America is not a better country than it was in the 1950s

There are many people in the United States that claim the country is better today than it has ever been. The country has undergone two centuries of transformation, as people have increasingly gained more and more rights and freedoms, technology has made the lives of all Americans markedly easier, and its citizens have elected its first African-American president only a century after slavery ended. However, despite all this progress, it comes with a significant cost as people are forced to deal with threats like terrorism, unchecked scientific experimentation, and the dissolution of the American nuclear family.It seems that much of the current line of thought in the American public came during the social revolution of the 1960s, when sex, drugs, and rock and roll were used in conjunction with far more important social issues. The social rebellion of the 1960s, along with the unpopular war in Vietnam, gave way to the depressing decade of the 1970s, and the selfishness of the 1980s, whi ch still seem to have the public in its grasp in the quest for empty consumerism. For a look back at a time when America represented the ideals that country was founded upon, one would have to look all the way back to the 1950s.During this decade, America took its place as a respected world leader, family values were still strongly in place, consumerism and technology were used to advance the country and humanity in general, and while there were still threats to the safety and well being of American citizens, there were far fewer threats than each American is forced to deal with today. In evaluating the position of the United States in the world today, it is still a world leader. However, many of the events of recent years have only made the country a target of derision, criticism, and worse, even from its allies.In the 1950s, the world was still reeling from the horrors of the Second World War. America emerged from the turmoil as one of the world’s great superpowers, along w ith the Soviet Union. America was seen as the champions of democracy, responsible for allowing the Allies to win the war and bringing freedom and peace to millions around the world. However, much of this good will and power have been slowly eroded in the decades since, and almost completely removed after the events of the past decade.After the terrorist attacks on September 11, 2001, America had the good will and support of the entire world. However, poor leadership quickly led these same supporters to accuse America of being imperialistic and ignorant. President George W. Bush did little to help dissuade this view, and in fact contributed to America’s decline more than any president since Richard Nixon resigned in disgrace. Though the election of Barack Obama has brought a fair amount of good will back to America, the damage done by Bush is long and lasting.While Christian conservatives supported Bush, his personal beliefs seriously held up scientific discoveries in the way of stem cell research by refusing to support federal funding; he denied social advancements to people fighting for equal rights; he spearheaded a renewed campaign to take away women’s rights; he also was instrumental in creating a new paranoia over immigration, despite being the president of a country made of immigrants; and, the gap between the rich and the poor continued to grow until the country found itself poised on the brink of depression.But, his greatest shortcomings were concerning the war on terror, which needlessly expanded, and his flippant abuse of federal power concerning the privacy of U. S. citizens. For a president that used the word â€Å"freedom† so frequently, he did more than most presidents to take it away from his fellow countrymen. A man who avoided serving in Vietnam, Bush learned none of the lessons and started a war in Iraq that has been compared by many as the Vietnam War of this generation. For someone that touted simple American values and hard work, Bush and his administration did a great deal to hurt America and make it weaker.This is very different than the strong leadership of Dwight D. Eisenhower who used his military experience and knowledge to make sure that America remained strong and vigilant in the postwar world. Additionally, Eisenhower’s presidency also saw the emergence of a modern American system of strong family values that have all but disappeared in recent years. American family values have certainly fallen off since the 1950s, and things like divorce as well as drug use have grown to epidemic numbers.One of the key differences is the fact that couples are no longer staying together, divorce rates have gone through the roof, and the traditional nuclear family no longer seems to exist. According to an analysis of new census figures by The New York Times, married couples, whose numbers have been declining for decades as a proportion of American households, have slipped into a minority in the Uni ted States. The American Community Survey, released in October by the Census Bureau, found that 49. 7 percent, or 55. 2 million, of the nation's 111.1 million households in 2005 were made up of heterosexual married couples — with and without children — just shy of a majority and down from more than 52 percent five years earlier (Hurley). This trend shows that less and less heterosexual couples are choosing to get married, instead preferring to cohabitate and have children without marriage. These figures do not include divorce rates. In the United States, it is widely believed that one in two marriages will end in divorce, though these figures are debatable.This rate has since been revised downward to roughly 43% by the National Center for Health Statistics but was moved back up to around 50% by the Census Bureau in 2002. Most recently, according to the New York Times, it has been revised downward to just over 40% (â€Å"Divorce Rates†). This lower figure could b e due to the fact that less people are getting married, but it cannot be denied that in a society of increasing equality and civil rights, less people are getting and staying married than ever before.This is quite different than the 1950s, when the nuclear family was something that most people aspired to create: â€Å"Nearly all accounts of the 1950s stress the great importance attached to home, family, and children†¦ Indeed, widely read authors and commentators and well-known political leaders in the 1950s all extolled the virtues of a traditional family life. Women’s magazines published a steady stream of articles praising the homemaker and warning women of the perils of trying to combine marriage and childbearing with work outside the home† (Cherlin 35).Today, usually just to make ends meet, parents are often both forced to work, leaving very little room for the simple family activities that were so valued in the 1950s. This leads to a society that is increasin gly more isolated from each other and living with more fear and anxiety than ever before. This has also led to an increase in the amount of drugs that Americans consume, something which was virtually unheard of in the 1950s. The war on drugs was started in the 1980’s helped along by Nancy Reagan’s slogan, â€Å"Say no to drugs.† While this continues to apply to illegal drugs, in the years since Americans have answered with a resounding â€Å"yes† to legalized drugs. This displays how the war on drugs is not really how it sounds and is really a hypocritical creation. Drugs have become a part of the American fabric, and that is no more apparent than the recent explosion of popular legal drugs. Today, Americans use drugs to remedy everything from receding hairlines, to erectile dysfunction, to the boredom of everyday life.Federal regulations are strict in regards to advertisements of such legal drugs like cigarettes and alcohol, but not pharmaceuticals. Ads for various legal drugs seem to be all over the television, print media, and the internet. In America, the war on drugs could really be renamed â€Å"the war on drugs deemed undesirable by the government,† because there remain many, many potentially harmful and addictive drugs in the public marketplace. In 1998, Americans spent $66 billion on these drugs, including $39 billion on cocaine, $12 billion on heroin, $2.2 billion on methamphetamine, and $11 billion on marijuana (ONDCP). During that same year, Americans spent more than $120 billion dollars on legal drugs, not including the staples alcohol, nicotine, or caffeine, and this number has only continued to grow. And while America is fighting a war on drugs that was not even a concept in the 1950s, it is also fighting an open-ended war on terrorism. Few things show the differences between today and the 1950s as the state of international terrorism and the fear it invokes in people. Even in the 1950s, where the U. S.fought i n Korea and there was a constant threat of nuclear annihilation, the level of fear that American citizens felt during that decade pales in comparison to what it feels in the post-9/11 world. The entire country has been in a frightened and angry state, with the threat of terrorism going hand and hand with government intrusion, religious hatred, and economic failure. After the September 11, 2001 attacks, â€Å"fear of terrorism became something of a way of life for government, first responders, and many citizens, even though no additional attacks on the American mainland have occurred† (Smelser 124).The threat of terrorism has not only affected the American psyche, but it has also led to the deaths of thousands of American soldiers who are busy fighting the long wars in Afghanistan and Iraq. And, unfortunately, there appears to be no end in sight for either war, and casualties only continue to mount on both sides. Despite all the international turmoil that followed the Second W orld War, there was always stability and confidence in America.Now that the confidence is eroding, one can only hope that stability can continue to be achieved. The United States was far better off in the 1950s than the country is today. While it had the Soviet Union to contend with, there was hardly more fear than there is today over the faceless and suicidal terrorists that threaten the very fabric of everyday life. In addition to all the added fears, there are not even the traditional support systems to help alleviate any of the anxiety, as family values are at an all-time low.People are choosing to no longer get married and when they do get married, they are getting divorced at a pace that continues to grow each passing year. With the drug epidemic, war, moral decay, and fear in the current America, one can only think back on the simpler and more stable times that marked the 1950s. Works Cited: Cherlin, Andrew. Marriage, Divorce, Remarriage. Cambridge: Harvard University Press, 1981 â€Å"Divorce Rates. † Divorce Reform Page. 2009. Americans for Divorce Reform. 12 July 2009. . Hurley, Dan. â€Å"Divorce Rate: It's Not as High as You Think. † The New York Times. 19 April 2005. 13 July 2009. . Office of National Drug Control Policy. â€Å"What America's Users Spend on Illegal Drugs 1988– 1998. † ONDCP Publications. 4 March 2002. 13 July 2009. . Smelser, Neil J. The Faces of Terrorism: Social and Psychological Dimensions. New Jersey: Princeton University Press, 2007

Goal and Career Action Plan

University of Phoenix Material Professional Career Action Plan Outline Complete this professional career action plan outline after viewing the Career 101 workshop link on the student website. You may need to research specific careers or companies to answer all of the questions. A professional career plan details career goals, rather than personal goals. This plan will look at your professional strengths and weaknesses, the type of company you wish to work for, any knowledge gaps that exist, and your professional resume.Create three to five professional goals (for example, â€Å"I want to get a job in a health care facility in the emergency services department†), and then complete this outline with those goals in mind. 1. Goal #1 2. Goal #2 3. Goal #3 I. Self-Awareness a. Professional strengths i. ii. b. Personal strengths i. ii. c. Professional weaknesses i. ii. d. Personal weaknesses i. ii. e. Write 4 to 5 sentences, using the strengths and weaknesses above, to describe yours elf to a potential employer. II.Ideal Next Objective (or position) – based on your self-assessment, where will you go next? a. Required competencies i. ii. b. Compensation requirements i. ii. c. Company culture i. ii. d. Compromises i. ii. III. Gap analysis, plan, and execution – these are skills you already have a. Credentials i. ii. b. Responsibilities i. ii. c. Accomplishments (personal and professional) i. ii. d. Career management gaps (lacking credentials) i. ii. IV. Personal marketing a. Resume (include) b. Cover letter (include) c.Networking – what do you do to network? i. ii. d. Interviewing techniques and skills i. ii. V. Periodic career audit a. How often will you evaluate career plan? b. What influences or affects career plans i. ii. Professional Career Action Plan Outline Complete this specialized career action plan outline after watching the Career 101 workshop link onthe student website. You may need to investigate precise careers or companies to a nswer all of theinquiries. A professional  career  plan specifics  career  objectives, rather than personal objectives.Thisproposal will look at your specialized fortes and faintness, the kind of business you wish to work for,any knowledge gaps that exist, and your expert recommence. Create three to five objectives professionals (e. g. , â€Å"I want to get a job at a health center in the unitof emergency services†), and then thorough the picture with the objectives in mind. 1. Goal  #12. I would  get a job in a  supported living community  as a health manager. 3. Goal  #24. I love to finish my  education with a  DrPH. 5. Goal  #3I excelsior’s link program for paramedic’s. I.Self-Awarenessa. Professional fortesi. Communication  talentsii. Written abilitiesb. Personal fortesi. People  expertiseii. Trust  worthyc. Professional  weaknessesi. Computer skillsii. Typing skillsd. Personal  faintnessi. I over-extend myself  ii. e. Wri te  4 to 5 sentences, using the  fortes and faintness above, to describe you  to apotential company. I am a very outbound and optimistic thinking individual with brilliant leadershipskills. I am a instigator and very honest and trust worthy. I must declare I need toprogress my computer and typing talents

Racist Speech

As a society, we need to realize that with honesty, you have a certain responsibility and walk a fine line between offending people and possibly making racial statements. Therefore, the main difference between my interpretation and the conventional one is my focus is on unintentional vs.. Intentional racist speech. The Balance between racist speech and expression in a college environment can be difficult to decipher; students are encouraged and should express themselves while n campus, this embraces their creativity, passion, talent and allows them to feel Like they're in a safe environment.However, there is a fine line between expressing themselves in an offensive way vs.. An effective way. The article written by Derek Book titled Protecting Freedom of Expression on the Campus focuses on a situation that occurred at Harvard, stating that â€Å"Two students hung Confederate flags in public view, upsetting students who equate the Confederacy with slavery'. According to my deflation t his Is clearly racist speech and started quite the commotion among the Taft at the prestigious university and caused some other colleges to take racist speech too new level.In Books article his statement of colleges â€Å"some have enacted codes to protect their communities from forms of speech that are deemed to be insensitive to the feelings of other groups. † Even the words â€Å"Insensitive to the feelings of other groups† degrades the first amendment and could lead to racism. While some colleges chose not to enforce any restrictions, others varied In their approach and seventy of retribution.There are many ways to deal with this issue but the fact that each institution deals with it differently proves that racist speech continues and the answer remains elusive. Even though communities have the right to regulate speech they must do so very cautiously. If they do, they must apply the rules and limitations across the board and cannot enforce selectively to prohibit c ertain kind of messages and allow others that they think are acceptable; which can again be portrayed as racist speech.He goes on to say that â€Å"I am sure that the vast majority of Harvard students believe hat hanging a Confederate flag in public view-or displaying a swastika in response-is insensitive and unwise because any satisfaction It gives to the students who display these symbols Is far outweighed by the discomfort It causes to many others. † When freedom of speech does not guarantee that the choice made by the student's will be the same choice Book would make. Right after that quote, Book states â€Å"l share this view', but we forget that the flag symbolizing slavery was not the intent but rather an unintentional form of racist speech.If you are an agency of the government including public universities the free speech clause in the first amendment will be upheld even if the event offends the feelings or believes of that community. Book says in his article  "l have difficulty understanding why a university such as Harvard should have less free speech than the surrounding society- or than a public university'. In response Harvard is a private university which means it is not obligated to all government rules and regulation, the problem comes from the ambiguous limitations of the first amendment.Who's to say what is offensive or not in the eyes of the law, there are no tangible words for racist speech which results in many different interpretations. Colleges are not the only institutions with this problem; racist speech can be found everywhere. Even President Barack Obama is trying to end discrimination regarding the military and people who have different sexual preferences. The controversial â€Å"don't ask, don't tell†, passed in 1993, prevents gay men and lesbians from revealing their sexual orientation, and prevents the military from asking about it.This discuss policy has been in effect for over 15 years, and it's been suppor ted by our military at all levels. However, this law of the â€Å"don't ask, don't tell† policy is unconstitutional because the main purpose of the First Amendment is freedom of speech, if lesbians and gay men are not allowed to have this right in the military; then the military and congress who approved this law are both racist. This is an example of racist speech and our government is acting as if it were a private institution and not part of a government that is owned by the people.President Barack Obama wants to put an end to the anti-gay policy because it clearly sends a message of discrimination regarding the right to freedom of speech. It is a battle between our right to freedom of speech and the Military right to pass a law only because it can. Although these incidents seem quite manageable they can easily become a much bigger problem. For instance what if someone decides to burn the offensive flag at Harvard down, we now have crossed the freedom of speech line and ha ve committed an illegal act.Can you imagine what would happen in our public schools if we tried to enforce â€Å"don't ask, don't tell†. Speech can cross over to action which causes racial tension but is also considered a crime. If you minimize racist speech you put a spotlight on racism only making the situation worse igniting the flames that started the problem in the first place. Book says â€Å"it would be better to ignore† however ignoring the problem is a Band-Aid not a solution. In order to come to a universal agreement that will end racism, means making it a priority to our first amendment.Book says â€Å"The fact that speech is protected by the tuition from Harvard the students who felt offended by the flag that symbolized slavery through their eyes, would strongly disagree with Book protesting that it is our right. However our leaders in congress seem to strongly agree, by their actions of standing by â€Å"Don't ask Don't Tell†, they must believe gay men and lesbians do not have the right to voice talk or congregate with others of their persuasion while in the service of our government about their sexual preference. As long as there is freedom of speech, it is considered wrong to tell someone what they can or can't say.

Final wiki Assignment Example | Topics and Well Written Essays - 250 words

Final wiki - Assignment Example The class group debate created relaxed environment for allotment thoughts and ideas while deliberating on the issues of discussion. Moreover, it helped me in improving writing skills i.e. use of active and passive voices appropriately, verbs, adjectives and avoidance of clichà ©s. Further, it improved my research skills such as analytical skills in data breakdown to manageable units, ability to timely grasp new concepts and practical skills in performance of experiments and identification of resources. Debating skills like peer group discussion, arguing and supporting your opinion with logic and articulation of ideas. Nevertheless, the group activities in class enhanced interaction and collaboration between my members and me. I was taught actually to understand cultural diversity and acceptance of varied views and opinions of different individuals on different topics. Above all, the tools greatly improved my expressing ability mainly using concept maps for the topics that were tedious for me to express through essay writings and hence earned a chance of learning new tools to build

Principles of Marketing Essay Example | Topics and Well Written Essays - 3000 words

Principles of Marketing - Essay Example The report indicates that Thornton's PLC should focus on cutting down costs, improving convenience to consumers and enhancing communication. In doing this, there should be four main categories of services that the company need to focus on: Chocolate Sweets, Personalized Gifts, Hampers and Gift Ideas as well as Corporate Gifts. Based on the Boston Consulting Group model, it is recommended that Thorntons in Hull City should focus on the Star products that have high growth and high market share so that they expand on that and build profitability in the December markets. The paper concludes with guidelines on how to place, price, promote the Thornton chocolates in the December markets. ... ..........................14 Implementation and Control.......................................................................14 Increasing Fanbase......................................................................................15 Sales Increase Objectives & Budgeting Plans.............................................15 Introduction â€Å"The marketing plan sets out the marketing objectives of the company and suggest strategies for achieving these objectives† (Westwood, 2002 p5). This means that the marketing plan is a tool that supports a business to market its products to the public. The marketing plan is somewhat different from the firm's strategic plan and/or business plan. The marketing plan is specific and provides a strong blueprint for the promotion and marketing of a given product(s). The marketing plan lays out specific production objectives, financial objectives and personnel objectives for given products that are going to be sold (Westwood, 2002 p5). During Ch ristmas, sales increase tremendously. Stefanowicz identifies that sales in Christmas represents 14.3% of sales in the entire year (2010). This means that in a 12 month period, the month of December marks a disproportionately high level of demand for products. This trend could be attributed to the festive nature of the season and the fact that most people get a lot of bonuses in that people whilst others are prepared to spend more of their savings at this point in time. As such, it is appropriate for any business to have a marketing plan for such a period. This is because demand and sales could increase disproportionately in respect to the increase in the volume of buyers. This paper is a marketing plan for Thorntons PLC, a UK confectionery company. It examines how Thorntons can draw up a

The song Dressin Up by Katy Perry Essay Example | Topics and Well Written Essays - 1000 words

The song Dressin Up by Katy Perry - Essay Example ?s the night/ I’m dressing up for you The feminist theory does not support sexual submission for women, arguing that sexual submissiveness refers to a subordinate position for women which can also set back the advantages which have been secured by women throughout the years (McRobbie, 2004). Such advantages include the fact that women are no longer sexual objects, they are individuals who are beyond such elements of sexual depravity and debasement. The feminist theory also glories in women fulfilling goals, regardless of traditional gender dictates (McRobbie, 2004). Bringing in sexuality to the discussion of feminine rights and qualities is a step back from the fulfilment of these goals, especially since sexuality objectifies women as nothing more than sexual objects. It is important however to note that in equalizing the sexuality of men and women, the lyrics of Katy Perry suggest the presence of a female sexual aggressor, one which is far removed from the sexually submissive individual (Hopkins, 1994). As opposed to the tradition of women being the sexually submissive parties, Katy Perry’s lyrics suggest a sexually active and sexually aggressive female partner, one who initiates the sexual experience with the male party. In general however, the tone of the song is opposed to the ideals of feminism and gender equality. The lyrics, ‘I’m dressin’ up for you’ evoke an act which to most feminists is contrary to what they seek for women – gender equality (Moi, 2008). The feminist theory objects to any action which is made for the opposite gender, and they point out that such actions degrade women. Women must do things to please themselves, not to please the opposite gender. This concept reverts back to the need to do away with the past traditions where women... The feminist theory does not support sexual submission for women, arguing that sexual submissiveness refers to a subordinate position for women which can also set back the advantages which have been secured by women throughout the years (McRobbie, 2004).   Such advantages include the fact that women are no longer sexual objects, they are individuals who are beyond such elements of sexual depravity and debasement.   The feminist theory also glories in women fulfilling goals, regardless of traditional gender dictates (McRobbie, 2004).   Bringing in sexuality to the discussion of feminine rights and qualities is a step back from the fulfilment of these goals, especially since sexuality objectifies women as nothing more than sexual objects.   It is important however to note that in equalizing the sexuality of men and women, the lyrics of Katy Perry suggest the presence of a female sexual aggressor, one which is far removed from the sexually submissive individual (Hopkins, 1994).à ‚   As opposed to the tradition of women being the sexually submissive parties, Katy Perry’s lyrics suggest a sexually active and sexually aggressive female partner, one who initiates the sexual experience with the male party.   In general however, the tone of the song is opposed to the ideals of feminism and gender equality.   The lyrics, ‘I’m dressin’ up for you’ evoke an act which to most feminists is contrary to what they seek for women – gender equality. The song also evokes some sexual bondage and masochism with the words ‘dominatrix’ and ‘tied.’

A hard days Night Essay Example | Topics and Well Written Essays - 500 words

A hard days Night - Essay Example With acknowledgement that each era presents its own values, â€Å"A Hard Day’s Night† movie did its best in reflecting the values of then. The movie presents a number of themes which were very imminent in the 1960’s. With it’s critically thought scenes; this movie is indeed balanced in conveying the situation of the American society in the 1960’s. Struggle for fame is one of the basic elements that are very evident in the movie. The scene of interview brings out this clearly. Everybody in the 1960’s was in pursuit of fame. This implied using any method as is depicted by the way the actors were answering questions to the journalists. They did it in a very comical way and throughout the press conference; they had to be very witty. This is because the questions were not by the journalists for themselves but for their fans. They were though very respectable despite Ringo saying that he was a mocker. Liberation is also a powerful theme which is also portrayed by this film. Thoughtfulness leads characters to wander around making them to be in control. There is joy in having freedom over what you do. Simplicity is everything in any major artistic work. In the 1960’s, there were a lot of pressures and expectations in the movie industry. A break from that monotony is what the â€Å"free style interview† depicts. People now want to the village on the screen and this is what exactly this film goes into fulfilling. This movie has even been argued as to have happened by a mistake because of the way it breaks from the previous rules of filming. Following formalities is overcome by doing notion of doing one’s thing. Nevertheless, the liberation did not lower the quality of the filming standards only that it impacted the feeling of liberation and diversification to anybody who watched it. Being real is human. In the 1960’s people were forced to mask most of the thing all

Implementation Research Paper Example | Topics and Well Written Essays - 1000 words

Implementation - Research Paper Example Poor training will mean that the people who are supposed to be using the system are in the dark in the running of the system. They need to be part of the implementers of the system rather than being mere spectators (Graham, 2009). For Aux Bons Soins to go through in the implementation process of the system, they need to have all the data that need to be captured in the system in place. The data should not have any signs of redundancy. They should be as clean as a possible. There should be modules in place that will be used in the various sectors like the finance module, the human resource and the payroll system. The placing of these systems in place will make integration of the systems to be simple (Graham, 2009). Challenges of implementing ERP There are various challenges that are experienced in implementing an ERP system. This was experienced with the implementation of ERP in Aux Bons Soins. The main causes for the difficulties of the implementation are that of lack of support from the top management. Initially, there was a lack of understanding of the system with the top management. The top management was not supportive of the implementation of the new system. They did not think that the system will solve the problems of the various departments. This therefore affected the way finances were distributed and the way funding was undertaken. Without enough financial resources, a new system will not be implemented well. This was a major issue with the implementation of ERP system in Aux Bons Soins (Graham, 2009). Another source of the difficulty was the lack of cohesion between the various departments in the organization. Since the ERP system will be used to serve various processes in the whole organization, there is a need to have a unified process and one vision of the whole organization. There was a problem with the whole organization as the various departments in the organization had varying views (Young, 2009). This is something that made the implementation process hard. If the system would be implemented in one department or fewer departments, the problem could be avoided and the implementation would be a lot easier. Each department has developed their own objectives. This is making the whole process difficult. This made unifying the whole implementation process a tedious process. ERP systems serve many departments and; this is unlike other systems which are used to manage one process which affects one or two departments (Graham, 2009). Another issue and source of difficulties in the process were the technical compatibility with the other systems which have been running in the organization. It was hard for the technical department to unify the technical modules so that there is one system and the compatibility with the various processes that are found in the different departments. This is one cause of the difficulties which were found in the various departments (Graham, 2009). Key elements which led to success One of the key factors t hat will determine the success of an ERP is the project management. This is the application of the skills and knowledge so that the coordination of the schedules and activity monitoring is achieved. The plan for project management involves the definition of the activities that will be performed, assigning of personnel to those activities, and promoting the acceptability of the process in the system. There is also the very important factor of business process reengineering. This is the

MAE 102 Global Economic Essay Example | Topics and Well Written Essays - 1500 words

MAE 102 Global Economic - Essay Example Information will be get from the following informational source http://data.worldbank.org/indicator. Question 1 First of all, we are going to consider such important economic indicator as GDP. This indicator for all the mentioned countries is provided in the table below. ... However, the gap between the degrees of GDP of both countries is quite high. The common feature between both countries is that they both suffered the global financial crisis quite well. Spain and Australia are almost similar in the terms of GDP. The last country in this group is Zimbabwe. In fact, it is an obvious fact, taking into account the recent economic problems in this country, about which we will say a few word below. Question 2 In order to evaluate the degree of social and economic development of a country it is important to evaluate not only an absolute level of GDP, but also such indicator as GDP per capita. This indicator for all the countries is provided below. Country Name Australia Brazil China Spain Zimbabwe 1998 21 364,21 4 980,99 820,86 15 126,43 522,11 1999 20 578,83 3 413,26 864,73 15 475,52 552,83 2000 21 708,04 3 696,15 949,18 14 413,79 534,79 2001 19 541,42 3 129,76 1 041,64 14 952,09 538,96 2002 20 100,99 2 812,33 1 135,45 16 611,71 503,03 2003 23 445,60 3 041 ,68 1 273,64 21 041,54 454,10 2004 30 375,83 3 609,88 1 490,38 24 468,75 460,84 2005 33 944,98 4 743,27 1 731,13 26 056,39 457,83 2006 35 986,07 5 793,40 2 069,34 28 024,75 434,48 2007 40 461,07 7 197,03 2 651,26 32 118,10 423,99 2008 49 232,97 8 628,95 3 413,59 34 977,39 354,63 2009 42 333,45 8 391,67 3 749,27 31 714,24 491,68 2010 51 628,60 10 992,94 4 433,36 29 956,16 591,29 2011 61 789,48 12 593,89 5 444,79 31 984,73 757,09 This table proposes the different picture. China now occupies the second place from the end, while Australia can be considered as the most economically developed country. In any case, the degree of well-being of its citizens is much higher than the same indicator of Chinese people. The main reason for it is of course the fact

Privacy Issue Problems for Emailing, AIM and MSN Essay

Privacy Issue Problems for Emailing, AIM and MSN - Essay Example This resulted into people having second thoughts of joining or subscribing to such services to receive the services of the company; Google. However, when the issues were resolved, business was good for a while before things got out of hand again later, on when they released Google Plus. Google buzz is embedded into the emailing services provider that Google gives its users. It runs in Gmail emailing services program. Google’s Buzz was not well designed; as a result, there were many loopholes in its design (Choney 1). For instance, it allowed people to share almost everything. In addition to this, anybody who has sent you email can see anything you post using the service or product from Google. This happened only a couple of days after they had released the product and they had to act fast to minimize the damage that could have erupted if the problems were not fixed. There many different people eager and very interested in people’s online conversations, both voice, chat via IM, and in the emails. Providers of broadband services and those of IM services also are eavesdropping and peeking into their customer’s conversation. In other words, the privacy problem as far as Instant Messaging is concerned is a major issue. Instant messaging is gaining popularity at a very high rate as the best form of communication (Spring 1). Many home users like using the different tools of instant messaging but again, most of them are not aware of the privacy issues associated with them. This results in situations that can embarrass people like having too much personal information on the internet that may land in the wrong hands and results to a lot of harm. As much as it is a popular mode of communication among home users, it is slowly gaining its way into the business sector. The companies may not make it legal to use the processes and resources of the company; however, individual users are installing the instant messaging tools on to the machines they use at p laces work. Although, instant messaging is a good and convenient way to communicate, there are privacy issues that arise because of using these tools (Sans 1). However, not all Instant messaging solutions have the same level of privacy issues neither does all offer the same security or privacy. The main question as far as the IM and emails privacy issue is concerned is whether these services are able to protect users against eavesdropping. While emails can only allow one user to be able to communicate with another and even several others people whether the recipient of the message is online or is not online, instant messaging is a little different. It can be used to communicate with people who mainly are online and connected to the internet. Emails can be hacked into, and the identity of the account holders can be compromised. In the process, valuable information can be stolen for malicious purposes. The mail sent or received is kept on the server just in case the user cannot access the ones on the web site of the company. The email can only be received when the email is retrieved from the mail server. The email can receive and include such things as links to URL’s, attachment files centre. Instant messaging allows for real time communicators. Instant messaging is plagued by so many privacy issues. Some of the problems include the fact that these tools let the world

Causes insomnia Essay Example for Free

Causes insomnia Essay The evolutionary theory can be directly linked to Darwins theory of survival of the fittest as any properties we have now are a result of what has been useful in the past therefore we sleep as it has been useful for our survival or it was at one time. Conservation was an idea that the theorist Webb came up with he suggested that those animals that slept more were more likely to survive such as hedgehogs. Conservation is where the body slows down the metabolism and heart rate as no food is being consumed and no energy is being used up as the animal is not moving about. Webbs theory is linked to hibernation mostly as his theory is more suggesting the likelihood of surviving due to sleeping. By looking at both theories I can now come to the conclusion that the restoration theory is more logical in its use of energy as it suggests that the more energy you use up in the day the more you look forward to going to bed to restore tissue and save energy. It also suggests that even if you dont fully exert yourself in a day it doesnt mean that your not going to sleep for long and this can be fully evident in teenagers as even if they do or dont exert themselves they still sleep a lot more as there bodies are developing and they need more sleep then the rest to gain in energy and also to give there bodies a time to relax as there bodies will be constantly secreting hormones. The cause and effect of insomnia still arent clear as the Pineal gland in the brain converts the neurotransmitter serotonin into the hormone melatonin. Melatonin is released into the blood stream and causes rhythmic changes around the body although the need for sleep is not affected by light. Melatonin plays a role in the co-ordination of the sleep wake cycle. So as sleep isnt affected by light then the cause of insomnia cant be known as you cant determine what effects the body that causes insomnia. REM sleep involves an increase in energy expenditure and blood flow which inhibits protein synthesis on the other hand it is known that amino acids are not stored by the body and last in the body for bout 4 hours after a meal. This means that protein synthesis maybe stopped half way through sleep because the amino acids have run out. Also people will sleep more after stress and it is known to improve moods which again can be explained by the fact that with NREM sleep occurring during slow wave so enables the body to repair itself and there is an increase in secretion of growth hormones. By looking at the evolutionary theory I can also conclude that the arguments presented for the evolutionary theory contradict themselves as some suggest that some animals sleep less to keep a vigil while others suggest that animals sleep longer to keep motionless thus staying away from harm. Also it is clear to see that animals such as lions do sleep longer as they are at less of a risk from being hunted so dont need that much sleep and animals like cattle need very little sleep and this puts them in danger of being hunted.

Simons Stigmata In Lord of the Flies Essay Example for Free

Simons Stigmata In Lord of the Flies Essay In William Goldings novel, Lord of the Flies, the character Simon portrays many characteristics similar to those demonstrated by Jesus in the bible. He is shown to have all the qualities that Jesus has: determination, intelligence and resilience. Even his physical appearance portrays Christ since he is skinny and not much of a tough person. Simon was very calm and caring for others, especially with the little children and enjoyed being alone when he could. Simon embodies a pure spiritual human goodness that is deeply connected with nature and people around him as Jesus did with his disciples. Both Jesus and Simon had prophecies about things to come, and they were both persecuted and were ridiculed of for sharing those prophecies. Whereas Ralph and Jack stand at opposite ends of the scale between civilization and savagery, Simon stands on an entirely different plane from all the other boys. Unlike all the other boys on the island, Simon acts with kindness and purity because he believes in the inherent value of morality. He behaves kindly toward the younger children, and he is the first to realize the problem posed by the beast, that the monster on the island is not real or something that can be hunted down and killed. It isnt physical but rather a savagery that lurks within each human being. In Golding’s view, the human impulse toward civilization is not as deeply entrenched as the human impulse toward savagery. Despite the fact that Simon is one of the smallest biguns he never follows the others way of thinking, nor backs down when it comes to speaking up for himself. One such occasion where he shows his defiance of the others beliefs is when he says to everyone, I think we ought to climb the mountain. (page 128) This shows that he knows the beast isnt real and he shows no fear of the unknown. Jesus called people to do things they thought would be simply impossible just as Simon did, and the fact that not even the stronger boys had the courage to do it shows how assured Simon is to his morals. Simon was sacrificed during the ritual dance so that the other boys could live. Simon was killed by all the boys in an excruciating way and claimed that it wasnt really him. Everyone but Ralph thought that Simon was the beast, and didn’t think twice before attacking him. Ralph knew it was Simon they killed, and he realized how everyone was acting like wild creatures. Also the way Simon was shown in the movie after he died showed him as a Christ-figure in the story; Simon dies on water that is calm and peaceful, as the light reflected off the water it gave a kind of feeling of holiness. Simon’s body was carried out by the waves and the way he was floating with his arms stretched out, replicates the way that Jesus died on the cross. Throughout the story, Simon is shown to have a very strong connection with Jesus by his actions of kindness. He displayed as a person with divine ties with Christ and a reminder that purity is everywhere, even when all hopes seem to be gone. The many occurrences Simon gains the courage to speak up and show how smart, intelligent he really is makes a huge impact on everyone. Simon, like Christ, was never evil and always helped others out with what he could. Simon symbolizes and demonstrates a sort a purity that goes beyond human goodness. However, his brutal murder at the hands of the other boys designates the lack of that goodness in people against an overwhelming abundance of evil that lies deep within each and everyone one of us.

Discuss The Strategic Options And Provide Examples Marketing Essay

Discuss The Strategic Options And Provide Examples Marketing Essay Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization refers to the integration of economics and societies all over the world. It involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation and infrastructure. http://hubpages.com/hub/Definition-of-Globalization Integration in globalization is either negative or positive depends breaking down of trade barriers. The removal of barriers can be beneficial for products that are important to the economy growth. An example of imported raw materials is very expensive but the cost will be down if the supply will increase and will make cheaper to produce the final products for export. 2STRATEGY Strategy is reflects decisions to offer particular products or services in the particular markets. The strategic options for the exploring opportunities in the new established market and existing product are good opportunity to use the availability resources. It is a tool in the direction of the firms objective in achieving business success in the long term. CORPORATE STRATEGY: This is the focus of an organization which products or service markets to compete and area to operate. This is because market definition is the domain of corporate level strategists, the responsibility for diversification, addition of new products or services to the existing product, also falls within the realm of corporate-level strategy. A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. Businesses use strategic alliances to: Achieve advantages of scale, scope and speed Increase market penetration Enhance competitiveness in domestic and/or global markets Enhance product development Develop new business opportunities through new products and services Expand market development Increase exports Diversify Create new businesses Reduce costs. 3How to enter Market The best mode of entry its broad choices are indirect exporting, direct exporting, licencing, joint ventures and direct investment. A joint venture is an agreement by two or more parties to form a single entity to undertake a certain project. Each of the businesses has an equity stake in the individual business and share revenues, expenses and profits. Joint ownership has certain drawbacks. The partners might disagree over investment, marketing, or other policies. One partner might want to reinvest earnings for growth, and the other partner might want to take out these earnings. Furthermore joint ownership can hamper a multinational company from carrying out specific manufacturing and marketing policies on a worldwide basis. Licensing is a simple way for a manufacturer to become involved in International business. The licensor enters an agreement with a licensee in the foreign market, offering the right to use a manufacturing process trademarks, intellectual property and trade secrets are licensed to an external firm. Its used mainly to manufacture and sell a certain product. Its a lower risk way of expanding the reach of product compared to building company manufacturing base and distribution reach. Coca-cola is an example of an international market by licensing bottlers around the world. Franchising is an excellent way of quickly rolling out a successful concept nationwide. Franchisees pays fixed fee and agree to ongoing payments so the process is financially risk-free for the company. However, downsides do exist, particularly with the loss of control over how franchisees run their franchise. It is thus an important form of vertical market integration. Potentially, the system provides an effective blending of skill centralization and operational decentralization. It permits the franchise to sell products or services under a highly publicized brand name and a well-proven set of procedures; it is a carefully developed and controlled marketing strategy. Examples of franchisers are hotels brands i.e. Hilton, Holiday in and Coco-cola. Advantages of forming strategic alliances Provide companies with the opportunity to gain new capacity and expertise Allow companies to enter related businesses or new geographic markets or gain new technological knowledge access to greater resources, including specialized staff and technology sharing of risks with a venture partner Disadvantages of strategic alliances It takes time and effort to build the right relationship and partnering with another business can be challenging. Problems are likely to arise if: There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners. Different cultures and management styles result in poor integration and co-operation. The partners dont provide enough leadership and support in the early stages. Success in a joint venture depends on thorough research and analysis of the objectives. Examples of strategic alliances companies   Sony-Ericsson is a joint venture by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones. Virgin Mobile India Limited is a cellular telephone service provider company which is a joint venture between Tata Tele service and Richard Bransons Service Group. http://wiki.answers.com/Q/Examples_of_joint_ventures#ixzz1KAPliPOB Product Strategies Is the central focus of the marketing mix. It is fails to satisfy the needs of the consumers, no amount of promotion, price cutting, or distribution will persuade them to buy. The total product, which is what the customer buys, which also include the package, the brand name, accessories, after sales service, the warranty and instructions for use. Thus international product strategies and policies should include the following aspects. 4Strategies Matrix Ansoff Matrix has four strategies which an organization will be good to process for good foundation of the company future development. Ansoff matrix focused on the firms present and potential products and market, customers by considering ways to grow through existing products and new products and in existing market and new markets. It is one of the best tools for the companies to develop market and product expansion. Market Penetration, Product development, Market Development Diversification Diagram below indicate the Ansoff Matrix : faculty.msb.edu/homak/homahelpsite/webhelp 5MARKET PENETRATION Is a term that indicates how deeply a product or service has become entrenched with a given consumer market. The degree of penetration is often measured by the amount of sales that are generated within the market itself, increasing sales force, increase distribution and promotion of products, more expenditure in marketing and advertising activities will results in increasing sales. Market penetration can be considered in broader terms, and be used as a way of identifying a wider consumer base. Penetration expands the influence of the product to new consumers and thus increases the sales and general proportion of the consumer market that the manufacturer controls. http://www.wisegeek.com/what-is-market-penetration.htm Market penetration seeks to achieve four main objectives: The market share of current products should be maintained, this will be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps Dominance of growth markets should be secured Competitors should be driving to restructure a mature market, promotion campaign should be more aggressive for the same pricing strategy should be designed to make difficult to the competitors Implemented loyalty scheme for the existing customers. 6Examples of Market Penetration Dell Recognizing the software as a service can be a potent market penetration tool, also assembling a services portfolio that now includes e-mail disaster recovery, spam/virus filtering and archiving via its Message one acquisition. Airlines Easyjet Airline market was by offering flights for the small distance cities. Southwest Airline same as Easyjet were more profitable on operating small distances Pakistan State Oil penetrates in Pakistan market growth from 40% to 65% in the duration of 4 years by developing new retail outlets. Car Manufacturing Toyota Motor Corporation is the worlds largest automobile manufacturer by sales and production. Toyota and BMW good relationship in marketing in order to retain and have high profile for their value customers. Toyota Motor Corporation is the largest conglomerates in the world. Toyota has grown to a large multinational corporation from where it started and expanded to different worldwide markets and countries. Banking HSBC Bank customers were very happy on internet banking that they can access their online account 24hrs a day wherever they are in the world. Telecommunication Airtel promoting its services to penetrate in the Indian market. It is the worlds fastest growing industry, they have couple of joint ventures with Alcatel in Indian, it is operates in 19 countries across South Asia, Africa and the Channel Islands. Airtel is the fifth largest telecom operator in the world. http://en.wikipedia.org/wiki/Market_penetration 7Advantage and Disadvantage of Market Penetration Benefits One of the successful penetration is pricing strategy may lead to large sales volumes/market shares and therefore lower costs per unit. Penetration strategies are often used by businesses that need to use up spare resources. A penetration pricing strategy may also promote complimentary and captive products. The main product may be priced with a low mark-up to attract sales. Risk The most obvious potential disadvantage of market penetration is the likelihood of competing suppliers following suit by reducing their prices, May lead to a price war with a competitor with the same strategy The effects of economies of both scale and experience lead to lower production costs, which justify the use of penetration pricing strategies to gain market share Low pricing could be detrimental to the perceived brand value and to the company reputation. Another potential disadvantage is the impact of the reduced price on the image of the offering, particularly where buyers associate price with quality. http://tutor2u.net/business/marketing/pricing_strategy_penetration.asp 8MARKET DEVELOPMENT Market development is a marketing technique aimed at increasing a companys market in order to widen the customer base for the purpose of selling more products. This is an important aspect of helping a company grow. Small companies with limited marketing experience may turn to consultants for this, while experienced large companies have internal marketing departments that may be responsible for market development. It is an ongoing part of doing business for successful companies. Also will help to grow your market by understanding how your product is perceived in the marketplace and what areas of improvement are there. Using the Starbucks example This occurs when the market analyzing makes some sort of change, market development has occurred over the past couple of years as consumers are becoming more health conscience. Preferences are moving toward different types of teas/drinks and consumers are demanding more healthy alternatives. These factors have aided to market development, with different franchises popping up, such as Argo tea, which become direct competitors to Starbucks Benefits Another way would be to focus on the  Ã‚   technology base used to supply existing products and to identify other products needs, which customers might need to be produced using current facilities and know how. Here the organization tries to develop  Ã‚   new products or services and thereby makes similar existing products obsolete unlike product development strategy which extends an existing products life cycle. There could be radical innovations where the company tries to replace existing products or technologies in an industry. In the case of incremental innovations, the firm tries to put focus on new products or services that modify the existing  ones. Apart from such radical innovations firms, also carry out incremental innovations to differentiate their products. One example, is Toyotas multi-utility vehicle Qualis.   Although other Indian  Ã‚   companies had similar products, Toyota, more effectively combined the styling an engineering that resulted   in increased demand   for its product (a great hit compared) to Sumo, Disadvantages/Risks As per Ansoff framework of a Market Development strategy New Markets may be different then expected ( especially in new geographic market with cultural differences Costly modifications may be required Examples of Market Development Compact disc technology has virtually replaced long playing vinyl records in the recording industry, and high definition television is likely to replace regular television technology. McDonalds has couple of new markets in the wake of globalization with its existing products. This is because of the nature of the business and products, McDonald; implemented its burgers which helps the growth of the market. Nestle expanded the market for its product Milkmaid by advertising the new uses of the product aggressively in India. Chinese products developed new market for their product worldwide Toyotas multi-utility vehicle Qualis although there are same product in India,  Toyota, more effectively combined the styling an engineering that resulted  in increased demand   for its product than Indian. Close Up toothpaste was first gel toothpaste which was transparent with a red distinctive colour, all others pastes were white. The market was dominated by Colgate which promised that it  would fight tooth decay and bad breath.  Ã‚   Close up promised the dual benefit of being a toothpaste and mouthwash in one and thus delivered fresh breath and white teeth. 9PRODUCT DEVELOPMENT This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers. http://www.marketingteacher.com/lesson-store/lesson-ansoff.html Developing of new products and offering to the existing market is product development strategy which need capital and time to implement. The company has to do a market survey in detailed if it is feasible to introduce new product in the current market. Challenges Several things need to be checked in developing new products in the company this is including, Technology and Cost, by using latest technology the product performance or the quality of products will be on highest level of functionality although Cost will be challenge to the company in either buying the new equipments or conducting trainings. Benefits Company products will be extended by producing different variants, packaging in new ways. Service industries shorten time to market and improve customer service and quality. Risks Customers might be confused among the existed and developed products, if the analysis will not performed carefully, example is the new Coke, Customers liked the taste of the new Coke in the taste tests conducted by Coca Cola, customers of the brand favoured classic Coke over the new product. Another Examples of Market Development Google developed a new browser chrome for the existing internet user McDonalds is always within the fast food industry, but frequently markets new burgers 10DIVERSIFICATION STRATEGY Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. Diversification is very important into related and unrelated areas. http://www.coursework4you.co.uk/essays-and-dissertations/ansoff-analysis.php Diversification related in the form of backward, forward, and horizontal integration. Concentric diversification This means that there is a technological similarity between the industries, which means that the firm is able to leverage its technical know-how to gain some advantage. For example, a company that manufactures industrial adhesives might decide to diversify into adhesives to be sold via retailers. The technology would be the same but the marketing effort would need to change. The company will focus to add more market share to launch a new product that helps the company earn more profit. An example technological related in concentric diversification is Tomato ketchup and sauce to the existing brand processed items of food specialties. Vertical diversification This is when the company is closer to the raw materials sources in production, in another words is backward vertical integration strategy. An example of Avons line on cosmetics business. Avon pursued a backward form of vertical integration by entering the production of cosmetics. Forward diversification occurs when Avon move closer to the consumer in term of production stages. Horizontal diversification, occurs when a company develops interests complementary to its current activities. For a company may integrate its activities to include all aspect of the value chain; design, manufacture, market and distribute. The company adds new products or services that are often technologically or commercially unrelated to current products but that may appeal to current customers. In a competitive environment, this form of diversification is desirable if the present customers are loyal to the current products and if the new products have a good quality and are well promoted and priced. For example, Avons move to market jewelry through its regular sales force involved marketing new products through existing channels of distribution. Conglomerate diversification (or lateral diversification) The company markets new products or services that have no technological or commercial synergies with current products but that may appeal to new groups of customers. The conglomerate diversification has very little relationship with the firms current business. Therefore, the main reasons of adopting such a strategy are first to improve the profitability and the flexibility of the company, and second to get a better reception in capital markets as the company gets bigger. Even if this strategy is very risky, it could also, if successful, provide increased growth and profitability. For example a company whose core business is media services may diversify into provision of financial services. Advantages of diversification strategy Control markets by guaranteeing sales and distribution. This can arise through a combination of linkages in the value chain. For example where production and distribution channels are combined, or where a company uses its well-established brand names or corporate identity to gain benefits in new markets Take advantage of existing expertise, knowledge and resources in the company when expanding into new activities. This may result in transfer of skills, such as research and development knowledge and sharing of resources. Provide better risk control through no longer being reliant on a single market Spread risk by avoiding having all eggs in one basket Disadvantages of diversification strategy Adding bureaucratic complexity. In addition to direct financial costs, there may additional bureaucratic complexities necessitated by the need to coordinate and control core activities with additional activities. Diversification through acquisition across national boundaries may result in the organisation having to deal with varying intricacies of the political and legal requirements of the different countries in which the organisation has controlling interests. Diversification also acquisition May result in failure where there is a mismatch between core competencies Adding management costs. Adding bureaucratic complexity. In addition to direct financial costs, there may additional bureaucratic complexities necessitated by the need to coordinate and control core activities with additional activities. Examples Virgin Media moved from music producing to travels and mobile phones Walt Disney moved from producing animated movies to theme park and vacation properties Canon diversified from a camera making company into producing whole new range of office equipment CONCLUSION It is true for the world investment and business to move from national and domestic markets to a worldwide environment. Globalisation eliminates all boundaries, causing firms to engage in business worldwide. Consequently firms have to deal with couple of challenges if the management strategies will not help them to make the correct choices and decisions. Strategic options related to products and services which a firm may offer in which markets are critical to the success of companies. The differences in strategic choices of the firm can often be attributed to the type of market in which the company operates. Changes in business environment play a crucial role in the strategic options that an organisation may pursue over its future development. There are risks associated with all of the four strategic options entailed in the Ansoff matrix. Market penetration is generally considered as a low risk strategy while diversification, on the other hand, is deemed as a high risk growth strateg y as it involves moving simultaneously into new products and new markets. Diversification remains a popular strategic option for firms in todays competitive business arena, and if the diversification strategy is consistent and well throughout, like the case of IBM, significant improvements in profitability can be experienced.

Of Mice and Men :: English Literature

Of Mice and Men The novel is about the American Dream, where America is meant to be a land built on promise and opportunity. It promises independence, land and a decent living through honest work. It also means, in theory, that anyone can become successful. The American Stock Market on Wall Street crashed catastrophically in 1929, this led to a massive economic depression in the 1930s.Poverty and starvation stalked California and other stricken states. The migrants were worst off. All of the suffering was much worse if you were black; America was still a highly racist and segregated society. The bunkhouse conditions were not very basic "what the hell kind of bed you giving us anyways. We don't want no pants rabbits." The ranch was obviously not nice. The boss is a bit aggressive and doesn't like George speaking for Lennie "then why don't you let him answer ?"He thinks George is getting something from lennie because migrant workers don't normally travel together''you takin' his pay away form him?" Curley the boss' son is a mean character , he dislikes Lennie from the beginning "well nex' time you answer when you are spoken to." Curley dislikes Lennie because he's not big himself. George's version of the American Dream is to own his own land "if I was bright , if I was even a little bit smart , I'd have my own place." George always knew the dream would fail " I think I knowed we'd never do her." George was possibly only possibly using the American Dream as an escape.The fact that he was fond of the American Dream is evident in the personification he refers to the American Dream as 'her'. Lennie's version of the American Dream is to have his own place ,dog, rabbits and chickens "we're gonna have a dog an' rabbits an chickens.'' Lennie and George have the same dream but approach it in a different way. Candy overhears George and Lennie's plans for a place of their own and decides to become a part of that dream " maybe if I give you guys my money ,you'll let me hoe in the garden even after I ain't no good at." This is probably the happiest and most optimistic bit of the whole book. You start to believe their dream is possible. You know it's a great idea and forget it's a dream , it seems to be changing into a practical plan. Crooks reminisces about his child hood when he could play with white kids " the white kids come to our place , an' sometimes I went to play with them and some of them was pretty nice.

Christian G. Appys Working-Class War: American Combat Soldiers and Vietnam :: American History

The Vietnam War, which lasted for two decades (1955-1975), was probably the most problematic of all American wars. US involvement in Vietnam occurred within the larger context of the Cold War between the US and the USSR. It was, and remains, morally ambiguous and controversial. The Vietnam War was slated as both a war against Communism and a war aimed at suppressing dangerous nationalist self-determination. Christian G. Appy's book, Working-Class War: American Combat Soldiers and Vietnam, is a graphic and perceptive portrayal of soldiers' experiences and the lasting effects the Vietnam War has had on the American culture and people. Working-Class War: American Combat Soldiers and Vietnam, is an analytical work that has three major purposes: 1. to show that those who fought in Vietnam were predominantly from the working class 2. to convey the experiences of the soldiers who served in Vietnam and 3. to offer his own scathing commentary of American actions in Vietnam. After World War II ended, Cold War alignments emerged. In 1946, Winston Churchill spoke against the USSR in his "Iron Curtain" speech. George Kennan's "Long Telegram" introduced the concept of containment, arguing that the US could keep communism from spreading by deterring Soviet expansion at critical points. Critical occurrences in1949 brought American communist fears to an extreme level. The Berlin Blockade and the Berlin Airlift, followed by Mao Zedong's triumph over Chiang Kai-Shek's Chinese Nationalist forces, and the successful atomic bomb tests of the USSR all contributed to the hysteria. America was gripped by paranoia, embodied by Wisconsin Senator Joseph McCarthy Communist witch hunts. The escalation period of the Vietnam War, which lasted for a decade (1955-1965) reflected the Cold War conflict in which the US and USSR avoided direct combat and thus avoided the possibility of nuclear war. Instead, the two superpowers battled though puppet forces. While the US backed South Vietnamese government was weak and corrupt, the USSR backed North Vietnamese government was a proud and group of nationalists willing to fight fiercely for Vietnamese unification and against foreign influence. The US faced an enemy that believed deeply in its nationalist as well as communist cause and hated US, and for that matter any foreign intervention. In Working-Class War: American Combat Soldiers and Vietnam, Appy estimates that approximately eighty percent of the soldiers who experienced combat in Vietnam were the sons of blue-collar workers. He presents his definition of

Atmospheric Oxygen, Giant Paleozoic Insects and the Evolution of Aeria

Animal gigantism was prevalent during the Carboniferous period of the Paleozoic era. Gigantism in flying insects occurred in abundance; however, arthropods, such as arthropleurids, also experienced gigantism. Arthropleurids existed during the Paleozoic era and were the largest land dwelling arthropods in the history of the Earth. 1m long millipedes are classified as arthropleurids. Amphibians such as the terrestrial labyrinthodont amphibians also became gigantic during the Carboniferous period. Large amphibians reached body lengths of up to 2m. However, these amphibians are limited by respiration through the skin, which is known to restrict maximum body size. The wingspan of a certain extinct dragon fly exceeded 70cm and the wingspan of late Paleozoic Paleodictyoptera was between .9-43cm. There are a few hypotheses that have been aimed at explaining the gigantism during the Paleozoic era. Some are predatory defense and enhanced flight performance. However, the most plausible is the idea that the oxygen increase in the atmosphere caused the increase in body size. Increased oxygen partial pressure caused an increase in diffusive flux in the tracheal system. This led to the adaptation of the bodies of insects, amphibians, and arthropods to the new environment. Carboniferous - is a major division of the geologic timescale that extends from the end of the Devonian period, about 359.2 Ma (million years ago), to the beginning of the Permian period, about 299.0 Ma (ICS 2004). Geological records of atmospheric oxygen and carbon dioxide Since plants have been able to survive on land by carbon dioxide fixation, also known as terrestrializaion, the earth’s atmosphere has undergone a ... ...f terrestrial arthropods with diffusion-limited respiratory systems is consistent with the levels of atmospheric oxygen. (This can be seen in the charts included in the article) A second peak of insect gigantism appears to occur in the Cretaceous period when the atmosphere was also hyperoxic, or contained a high concentration of oxygen. References Orr, W. C. and Sohal, R. S. (1994). Extension of life-span by overexpression of superoxide dismutase and catalase in Drosophila melanogaster. Science 263, 1128–1130. Tyler, R. H., Brar, H., Singh, M., Latorre, A., Graves, J. L., Mueller, L. D., Rose, M. R. and Ayala, F. J. (1993). The effect of superoxide dismutase alleles on aging in Drosophila. Genetica 91, 143–149. Withers, P.C. (1981). The effects of ambient air pressure on oxygen consumption of resting and hovering honeybees. J. comp. Physiol.

Marine Corps Mci Answers Math For Marines Essay

Getting Marine Corps Mci Answers Math For Marines PDF Ebook is easy and simple. Mostly you need to spend much time to search on search engine and doesnt get Marine Corps Mci Answers Math For Marines documents that you need. We are here to serve you, so you can easily access, read and download its. No need to wasting time to lookup on another place to get Marine Corps Mci Answers Math For Marines PDF Ebook. We provide you Marine Corps Mci Answers Math For Marines in PDF format so you can read and download its to your computer which this file are safe and virus free. You can read this document with Adobe Acrobat or other PDF Reader. We have massive collection of documents, books, eBook and pdf files including that you are looking Marine Corps Mci Answers Math For Marines PDF Ebook. To access this you just need to signed up and complete its through website to open your limited access for documents that you needs. So what do you waiting for? Read/Download: MARINE CORPS MCI ANSWERS MATH FOR MARINES PDF You are also possible to search for a book or subject on the digital platform. You can access ebooks on our online library related to the subject, i.e.

The Usage of Foreshadowing in “The Book Theif

Stephan Muccular 5/17/12 English 1 Mr. Smith Authors use a variety of literary devices to make a book more interesting and keep the reader in suspense. The author of the â€Å"The Book Thief†, Markus Zusak, likes to use the literary device called foreshadowing. He makes the book suspenseful, revealing how characters die early on and telling the reader the outcome to certain events. By revealing how characters die early on and telling the reader the outcome, Zusak makes the novel more suspenseful with his use of vague descriptions of the scenes which he is foreshadowing.In the book, Zusak tells the reader early on that Rudy, one of the main characters, is going to die. â€Å"He didn’t deserve to die the way he did†. Zusak then tells the reader how he died and two years later he is going to die. â€Å"Recollections like those merely remind me that he was not deserving of the fate that met a little under two years later†¦He’d have been glad to witness h er kissing his dusty, bomb-hit lips. † Rudy dies from a bomb. The question the reader would have is; two years from what?That’s what leaves the reader in suspense–the fact that the reader knows Rudy will die in two years, but does not know exactly when those two years start. This is a way Zusak tells us the future without giving us all the details. With just a little information, the reader is eager to read more about the situation and satisfy his curiosity. Alex Steiner and Hans Huberman had to serve the same punishment? â€Å"Alex Steiner wouldn’t have suffered the same punishment as Hans Huberman. At this point in the book, the reader wouldn’t know that why Hans and Alex would be punished or what their punishments would be. We know from this quote that they would be punished and their punishment would be the same. But this leaves the reader with questions like: What is Han’s punishment? Why is Alex Steiner being punished? Why is the punis hment the same? These questions have yet to be answered. Zusak is giving the reader a statement that raises questions that are not answered until later in the book, making the novel more suspenseful.Towards the end of the book, Zusak gives the reader a look into when the world ended for Liesel Mimmel, the main character. â€Å"I must warn you that it was raining when the world ended for Liesel Mimmel†¦.. Rudy Steiner slept. Mama and Papa slept. .Fra Holtzapfel, Fra Diller. Tommy Muller. All sleeping. All dying. † In the foreshadowing, Zusak tells the reader that everyone dies around Liesel, which is why her world ended.This leaves the reader in suspense because Zusak only tells the reader what happens–not when it happened, why it happened or why Liesel was still alive. These quotes from â€Å"The Book Thief† mentioned were examples of how Zuzak makes this book thrilling. By using vague descriptions of scenes, Zusak is foreshadowing which makes the reader wa nt to read more to satisfy the reader’s curiosity. This is how Zusak made â€Å"The Book Thief† so interesting and how, when a reader picks up the book and starts reading, the book is hard to put down.

A Financial Perspective on Mergers and Acquisitions

The Free Cash Flow Theory of Takeovers: A Financial Perspective on Mergers and Acquisitions and the Economy Michael C. Jensen Harvard Business School [email  protected] edu  © Michael C. Jensen, 1987 â€Å"The Merger Boom†, Proceedings of a Conference sponsored by Federal Reserve Bank of Boston, Oct. 1987, pp. 102-143 This document is available on the Social Science Research Network (SSRN) Electronic Library at: http://papers. ssrn. com/ABSTRACT=350422 The Free Cash Flow Theory of Takeovers: A Financial Perspective on Mergers and Acquisitions and the Economy Michael C.Jensen* Harvard Business School [email  protected] edu From, â€Å"The Merger Boom†, Proceedings of a Conference sponsored by Federal Reserve Bank of Boston, Oct. 1987, pp. 102-143 Economic analysis and evidence indicate the market for corporate control is benefiting shareholders, society, and the corporate form of organization. The value of transactions in this market ran at a record rate of about $ 180 billion per year in 1985 and 1986—47 percent above the 1981 record of $122 billion.The number of transactions with purchase prices exceeding one billion dollars was 27 of 3300 deals in 1986 and 36 of 3000 deals in 1985 (Grimm, 1985). There were only seven billion-dollar plus deals in total, prior to 1980. In addition to these takeovers, mergers, and leveraged buyouts, there were numerous corporate restructurings involving divestitures, spinoffs, and large stock repurchases for cash and debt. The gains to shareholders from these transactions have been huge.The gains to selling-firm shareholders from mergers and acquisition activity in the period 1977-86 total $346 billion (in 1986 dollars). 1 The gains to buying-firm shareholders are harder Estimated from data in Grimm (1986). Grimm provides total dollar values for all merger and acquisition deals for which there are publicly announced prices amounting to at least $500,000 or 10 percent of the firm and in which at least on e of the firms was a U. S. company. Grimm also counts in its numerical totals deals with no publicly announced prices that it believes satisfy these criteria.I have assumed that the deals with no announced prices were on average equal to 20 percent of the size of the announced transactions and carried the same average premium. *Professor of Business Administration, Harvard Business School, and Professor of Finance and Business Administration, University of Rochester. The author is grateful for the research assistance of Michael Stevenson and the helpful comments by Sidney Davidson, Harry DeAngelo, Jay Light, Robert Kaplan, Nancy Macmillan, Kevin Murphy, Susan Rose-Ackerman, Richard Ruback, Wolf Weinhold, Toni Wolcott, and especially Armen Alchian.This research is supported in part by the Division of Research, Harvard Business School, and the Managerial Economics Research Center, University of Rochester. The analysis here draws heavily on that in Jensen (forthcoming 1988). 1 M. C. Je nsen 2 1987 to estimate, and to my knowledge no one has done so yet, but I estimate that they would add at least another $50 billion to the total. These gains, to put them in perspective, equal 31 percent of the total cash dividends (valued in 1986 dollars) paid to investors by the entire corporate sector in the past decade. Corporate control transactions and the restructurings that often accompany them can be wrenching events in the lives of those linked to the involved organizations: the managers, employees, suppliers, customers and residents of surrounding communities. Restructurings usually involve major organizational change (such as shifts in corporate strategy) to meet new competition or market conditions, increased use of debt, and a flurry of recontracting with managers, employees, suppliers and customers.This activity sometimes results in expansion of resources devoted to certain areas and at other times in contractions involving plant closings, layoffs of top-level and mi ddle managers and of staff and production workers, and reduced compensation. Change due to corporate restructuring requires people and communities associated with the organization to adjust the ways they live, work and do business. It is not surprising, therefore, that this change creates controversy and that those who stand to lose are demanding that something be done to stop the process.At the same time, shareholders in restructured corporations are clear-cut winners; in recent years restructurings have generated average increases in total market value of approximately 50 percent. Those threatened by the changes argue that corporate restructuring is damaging the U. S. economy, that this activity damages the morale and productivity of organizations and pressures executives to manage for the short term. Further, they hold that the value that restructuring creates does not come from increased efficiency and productivity; rather, the gains come from lower tax payments, broken contract s withTotal dividend payments by the corporate sector, unadjusted for inflation, are given in Weston and Copeland (1986, p. 649). I extended these estimates to 1986. 2 M. C. Jensen 3 1987 managers, employees and others, and mistakes in valuation by inefficient capital markets. Since the benefits are illusory and the costs are real, they argue, takeover activity should be restricted. The controversy has been accompanied by strong pressure on regulators and legislatures to enact restrictions to curb activity in the market for corporate control.Dozens of congressional bills in the past several years have proposed new restrictions on takeovers, but as of August 1987, none had passed. The Business Roundtable, composed of the chief executive officers of the 200 largest corporations in the country, has pushed hard for restrictive legislation. Within the past several years the legislatures of New York, New Jersey, Maryland, Pennsylvania, Connecticut, Illinois, Kentucky, Michigan, Ohio, Indi ana, Minnesota and Massachusetts have passed antitakeover laws.The Federal Reserve Board implemented new restrictions in early 1986 on the use of debt in certain takeovers. In all the controversy over takeover activity, it is often forgotten that only 40 (an all-time record) of the 3,300 takeover transactions in 1986 were hostile tender offers. There were 110 voluntary or negotiated tender offers (unopposed by management) and the remaining 3,100-plus deals were also voluntary transactions agreed to by management. This simple classification, however, is misleading since many of the voluntary transactions would not have occurred absent the threat of hostile takeover.A major reason for the current outcry is that in recent years mere size alone has disappeared as an effective takeover deterrent, and the managers of many of our largest and least efficient corporations now find their jobs threatened by disciplinary forces in the capital markets. Through dozens of studies, economists have accumulated considerable evidence and knowledge on the effects of the takeover market. Most of the earlier work is well summarized elsewhere (Jensen and Ruback (1983); Jensen (1984); Jarrell, Brickley and M. C.Jensen 4 1987 Netter (1988)). Here, I focus on current aspects of the controversy. In brief, the previous work tells us the following: †¢ Takeovers benefit shareholders of target companies. Premiums in hostile offers historically exceed 30 percent on average, and in recent times have averaged about 50 percent. †¢ Acquiring-firm shareholders on average earn about 4 percent in hostile takeovers and roughly zero in mergers, although these returns seem to have declined from past levels. †¢ Takeovers do not waste credit or resources.Instead, they generate substantial gains: historically, 8 percent of the total value of both companies. †¢ Actions by managers that eliminate or prevent offers or mergers are most suspect as harmful to shareholders. †¢ Golden pa rachutes for top-level managers do not, on average, harm shareholders. †¢ The activities of takeover specialists (such as Icahn, Posner, Steinberg, and Pickens) benefit shareholders on average. †¢ Merger and acquisition activity has not increased industrial concentration.Over 1200 divestitures valued at $59. 9 billion occurred in 1986, also a record level (Grimm, 1986). †¢ Takeover gains do not come from the creation of monopoly power. Although measurement problems make it difficult to estimate the returns to bidders as precisely as the returns to targets,3 it appears the bargaining power of target managers, coupled with competition among potential acquirers, grants a large share of the acquisition benefits to selling shareholders. In addition, federal and state regulation of 3See Jensen and Ruback (1983, pp. 18ff). M. C. Jensen 5 1987 tender offers appears to have strengthened the hand of target firms; premiums received by target-firm shareholders increased substanti ally after introduction of such regulation. 4 Some have argued that the gains to shareholders come from wealth reallocations from other parties and not from real increases in efficiency. Roll (1986) argues the gains to target firm shareholders come from acquiring firm shareholders, but the data are not consistent with this hypothesis.While the evidence on the returns to bidding firms is mixed, it does not indicate they systematically suffer losses; prior to 1980 shareholders of bidding firms earned on average about zero in mergers, which tend to be voluntary, and about 4 percent of their equity value in tender offers, which more often are hostile Jensen and Ruback (1983). These differences in returns are associated with the form of payment rather than the form of the offer: tender offers tend to be for cash and mergers tend to be for stock (Huang and Walkling, 1987).Some argue that bondholders in acquired firms systematically suffer losses as substantial amounts of debt are added to the capital structure. Asquith and Kim (1982) do not find this, nor do Dennis and McConnell (1986). The Dennis and McConnell study of 90 matched acquiring and acquired firms in mergers in the period 1962-80 shows that the values of bonds, preferred stock and other senior securities, as well as the common stock prices of both firms, increase around the merger announcement. Changes in the value of senior securities are not captured in measures of changes in the value of common stock prices summarized previously.Taking the changes in the value of senior securities into account, Dennis and McConnell find the average change in total dollar value is positive for both bidders and target firms. Shleiffer and Summers (1987) argue that some of the benefits earned by target and bidding firm shareholders come from the abrogation of explicit and implicit longterm contracts with employees. They point to highly visible recent examples in the airline See Jarrell and Bradley (1980), Nathan and Oâ⠂¬â„¢Keefe (1986), however, provide evidence that this effect occurred in 1974, several years after the major legislation. M. C. Jensen 6 1987 industry, where mergers have been frequent and wages have been cut in the wake of deregulation. But given deregulation and free entry by low-cost competitors, the cuts in airline industry wages were inevitable and would have been accomplished in bankruptcy proceedings if not in negotiations and takeover-related crises. Medoff and Brown (1988) study this issue using data from Michigan. They find that both employment and wages are higher, not lower, after acquisition than would otherwise be expected; however, their sample consists largely of combinations of small firms.The Market for Corporate Control The market for corporate control is best viewed as a major component of the managerial labor market. It is the arena in which alternative management teams compete for the rights to manage corporate resources (Jensen and Ruback, 1983). Understandin g this point is crucial to understanding much of the rhetoric about the effects of hostile takeovers. Takeovers generally occur because changing technology or market conditions require a major restructuring of corporate assets (although in some cases, takeovers occur because incumbent managers are incompetent).Such changes can require abandonment of major projects, relocation of facilities, changes in managerial assignments, and closure or sale of facilities or divisions. Managers often have trouble abandoning strategies they have spent years devising and implementing, even when those strategies no longer contribute to the organization’s survival, and it is easier for new top-level managers with no ties to current employees or communities to make changes. Moreover, normal organizational resistance to change commonly is lower early in the reign of new top-level managers.When the internal processes for change in large corporations are too slow, costly, and clumsy to bring about the required restructuring or change in managers efficiently, the capital markets do so through the M. C. Jensen 7 1987 market for corporate control. Thus, the capital markets have been responsible for substantial changes in corporate strategy. Causes of Current Takeover Activity A variety of political and economic conditions in the 1980s have created a climate where economic efficiency requires a major restructuring of corporate assets.These factors include: †¢ †¢ The relaxation of restrictions on mergers imposed by the antitrust laws. The withdrawal of resources from industries that are growing more slowly or that must shrink. †¢ Deregulation in the markets for financial services, oil and gas, transportation, and broadcasting, bringing about a major restructuring of those industries. †¢ Improvements in takeover technology, including more and increasingly sophisticated legal and financial advisers, and innovations in financing technology (for example, the strip financing commonly used in leveraged buyouts and the original issuance of high-yield non-investment-grade bonds).Each of these factors has contributed to the increase in total takeover and reorganization activity. Moreover, the first three factors (antitrust relaxation, exit, and deregulation) are generally consistent with data showing the intensity of takeover activity by industry. Table 1 indicates that acquisition activity in the period 1981-84 was highest in the oil and gas industry, followed by banking and finance, insurance, food processing, and mining and minerals. For comparison purposes, the table also presents data on industry value measured as a percentage of the total value of all firms.All but two of the industries, retail trade and transportation, represent a larger fraction of total takeover activity than their representation in the economy as a whole, indicating that the takeover market is concentrated in particular industries, not spread evenly throughout the corpo rate sector. M. C. Jensen 8 1987 Table 1 Intensity of Takeover Activity, by Industry, 1981-84 Percent Percent of Total of Total Takeover Corporate Industry Classification of Seller Market Valueb Activitya Oil and Gas 26. 13. 5 Banking and Finance 8. 8 6. 4 Insurance 5. 9 2. 9 Food Processing 4. 6 4. 4 Mining and Minerals Conglomerate Retail Trade Transportation Leisure and Entertainment Broadcasting Other a 4. 4 4. 4 3. 6 2. 4 2. 3 2. 3 39. 4 1. 5 3. 2 5. 2 2. 7 . 9 . 7 58. 5 Value of merger and acquisition transactions in the industry as a percentage of total takeover transactions for which valuation data are publicly reported. Source: W. T Grimm, Mergerstat Review (1984, p. 41). bIndustry value as a percentage of the value of all firms, as of 12/31/84 Total value is measured as the sum of the market value of common equity for 4,305 companies, including 1,501 companies on the New York Stock Exchange, 724 companies on the American Stock Exchange, plus 2,080 companies in the over-the -counter market. Source: The Media General Financial Weekly, (December 31, 1984, p 17) Many sectors of the U. S. economy have been experiencing slower growth and, in some cases, even retrenchment. This phenomenon has many causes, including substantially increased foreign competition.The slow growth has meant increased takeover activity because takeovers play an important role in facilitating exit from an industry or activity. Changes in energy markets, for example, have required radical restructuring and retrenchment in that industry, and takeovers have played an important role in accomplishing these changes; oil and gas rank first in takeover activity, with twice their proportionate share of total activity. Managers who are slow to adjust to the new energy environment and slow to recognize that many old practices and strategies are no longer viable find that takeovers M. C.Jensen 9 1987 are doing the job for them. In an industry saddled with overcapacity, exit is cheaper to accompl ish through merger and the orderly liquidation of marginal assets of the combined firms than by disorderly, expensive bankruptcy. The end of the competitive struggle in such an industry often comes in the bankruptcy courts, with the unnecessary destruction of valuable parts of organizations that could be used productively by others. Similarly, deregulation of the financial services market is consistent with the number 2 rank of banking and finance and the number 3 rank of insurance in table 1.Deregulation has also been important in the transportation and broadcasting industries. Mining and minerals has been subject to many of the same forces impinging on the energy industry including the changes in the value of the dollar. The development of innovative financing vehicles, such as high yield noninvestment-grade bonds (junk bonds), has removed size as a significant impediment to competition in the market for corporate control. Investment grade and high-yield debt issues combined were associated with 9. percent of all tender offer financing from January 1981 through September 1986 (Drexel Burnham Lambert, undated). Even though not yet widely used in takeovers, these new financing techniques have had important effects because they permit small firms to obtain resources for acquisition of much larger firms by issuing claims on the value of the venture (that is, the target firm’s assets) just as in any other corporate investment activity. Divestitures If assets are to move to their most highly valued use, acquirers must be able to sell off assets to those who can use them more productively.Therefore, divestitures are a critical element in the functioning of the corporate control market and it is important to avoid inhibiting them. Indeed, over 1200 divestitures occurred in 1986, a record level (Mergerstat Review (1986)). This is one reason merger and acquisition activity has not increased industrial concentration. M. C. Jensen 10 1987 Divested plants and asse ts do not disappear; they are reallocated. Sometimes they continue to be used in similar ways in the same industry, and in other cases they are used in very different ways and in different industries.But in both cases they are moving to uses that their new owners believe are more productive. Finally, the takeover and divestiture market provides a private market constraint against bigness for its own sake. The potential gains available to those who correctly perceive that a firm can be purchased for less than the value realizable from the sale of its components provide incentives for entrepreneurs to search out these opportunities and to capitalize on them by reorganizing such firms into smaller entities.The mere possibility of such takeovers also motivates managers to avoid putting together uneconomic conglomerates and to break up existing ones. This is now happening. Recently many firms’ defenses against takeovers appear to have led to actions similar to those proposed by th e potential acquirers. Examples are the reorganizations occurring in the oil and forest products industries, the sale of â€Å"crown jewels,† and divestitures brought on by the desire to liquidate large debts incurred to buy back stock or make other payments to stockholders.The basic economic sense of these transactions is often lost in a blur of emotional rhetoric and controversy. Managerial Myopia versus Market Myopia It has been argued that, far from pushing managers to undertake needed structural changes, growing institutional equity holdings and the fear of takeover cause managers to behave myopically and therefore to sacrifice long-term benefits to increase short-term profits.The arguments tend to confuse two separate issues: 1) whether managers are shortsighted and make decisions that undervalue future cash flows while overvaluing current cash flows (myopic managers); and 2) whether security markets are shortsighted and undervalue future cash flows while overvaluing ne ar-term cash flows (myopic markets). M. C. Jensen 11 1987 There is little formal evidence on the myopic managers issue, but I believe this phenomenon does occur.Sometimes it occurs when managers hold little stock in their companies and are compensated in ways that motivate them to take actions to increase accounting earnings rather than the value of the firm. It also occurs when managers make mistakes because they do not understand the forces that determine stock values. There is much evidence inconsistent with the myopic markets view and no evidence that indicates it is true: (1) The mere fact that price-earnings ratios differ widely among securities indicates the market is valuing something other than current earnings. For example, it values growth as well.Indeed, the essence of a growth stock is that it has large investment projects yielding few short term cash flows but high future earnings and cash flows. The continuing marketability of new issues for start-up companies with li ttle record of current earnings, the Genentechs of the world, is also inconsistent with the notion that the market does not value future earnings. (2) McConnell and Muscarella (1985) provide evidence that (except in the oil industry) stock prices respond positively to announcements of increased investment expenditures and negatively to reduced expenditures.Their evidence is also, inconsistent with the notion that the equity market is myopic, since it indicates that the market values spending current resources on projects that promise returns in the future. (3) The vast evidence on efficient markets, indicating that current stock prices appropriately incorporate all currently available public information, is also inconsistent with the myopic markets hypothesis. Although the evidence is not literally 100 percent in support of the efficient market hypothesis, no proposition in any of the social sciences is better documented. 5For an introduction to the literature and empirical evidence on the theory of efficient markets, see Elton and Gruber (1984, Chapter 15, p. 375ff), and the 167 studies referenced in the bibliography. For some anomalous evidence on market efficiency, see Jensen (1978). For recent criticisms of the efficient market hypothesis see Shiller (1981a; 1981b), Marsh and Merton (1983; 1986) demonstrate that the Shiller 5 M. C. Jensen 12 1987 (4) Recent versions of the myopic markets hypothesis emphasize increases in the amount of institutional holdings and the pressure funds managers face to generate high quarterly returns.It is argued that these pressures on institutions are a major cause of pressures on corporations to generate high current quarterly earnings. The institutional pressures are said to lead to increased takeovers of firms, because institutions are not loyal shareholders, and to decreased research and development (R&D) expenditures. It is hypothesized that because R&D expenditures reduce current earnings, firms making them are more like ly to be taken over, and that reductions in R&D are leading to a fundamental weakening of the corporate sector of the economy.A study of 324 firms by the Office of the Chief Economist of the SEC (1985a) finds substantial evidence that is inconsistent with this version of the myopic markets argument. The evidence indicates the following: †¢ Increased institutional stock holdings are not associated with increased takeovers of firms. †¢ Increased institutional holdings are not associated with decreases in R&D expenditures. †¢ †¢ Firms with high R&D expenditures are not more vulnerable to takeovers. Stock prices respond positively to announcements of increases in R&D expenditures.Moreover, total spending on R&D is increasing concurrent with the wave of merger and acquisition activity. Total spending on R&D in 1984, a year of record acquisition activity, increased by 14 percent according to Business Week’s annual survey. This represented â€Å"the biggest gain since R&D spending began a steady climb in tests depend critically on whether, contrary to generally accepted financial theory and evidence, the future levels of dividends follow a stationary stochastic process. Merton (1985) provides a discussion of the current state of the efficient market hypothesis and concludes (p. 0), â€Å"In light of the empirical evidence on the nonstationarity issue, a pronouncement at this moment that the rational market theory should be discarded from the economic paradigm can, at best, be described as ‘premature’. † M. C. Jensen 13 1987 the late 1970’s. † All industries in the survey increased R&D spending with the exception of steel. In addition, R&D spending increased from 2 percent of sales, where it had been for five years, to 2. 9 percent. In 1985 and 1986, two more record years for acquisition activity, R&D also set new records.R&D spending increased by 10 percent (to 3. 1 percent of sales) in 1985, and in 1986, R &D spending again increased by 10 percent to $51 billion (3. 5 percent of sales), in a year when total sales decreased by 1 percent. 6 Bronwyn Hall (1987), in a detailed study of all U. S. manufacturing firms in the years 1976-85, finds in approximately 600 acquisitions that firms that are acquired do not have higher R&D expenditures (measured by the ratio of R&D to sales) than firms in the same industry that are not acquired.Also, she finds that â€Å"firms involved in mergers showed no difference in their pre- and post-merger R&D performance over those not so involved. † I know of no evidence that supports the argument that takeovers reduce R&D expenditures, even though this is a prominent argument among many of those who favor restrictions on takeovers. Free Cash Flow Theory More than a dozen separate forces drive takeover activity, including such factors as deregulation, synergies, economies of scale and scope, taxes, managerial incompetence, and increasing globalization of U. S. markets. 7 One major cause of takeover activity, the gency costs associated with conflicts between managers and 6 The â€Å"R&D Scoreboard† is an annual survey, covering companies that account for 95 percent of total private-sector R&D expenditures. The three years referenced here can be found in â€Å"R&D Scoreboard: Reagan & Foreign Rivalry Light a Fire Under Spending,† Business Week, (, July 8, 1985, p. 86 ff. ); â€Å"R&D Scoreboard: Now, R&D is Corporate America’s Answer to Japan Inc. ,† Business Week, (, June 23, 1986, p. 134 ff. ); and â€Å"R&D Scoreboard: Research Spending is Building Up to a Letdown,† Business Week, (, June 22, 1987, p. 39 ff. ). In 1984 the survey covered 820 companies; in 1985, it covered 844 companies; in 1986, it covered 859 companies. 7 Roll (1988) discusses a number of these forces. M. C. Jensen 14 1987 shareholders over the payout of free cash flow,8 has received relatively little attention. Yet it has pla yed an important role in acquisitions over the last decade. Managers are the agents of shareholders, and because both parties are selfinterested, there are serious conflicts between them over the choice of the best corporate strategy.Agency costs are the total costs that arise in such cooperative arrangements. They consist of the costs of monitoring managerial behavior (such as the costs of producing audited financial statements and devising and implementing compensation plans that reward managers for actions that increase investors’ wealth) and the inevitable costs that are incurred because the conflicts of interest can never be resolved perfectly. Sometimes these costs can be large, and when they are, takeovers can reduce them.Free Cash Flow and the Conflict Between Managers and Shareholders Free cash flow is cash flow in excess of that required to fund all of a firm’s projects that have positive net present values when discounted at the relevant cost of capital. Suc h free cash flow must be paid out to shareholders if the firm is to be efficient and to maximize value for shareholders. Payment of cash to shareholders reduces the resources under managers’ control, thereby reducing managers’ power and potentially subjecting them to the monitoring by the capital markets that occurs when a firm must obtain new capital.Financing projects internally avoids this monitoring and the possibility that funds will be unavailable or available only at high explicit prices. Managers have incentives to expand their firms beyond the size that maximizes shareholder wealth. 9 Growth increases managers’ power by increasing the resources This discussion is based on Jensen (1986a). Gordon Donaldson (1984), in a detailed study of 12 large Fortune 500 firms, concludes that managers of these firms were not driven by maximization of the value of the firm, but rather by the maximization of â€Å"corporate wealth. He defines corporate wealth as â€Å" the aggregate purchasing power available to management for strategic purposes during any given planning period†¦. this wealth consists of 9 8 M. C. Jensen 15 1987 under their control. In addition, changes in management compensation are positively related to growth. 10 The tendency of firms to reward middle managers through promotion rather than year-to-year bonuses also creates an organizational bias toward growth to supply the new positions that such promotion-based reward systems require (Baker, 1986);.The tendency for managers to overinvest resources is limited by competition in the product and factor markets that tends to drive prices toward minimum average cost in an activity. Managers must therefore motivate their organizations to be more efficient in order to improve the probability of survival. Product and factor market disciplinary forces are often weaker in new activities, however, and in activities that involve substantial economic rents or quasi-rents. 1 Activities yielding substantial economic rents or quasi-rents are the types of activities that generate large amounts of free cash flow. In these situations, monitoring by the firm’s internal control system and the market for corporate control are more important. Conflicts of interest between shareholders and managers over payout policies are especially severe when the organization generates substantial free cash flow. The problem is how to motivate managers to disgorge the cash rather than invest it below the cost of capital or waste it through organizational inefficiencies.Myers and Majluf (1984) argue that financial flexibility (unused debt capacity and internally generated funds) is desirable when a firm’s managers have better information about the firm than outside investors. Their arguments assume that managers act in the best interest of shareholders. The arguments offered here imply the stocks and flows of cash and cash equivalents (primarily credit) that management can u se at its discretion to implement decisions involving the control of goods and services† (p. 3, emphasis in original). In practical terms it is cash, credit, and other corporate purchasing power by which management commands goods and services† (p. 22). 10 Where growth is measured by increases in sales. See Murphy (1985). This positive relationship between compensation and sales growth does not imply, although it is consistent with, causality. 11 Rents are returns in excess of the opportunity cost of the permanent resources in the activity. Quasirents are returns in excess of the opportunity cost of the short-lived resources in the activity. M. C.Jensen 16 1987 that such flexibility has costs; financial flexibility in the form of free cash flow (including both current free cash in the form of large cash balances, and future free cash flow reflected in unused borrowing power) provides managers with greater discretion over resources that is often not used in the shareholder s’ interests. Therefore, contrary to Myers and Majluf, the argument here implies that eventually the agency costs of free cash flow cause the value of the firm to decline with increases in financial flexibility.The theory developed here explains (1) how debt-for-stock exchanges reduce the organizational inefficiencies fostered by substantial free cash flow; (2) how debt can substitute for dividends; (3) why â€Å"diversification† programs are more likely to be associated with losses than are expansion programs in the same line of business; (4) why mergers within an industry and liquidation-motivated takeovers will generally create larger gains than cross-industry mergers; (5) why the factors stimulating takeovers in such diverse businesses as broadcasting, tobacco, cable systems and oil are essentially identical; and (6) why bidders and some targets tend to show abnormally good performance prior to takeover.The Role of Debt in Motivating Organizational Efficiency The a gency costs of debt have been widely discussed (Jensen and Meckling (1976); Smith and Warner (1979)), but, with the exception of the work of Grossman and Hart (1980), the benefits of debt in motivating managers and their organizations to be efficient have largely been ignored. Debt creation, without retention of the proceeds of the issue, enables managers effectively to bond their promise to pay out future cash flows. Thus, debt can be an effective substitute for dividends, something not generally recognized in the corporate finance literature. 12 By issuing debt in exchange for stock, Literally, principal and interest payments are substitutes for dividends. Dividends and debt are not perfect substitutes, however, because interest is tax-deductible at the corporate level and dividends are not. 12 M. C. Jensen 17 1987 anagers bond their promise to pay out future cash flows in a way that simple dividend increases do not. In doing so, they give shareholder-recipients of the debt the ri ght to take the firm into bankruptcy court if they do not keep their promise to make the interest and principal payments. 13 Thus, debt reduces the agency costs of free cash flow by reducing the cash flow available for spending at the discretion of managers. These control effects of debt are a potential determinant of capital structure. Managers with substantial free cash flow can increase dividends or repurchase stock and thereby pay out current cash that would otherwise be invested in low-return projects or wasted.This payout leaves managers with control over the use of future free cash flows, but they can also promise to pay out future cash flows by announcing a â€Å"permanent† increase in the dividend. 14 Because there is no contractual obligation to make the promised dividend payments, such promises are weak. Dividends can be reduced by managers in the future with little effective recourse available to shareholders. The fact that capital markets punish dividend cuts wit h large stock price reductions (Charest (1978); Aharony and Swary (1980)) can be interpreted as an equilibrium market response to the agency costs of free cash flow. Brickley, Coles and Soo Nam (1987) find that firms that regularly pay extra dividends appear to have positive free cash flow. In comparison with a control group they have significantlyRozeff (1982) and Easterbrook (1984b) argue that regular dividend payments can be effective in reducing agency costs with managers by assuring that managers are forced more frequently to subject themselves and their policies to the discipline of the capital markets when they acquire capital. 14 Interestingly, Graham and Dodd (1951, Chapters 32, 34 and 36) in their treatise, Security Analysis, place great importance on the dividend payout in their famous valuation formula: V=M(D+. 33E). (See p. 454. ) V is value, M is the earnings multiplier when the dividend payout rate is a â€Å"normal two-thirds of earnings,† D is the expected di vidend, and E is expected earnings.In their formula, dividends are valued at three times the rate of retained earnings, a proposition that has puzzled many students of modern finance (at least of my vintage). The agency cost of free cash flow that leads to over retention and waste of shareholder resources is consistent with the deep suspicion with which Graham and Dodd viewed the lack of payout. Their discussion (chapter 34) reflects a belief in the tenuous nature of the future benefits of such retention. Although they do not couch the issues in terms of the conflict between managers and shareholders, the free cash flow theory explicated here implies that their beliefs, sometimes characterized as a preference for â€Å"a bird in the hand is worth two in the bush,† were perhaps well founded. 13 M. C. Jensen 18 1987 igher cash plus short-term investments, and earnings plus depreciation, relative to their total assets. They also have significantly lower debt-to-equity ratios. Th e issuance of large amounts of debt to buy back stock sets up organizational incentives to motivate managers to pay out free cash flow. In addition, the exchange of debt for stock helps managers overcome the normal organizational resistance to retrenchment that the payout of free cash flow often requires. The threat of failure to make debt-service payments serves as a strong motivating force to make such organizations more efficient. Stock repurchase for debt or cash also has tax advantages.Interest payments are tax-deductible to the corporation, that part of the repurchase proceeds equal to the seller’s tax basis in the stock is not taxed at all, and prior to 1987 tax rates on capital gains were favorable. Increased leverage also has costs. As leverage increases, the usual agency costs of debt, including bankruptcy costs, rise. One source of these costs is the incentive to take on projects that reduce total firm value but benefit shareholders through a transfer of wealth fro m bondholders. These costs put a limit on the desirable level of debt. The optimal debt/equity ratio is the point at which firm value is maximized, the point where the marginal costs of debt just offset the marginal benefits. The debt created in a hostile takeover (or takeover defense) of a firm suffering severe agency costs of free cash flow need not be permanent.Indeed, sometimes â€Å"overleveraging† such a firm is desirable. In these situations, leveraging the firm so highly that it cannot continue to exist in its old form yields benefits by providing motivation for cuts in expansion programs and the sale of divisions that are more valuable outside the firm. The proceeds are used to reduce debt to a more normal or permanent level. This process results in a complete rethinking of the organization’s strategy and structure. When it is successful, a much leaner, more efficient, and competitive organization results. M. C. Jensen 19 1987 The control hypothesis does not i mply that debt issues will always have positive control effects.For example, these effects will not be as important for rapidly growing organizations with large and highly profitable investment projects but no free cash flow. Such organizations will have to go regularly to the financial markets to obtain capital. At these times the markets have an opportunity to evaluate the company, its management, and its proposed projects. Investment bankers and analysts play an important role in this monitoring, and the market’s assessment is made evident by the price investors pay for the financial claims. The control function of debt is more important in organizations that generate large cash flows but have low growth prospects, and it is even more important in organizations that must shrink.In these organizations the pressure to waste cash flows by investing them in uneconomic projects is most serious. Evidence from Financial Transactions Free cash flow theory helps explain previously puzzling results on the effects of various financial transactions. Smith (Smith, 1986, tables 1 to 3) summarizes more than 20 studies of stock price changes at announcements of transactions that change capital structure as well as various other dividend transactions. These results and those of others are presented in table 2. For firms with positive free cash flow, the theory predicts that stock prices will increase with unexpected increases in payouts to shareholders and decrease with unexpected decreases in payouts.It also predicts that unexpected increases in demand for funds from shareholders via new issues will cause stock prices to fall. The theory also predicts stock prices will increase with increasing tightness of the constraints binding the payout of future cash flow to shareholders and decrease with reductions in the tightness of these constraints. These predictions do not apply to those firms with more profitable projects than cash flow to fund them. M. C. Jensen 20 1987 The predictions of free cash flow theory are consistent with all but three of the 32 estimated abnormal stock price changes summarized in table 2, and one of the inconsistencies is explained by another phenomenon.Panel A of table 2 shows that stock prices rise by a statistically significant amount with announcements of the initiation of cash dividend payments, increases in dividends and specially designated dividends, and fall by a statistically significant amount with decreases in dividend payments. (All coefficients in table 2 are significantly different from zero unless noted with an asterisk. ) Panel B shows that security sales and retirements that raise cash or pay out cash and simultaneously provide offsetting changes in the constraints bonding the payout of future cash flow are all associated with returns that are insignificantly different from zero.The insignificant return on retirement of debt fits the theory because the payout of cash is offset by an equal reduction in th e present value of promised future cash payouts. If debt sales are not associated with changes in the expected investment program, the insignificant return on announcement of the sale of debt and preferred also fits the theory. The acquisition of new funds with debt or preferred stock is offset exactly by a commitment bonding the future payout of cash flows of equal present value. If the funds acquired through new debt or preferred issues are invested in projects with negative net present values, the abnormal stock price change will be negative. If they are invested in projects with positive net present values, the abnormal stock price change will be positive.Sales of convertible debt and preferred securities are associated with significantly negative stock price changes (panel C). These security sales raise cash and provide little effective bonding of future cash flow payments; when the stock into which the debt is convertible is worth more than the face value of the debt, manageme nt has incentives to call the convertible securities and force conversion to common. M. C. Jensen 21 1987 Panel D shows that, with one exception, security retirements that pay out cash to shareholders increase stock prices. The price decline associated with targeted large block repurchases (often called greenmail) is highly likely to be due to the reduced probability that a takeover premium will be realized.These transactions are often associated with standstill agreements in which the seller of the stock agrees to refrain from acquiring more stock and from making a takeover offer for some period into the future (Mikkelson and Ruback (1985; 1986); Dann and DeAngelo (1983); and Bradley and Wakeman (1983);). Panel E summarizes the effects of security sales and retirements that raise cash and do not bond future cash flow payments. Consistent with the theory negative abnormal returns are associated with all such changes, although the negative returns associated with the sale of common t hrough a conversion-forcing call are statistically insignificant.Panel F shows that all exchange offers or designated use security sales that increase the bonding of payout of future cash flows result in significantly positive increases in common stock prices. These include stock repurchases and exchange of debt or preferred for common, debt for preferred, and income bonds for preferred. The twoday gains range from 21. 9 percent (debt for common) to 1. 6 percent for income bonds and 3. 5 percent for preferred. 15 The theory predicts that transactions with no cash flow and no change in the bonding of payout of future cash flows will be associated with returns that are insignificantly different from zero. Panel G of table 2 shows that the evidence is mixed; 15 The two-day returns of exchange offers and self-tenders can be affected by the offer.However, if there are no real effects or tax effects, and if all shares are tendered to a premium offer, then the stock price will be unaffecte d by the offer and its price effects are equivalent to those of a cash dividend. Thus, when tax effects are zero and all shares are tendered, the two-day returns are appropriate measures of the real effects of the exchange. In other cases the correct returns to be used in these transactions are those covering the period from the day prior to the offer announcement to the day after the close of the offer (taking account of the cash payout). See, for example, Rosenfeld (1982), whose results for the entire period are also consistent with the theory. M. C. Jensen 22 1987 he returns associated with exchange offers of debt for debt are significantly positive and those for designated-use security sales are insignificantly different from zero. All exchanges and designated-use security sales that have no cash effects but reduce the bonding of payout of future cash flows result, on average, in significant decreases in stock prices. These transactions include the exchange of common for debt or preferred or preferred for debt, or the replacement of debt with convertible debt and are summarized in Panel H. The two-day losses range from 7. 7 percent (preferred for debt) to 1. 1 percent (common for debt). In summary, the results in table 2 are remarkably consistent with free cash flow theory hich predicts that, except for firms with profitable unfunded investment projects, stock prices will rise with unexpected increases in payouts to shareholders (or promises to do so) and will fall with reductions in payments or new requests for funds from shareholders (or reductions in promises to make future payments). Moreover, the size of the value changes seems to be positively related to the change in the tightness of the commitment bonding the payment of future cash flows. For example, the effects of debtfor-preferred exchanges are smaller than the effects of debt-for-common exchanges. Tax effects can explain some of the results summarized in table 2, but not all.For example, the ex change of preferred for common, or replacement of debt with convertible debt, has no tax effects and yet is associated with price increases. The last column of table 2 denotes whether the individual coefficients are explainable by pure corporate tax effects. The tax theory hypothesizes that all unexpected changes in capital structure that decrease corporate taxes increase stock prices and vice versa. 16 Therefore, increases in dividends and reductions of debt interest should cause stock prices to fall, and vice versa. 17 Fourteen of the 32 coefficients are inconsistent with the corporate tax See, however, Miller (1977) who argues that allowing for personal tax effects and the equilibrium response of firms implies that no tax effects will be observed. 7 Ignoring potential tax effects due to the 85 percent exclusion of dividends received by corporations on holdings of preferred stock. 16 M. C. Jensen 23 1987 Table 23 Summary of Two-Day Average Abnormal Stock Returns Associated with th e Announcement of Various Dividend and Capital Structure Transactionsa Average Sample Size Average Abnormal Return (Percent) Free Cash Flow Theory Agreement with Tax Predicted Agreement Theory Sign with Theory? Type of Transaction A. Dividend changes that change the cash paid to shareholders Dividend initiation1 Dividend increase2 Specially designated dividend Dividend decrease2 3 Security Issued Security Retired 160 281 164 48 3. 7% 1. 0 2. 1 -3. 6 + + + – es yes yes yes no no no no B. Security sales (that raise cash) and retirements (that pay out cash) that simultaneously provide offsetting changes in the constraints bonding future payment of cash flows Security sale (industrial) 4 Security sale (utility) 5 Security sale (industrial) 6 Security sale (utility) Call8 7 debt debt preferred preferred none none none none none debt none none none common common common common 248 140 28 251 133 74 54 9 147 182 15 68 – 0. 2* -0. 1* -0. 1* -0. 1* -0. 1* -2. 1 -1. 4 -1. 6 15. 2 3. 3 1. 1 -4. 8 0 0 0 0 0 – – – + + + + yes yes yes yes yes yes yes yes yes yes yes no b no no yes yes no no no no yes yes yes no b C.Security sales that raise cash and bond future cash flow payments only minimally Security sale (industrial) 4 conv. debt 7 Security sale (industrial) conv. preferred 7 Security sale (utility) conv. preferred D. Security retirements that pay out cash to shareholders Self tender offer 9 Open market purchase10 Targeted small holdings11 Targeted large block repurchase12 none none none none M. C. Jensen 24 1987 E. Security sales or calls that raise cash and do not bond future cash flow payments Security sale (industrial) 13 common none Security sale (utility)14 common none Conversion-forcing call15 common conv. preferred Conversion-forcing call15 common conv. debt F.Exchange offers, or designated use security sales that increase the bonding of payout of future cash debt common Designated use security sale16 Exchange offer 17 debt comm on 17 Exchange offer preferred common 17 Exchange offer debt preferred Exchange offer 18 income bonds preferred G. Transaction with no change in bonding payout of future cash flows Exchange offer 19 debt 20 Designated use security sale debt debt debt 215 405 57 113 flows 45 52 10 24 18 36 96 -3. 0 -0. 6 -0. 4* -2. 1 21. 9 14. 0 8. 3 3. 5 1. 6 0. 6 0. 2* -2. 4 -2. 6 -7. 7 -4. 2 -1. 1 – – – – + + + + + 0 0 – – – – – yes yes no yes yes yes yes yes yes no yes yes yes yes yes yes yes yes yes yes yes yes no yes yes no yes yes no yes yes yes H.Exchange offers, or designated use security sales that decrease the bonding of payout of future cash flows Security sale 20 conv. debt debt 15 Exchange offer 17 common preferred 23 17 Exchange offer preferred debt 9 20 Security sale common debt 12 Exchange offer 21 common debt 81 a Returns are weighted averages, by sample size, of the returns reported by the respective studies All returns are significantly different from zero unless noted otherwise by *. b Explained by the fact that these transactions are frequently associated with the termination of an actual or expected control bid. The price decline appears to reflect the loss of an expected control premium. Source: 1 Asquith and Mullins (1983). 2 Charest (1978); Aharony and Swary (1980). 3 From Brickley (1983). Dann and Mikkelson (1984); Eckbo (1986); Mikkelson and Partch (1986). 5 Eckbo (1986). 6 Linn and Pinegar (1985); Mikkelson and Partch (1986). 7 Linn and Pinegar (1985). 8 Vu (1986). 9 Dann (1981); Masulis (1980); Vermaelen (1981); Rosenfeld (1982). 10 Dann (1980); Vermaelen (1981). 11 Bradley and Wakeman (1983). 12 Calculated by Smith (1986), table 4, from Dann and DeAngelo (1983); Bradley and Wakeman (1983). 13 Asquith and Mullins (1986); Kolodny and Suhler (1985); Masulis and Korwar (Korwar and Masulis); Mikkelson and Partch (1986). 14 Asquith and Mullins (1986); Masulis and Korwar (1986); Pettway and R adcliffe (1985). 15 Mikkelson (1981). 16 Others with more than 50% debt Masulis (1980). 17 Masulis (1983).These returns include announcement days of both the original offer and, for about 40 percent of the sample, a second announcement of specific terms of the exchange 18 McConnell and Schlarbaum (1981). 19 Dietrich (1984). 20Eckbo (1986); Mikkelson and Partch (1986). 21Rogers and Owers (1985); Peavy and Scott (1985); Finnerty (1985). (Allen, 1987; Auerbach and Reishus, 1987; Biddle and Lindahl, 1982; Bradley, Desai, and Kim, 1983; Bradley and Rosensweig, 1986; Comment and Jarrell, 1986; 1986; Crovitz, 1985; Easterbrook, 1984a; Eckbo, 1985; 1985; Fama and Jensen, 1983a, b, 1985; Franks, Harris, and Mayer, 1987; Golbe and White, 1987; Herzel, Colling, and Carlson, 1986; Holderness and Sheehan, 1985; 1985; Jarrell, Poulsen, and Davidson, 1985; Jensen, 1985, 1986b; Jensen and Smith, 985; Kaplan and Roll, 1972; Koleman, 1985; Lambert and Larcker, 1985; Malatesta and Walkling, 1985; Mart in, 1985; Morrison, 1982; Mueller, 1980; Myers, 1977; Office of the Chief Economist, 1984, 1985b, 1986; Paulis, 1986; Ravenscraft and Scherer, 1985a, b; Ricks, 1982; Ricks and Biddle, 1987; Ruback, 1988; Ryngaert, 1988; Shoven and Simon, 1987; Sunder, 1975; You et al. ) Jensen 25 1987 hypothesis. Simple signaling effects, where the payout of cash signals the lack of present and future investments promising returns in excess of the cost of capital, are also inconsistent with the results-for example, the positive stock price changes associated with dividend increases and stock repurchases. If anything, the results in table 2 seem too good, for two reasons.The returns summarized in the table do not distinguish firms that have free cash flow from those that do not have free cash flow, yet the theory says the returns to firms with no free cash flow will behave differently from those which do. In addition, only unexpected changes in cash payout or the tightness of the commitments bonding the payout of future free cash flow should affect stock prices. The studies summarized in table 2 do not, in general, control for the presence or absence of free cash flow or for the effects of expectations. If free cash flow effects are large and if firms on average are in a positive free cash flow position, the predictions of the theory will hold for the simple sample averages. To see how the agency costs of free cash flow can be large enough to show up in the uncontrolled tests summarized in table 2, consider the graph of equilibrium firm M.C. Jensen 26 1987 value and free cash flow in figure 1. Figure 1 portrays a firm whose manager values both firm value (perhaps because stock options are part of the compensation package) and free cash flow. The manager, however, is willing to trade them off according to the given indifference curves. By definition, firm value reaches a maximum at zero free cash flow. The point (V*, F*) represents the equilibrium level of firm value and free ca sh flow for the manager. It occurs at a positive level of free cash flow and at a point where firm value is lower than the maximum possible. The difference Vmax – V* is the agency cost of free cash flow.Because of random factors and adjustment costs, firms will deviate temporarily from the optimal F*. The dashed line in figure 1 portrays a hypothetical rectangular distribution of free cash flow in a cross section of firms under the assumption that the typical firm is run by managers with preferences similar to those portrayed by the given indifference curves. Changes in free cash flow (or the tightness of constraints binding its payout) will be positively related to the value of the firm only for the minority of firms in the cross section with negative free cash flow. These are the firms lying to the left of the origin, 0. The relation is negative for all firms in the range with positive free cash flow.Given the hypothetical rectangular distribution of firms in figure 1, the majority of firms will display a negative relation between changes in free cash flow and changes in firm value. As a result the average price change associated with movements toward (V*, F*) will be negatively related to changes in free cash flow. If the effects are so pervasive that they show up strongly in the crude tests of table 2, the waste due to agency problems in the corporate sector is probably greater than most scholars have thought. This waste is one factor contributing to the high level of activity in the corporate control market over the past decade. More detailed tests of the propositions that control for growth prospects and expectations will be interesting. M. C. Jensen 27 1987Evidence from Going-Private and Leveraged Buyout Transactions Many of the benefits in going-private and leveraged buyout transactions seem to be due to the control function of debt. These transactions are creating a new organizational form that competes successfully with the open corporate form because of advantages in controlling the agency costs of free cash flow. In 1985, going-private and leveraged buyout transactions totaled $37. 4 billion and represented 32 percent of the value of all public acquisitions. 18 Most studies have shown that premiums paid for publicly held firms average over 50 percent,19 but in 1985 the premiums for publicly held firms were 31 percent (Grimm, 1985). Leveraged buyouts are frequently financed with high debt; 10:1 ratios of debt to equity are not uncommon, and they average 5. 5:1 (Schipper and Smith (1986); Kaplan (1987); and DeAngelo and DeAngelo (1986)). Moreover, the use of â€Å"strip financing† and the allocation of equity in the deals reveal a sensitivity to incentives, conflicts of interest, and bankruptcy costs. Strip financing, the practice in which investors hold risky nonequity securities in approximately equal proportions, limits the conflict of interest among such securityholders and therefore limits bankruptcy costs. T op managers and the sponsoring venture capitalists hold disproportionate amounts of equity. A somewhat oversimplified example illustrates the organizational effects of strip financing. Consider two firms identical in every respect except financing.Firm A is entirely financed with equity, and Firm B is highly leveraged with senior subordinated debt, convertible debt, and preferred as well as equity. Suppose Firm B securities are sold only in strips; that is, a buyer purchasing a certain percentage of any security must purchase the same percentage of all securities, and the securities are â€Å"stapled† together See W. T. Grimm, Mergerstat Review (1985, Figs. 29, 34 and 38). See DeAngelo, DeAngelo and Rice (1984), Lowenstein (1985), and Schipper and Smith (1986). Lowenstein also mentions incentive effects of debt but argues tax effects play a major role in explaining the value increase. 19 18 M. C. Jensen 28 1987 o they cannot be separated later. Security holders of both firms have identical unlevered claims on the cash flow distribution, but organizationally the two firms are very different. If Firm A managers withhold dividends to invest in value-reducing projects or if they are incompetent, the shareholders must use the clumsy proxy process to change management or policies. In Firm B, strip holders have recourse to remedial powers not available to the equity holders of Firm A. Each Firm B security specifies the rights its holder has in the event of default on its dividend or coupon payment; for example, the right to take the firm into bankruptcy or to have board representation.As each security above equity goes into default, the strip holder receives new rights to intercede in the organization. As a result, it is quicker and less expensive to replace managers in Firm B. Moreover, because every security holder in the highly leveraged Firm B has the same claim on the firm, there are no conflicts between senior and junior claimants over reorganization of the claims in the event of default; to the strip holder it is a matter of moving funds from one pocket to another. Thus, Firm B will not go into bankruptcy; a required reorganization can be accomplished voluntarily, quickly, and with less expense and disruption than through bankruptcy proceedings. The extreme form of strip financing in the example is not normal practice.Securities commonly subject to strip practices are often called â€Å"mezzanine† financing and include securities with priority superior to common stock yet subordinate to senior debt. This arrangement seems to be sensible, because several factors ignored in our simplified example imply that strictly proportional holdings of all securities is not desirable. For example, IRS restrictions deny tax deductibility of debt interest in such situations and bank holdings of equity are restricted by regulation. Riskless senior debt need not be in the strip because there are no conflicts with other claimants in the event of reorganization when there is no probability of default on its payments. M. C. Jensen 29 1987Furthermore, it is advantageous to have the top-level managers and venture capitalists who promote leveraged buyout and going-private transactions hold a larger share of the equity. Top-level managers on average receive over 30 percent of the equity, and venture capitalists and the funds they represent generally retain the major share of the remainder (Schipper and Smith (1986); Kaplan (1987)). The venture capitalists control the board of directors and monitor the managers. Both managers and venture capitalists have a strong interest in making the venture successful because their equity interests are subordinate to other claims. Success requires (among other things) implementation of changes to avoid investment in low-return projects in order to generate the cash for debt service and to increase the value of equity.Finally, when the equity is held by a small number of people, efficiencies in risk-bearing can be achieved by placing more of the risk in