TMB). In consolidation, two or more companies combine to form a new company. For example, Polka and Walls. The less significant corporation loses its identity and turn into the more significant corporation, which keep hold of its identity. A merger put out the merged corporation, and the existing company supposes all the rights, civil liberties, and liabilities of the merged company. A merger is not like a consolidation, in which two companies lose their detach uniqueness and join to make a totally new company. A rule is based on the relation that mergers inevitably remove competition between the merging companies. This relation is most sharp where the parties are direct opponent, because courts often believe that such provision are more horizontal to limit output and to raise prices. The terror that mergers and acquisitions decrease competition has inevitable that the government carefully examine planned mergers (Altunbas, 2005). in spite of disquiet about a decreasing of competition, companies are comparatively free to buy or sell whole companies or particular parts of a company. Mergers and acquisitions frequently result in a number of social reimbursements. Mergers can convey better management or technological skill to abide on underused assets. They also can create economies of scale and range that decrease costs, get better quality, and raise output. The opportunity of a takeover can deject company managers from acting in ways that fail to capitalize on profits. A merger can enable to owner to sell the company to someone who is more proverbial with the particular industry and maintain a better position to shell out the highest price. The view of a profitable sale encourages entrepreneurs to form new company. Merger is known as amalgamation too. Merger is the synthesis of two or more companies which are working in same era. All current and fixed assets, short and long term liabilities and the stocks of one company shifted toward other Company in reflection of payment in nature of: Cash Equity share of the acquired corporation, Debentures of acquired corporation, All of the above in mixed mode (Chawla, 2008) 2.2 Mergers vs. Acquisitions These conditions are usually used to describe same thing but in actuality, they have vaguely dissimilar meanings. An acquisition and merger pass on to the act of one corporation attainment of another company and obviously fitting the new possessor. Legally, the target corporation, the corporation that is bought, no more presents. Generally acquisition is use to acquired property in ownership. In the scenario of corporation combinations, an acquisition is to buy one company by getting controlling interest in all resources of other company. A merger is a combination of two or more corporations that are frequently about the similar size and concur to bond into one large corporation. In the scenario of a merger, mutually companys stocks come to an end to trade as the fresh corporation selects a latest name and a new stock is announced in position of the two different companys stock. This view of a merger is unrealistic by real world standards as it is often the case that one company is actually bought by another while the terms of the deal that is struck between the two allows for the company that is bought to publicize that a merger has occurred while the company that is doing the buying backs up this claim. This is done in order to allow the company that is bought to save face and avoid the negative connotations that go along with selling out. 2.3 Purpose of Mergers Acquisition: Purposes for mergers are given below. (1) Procurement of materials: To uphold the resources of supplies of raw materials or mediator product To get hold of economies of purchase as a discount, reduce transportation costs, many overhead costs to introduce new department, etc. To divide the reimbursement of suppliers economies by generalizing the resources (Cartwright, 1995). (2) Revamping production facilities: To accomplish economies of scale by combining production services throughout concentrated utilization of deposit and capital To generalized product specifications, perfection in quality of manufactured goods, growing market and planning at customers satisfaction in the course of amplification subsequent to sale services (Chawla, 2008) To attain improved manufacturing technology and knowledge from the acquired company To diminish cost, improvement in quality and manufacture competitive goods to hang on to and get better market share (Altunbas, 2005). (3) Market expansion and strategy: To get rid of competition and defend present market; To get new market channel in control of the acquirer; Strategic control of patents and copyrights To acquire innovative product for diversification or replacement of accessible goods and to increase products range; (Kruse, 2002) Strengthening keep hold of channels and sale the products to downsize the distribution; To decrease advertising cost and get better public image (4) Financial strength: To perk up liquidity and boast direct right to use to cash. To organize of extra and obsolete assets for cash To improve mechanism to maintain capacity, make use of better strength and the superior assets assistance; (Chawla, 2008) To achieve tax advantages To get better Earning Per Share (5) Commonachievements: To get better representation and draw attentions of better-quality managerial aptitude to administer its associations; To give more satisfaction to customers or product user (Chawla, 2008) (6) Own developmental plans: The main reason of merger and acquisition is reversed by the acquirer corporations strategies. A corporation decide to acquire the other business only when it develop it own goals to enlarge its operation by examining its internal strength where it is not going to face any difficulty in tax, accounting and in valuation of company, etc. It has a goal to attain a suitable amalgamation that provide opportunities to enhancement in its funds by increasing its securities. (7) Strategic purpose: The Acquirer Corporation inspect the merger to attain strategic goals in the course of substitute of amalgamation which could be vertical, horizontal merger, product expansion, market expansion or other particular different goals according to attentions of achieving the corporate strategies. Thus, various types of combinations distinct with each other in nature are adopted to pursue this objective like vertical or horizontal combination. (8) Corporate friendliness: Even though it is uncommon but it is reality that companies demonstrate degrees of cooperative spirit regardless of competitiveness to give security to each other from hostile takeovers and develop circumstances of partnership allotment of goodwill of another to get more efficiency through business amalgamation. (9) Desired level of integration: Mergers and acquisition are hunted to achieve the most wanted level of integration between the two corporations. This type of merger could be an operational or financial. The main reason and the necessities of the acquiring corporation get a long term benefit in choosing a appropriate partnership in merger or acquisition in companionship. (Chawla, 2008) 2.4 Reasons of merger Acquisition: The principal economic rationale of a merger id that the value of the combined entity is expected to be greater than the sum of the independent values of the merging entities. For example, if companys A and B merge, the value of the combined entity, V (AB), is expected to be greater than (VA+VB), the sum of the independent values of A and B. (Chawla, 2008) A variety of reasons like growth, diversification, economies of scale, managerial effectiveness and so on are cited in support of merger proposals. Some of them appear to be plausible in the sense that they create value; others seem to be dubious as they dont create value. The most plausible reasons in favor of mergers are strategic benefits, economies of scale, economies of scope, economies of vertical integration, complementary resources, tax shields, utilization of surplus funds, and managerial effectiveness. Strategic benefit: As a pre-emptive move it can prevents competitor from establishing a similar position in that industry. It offers a special timing advantage because the merger alternative enables the company to ‘leap frog several stages in the process of expansion. It may entail less risk and even less cost In a ‘saturated market, simultaneous expansion and replacement (through merger) makes more sense than creation of additional capacity through internal expansion Economies of scale: When two or more companys combine, certain economies are realized due to larger volume of operations of the combined entity. These economies arise because of more intensive utilization of production capacity, distribution networks, and research and development facilities, data processing systems and so on. Economies of scale are prominent in horizontal mergers where the scope of more intensive utilization of resources is greater. Even in conglomerate mergers there is scope for reduction of certain overhead expenses. Economies of scope: A company may use a specific set of skills or assets that it possesses to widen the scope of its activities. For example: proctor and gamble can enjoy economies or scope if it acquires a consumer product company that benefits from its highly regarded consumer marketing skills. Economies of vertical integration: When corporations occupied at dissimilar stages of manufacturing and value chain merge, financial system of vertical integration may be comprehend. For instance, the merger of a corporation occupied in searching and production with a company occupied in cleansing and marketing may get better co-ordination and manage. Vertical integration, though, is not forever a good thought. If a company does everything in-house it may not get the advantage of outsourcing from self-governing suppliers who may be additional well-organized in their division of the value chain. Complementary resources: If two companies have harmonizing resources, it may make sense for them to merge. A good example of a merger of companies which complemented each other well is the merger of online gift shop with TCS. Online gift shop is best to know the demands of customer but they dont have excellent transport infrastructure to deliver that gifts to customers but to make its system efficient online gift business should be merge/acquire with TCS or any other service like that. Tax shields: When a company with accumulated losses and/or unabsorbed depreciation merges with a profit making company, tax shields are utilized better. The company with accumulated losses and/or unabsorbed depreciation may not be able to derive tax advantages for a long time. However, when it merges with a profit making company, its accumulated losses and/or unabsorbed depreciation can be set off against the profits of the profit making company and the tax benefits can be quickly realized. (Mylonakis, 2006) Utilization of surplus funds: A company in a mature industry may generate a lot of cash but may not have opportunities for profitable investment. Such a company ought to distribute generous dividends and even buy back its shares, if the same is possible. However, most management has a tendency to make further investments, even though they may not be profitable. In such a situation, a merger with another company involving cash compensation often represents a more efficient utilization of surplus funds. Managerial effectiveness: One of the potential gains of merger is an increase in managerial effectiveness. This may occur if the existing management team, which is performing poorly, is replaced by a more effective management team. Another allied benefit of a merger may be in the form of greater congruence between the interests of the managers and the share holders. (Mylonakis, 2006) Often mergers are motivated by a desire to diversify and lower financing costs. Prima facie, these objectives look worthwhile, but they are not likely to enhance value. Diversification: A frequently acknowledged reason for mergers is to attain risk diminution through diversification. The degree, to which risk is condensed, of course, depends on the association connecting with the earnings of the merging units. at the same time as negative correlation fetches superior lessening in risk, positive correlation takes smaller diminution in risk. Corporate diversification, though, may present value in at smallest amount two special gears. (Chawla, 2008) 1) If a company is overwhelmed with troubles which can put in danger its existence and its merger with one more company can hoard it from possible liquidation. 2) If shareholders do not have the chance of diversification because one of the corporations is not traded in the bazaar, corporate diversification might be the merely possible route to risk diminution. Lower financing costs: The outcomes of larger size and greater earnings and stability, many argue, are to reduce the cost of borrowing for the merged company. The reason for this is that the creditors of the merged company enjoy better protection than the creditors of the merging companies independently. Increase Supply-Chain Pricing Power: Bybuying out one of its suppliers or one of the distributors, a business can eliminate a level of costs. If a company buys out one of its suppliers,it is able to save on themargins that the supplier was previouslyadding to its costs; this isknown asa vertical merger.If a company buys out a distributor, it may be able to ship its products at a lower cost. Eliminate Competition: Many MA dealsallow the acquirer to eliminate future competition and gain a larger market share inits products market.The downside of thisis that a large premium is usually required to convince the target companys shareholders to accept the offer. It is not uncommon for the acquiring companys shareholdersto sell their shares and push the price lower in response to the company paying too much for the target company. Synergy: The most used word inMA is synergy, which is the idea that by combining business activities, performance will increase and costs will decrease. Essentially, a business will attempt to merge with another business that has complementary strengths and weaknesses. (Mylonakis, 2006) 2.5 categories of mergers Acquisitions The resulted merger and acquisition is based on the offeror corporations attention what it desires to attain. Depend on offerors goal, mergers could be conglomeratic, vertical, horizontal, and circular which will explain below. I. Vertical combination: A corporation merged with another company to increase espousing in backward integration and forward integration to absorb the resources of supply in market. The acquiring business due to merger can reduce inventories and finished products. In the vertical combination, the acquirer may be a supplier or a buyer who use their intermediary material for finished goods. (Ahmed Badreldin, October 2009) There are some benefits from merger that acquiring companies achieved i.e. 1. Due to imperfect market and shortage of resources and obtained products, it gets strong position. 2. Has monopoly in goods specifications. II. Horizontal combination: It is a combination of two competitive companies which are at same level of success in industry, and both companies should be related from same business. The main rationale of such mergers is to get economies of scale by removing repetition of conveniences and the processes and expansions the product line, diminution in speculation in working capital, removal in competition attentiveness in product, lessening in advertising costs, raise in market segments and work out improved control on market (Badreldin, 2009). III. Circular combination: Corporations generating unique products look for merger to contribute to general division and investigate facilities to get economies by reducing cost on replication and prop up market growth. The acquiring corporation gets advantaged as diversification and resource sharing. IV. Conglomerate combination: It is combination of two corporations affianced in different businesses. Main reason of this type of merger remains consumption of finances and increase debt capacity by bringing change in their financial system and also boost share holders leveraging and earning per share, lessening average cost of capital and in that way raising present worth of the outstanding shares. Merger increases the on the whole constancy of the acquirer corporation and generates balance in the corporations whole portfolio of various products and manufacturing processes. (Sue Cartwright, May 01, 1995) V. Market-extension This entails the grouping of two corporations that sell the identical products in dissimilar markets. A market-extension permits for the market that can be accomplished to develop into larger and is the foundation for the repute of the merger. VI. Product-extension This merger is flanked by two corporations that sell different, but to some extent associated products, in a same market. This allows the new, larger company to group their goods and sells them with better success to the previously common market with the intention of the two different companies shared. VII. Accretive In accretive an acquired firms earnings per share enlarge. A substitute way of manipulative this is if a corporation with a high cost to earnings ratio obtains one with a less price earning ratio. (Chawla, 2008) 2.6 Concerns of Mergers Acquisitions Conglomerate, Horizontal and vertical mergers each hoist unique competitive alarms. Horizontal Mergers: Horizontal mergers lift up three basic cutthroat problems. The first is the removal of competition among merging corporations, which, depending on their bulk, could be important. The second is that the amalgamation of the merging companys operations might make sizeable market power and might facilitate the merged company to raise prices by falling output unilaterally. The third difficulty is that, by rising concentration in the related market, the deal might make stronger the ability of the markets outstanding contributors to synchronize their pricing and production decisions. The terror is not that the companies will connect in secret partnership but that the decrease in the number of industry members will improve implicit coordination of performance. (Chawla, 2008) Vertical Mergers: Vertical mergers have two essential forms: Forward integration: by which a company purchases a customer, and backward integration, in which a company gets a supplier. Swapping the market contacts with interior transfers can present at least two foremost benefits. First, the vertical merger maintains all transactions between a producer and its supplier, as a result adapt a potentially adversarial association into impressive more like a partnership. Next, internalization can provide management more effectual ways to scrutinize and get better performance. Vertical integration merger does not diminish the total number of economic units working at one level of the market, but it is changing patterns of industry performance. Either its a forward or backward integration, the newly acquired company may make a decision to deal only with the acquiring company, thus changing competition between the acquiring companys suppliers, customers, or opponents. Suppliers may misplace a market for their possessions; retail channel may be destitute of supplies; or opponents may locate that both supplies and channel are infertile. These potential raise to the anxiety that vertical integration will shut out opponents by restrictive their access to resources of supply or to customers. Vertical mergers also might be less competitive because their well-established market power may hamper new industry from entering the market. (Chawla, 2008) Conglomerate Mergers: Conglomerate mergers take many forms, series from provisional joint ventures to complete mergers. Moreover a multinational merger is wholesome, ecological, or a product-line addition, it engages companys that operate in separate markets. Therefore, a corporation transaction generally has no direct result on competition. There is no reduction or other alters in the number of companies in both the acquiring and acquired corporations market. (Chawla, 2008) Conglomerate mergers can provide a market or requirement for companies, therefore giving entrepreneurs liquidity at an open market price and with a key inducement to form new enterprises. The danger of conquest might force offered managers to increase competence in competitive markets. Conglomerate mergers also offer openings for companies to lessen capital costs and transparency and to attain other efficiencies. Conglomerate mergers, though, may lessen future competition by get rid of the option that acquiring company would have come into the acquired companys market separately. A conglomerate merger may exchange a strong company into a leading one with an influential competitive benefit, or else formulate a policy to make it complex for other corporations to penetrate the market. Such mergers also may lessen the number of minor companies and may enlarge the merged companys political influence, in that way weaken the social and political objectives of keeps self-governing decision-making hubs, assurance that small firm will get opportunities, and defending democratic practices. (Mylonakis, 2006) 2.7 Benefits of Mergers Acquisition Diversification: Corporations that want quick growth in dimension or diversification or market share in the variety of products may discover that a merger can be worn to accomplish the intentions instead of obtainable throughout the volume overriding practices of internal expansion or diversification. The company may attain the similar goals in a short time period merging with an existing company. Moreover this type of a strategy is frequently show low cost than the alternative of mounting the necessary production potential and capability. If a company that wants to expand operations in existing or new product area can find a suitable going concern (Altunbas, 2005). It may avoid many of risks associated with a design; manufacture the sale of addition or new products. Moreover when a company expands or extends its product line by acquiring another company, it also removes a potential competitor. Synergism: The scenery of synergism is very simple. Synergism exists at any time the value of the combination is greater than the sum of the real values. We can explain it as; synergism is â€Å"2+2=5†. But categorize synergy on appraise it may be difficult; in fact occasionally its implementations may be very delicate (Chawla, 2008). As generally defined to include any incremental worth is resulting from business combination, synergism in the basic economic good reason of merger. The incremental value may draw from raise in either operational or financial competence. (Chawla, 2008) Operating Synergism: Operating synergism may result from economies of scale, some degree of monopoly power or increased managerial efficiency. The value may be achieved by increasing the sales volume in relation to assts employed increasing profit margins or decreasing operating risks. Although operating synergy usually is the result of either vertical/horizontal integration some synergistic also may result from conglomerate growth. In addition, sometimes a company may acqu Impact of Bank Mergers and Acquisitions on Pakistan Banks Impact of Bank Mergers and Acquisitions on Pakistan Banks 1. INTRODUCTION 1.1 Background of the Study The Pakistani banking sector has undergone extraordinary transformation over the years, in provisions of number of organizations, ownership constitution, as well as the deepness of operations. These modifications have been prejudiced mostly by challenges pretended by deregulation in policies of financial sector, globalization of procedures, technical innovations and embracing of managerial and prudential necessities that kowtow to international principles. The wave of merger and acquisitions that currently swept through the banking sector started after the announcement by the state bank of Pakistan, that banks in Pakistan should beef up their minimum capital adequacy ratio should according to bank risk weighted assets or set by SBP. Mergers and Acquisitions are commonplace in developing countries of the world but are just becoming prominent in Pakistan. Merger and acquisition is simply another way of saying survival of the fittest that is to say a bigger, more efficient, better-capitalized, more skilled industry. Is part of the natural evolution of industries? It is primary driven by Business motives or market forces and Regulatory interventions. The issues therefore , which this study intend to address are whether merger and acquisition will bring about efficient reliable and sound capital base for the bank that fully embraced mergers and to what extend can bank merge boost the confidence of the customers , the investors , the shareholders and ability to finance the real time sector . 1.2 Problem statement The recent sudden increase of bank mergers in Pakistan is attracting much attention, partly because of keen interest in what motivates companies to merge and how mergers affect efficiency. A view holds that companys merger not just to obtain superior but also to be well-organized. It is argued that mergers allow the banking industry to take improvement of new occasions created by transformation in the technical and authoritarian surroundings. A dispute of this is the reduction in the number of banks countrywide but the concentration of power in local banking markets has not increased. The problems of under-capitalization, mismanagement and poor corporate governance have continued to be sources of instability and corruption in successive Pakistani banking crises up till now. Hence, mergers are singing a useful role in restructuring the banking industry with no risk and lack of opposition though, it collide on competence be worthy of attention. This research will consider this inspection by probing the effect of the merger as well acquisition that had taken place in the banking sector of Pakistan on the performance of a selected bank. 1.3 Objectives of the study The reason of this project is to examine the overall impact of Banks mergers and acquisitions in the Pakistani Banking sector. This research also focuses on some issues: To explore the collision of merger as well as acquisition on bank effectiveness, profitability, enlargement and endurance. To observe the impact of the merger as well as acquisition on the stage of competitiveness in the Pakistani Banking Sector. To classify those which will give advantage and be defeated in the merger and acquisition procedures? Does merger boost the capital base of banks? Does merger improve customers service delivery in the area of information technology, innovation and boosting customers confidence? 1.4 Hypothesis The hypothesis with the intention of testing in this research is stated below as: H0: Merger and acquisition has not impact on the banks performance in Pakistan h3: Merger and acquisition has an impact on the banks performance in Pakistan 1.5 Significance of the study The requirement for having a jingle economy and most especially disinfecting the banking sector; It is anticipated that this work will hold out a solution to the importance and recompense of merger and acquisition as a policy tool for the survival of our banking sector. It will equally be of a tremendous significance to those outside the financial sector, who do not know much about some of the benefit of bank merger and acquisition. 1.6 The scope and limitation of the study The study will not in any way inhabit on the technical issues connecting to merger and acquisition or in the locale of work out figures, slightly, it will attempt to examine the impact of merger and acquisition in the Banking industry of Pakistan. The study will be carried out in Islamabad/Rawalpindi. For this reason the result cannot be generalized. Also, the study has nothing to do with other banks even though a number of them have experienced mergers too. CHAPTER 2 2.0 LITERATURE REVIEW There are many companies that coming together to originate another company and companies taking over the currently existing companies to expand their business (Altunbas, 2005). Due to recession many Pakistani companies are facing the feeling of uncertainty rising which become reason to alarmed to businessmen, it is not astonishing when we listen to about the enormous corporate restructurings comes into being, particularly in the previous couple of years. Some companies have been taken over and numerous have going to take internal restructuring, while confident companies in same area of trade have consider it valuable to merge with each other to form one company. There are many gears of merger and acquisitions, offshoot, tender proposal, and many other forms of corporate restructuring in our daily news paper. Thus significant matters both for company decision and policy making and public image have been elevated. No company is considered secure from a conquest risk. On the encouraging elevation Mergers may be dangerous for the strong expansion and enlargement of the company. Victorious entry into innovative product and services and ecological markets may necessitate Mergers at some stage in the companys development. Flourishing contest in international markets may focus on abilities gain in a timely and proficient fashion in the course of Mergers. Most disputed that mergers boost value and competence and move capital to their uppermost and best uses, thus mounting shareholder value (Kruse, 2002). To decide on a merger or not is a complex issue, particularly in provisos of the technicalities concerned. We encompass almost all issues that the management must focus before taking final decision for merger. A lot of brainstorming would be necessary through the managements to attain conclusion. Judgment has to be fulfilled after discussing the advantages and disadvantages of the planned merger and the impact of that merger on the business, administrative benefits, on shareholders value, tax implications including stamp duty. 2.1 MERGER Meaning â€Å"A merger is a combining two companies in one corporation which is completely absorbed by another company. The less significant company loses its name and operates with more important company, which exists with its identity.† (Chawla, 2008) What Mergers actually mean: A merger is a combining two companies in one corporation which is completely absorbed by another company. It may entail absorption or consolidation. In absorption one company acquires another company. For example, Telenor and Tameer Microfinance Bank (TMB). In consolidation, two or more companies combine to form a new company. For example, Polka and Walls. The less significant corporation loses its identity and turn into the more significant corporation, which keep hold of its identity. A merger put out the merged corporation, and the existing company supposes all the rights, civil liberties, and liabilities of the merged company. A merger is not like a consolidation, in which two companies lose their detach uniqueness and join to make a totally new company. A rule is based on the relation that mergers inevitably remove competition between the merging companies. This relation is most sharp where the parties are direct opponent, because courts often believe that such provision are more horizontal to limit output and to raise prices. The terror that mergers and acquisitions decrease competition has inevitable that the government carefully examine planned mergers (Altunbas, 2005). in spite of disquiet about a decreasing of competition, companies are comparatively free to buy or sell whole companies or particular parts of a company. Mergers and acquisitions frequently result in a number of social reimbursements. Mergers can convey better management or technological skill to abide on underused assets. They also can create economies of scale and range that decrease costs, get better quality, and raise output. The opportunity of a takeover can deject company managers from acting in ways that fail to capitalize on profits. A merger can enable to owner to sell the company to someone who is more proverbial with the particular industry and maintain a better position to shell out the highest price. The view of a profitable sale encourages entrepreneurs to form new company. Merger is known as amalgamation too. Merger is the synthesis of two or more companies which are working in same era. All current and fixed assets, short and long term liabilities and the stocks of one company shifted toward other Company in reflection of payment in nature of: Cash Equity share of the acquired corporation, Debentures of acquired corporation, All of the above in mixed mode (Chawla, 2008) 2.2 Mergers vs. Acquisitions These conditions are usually used to describe same thing but in actuality, they have vaguely dissimilar meanings. An acquisition and merger pass on to the act of one corporation attainment of another company and obviously fitting the new possessor. Legally, the target corporation, the corporation that is bought, no more presents. Generally acquisition is use to acquired property in ownership. In the scenario of corporation combinations, an acquisition is to buy one company by getting controlling interest in all resources of other company. A merger is a combination of two or more corporations that are frequently about the similar size and concur to bond into one large corporation. In the scenario of a merger, mutually companys stocks come to an end to trade as the fresh corporation selects a latest name and a new stock is announced in position of the two different companys stock. This view of a merger is unrealistic by real world standards as it is often the case that one company is actually bought by another while the terms of the deal that is struck between the two allows for the company that is bought to publicize that a merger has occurred while the company that is doing the buying backs up this claim. This is done in order to allow the company that is bought to save face and avoid the negative connotations that go along with selling out. 2.3 Purpose of Mergers Acquisition: Purposes for mergers are given below. (1) Procurement of materials: To uphold the resources of supplies of raw materials or mediator product To get hold of economies of purchase as a discount, reduce transportation costs, many overhead costs to introduce new department, etc. To divide the reimbursement of suppliers economies by generalizing the resources (Cartwright, 1995). (2) Revamping production facilities: To accomplish economies of scale by combining production services throughout concentrated utilization of deposit and capital To generalized product specifications, perfection in quality of manufactured goods, growing market and planning at customers satisfaction in the course of amplification subsequent to sale services (Chawla, 2008) To attain improved manufacturing technology and knowledge from the acquired company To diminish cost, improvement in quality and manufacture competitive goods to hang on to and get better market share (Altunbas, 2005). (3) Market expansion and strategy: To get rid of competition and defend present market; To get new market channel in control of the acquirer; Strategic control of patents and copyrights To acquire innovative product for diversification or replacement of accessible goods and to increase products range; (Kruse, 2002) Strengthening keep hold of channels and sale the products to downsize the distribution; To decrease advertising cost and get better public image (4) Financial strength: To perk up liquidity and boast direct right to use to cash. To organize of extra and obsolete assets for cash To improve mechanism to maintain capacity, make use of better strength and the superior assets assistance; (Chawla, 2008) To achieve tax advantages To get better Earning Per Share (5) Commonachievements: To get better representation and draw attentions of better-quality managerial aptitude to administer its associations; To give more satisfaction to customers or product user (Chawla, 2008) (6) Own developmental plans: The main reason of merger and acquisition is reversed by the acquirer corporations strategies. A corporation decide to acquire the other business only when it develop it own goals to enlarge its operation by examining its internal strength where it is not going to face any difficulty in tax, accounting and in valuation of company, etc. It has a goal to attain a suitable amalgamation that provide opportunities to enhancement in its funds by increasing its securities. (7) Strategic purpose: The Acquirer Corporation inspect the merger to attain strategic goals in the course of substitute of amalgamation which could be vertical, horizontal merger, product expansion, market expansion or other particular different goals according to attentions of achieving the corporate strategies. Thus, various types of combinations distinct with each other in nature are adopted to pursue this objective like vertical or horizontal combination. (8) Corporate friendliness: Even though it is uncommon but it is reality that companies demonstrate degrees of cooperative spirit regardless of competitiveness to give security to each other from hostile takeovers and develop circumstances of partnership allotment of goodwill of another to get more efficiency through business amalgamation. (9) Desired level of integration: Mergers and acquisition are hunted to achieve the most wanted level of integration between the two corporations. This type of merger could be an operational or financial. The main reason and the necessities of the acquiring corporation get a long term benefit in choosing a appropriate partnership in merger or acquisition in companionship. (Chawla, 2008) 2.4 Reasons of merger Acquisition: The principal economic rationale of a merger id that the value of the combined entity is expected to be greater than the sum of the independent values of the merging entities. For example, if companys A and B merge, the value of the combined entity, V (AB), is expected to be greater than (VA+VB), the sum of the independent values of A and B. (Chawla, 2008) A variety of reasons like growth, diversification, economies of scale, managerial effectiveness and so on are cited in support of merger proposals. Some of them appear to be plausible in the sense that they create value; others seem to be dubious as they dont create value. The most plausible reasons in favor of mergers are strategic benefits, economies of scale, economies of scope, economies of vertical integration, complementary resources, tax shields, utilization of surplus funds, and managerial effectiveness. Strategic benefit: As a pre-emptive move it can prevents competitor from establishing a similar position in that industry. It offers a special timing advantage because the merger alternative enables the company to ‘leap frog several stages in the process of expansion. It may entail less risk and even less cost In a ‘saturated market, simultaneous expansion and replacement (through merger) makes more sense than creation of additional capacity through internal expansion Economies of scale: When two or more companys combine, certain economies are realized due to larger volume of operations of the combined entity. These economies arise because of more intensive utilization of production capacity, distribution networks, and research and development facilities, data processing systems and so on. Economies of scale are prominent in horizontal mergers where the scope of more intensive utilization of resources is greater. Even in conglomerate mergers there is scope for reduction of certain overhead expenses. Economies of scope: A company may use a specific set of skills or assets that it possesses to widen the scope of its activities. For example: proctor and gamble can enjoy economies or scope if it acquires a consumer product company that benefits from its highly regarded consumer marketing skills. Economies of vertical integration: When corporations occupied at dissimilar stages of manufacturing and value chain merge, financial system of vertical integration may be comprehend. For instance, the merger of a corporation occupied in searching and production with a company occupied in cleansing and marketing may get better co-ordination and manage. Vertical integration, though, is not forever a good thought. If a company does everything in-house it may not get the advantage of outsourcing from self-governing suppliers who may be additional well-organized in their division of the value chain. Complementary resources: If two companies have harmonizing resources, it may make sense for them to merge. A good example of a merger of companies which complemented each other well is the merger of online gift shop with TCS. Online gift shop is best to know the demands of customer but they dont have excellent transport infrastructure to deliver that gifts to customers but to make its system efficient online gift business should be merge/acquire with TCS or any other service like that. Tax shields: When a company with accumulated losses and/or unabsorbed depreciation merges with a profit making company, tax shields are utilized better. The company with accumulated losses and/or unabsorbed depreciation may not be able to derive tax advantages for a long time. However, when it merges with a profit making company, its accumulated losses and/or unabsorbed depreciation can be set off against the profits of the profit making company and the tax benefits can be quickly realized. (Mylonakis, 2006) Utilization of surplus funds: A company in a mature industry may generate a lot of cash but may not have opportunities for profitable investment. Such a company ought to distribute generous dividends and even buy back its shares, if the same is possible. However, most management has a tendency to make further investments, even though they may not be profitable. In such a situation, a merger with another company involving cash compensation often represents a more efficient utilization of surplus funds. Managerial effectiveness: One of the potential gains of merger is an increase in managerial effectiveness. This may occur if the existing management team, which is performing poorly, is replaced by a more effective management team. Another allied benefit of a merger may be in the form of greater congruence between the interests of the managers and the share holders. (Mylonakis, 2006) Often mergers are motivated by a desire to diversify and lower financing costs. Prima facie, these objectives look worthwhile, but they are not likely to enhance value. Diversification: A frequently acknowledged reason for mergers is to attain risk diminution through diversification. The degree, to which risk is condensed, of course, depends on the association connecting with the earnings of the merging units. at the same time as negative correlation fetches superior lessening in risk, positive correlation takes smaller diminution in risk. Corporate diversification, though, may present value in at smallest amount two special gears. (Chawla, 2008) 1) If a company is overwhelmed with troubles which can put in danger its existence and its merger with one more company can hoard it from possible liquidation. 2) If shareholders do not have the chance of diversification because one of the corporations is not traded in the bazaar, corporate diversification might be the merely possible route to risk diminution. Lower financing costs: The outcomes of larger size and greater earnings and stability, many argue, are to reduce the cost of borrowing for the merged company. The reason for this is that the creditors of the merged company enjoy better protection than the creditors of the merging companies independently. Increase Supply-Chain Pricing Power: Bybuying out one of its suppliers or one of the distributors, a business can eliminate a level of costs. If a company buys out one of its suppliers,it is able to save on themargins that the supplier was previouslyadding to its costs; this isknown asa vertical merger.If a company buys out a distributor, it may be able to ship its products at a lower cost. Eliminate Competition: Many MA dealsallow the acquirer to eliminate future competition and gain a larger market share inits products market.The downside of thisis that a large premium is usually required to convince the target companys shareholders to accept the offer. It is not uncommon for the acquiring companys shareholdersto sell their shares and push the price lower in response to the company paying too much for the target company. Synergy: The most used word inMA is synergy, which is the idea that by combining business activities, performance will increase and costs will decrease. Essentially, a business will attempt to merge with another business that has complementary strengths and weaknesses. (Mylonakis, 2006) 2.5 categories of mergers Acquisitions The resulted merger and acquisition is based on the offeror corporations attention what it desires to attain. Depend on offerors goal, mergers could be conglomeratic, vertical, horizontal, and circular which will explain below. I. Vertical combination: A corporation merged with another company to increase espousing in backward integration and forward integration to absorb the resources of supply in market. The acquiring business due to merger can reduce inventories and finished products. In the vertical combination, the acquirer may be a supplier or a buyer who use their intermediary material for finished goods. (Ahmed Badreldin, October 2009) There are some benefits from merger that acquiring companies achieved i.e. 1. Due to imperfect market and shortage of resources and obtained products, it gets strong position. 2. Has monopoly in goods specifications. II. Horizontal combination: It is a combination of two competitive companies which are at same level of success in industry, and both companies should be related from same business. The main rationale of such mergers is to get economies of scale by removing repetition of conveniences and the processes and expansions the product line, diminution in speculation in working capital, removal in competition attentiveness in product, lessening in advertising costs, raise in market segments and work out improved control on market (Badreldin, 2009). III. Circular combination: Corporations generating unique products look for merger to contribute to general division and investigate facilities to get economies by reducing cost on replication and prop up market growth. The acquiring corporation gets advantaged as diversification and resource sharing. IV. Conglomerate combination: It is combination of two corporations affianced in different businesses. Main reason of this type of merger remains consumption of finances and increase debt capacity by bringing change in their financial system and also boost share holders leveraging and earning per share, lessening average cost of capital and in that way raising present worth of the outstanding shares. Merger increases the on the whole constancy of the acquirer corporation and generates balance in the corporations whole portfolio of various products and manufacturing processes. (Sue Cartwright, May 01, 1995) V. Market-extension This entails the grouping of two corporations that sell the identical products in dissimilar markets. A market-extension permits for the market that can be accomplished to develop into larger and is the foundation for the repute of the merger. VI. Product-extension This merger is flanked by two corporations that sell different, but to some extent associated products, in a same market. This allows the new, larger company to group their goods and sells them with better success to the previously common market with the intention of the two different companies shared. VII. Accretive In accretive an acquired firms earnings per share enlarge. A substitute way of manipulative this is if a corporation with a high cost to earnings ratio obtains one with a less price earning ratio. (Chawla, 2008) 2.6 Concerns of Mergers Acquisitions Conglomerate, Horizontal and vertical mergers each hoist unique competitive alarms. Horizontal Mergers: Horizontal mergers lift up three basic cutthroat problems. The first is the removal of competition among merging corporations, which, depending on their bulk, could be important. The second is that the amalgamation of the merging companys operations might make sizeable market power and might facilitate the merged company to raise prices by falling output unilaterally. The third difficulty is that, by rising concentration in the related market, the deal might make stronger the ability of the markets outstanding contributors to synchronize their pricing and production decisions. The terror is not that the companies will connect in secret partnership but that the decrease in the number of industry members will improve implicit coordination of performance. (Chawla, 2008) Vertical Mergers: Vertical mergers have two essential forms: Forward integration: by which a company purchases a customer, and backward integration, in which a company gets a supplier. Swapping the market contacts with interior transfers can present at least two foremost benefits. First, the vertical merger maintains all transactions between a producer and its supplier, as a result adapt a potentially adversarial association into impressive more like a partnership. Next, internalization can provide management more effectual ways to scrutinize and get better performance. Vertical integration merger does not diminish the total number of economic units working at one level of the market, but it is changing patterns of industry performance. Either its a forward or backward integration, the newly acquired company may make a decision to deal only with the acquiring company, thus changing competition between the acquiring companys suppliers, customers, or opponents. Suppliers may misplace a market for their possessions; retail channel may be destitute of supplies; or opponents may locate that both supplies and channel are infertile. These potential raise to the anxiety that vertical integration will shut out opponents by restrictive their access to resources of supply or to customers. Vertical mergers also might be less competitive because their well-established market power may hamper new industry from entering the market. (Chawla, 2008) Conglomerate Mergers: Conglomerate mergers take many forms, series from provisional joint ventures to complete mergers. Moreover a multinational merger is wholesome, ecological, or a product-line addition, it engages companys that operate in separate markets. Therefore, a corporation transaction generally has no direct result on competition. There is no reduction or other alters in the number of companies in both the acquiring and acquired corporations market. (Chawla, 2008) Conglomerate mergers can provide a market or requirement for companies, therefore giving entrepreneurs liquidity at an open market price and with a key inducement to form new enterprises. The danger of conquest might force offered managers to increase competence in competitive markets. Conglomerate mergers also offer openings for companies to lessen capital costs and transparency and to attain other efficiencies. Conglomerate mergers, though, may lessen future competition by get rid of the option that acquiring company would have come into the acquired companys market separately. A conglomerate merger may exchange a strong company into a leading one with an influential competitive benefit, or else formulate a policy to make it complex for other corporations to penetrate the market. Such mergers also may lessen the number of minor companies and may enlarge the merged companys political influence, in that way weaken the social and political objectives of keeps self-governing decision-making hubs, assurance that small firm will get opportunities, and defending democratic practices. (Mylonakis, 2006) 2.7 Benefits of Mergers Acquisition Diversification: Corporations that want quick growth in dimension or diversification or market share in the variety of products may discover that a merger can be worn to accomplish the intentions instead of obtainable throughout the volume overriding practices of internal expansion or diversification. The company may attain the similar goals in a short time period merging with an existing company. Moreover this type of a strategy is frequently show low cost than the alternative of mounting the necessary production potential and capability. If a company that wants to expand operations in existing or new product area can find a suitable going concern (Altunbas, 2005). It may avoid many of risks associated with a design; manufacture the sale of addition or new products. Moreover when a company expands or extends its product line by acquiring another company, it also removes a potential competitor. Synergism: The scenery of synergism is very simple. Synergism exists at any time the value of the combination is greater than the sum of the real values. We can explain it as; synergism is â€Å"2+2=5†. But categorize synergy on appraise it may be difficult; in fact occasionally its implementations may be very delicate (Chawla, 2008). As generally defined to include any incremental worth is resulting from business combination, synergism in the basic economic good reason of merger. The incremental value may draw from raise in either operational or financial competence. (Chawla, 2008) Operating Synergism: Operating synergism may result from economies of scale, some degree of monopoly power or increased managerial efficiency. The value may be achieved by increasing the sales volume in relation to assts employed increasing profit margins or decreasing operating risks. Although operating synergy usually is the result of either vertical/horizontal integration some synergistic also may result from conglomerate growth. In addition, sometimes a company may acqu