Coach Inc Essay

1) 1. What are the defining characteristics of the luxury goods industry? What is the industry like? A luxury brand may have profound influence on an overall product strategy since its position may determine how the company is going to make its next step. A luxury brand like Coach epitomizes elegance and combines classic beauty with modern design. According to John E. Gamble, not only has Coach become one of the most respected and known brand names in the ladies’ handbags and leather accessories luxury brand industry, it is also one of the most best-selling luxury brand companies in the world, with net sales reaching 2.1 billion in 2006 (Gamble). When a company like Coach decides to set up a product strategy for the next season, the manager will need to take the brand’s established style into account, since their incoming products must fit with the existing brand. When a manager, such as Lew Frankfort, chairman and CEO of Coach, Inc., aims to build a luxury brand like Coach, he invests millions of dollars in setting up a series of business strategies, including advertising on television, organizing fashion shows, and gaining the approval of fashion designers. These actions are decided based on how a luxury brand is built; essentially, the brand will guide the future steps of the company to a certain degree. Coach, Inc. is different from other more expensive luxury brands, such as Hermes, Prada, Fendi, and Louis Vuitton in the sense that Coach focuses more on middle-income consumers who want to purchase their hand bags from a price range of $200 to $500. Coach is the alternative to these competing companies, matching their key luxury products on quality and styling, while beating them on price by 50% or more (Gamble). 2) 2. What is competition like in the luxury goods industry? What competitive forces seem to have the greatest effect on industry attractiveness? The Luxury branding decision will influence an organization’s pricing decisions because its position is related to the product’s price. Take Coca Cola, for example. It is the most valuable brand in the world. The brand makers intend to compel everyone to drink Coca and provide a feeling of happiness. Thus, the price of the product will be cheap, since the brand is aimed at inducing the public’s joy. If the company sets the prices high, people may not be able to afford Coca Cola. Since the brand targets consumers of all backgrounds and income levels, it aims to market itself as a cheap beverage that tastes remarkable. This is how the brand is related to the pricing. Similarly, Coach, Inc. succeeds in maintaining a balance between affordable price and luxurious design. Coach is a less expensive luxury brand compared to its more expensive Italian and French counterparts. The type of brand will directly influence an organization’s distribution system, especially if it is a luxury brand, since the brand may tell people where the product is distributed. According to the website (americanessays.com) â€Å"Coca Cola has its own distribution channel including direct and indirect selling.† By using this strategy, Coca Cola is able to provide Coke all over the world. Coach, Inc. keyed into â€Å"accessible† luxury ladies’ handbags and leather accessories. The brand will influence a company’s promotion decision because of its nature. For a brand like Louis Vuitton, customers barely receive any discounts or find any promotions since it is a very well-known brand with French elegance. The company may not perform any promotions since it may hurt the brand. In contrast, a brand like Best Buy frequently holds promotions, usually every season or every month since this brand is meant to be economic. Thus, the company will execute promotions quite often. Coach, Inc. created its business model, which has different kinds of stores, including full-price stores, factory stores, wholesale department stores, and internet sales stores. Full-price stores sell the newest designer hand bags, leather accessories, fragrances, and women’s knitwear collections. Factory stores sell slightly out-of-season products. Coach, Inc. selects the highest quality materials to produce its products in order to maintain its reputation of exceptional quality. Under the manager’s marketing team, Coach launches new collections every month to attract customers to return and browse its product selection. On the other hand, customers can find their favorite handbags and accessories in factory stores at discounted prices. Coach has become the best-selling brand of women’s luxury handbags and leather accessories in the United States, with a 25% market share. Moreover, Coach is the second best-selling brand of those products in Japan, with an 8% market share. With its successful global business strategy, Coach, Inc. has rapidly grown in the last six years after its initial IPO in 2000 (Paul. 283). It attracts mostly middle-income consumers, who purchase its products rather than those of other name brands on the same price level. The growing desire for luxury goods in middleclass consumers is thought to be a result of a wide range of factors, including effective advertising and TV programming that glorifies conspicuous consumption. On the other hand, the demanding daily rigor of two-income households is thought to be another suggested factor. Additional factor are the rising sales of luxury goods and the growth of big box discounters, such as Wal-Mart and Target (Gamble). Therefore, in the contemporary market environment, should the company want to build its business successfully, the key points are great design, high quality, and luxury styling in an acceptable price range. If the company doesn’t adhere to those key points, it will lead itself to loss of its market share or bankruptcy. 3) 3. How is the market for luxury handbags and leather accessories changing? What are the underlying drivers of change and how might those driving forces change the industry? In the current luxury handbags and leather accessories market, any competing company faces two sets of challenges in continuing the development of its business and succeeding in growing its market share. First, when Coach, Inc. was founded in 1941, it was a small family-owned handbag business in New York City. After 44 years of family management with a steadily set price 50% lower than more luxurious brands, Coach was sold to Sara Lee. Coach continued to grow rapidly until the mid-1990s. Then, in an abrupt change of events, consumers quit purchasing Coach’s handbags in order to focus on French and Italian brands, such as Gucci, Prada, and Louis Vuitton. The company’s market share fell from 40% to a tragic 5%. Reed Krakoff, the top Tommy Hilfiger designer, was hired by Sara Lee to save the business that had more than half a century’s worth of history. In the beginning, Reed did the extensive consumer surveys and held focus groups to get the information of styling, comfort, and functionality preferences. After doing consumer surveys, Reed found that customers wanted handbags with edgier styling, softer leather, and leather-trimmed fabric. After six months, Coach launched redesigned, brand-new handbags to the market. Furthermore, Reed improved the appearance from dark, wood-paneled interiors design to a bring and air ambiance design. Reed planned to launch new collections every month instead of twice a year. Reed introduced the test models and the discontinued models sold at discounted price. After innovation, Coach sales continued to grow from $500 million in 1999 to more than $2.1 billion in 2006 (John E. Gamble). In addition, luxury brand name products face counterfeit goods, which threatened their market sales in current years. In 2006, more than $500 billion worth of counterfeit goods were sold all over the world. As a result, it seriously threatened the profit of name brand companies. Combating counterfeit goods requires the government to take a step to combat and convict intellectual property rights crimes. 4) 6. What are the resource strengths and weaknesses of Coach Inc.? What competencies and capabilities does it have that its chief rivals don’t have? What new market opportunities does Coach have? What threats do you see to the company’s future well-being? Coach, Inc. is the well known luxury brand of handbags and leather accessories which that originated in the United States. It should be more popular and widely-accepted by Americans since it is an American luxury brand. Furthermore, Coach, Inc. continues to attract consumers by launching new collections every month, marking up full-priced new products and over-seasonal products’ low price level. Those business characteristics hardly occur in its chief rivals, such as Hermes, Ralph Lauren, Prada, and Louis Vuitton. Therefore, it creates a long-term relationship with its customers. In recent years, Coach, Inc. has continued to expand and develop its business all over the world. For example, it builds more flagship stores in different countries. Moreover, Coach, Inc. tries to diversity its business. For example, Coach, Inc. now launches women’s knitwear collections, and ladies’ footwear. To the contrary, Coach, Inc. sets up too many stores in the nearby areas, which will hurt the luxury brand name’s reputation. If one can buy Coach’s products anywhere, will one still find Coach to be luxurious? The economy is now getting better and better. Companies will compensate their employees well, and grant them more buying powerful to purchase Coach’s products. However, the challenge of Coach, Inc. is to compete with other luxury French and Italian brand goods and to combat the threat of counterfeit goods (John E. Gamble). 5) 7. What recommendations would you make to Lew Frankfort to improve the company’s competitive position in the industry and its financial and market performance? In conclusion, Coach, Inc. is one of the most successful luxury brands of women’s handbags and leather accessories. Its products match key luxury rivals on quality and styling with pricing level focus on middle-income consumers (John E. Gamble). In the company’s future development, I would recommend that Lew Frankfort focus on market situations and customers’ perpetually-changing desires. It would be to his benefit to do market surveys prior to a new product’s creation. The company should set up stores only in locations where expansion is profitable. The company should follow current business models, such as different price levels, launch new collections every month, continue with high quality production, and provide excellent customer service, which can develop and reach higher level returns on shareholders’ equities. References: 1) Case 5. John E. Gamble. Page 238-97 2) Marketing Management (J. Paul Peter/James H. Donnelly, JR.) 3)http://www.americanessays.com/study-aids/free-essays/education/the-coca-cola-enterprises.php

Difference between growing up in rich and a poor family Essay

My character, physical, emotional, and psychological development would drastically be different had I been born and raised in a poor family as opposed to a rich family. Growing up in a rich family, I would be more or less secure in a lot of aspects. For example, I wouldn’t worry about my basic needs such as food, clothing, shelter, and education, among others. My emotional and psychological development would also be nourished as I would be provided with things that would facilitate my growth such as toys and books, among others. It can also be said that I would also be physically fit as I will always have ample food. In short, in a rich family, I would have a well-provided and highly secure life in which most aspects of my growth and development would flourish. On the other hand, growing in an impoverished family would have significantly different circumstances. I wouldn’t have a guaranteed education nor would I be assured of my basic needs. My emotional and psychological development would be very difficult as I may become envious of rich people and even development a feeling of resentment and shame towards my family’s status. Since I wouldn’t always have enough food, most of the time I would be physically unhealthy or malnourished. According to article, â€Å"The Science of Early Childhood Development: Closing the Gap of What We Know and What We Do,† which was done by Harvard University’s National Scientific Council on the Developing Child, the early stages of childhood is a critical stage in the over-all development of a person. In the article, it is said that the early development of â€Å"cognitive skills, emotional well-being, social competence, and sound physical and mental health† (4) lays a strong foundation for success into adulthood. Moreover, the article also noted that high levels of stress in childhood can significantly affect a person’s behavior and physical and mental health. Meaning to say, the circumstances and the environment during childhood can significantly affect my emotional, physical, and psychological status which is why growing in a rich family and poor family can be significantly different from each other. *Word Count : 354 Works Cited â€Å"The Science of Early Childhood Development. † January 2007. National Scientific Council On The Developing Child, Harvard University. 29 January 2009 .

French revolution and Enlightenment Essay Example | Topics and Well Written Essays - 500 words

French revolution and Enlightenment - Essay Example privileged, power and the control of the Revolution was passed on from the privileged class to the middle class, and then, temporarily, to the poor and extreme – the sans-cullotes in Paris. It is in this sense that the French Revolution of 1789, which lasted for ten years, is hailed by historians as an event which changed societies. The idea of nationalism, as known in modern times, was a product of the French Revolution. It also provided the empirical data from which Karl Marx, among others, based his theory of modern revolution. Moreover, it served as an important model for succeeding revolutions that changed the rest of the world. Most historians would consider the political ideals of the Enlightenment as the driving force behind the Revolution. Some, such as Burke, even went as far as including Rousseau and his philosophy. Rousseau’s book, The Social Contract, is considered the Bible of many leaders of the French Revolution (Russell, 1945). Russell also states that Robespierre’s reign is the fruit of Rousseau’s teaching. Moreover, he also holds Rousseau’s ideas partly responsible for the dictatorships of Russia and Germany. Specifically, he writes, â€Å"Hitler is an outcome of Rousseau.† Even if Rousseau’s ideas did bring about Robespierre’s reign of Terror, wherein thousands were executed for alleged crimes against the Revolution, and the dictatorships of Russia and Germany, he did advocate democracy. Our modern idea of democracy is what he calls elective aristocracy and this, for him, is the best form of government. However, he points out that this is not for all countries. His idea of democracy, no doubt, was the thread that connected him to the French Revolution. Eventually, the idea of democracy brought about the downfall of monarchy in France. According to Karl Marx, all the Revolution did was replace the feudal economic system of France with that of a capitalistic system, which reinforced the peasantry. It is at this point that one may

DQ Questions 5 Essay Example | Topics and Well Written Essays - 250 words

DQ Questions 5 - Essay Example Personal ethics is also applicable in both personal and professional environment while professional ethics is limited to a profession. In a professional environment, personal ethics is applicable as long as it does not contravene any of professional ethics provisions while professional ethics is not applicable outside the profession even if it is not contradictory to a personal ethics’ provision (Harris, Pritchard and Rabins, 2008). In case of a decision by my employers to which I am ethically opposed, I would respond by applying utilitarianism ethics towards a decision to comply with the decision or to oppose it. Based on the theory’s provisions for decisions that maximize benefits to a majority of stakeholders to a case, I would consider every stakeholder and determine effects of the decision that the employer has made and effects of application of my ethical value. A review of benefits and harm of each position would follow and I would adopt the option that maximizes benefits. if the employer’s decision has more benefits to a majority of stakeholders then I would implement it. Otherwise, I would try to convince the employer against the decision. If they refuse to change their position then I would resign and inform relevant moral authorities of the case (Trevino and Nelson,

Immersion Program Essay Example | Topics and Well Written Essays - 500 words

Immersion Program - Essay Example The first lesson learned was that language taught in a meaningful context is acquired much easier and more completely than language taught in isolation from other subjects. Rather than focusing attention on the academically correct grammar and syntax of the language, the lesson learned here was that language taught with a focus on meaningful communication between and among students and teachers is much more successful than language focused on academic proficiency. In addition, by placing the language instruction in the context of other academic pursuits, the main focus on learning is not placed as severely on the language acquisition itself, but on the academic subject matter, with language acquisition merely a part of communicating information about this subject with the teacher and with other students. By taking the pressure and focus off of the language itself, it becomes less of a burden to students and more of a challenge to accomplish. In addition, this context provides stimula tion and encouragement for students to learn more about the language as a means of communicating more about the subject involved. A second lesson learned through the research was that while comprehension among immersion students was far higher than that among students taught in isolation, the speaking and writing skills of these students remained at a much lower level than those of native speakers of the language. The study theorized that the reason for this shortfall was due to the lack of actual language use by the students while participating in their classes, often responding to questions posed by the teacher rather than formulating their own ideas in the second language. This hypothesis was backed up with discussion from various other studies that have been conducted all seeming to reach the same conclusion. This reveals the importance of providing ample opportunity

CASE ASSIGNMENT MODULE 5 Performance Management Essay

CASE ASSIGNMENT MODULE 5 Performance Management - Essay Example Performance of employees is clearly impacted by the performance management systems used within a company. These systems also help the human resources team to deal with various opportunities and also help in developing new career options and growth levels likewise. A well planned and implemented system can prove to be the success factor for the business (Armstrong and Baron). Performance management systems help in developing the competencies of the workforce as well as help in identifying the week areas of the employees. This can be used as a method to overcome the weaknesses of the employees and to develop them to become good in the particular area (Smither). Also the performance management systems help in continuous monitoring and help in better overall performance of the employees. Considering an China – US Joint venture, the main area that needs to be considered is the need for constant monitoring. Here the company needs to ensure that all employees are monitored constantly , to help gain the best results. Managing performance can be a result of many difference methods like training and development, mentoring, management of stress, competitive assessments and also ideas like performance appraisals (FSA). When there is a joint venture, it is important to ensure that the cultural differences are kept in mind while developing the performance management systems. The basis for a successful performance management system is effective communication of the goals and responsibilities both to the employees as well as to the managing individuals within the company. If the employees are clear about their role, and the part they play within a company, the contribution will be accordingly and will help in keeping up to the expected performance as well (Rollo). The second crucial stage here is the monitoring of the individuals and to ensure that the business performance is also well tracked and focused upon (Daniels and Daniels). Monitoring the business and the indivi duals within the company helps the managers and top management provide constructive feedback to the employees and also constantly requires the managers to reinstate the main goals and objectives of the company (Paladino). Here the management can lay down the expectations of the organisation effectively and provide the employees with a clear path of their duties. This is crucial especially in a multi cultural organisation as it helps in healthier working condition and better performance as a whole. Finally, it is crucial to implement a fair rewarding structure for the employees of China as well as the US organisations and here the actual performance of the employees needs to be considered while providing both monetary as well as non monetary benefits (FSA). The above mentioned points will benefit the overall implementation of the performance management systems and these will allow developing an effective system (Smither). Here in this case, since the joint venture is between two inte rnational firms, hence, there are a number of international considerations that also need to be addressed while developing and implementing the performance management systems (Daniels and Daniels). Of these, the first and foremost factor that needs consideration is the cultural differences. Here it is important to take this into account as people from different cultures work

Gallipoli - the movie Essay Example | Topics and Well Written Essays - 1500 words

Gallipoli - the movie - Essay Example However, this battle just marked a beginning of a stream of others at different battlefields such as within Belgium and France. The historical World War 1 broke in the year 1914 with two, main opposing alliances of nations. By the fact that Austria was a member to the British Empire, most Australians supported the battle of land. Many Australian men volunteered to fight the war in support of the Britain and were ferried overseas for training the British side opted to support Russia in order to defeat Turkey through which they would be in a position to weaken Germany (Commonwealth of Australia, 2005 p. 1-2). Through this, the trainees interacted with other cultures and thus learnt to appreciate diversity. During the World War 1, April 25 of 1915 marked a memorable occurrence when the troops of Australia were deployed to the peninsula of Gallipoli in order to secure it strategically for the ease of taking victory from their counters who also eyed the battle field. The site was importan t for the battle as it commanded good way for supplies through the sea and also as attacking points with the security of rocky cliffs and long range of viewership. The battle at Gallipoli is interpreted to have given the people of Australia a chance to come out for the world to note on her morals and honor, and to display her sovereignty as an independent state. It is sure that the battle at Gallipoli stuck to the history of this country, not only to the relatives that lost their loved ones but also to the country as a whole; for through the war and the campaign, the young Australian men were presented with a rare opportunity to showcase their patriotism, a chance that would have never been provided. As depicted from the movie, the young men got a chance to travel wide and far and interact with various cultures different from their indigenous one. The movie, which was done for a reminder of the historic war serves to remind the people of the strong will, the bond of fraternity as we ll as the thrilling strength with which the men fought for defense of their national heritage; their land. The young men fought relentlessly even when nothing else faced them but death, they would not turn back. Together with thousands of other strong willed soldiers, thousands of young men surrendered their lives for the sake of patriotism. Though with bitter memories of pain and loss, the name Gallipoli as adopted and used by the Australians means pride, honor as well as glory of the many young men who surrendered their lives for the sake of future generations in Australia. As historians reveal, the sheer horror that faced the Australian at Gallipoli, their spirit in determination would not stop them from their mission; standing for their nation (Anon, nd, p.2). Therefore, these along others formed the basis through which the social benefits emanating from the war are persistently seen many years after the horror. Australia underwent through major reforms within the period of 1980 to 1990. The major thematic provisions of the movie as set in the 1980s are the development of a country which innocence is evident through the setting of early 1900 before and during the World War 1. The coming of age of the country is seen through the depicted imagery of the gradual loss of innocence of the Australian soldiers who

Resolving International Disputes. What Mechanisms are Available to the Essay

Resolving International Disputes. What Mechanisms are Available to the United Nations to Resolve International Disputes - Essay Example The UN has an additional challenge in the form of geographical dispersion and cultural diversity1. Among the primary purposes of the UN are international dispute resolution and upkeep of international security and peace, which means that the body takes collective measures to prevent and remove threats to the security and peace. The mechanisms that are in place to facilitate such objectives include the Security Council, the International Court of Justice, the General Assembly and the Secretary General. Being the key organ charged with the responsibility of maintenance of security and peace, the Security Council calls upon parties involved in disputes for the purpose of settlement as per articles listed in Article 33 of its statutes2. The dispute mechanisms are structured processes that address grievances or disputes arising between parties engaged in societal, legal or business relationships. The mechanisms are used in resolution of disputes and usually incorporate negotiation, mediat ion and conciliation. Through the dispute settlement systems in place, the UN is the best-suited international institution to address the new challenges facing international security. This paper will discuss the mechanisms available to the United Nations to resolve international disputes and their merits. The Security Council has the key responsibility of maintaining security and peace among countries. Other organs of the UN may only make recommendations to member states, but the Security Council has the authority to implement 1 Winnefeld, J 2004, The changing nature of intra-state conflict, Rand, California, pp. 19. 2 Simma, S 2003, The charter of the United Nations, Oxford University Press, New York, pp. 56. binding decisions that member states have agreed to carry out3. Such decisions by the Security Council are referred to as Security Council resolutions. As described in Article One, the UN has a purpose to maintain international security and peace. Hence, it takes collective me asures to prevent and remove threats to peace, suppresses acts of aggression and brings peace in conformity with the guidelines of international law and justice. It aims to develop friendly relations based on respect among nations. As an international body, the UN is determined to reaffirm faith in basic human rights, dignity and value of humanity. Its intention is to establish conditions that facilitate respect and justice for the obligations that stem from international sources of law and treaties as well as promoting better qualities of life, freedom and social progress4. The key motivation behind creating the UN was to save future generations from the threats of war. From the time it was created, the body has been striving to prevent the escalation of disputes into war as well as facilitating the restoration of peace in the event of armed conflicts. Typically, dispute mechanisms used by the UN are not judicial in nature since they are not deployed in courts of law. Instead, they are governed by core processes of human rights as defined by treaties of human rights5. The UN acknowledges that the absence of military conflicts or war between countries is not an assurance of international security and peace. Threats to international security and peace are seen in other sources outside of the military such as the instability arising from ecological, humanitarian, social and economic fields. Other factors that contribute to the insecurity are international environmental disputes that stem from 3 Thomas, G 2009, Admission to the United Nations: Charter Article 4 and the Rise of Universal Organization, Martinus Publishers, Chicago, pp. 64. 4

DinkaAgaar of South Sudan Essay Example | Topics and Well Written Essays - 750 words

DinkaAgaar of South Sudan - Essay Example Information was also given to Deal by various government officials and military officers, to try and determine the root and level of the violence and torture experience by the DinkaAgaar. Perhaps the most central concept of the research is that of Cieng. This is, as a noun, â€Å"human relations, conduct, behavior, habit, personality, custom, law, rule, way of life, culture, essence, and nature† (Deal, 2010, p571) and dictates the reason behind much of the violence within the group. The definition of Cieng seems to be the object of study in much of social anthropology, and the fact that it plays such an important role in the group dynamic explains the reasons for much of the behaviour. Deal (2010, p571) suggests that the importance of Ciengensures that the good of the group outweighs the good of the individual, and therefore, some of the torture and violent behaviour continues as it is thought to be an important part of Dinka culture. The main approach used by Deal (2010) is t hat sanctioned by Malinowski; fieldwork, taking the time to get the ‘native’s perspective’ through participant observation and communication with the members of the tribe. Torture and other forms of violence may seem unsavoury to an outsider, but when torture â€Å"appears to be a manifestation of deeply held perceptions of self and society within the people one studies, the calls to intervene are not so sharp† (Deal, 2010, p571) and an anthropologist needs to be sure not to use personal ethical frameworks on the tribe in question. This is perhaps the most appropriate methodology to use when studying such a culture. 17 months is a long period of time to be conducting fieldwork, but perhaps is needed to gain the trust of the group and a true appreciation for their lifestyle. Going in and collecting surveys full of quantitative information can be useful in some approaches, but may be likely to give bias. Deal (2010) was incorporated into the society and was even given a Dinka name by which he was addressed (p566), and as such it is certain that there was a certain level of trust in the researcher by the group. This is not without its failings, as there may be a situations where the group is misrepresented by the researcher due to sympathetic bias. However, it seems more appropriate than using a Western framework on a distinct culture. Additionally, Deal listed the types of information he gathered during the fieldwork period, and these were numerous and came from a number of different sources, so it seems certain that the majority of the research was free from particular bias (Deal, 2010, p564). As the research here focuses on the use of violence and torture as part of the justice system, the most interesting thing to be learnt is about the use of different moral and legal codes by the Dinka people. The use of violence within this tribe must only be seen from their social perspective, as they use violence as a means of starting war, rev enge, and justice (Deal, 2010, p567). Torture is also used to exacerbate the differences between the Dinka and the neighbouring Nyueii, as well as a punishment from indecent contact with these rivals (Deal, 2010, p566). Violence is part of the Cieng defined and used by the Dinka, and it is used to define ‘us’ from ‘them’ in the tribe. In conclusion, this research uses a wide range of material to illustrate the use of violen

Social and Developmental Essay Example for Free

Social and Developmental Essay Psychodynamic theories of personality have impacted greatly on the Developmental Psychology of today. They originated with the work of Sigmund Freud in the later part of the nineteenth and beginning of the 18th century. Freud, Jung, Erickson and Fromm all focussed on the unconscious mind and the effects of early childhood experiences on the development of personality. Freuds psychosexual model is based on 5 stages with the first five years of life being most crucial to development of personality. Erikson proposed an 8 stage psychosocial plan, which placed importance on the whole lifespan, arguing that development does not cease at a certain age. According to Hayes (2000) both Freud and Jung argued that personality was set by childhood experiences and was due partly to maturation and partly to the influences of close family. Fromm on the other hand recognised both factors as well as acknowledging society as a third factor in the formation of personality. A more current view based on both the psychoanalytical and biological approaches is that of Bowlby (1969) who studied attachment in children. His Affective perspective concentrates on emotional development and has had an impact how children are cared for whilst away from their central carer for example whilst in childcare or hospital. Genetic and Biological explanations propose that each individual is born with genetically determined characteristic patterns of personality. Studies of twins show that identical twins brought up apart share much more in common than fraternal twins. The Minnesota twin study, (Bouchard, 1984 as cited by Bee 2000 p266) not only demonstrated this point, but also uncovered striking similarities in aspects such as taste in clothes, hobbies and interests, posture, body language etc. in identical twins who had never met each other. The biological approach to personality is strongly supported by a large amount of empirical research and as such is difficult to dispute. As Bee (2000) explains there is simply no refuting the fact that built-in genetic and physiological patterns underlie what we think of as both temperament and personality. (Bee 2000 p269) Some studies show that as much as 60% of our personality is genetically determined. A further strength in the biological explanation is that it is interactionist, thereby acknowledging the role of the environment in addition to the biological factors. The biological approach has one main weakness in that it does not account for change as temperament is not necessarily permanent.

The basque conflict

The basque conflict THE BASQUE CONFLICT Project Framework The Basque conflict, rendered more acute by the establishment of a terrorist organisation in the second half of the 20th century, illustrates the contemporary hindrances of an invigorated Europe, concerned with theories of integration and social consensus. This project intends to comprise a descriptive and theoretical approach, rather than a quantitative analysis based on the materialisation of the conflict by the violent incursions of the nationalist group Euskadi Ta Askatasuna (ETA). On the one hand, the first part compares and contrasts the sui generis Spanish state-building process to the thriving ‘imagined community of Sabino Arana, raised through the nationalism of the 19th century, and articulated in relevant facts and figures. On the other hand, the second part brings the conflict to a modern state of affairs, i.e. a scenario of diverse attempts to lessen violence and extremism. It considers micro and macro perspectives and reactions of exogenous actors to this aggiornamento, and despite the diverse interpretations of ethnicity, the paper considers the present context of globalisation, in which identities are no longer guaranteed through states and borders. Introduction The weaknesses in the process of Spanish state-building to which Basque nationalism is inextricably linked constitute an elementary foundation to understand the principles of ETA (1959), as a terrorist organisation, and the nature of the nationalist identities involved in the conflict. In accordance with Linz: ‘Spain [†¦] is a case of early state-building, where the political, social and cultural integration of its territorial components was not fully accomplished (1973: 33), and as a result, its development differs from other European case studies in significant ways, mainly due to its dramatic collapse as a colonial power (Mees 2003). Throughout time, Spain was downplayed from being the most dominant European colonial power to a bankrupt, weakened state with ‘internal problems of legitimacy, identity, penetration and participation (Mees 2003: 6). Within this unstable context, the unification of the disparate territories in Spain resulted in a nation lacking the instruments of integration and cohesion. Therefore, Spanish nationalism in the 19th century remained weak and never became a movement (Seixas 1993). The Post-Colonial State-Building This process involved no common external enemy or national symbols that would promote the idea of an ‘imagined community (Anderson 1999): it was not the aggressive nature of Spanish nationalism that fuelled the ‘durability of regional and local particularisms, but its weakness (Mees 2003: 7). The Spanish were never fully submitted to the idea of nation, and remained loyal to their local regions, such as the Basque Provinces, comprising a particular and differential culture, i.e. an ethnic community that would later become mobilised as a political nation (Smith 1986). In historical terms, the annexation of Navarre in the 16th century represents the establishment of modern Spain and the supremacy of Castile over uninfringeable cultures. Moreover, the Crown recognised the importance of conceiving special rights to certain regions that became exempt from appointing soldiers to the central forces, and were granted a system of laws and practices called fueros that represented a major right of the Basque population, as they conferred (since its codification in the 17th century) conditions for decision-making in most political and economic affairs, with no intervention from the central government (Osma 1996: 34). However, the evolution of the Carlist ideology (in the 19th century), desecrated the unwavering relations with Castile (Flynn 2000: 100), and following its victory in the third war (1872-1876), the Liberal Government declared the abolition of privileges to the Basque Country, instigating a strong resistance. Hence, the conflict in the Basque Country can be interpreted as a reaction to the abolition of rights and concessions granted throughout history, and according to the nationalists: the outraged reaction to the withdrawing of the fueros represented a ‘national awakening among the Basque people (Mees 2003). Early Basque nationalist feeling in the 19th century created an hostile political and social attitude towards the central government, with a developing anti-Spanish and separatist culture (Mees 2003: 8). Furthermore, urban industrialisation and the influx of Spanish-speaking labourers were seen to pose a threat to Basque culture, which is extremely conservative and based around strictly Catholic values, encouraging a nationalist feeling (Woodworth 2001:3). As Basque industrialisation occurred primarily in Biscay, with ‘production of steel, modern shipyards and mining (Conversi 1997: 48), these activities increased the demand for unskilled labour and society disintegration. As an illustration of this phenomenon, the population in Bilbao increased from 35,505 inhabitants in 1877 to 83,306 in 1900 (Atienza 1979: 73) out of the 80% of immigrants, 50% were not Basques (Atienza 1979: 74). The Establishment of an ‘Imagined Community The nationalist ideology expanded by Sabino Arana, founder of the Partido Nacionalista Vasco (PNV) in 1895 (Mees 2003: 5), followed his perception of industrialisation and the consequent immigration to the region as a threat to Basque culture. Arana published his book For the Independence of Biscay (1892) and assisted the formation of the first Batzoki later the Bizkai Buru Batzar i.e. an ideological group that worked as a precursor of the PNV (Elorza 1978: 113). However, after the intervention of Spanish Authorities, Arana was arrested and the party rose as an organised structure, adhering to its manifesto (PNV Manifesto 1906: Volume II). Returned to Biscay, after a course of Law in Barcelona where he was impressed by the Catalan Language and the development of Catalonia after the Renaixenà §a- Arana (a central player of nationalism in the 19th century) was motivated to study Euskerab and contribute to the Basque culture (Conversi 1997: 74). He took the view that only absolute independence from the Spanish state would secure permanent happiness and freedom for the Basque people as culture, history and race needed to be reaffirmed in order to solve the rooted problems. As a consequence, anything Spanish (or non-Basque) would have to be expelled (Mees 2003: 803), as following the nationalist feeling, the only way to succeed would be through the creation of a ‘nationalist history with deep mythological implications, as well as nationalist symbols and purification of the Basque language (Payne 1971: 23). Therefore, in a primary attempt to materialise the nationalist ideology, Arana created symbols that included: the name, Euskadi; the anthem, Gora Ta Gora; and the flag Ikurrià ±a, adopted by the PNV in 1933. Unlike Spanish unification, Arana succeeded in creating an ‘imagined community, with history, traditions and culture unique to the Basque region (Anderson 1999). Violent Incursions and Peace Attempts Since the early 1990s, the opposition within Basque society to the continuation of the conflict has been steadily increasing: groups of citizens became effectively mobilised in an effort to spread their pacifist views throughout the Basque community and build a new anti-violence consensus (Funes 1998: 493). Beyond Basque society, they aim at influencing political leaders, Spanish and Basque governments and at diminishing the power of ETA. As they believe that the people of the Basque Provinces has a responsibility for the existence and the continuity of violence, they intend to become a vehicle for peace. These pacifist groups have increased the conditions both socially and politically for resolution, though ETA retains the support of a ‘qualitatively significant sector of Basque society (Funes 1998). On a micro perspective of external intervention, Gesto por la Paz is composed of 160 subgroups throughout the Basque country and Navarre and organises street demonstrations that regularly attract 15-20,000 followers; and Elkarri, with up to 107 subgroups, was founded by members of the nationalist left, close to ETA and aims to influence those who would join the terrorist organisation or carry out violent attacks. The latter tries to expand dialogue on both sides through conferences, speeches and publications, as both groups look at the Basque people for support in denouncing violence and reducing separatist radical movements (Funes 1998). While groups such as these have done much over the years to create conditions for peace, as long as there is a minority who sees violence as the only solution, grass-root level protests have only a limited impact. There is evidence that Basque society is less and less inclined towards supporting the violence of ETA, giving room for optimism, but peace will only come when the leadership of the group comes to see diplomacy as the way forward. There are three important moments in the history of ETA as a terrorist group, which halted its activities and brought together the two sides of the conflict. The first moment follows the most intense attack against civilians in 1987, when the political parties decided to enter into talks with one another, motivating ETA and the government to discuss the problems of the Basque Country, such as: the Pact of Madrid (1987), the Pact of Ajuria Enea (1988), the Pact of Ardanza (1988), and the Pact of Navarra (1988). In addition, the Plan Ardanza (1998), created by the President of the Spanish Government, Josà © Antonio Ardanza Garro, in an attempt to solve the situation in the Basque Country, led to a proposal by the PNV and ETA to pursue a general agreement, in which the parties were committed to bring together the six territories of the Basque Country whereas ETA would declare ceasefire. Secondly, and considering the incapacity of the Partido Popular (PP) and the Partido Socialista Obrero Espaà ±ol (PSOE) in resolving the Basque conflict, parties and ideological organisations signed a pact in Estella, Navarre (1998), according to which they would study the adoption of the same political resolutions applied to the Northern Ireland case. The elections in the Autonomous Basque Community declared victory of the PNV, and there were many agreements between this party and the PP Government until the secret meeting of 1999 between the two parties, which represented strong contact between ETA and the central government. However, for PP, this was a way to understand whether the terrorist group would be favourable to a definite ceasefire. Therefore, the meeting proved unfruitful and the terrorist attacks restarted. ETA declared the end of ceasefire in 1999 and following this, the PNV accused the terrorist organisation of constituting a bad influence on Basque nationalism. On the other hand, ETA published the negotiations with the PNV and confessed the false ceasefire of 1998. The Euskal Herritarrok was favoured by the PNV but decided to abandon the Basque Parliament, leaving the latter in a political minority. Finally, the third important halt in violence was the announcement of a permanent ceasefire from the 24th March 2006 onwards, in order to carry on the negotiations with the central government of Josà © Luis Zapatero (PSOE), who informed the media on the 29th June 2006 that the conditions for an institutional dialogue had been met. Reactions of Exogenous Actors In terms of international cooperation by external actors, the reaction of France to this conflict has been elementary, as although in the past, the Basque leadership has chosen to operate from that country due to fewer police pressure- since the 1990s, it has made an effort to apprehend the ETA leadership (Telegraph 2nd March 2002). Nearly all high-ranking members of the organisation have been seized in France, including the suspected leader, Jurden Martitegi, arrested in April of this year. However, the significance of the Catholic faith in Basque nationalist expression led to another fundamental reaction, as it preceded the intervention of Pope John XXIII, in the Encyclical Letter Pacem in Terris (1963). In accordance with this document, minority groups became widespread throughout the world but due to some solid reasons in the international state of affairs, ‘[] minority peoples are often obliged to live within the territories of a nation of a different ethnic origin (Pope John XXIII 1963  §94). Consequently: This situation gives rise to serious problems [and] indeed, the best interests of justice are served by those public authorities who do all they can to improve the human conditions of the members of these minority groups, especially in what concerns their language, culture, ancient traditions, and their economic activity and enterprise (Pope John XXIII 1963  §96). This participation complemented by the address of Pope John Paul II to the United Nations (1995), where it is stated that the phenomenon of ethnicity ‘must not be underestimated or regarded as a simple left-over of the past but conversely ‘[] demands serious interpretation, and a closer examination on the levels of anthropology, ethics and law (John Paul II 1995  §7) appeals to the sense of respect of established nations and constitutes an illustration of international interventions that protect the interests of ethnic minorities. Although many authors share these same perspectives, papal interventions were particularly relevant in the religious status quo of that region. Moreover, as far as EU resolutions are concerned, and regarding the terrorist attack of 11th March 2004, the European Council carried out a ‘Declaration on Combating Terrorism (2004) referring to the provisions of the Charter of the United Nations (Security Council 1373 of 2001), which states that granting support to the victims is paramount in the fight against terrorism. In this framework, the EU revised its strategic principles, which included: strengthening a response against terrorism and its consequences; restraining the access of terrorists to economic resources; and maximising the capacity within the EU bodies to investigate and prosecute terrorists. Furthermore, all Member States would be obliged to act in solidarity in the case of a terrorist attack, mobilising all their resources. This measure complements the List of Terrorist Organisations that includes ideological groups of ETA created by the European Council in 2003. Similarly, the United States of America, following a recommendation to improve international collaboration by the President of the Spanish Government, Josà © Marà ­a Aznar, included this organisation in their list of terrorist threats. Conclusion As an example of an ethnic conflict, the preservation of nationalism and racial identity in the Basque Country has been guaranteed through violence in the name of its tradition, history and national symbols by those who perceive ancient heritage as an entitlement to self-determination, and regard their ethnicity as racially different from the rest of Spain. Violent incursions were justified on these grounds. In accordance with previous considerations, Sabino Arana realised that in order to save Basque cultural identity (including moral and religious values), nationalism would require an exclusivist identity. Therefore, one of the core principles of Basque nationalism became ‘unity of race, maintained through eliminating Spanish influence and migration (Payne 1971:36-37). In the Catalan and Galician Nationalist movements, membership can be gained through learning the language and assimilating culture. However, those wishing to join the PNV had to prove that their first four surnames (later only one) were ‘etymologically Basque. Therefore, in practice, Basque national identity cannot be acquired through learning of the language or practicing of Basque traditions. There is no possibility of non-natives joining and as such, it is a very exclusivist movement (Mees 2003: 12). The Basque nationalists encouraged a sense of a unique Basque racial purity, different from the one of the maketos (Conversi 1997: 60), there is condemnation of marriage between Basques and non-Basques due to the proliferation of Spanish values rather than Basque values (Flynn 2000: 154) and the belief that ‘compared to the Basques, the Spanish did not even constitute a race of their own, being a mix of many peoples (Flynn 2000: 154). There is not only a strong racial element, but also a strong religious one, with Basque nationalists believing that there should be absolute subordination of the political sphere to the religious one and of the state to the church (Payne 1971: 38). This racial stance has implications for immigrants wishing to come and work in the Basque region. Radicalisation has happened at times of mass immigration by non-Basques into the area, creating an anti-migrant culture within the community and a hatred for anything non-Basque. Race and religion are the core values of Basque Nationalism, not culture, giving it an extremely exclusive identity.

Monet Vs. Degas: Impressionist Aesthetics Essay example -- essays rese

Although from the same artist group, these Impressionists originated from backgrounds that seemed worlds apart. Claude Monet, known as the â€Å"Master Impressionist† varied the themes in his artwork more than any other artist did. Monet’s work â€Å"Impression Sunrise†, of which the term â€Å"Impressionist† originates also gives rise to the title â€Å"Master Impressionist†. Edgar Degas started his career as an artist with nothing in common with Monet but the era in which they lived. From themes to brushstrokes and choices of colours, Monet and Degas started their relationship as Impressionist artists on opposite ends of the earth. However, towards the climax of their lives as artists, Monet aided Degas in adopting Impressionist Aesthetic qualities. Monet chose to depict exquisite landscapes from his own gardens and elsewhere, particularly in France. He uses small, elegant brush strokes and vibrant colour to match the scenes he paints. In the mid-1870’s, Monet’s influence over Degas lead Degas to lean his colour choices nearer to those of other Impressionists. In addition to this, Degas began employing pastels, which gave his works a more granular affect that more closely resembled those of other Impressionists. For numerous years in his life, after attempting to paint his the first of his famous â€Å"Haystacks† ,and, being unable to seize the right shading or colours due to the rising sun, Monet was intrigued by the affect of weather and light on his outdoor projects. On the other hand, Degas, although also concentrated mainly in France, based his works on people, nudes and ballerinas in particular. Monet never painted a nude. Monet and Degas' earlier works have notably different brush stroke styles. While Monet has tended to lean towards the short, choppy and yet delicate, Degas’ strokes blended virtuously unnoticeable. However, these seem to correspond with their earlier themes and objectives. Monet mastered the art of illustrating waves with his brush stroke style, Degas, the curve of a woman’s body or the sheer coat of a young colt. The colours chosen by either artist’s match the scenes they tend to choose to paint. Degas normally chose colours that would show deep contrast between the background and foreground. Monet chose colours the gently blended and showed vibrancy but that created a kind of stable balance in the greater part of his paintings. Degas’ brushstrokes a... ...uring his later years; he painted almost no people in his work as he physically ripened. Both these artists’ lifestyles largely affected the aesthetic principals in their works. Degas depicts incredible detail on his subjects foreground and faces in particular while leaving the backgrounds of his works slightly hazing; therefore rendering them almost unimportant to his works. An example of this would be one of Degas earlier works: â€Å"Achille De Gas in the Uniform of A Cadet† c. 1855. However, Monet varied his work much more than Degas did. The evolution of Monet’s artistic style was extreme. Although both artists are of the Impressionist Movement, Degas and Monet started on very contrary bases in their approach to their production of painting and such. However, Monet influenced Degas into adapting his art to fit it into the Impressionist stereotype. Degas’ influence over Monet was minimal to non-existent putting aside his decision to add other colours to his palette. Since Monet was the leader of the Impressionists, this can be expected. If extensively examined, Degas’ later works and Monet’s works can be comparable; if not approach or style then in paint and pastel application.

The Founder of Pop Art: Andy Warhol :: essays research papers fc

The Founder of Pop Art: Andy Warhol Andy Warhol is the god father of Pop Art. His window advertisements were the beginning of an era where art would be seen in an array of forms away from the traditional paintings and sculptures of the old world. His love of bright colors and bold patters along with his quirky personality paved the way for his successful career as a major figure in the pop art movement.   Ã‚  Ã‚  Ã‚  Ã‚  Warhol was born in 1930, in the town of McKeesport, Pennsylvania. His parents were Czech immigrants. After his father died, Andy was forced to support his family through odd jobs. He worked his way through Carnegie Tech., Pittsburgh where he studied commercial art. After graduation, Warhol moved to New York where he launched a successful career as an illustrator.   Ã‚  Ã‚  Ã‚  Ã‚  He began producing â€Å"Pop† pictures in 1960 with works based on Popeye, Nancy and Dick Tracy comics. These early works were first shown as back drops for department store windows and were painted in loosely brushed style based on Abstract Expressionism. Warhol’s first works using comic material tended to soften hard professional gestures and aggressive vocabulary of the texts and images. Warhol countered the scrupulous accuracy of the original genre with imprecision and deliberate error. In doing so, he soiled the comic strips narrow-minded ideological and decorative purity.   Ã‚  Ã‚  Ã‚  Ã‚  Andy Warhol’s next series, depicting the mass-produced goods of Compels Soup cans and Coke bottles, captured the clean-edged look of commercially manufactured objects and made him famous. He also turned his art into mass produced objects. At the time many critics were up in arms over the banal subject matter. Abstract Expressionists were also angry at losing their place in the art market to a young upstart commercial artist. Campbell’s soup had a special significance to Warhol because it was his favorite meal as a child; his mother fed it to him at every lunchtime. Suddenly a bland object became art. Warhol’s images summed up the spirit of his society and times- from Marilyn Monroe to Chairman Zedong. The silk- screened image became a format Warhol used for many years. He became well known in the early sixties for his many ‘Marilyn’ silk-screens, of Marilyn Monroe, and for is used of the Campbell’s soup cans. His silk scree ned works would often use repeated imagery to render the subjects simply another artistic element. This celebrity silk screens and soup cans, simple as they may seem became the back bone of the pop art world, and are recognized more than any others as a Warhol work.

Finding James Cains Life in Mildred Pierce Essay -- Biography Biograp

Finding James Cain's Life in Mildred Pierce      Ã‚   An individual is greatly influenced by his/her environment, life   Ã‚  Ã‚  Ã‚  Ã‚   challenges, and experiences. As a result, in addition to imagination, a   Ã‚  Ã‚  Ã‚  Ã‚   novelist uses his life experiences to create his/her books. The influence   Ã‚  Ã‚  Ã‚  Ã‚   of James Cain's life in his writing is obvious.   In Mildred Pierce, James   Ã‚  Ã‚  Ã‚  Ã‚   Cain utilized his characters to portray the hardships suffered in the   Ã‚  Ã‚  Ã‚  Ã‚   Great Depression, characteristics that impressed him about his mother, and   Ã‚     Ã‚  Ã‚  his experience with love.      Ã‚  Ã‚  Ã‚  Ã‚   James Cain employed his experience of the Great Depression as a context of   Ã‚  Ã‚  Ã‚  Ã‚   Mildred Pierce. Like any American who lived during this period, he   Ã‚  Ã‚  Ã‚  Ã‚   suffered from this economic slowdown. In November 1931, Cain came to   Ã‚  Ã‚  Ã‚  Ã‚   Hollywood to start a six-month contract with Paramount; however, "within   Ã‚  Ã‚  Ã‚  Ã‚   six months of his arrival in Hollywood, Cain was out of job in the middle   Ã‚  Ã‚  Ã‚  Ã‚   of the Depression"(Contemporary Authors Online). Layoffs were common   Ã‚  Ã‚  Ã‚  Ã‚   because of the bad recession. Thus, although James Cain attained a job at   Ã‚  Ã‚  Ã‚  Ã‚   Columbia, he quickly lost it (Skenazy 12). Consequently, Cain used the   Ã‚  Ã‚  Ã‚  Ã‚   effects of the late 1920's market crash to create the story of Mildred   Ã‚  Ã‚  Ã‚  Ã‚   Pierce. Bert, Mildred's husband, lost all his invested money in the AT&T   Ã‚  Ã‚  Ã‚  Ã‚   stock on "Black Thursday of 1929, and his plunge to ruin was so rapid he   Ã‚  Ã‚  Ã‚  Ã‚   could hardly see Pierce Homes disappear on his way down" (Cain 10).   Ã‚  Ã‚  Ã‚  Ã‚   Similar to Bert, Cain was financially unstable, with a wife and two   Ã‚  Ã‚  Ã‚  Ã‚   children to support. Cain wrote some stories and essays; nevertheless, the... ...pedia of World Biography Supplement, Vol. 19.   Ã‚  Ã‚  Ã‚  Ã‚   Gale Group, 1999. Reproduced in Biography Resource   Ã‚  Ã‚  Ã‚  Ã‚   Center. Farmington Hills, Mich.: The Gale Group 2001.   Ã‚  Ã‚  Ã‚  Ã‚   (http://www.galenet.com/servlet/BioRC)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚   Hoopes, Roy. Cain: The Biography of James M. Cain. Southern   Ã‚  Ã‚  Ã‚  Ã‚   Illinois: University Press, 1987.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚   Marling, William. Hard-Boiled Fiction. Case Western Reserve   Ã‚  Ã‚  Ã‚  Ã‚   University. Updated 2 August 2001.   Ã‚  Ã‚  Ã‚  Ã‚   (http://www.cwru.edu/7177060/artsci/engl/marling/hardboiled/Cain%20James.HTM)      Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚   Murray, Bill.   James M. Cain: July 1, 1892 - October 27,   Ã‚  Ã‚  Ã‚  Ã‚   1977.(http://www2.rmcil.edu/users/dhaynes/hum120/caincainbio.htm)   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚   Skenazy, Paul. Cain James M. (James Mallahan), 1892-1977.   Ã‚  Ã‚  Ã‚  Ã‚   New York: Continuum, 1989.      

The phenomenon of city as a symbol of a modern way of life

The phenomenon of city as a symbol of a modern way of life is as complex as the structure of modern societies. In fact, city can be seen as a miniature version of a smaller society within a larger one, as most people living in cities tend to strongly identify themselves with them. And if we take into account the fact that in the Western world the percentage of city dwellers in contrast to people living in the countryside is continuing to grow due to the process of urbanisation (Hayward, 2004, pp.17-18), the phenomenon of city as a of dominant life style of humans deserves the most attentive examination.In particular, the urgent topic in the study of the ways in which city functions is the problem of its inner structure and dynamics in light of the often voiced concerns that the contemporary city is becoming more fractured and polarised than ever. The disturbing degree of this polarisation can be appreciated with the help of the so-called ‘dual city theory’, which, among other things, aims to show how the changes in economy, such as the removal of most of manufacturing jobs from the urban areas coupled with the state`s minimal involvement into the social sphere, lead to significant changes in the social structure of modern cities â€Å"in which the richer get richer, the poorer more poor and the middle classes are shrinking† (Holt-Jensen, 2002, p.3).Still, even without this socio-economic aspect of the city life, there is a plenty of reasons why the contemporary city may become fractured. One of them is the presence of ethnic sub-groups in many cities that occupy distinct areas and in this way in essence form isolated cultural islands. This peculiarity of many modern cities is reinforced by the more traditional but very important division between their functional parts, such as historical districts, usually attractive for tourists, downtown, industrial areas, and bedroom communities. This internal structure also inevitably shapes the economic and social structure of cities, as being historically perpetuated this type of division forms corresponding social patterns, represented by correspondence of a certain city district to a certain social class of people inhabiting it. As a sad example of such a firm correspondence may serve districts with the increased criminal activity, which cannot be exterminated by any legal enforcements.As the result of the working of the mentioned factors, it is indeed possible to say that the contemporary city in many respects resembles a fractured and polarized environment, in which it is possible for people to feel themselves lonely even in the crowd (Clarke, 2003, pp.192-195).By the way, speaking about specific problems stemming from the high density of population in most modern cities, such as ubiquitous traffic jams or the issue of environmental pollution, it is worth to mention that it is perhaps one of the unifying factors for all the city communities as such challenges require a cohere nt and unanimous action. Also, in relation to the positive roles that cities play in the modern world, it should be said that in their frames a lot of opportunities exist for the cultural exchange and development, so that cities can be seen as miniature melting pots of languages and cultures.As we can see, the view that the contemporary city is becoming more fractured and polarised is indeed not devoid of the truth. However, it seems safe to claim that this is happening not so much due to the peculiarities of the life in cities as such, but rather due to the natural processes of social interaction. Thus, city is an environment in which all the forms of social change are just manifested and amplified in a very clear form. SourcesClarke, D., B. (2003). Consumer Society and the Postmodern City. RoutledgeHayward, K. (2004). City Limits: Crime, Consumer Culture and the Urban Experience.

Model Stock Research for the Time-Warner Company Essay

Macroeconomic Review Being one of the fastest-paced and highest-profile industries in the world, the media sector has been in a whirlwind of change this past decade. There has been an explosive boom and bust and, of late, boom again, of internet technology. This has dramatically influenced media delivery. Clampdowns on shady accounting practices, assets changing hands and a more discerning and demanding media audience have also ensured that changes in the industry occurred at break-neck speed. This is why global media giant, Time Warner, has sought to embrace these challenges of the Information Age. Indeed, Time Warner had uniquely positioned itself to benefit from the explosive changes. Their size and resources make them a formidable competitor in the media arena because of their efficiency in an increasingly global environment. In front of the media arena, the average US citizen is confronted by more than 1,500 dailies, over 5,700 weekly newspapers, some 17,000 magazine titles, 10,000 commercial radio stations and more than 1,600 TV stations. Nielsen Media Research reported that as of January 2003, 98.2% of the over 100 million households own at least one TV set, with 69.8% of them hooked up to cable. The US also exports a massive amount of its media, which has become almost staple fare around the world. CNBC alone boasts a reach of 192 million households worldwide, with 82m of them in the US and Canada. The latest available GDP statistics from the US Bureau of Economic Analysis show that the radio and TV industry contributed $72.9 billion to the US GDP in 2001, up from $71.1 billion in 2000. Total US GDP for 2001 was $10,082 billion. In 2006, the US GDP is estimated at 3.2%, while the interest rates are at 8% (See Table 1). Table 1. United States – Country Data and Market Indicators (EIU, 2006). Series Units 2001 2002 2003 2004 2005 2006 Gross Domestic Product Key indicators GDP (% real change pa) 0.8 1.6 2.5 3.9 3.2 3.2 Fiscal and monetary indicators Interest rates Lending interest rate (%) 6.9 4.7 4.1 4.3 6.2 8.0 Inflation and wages Consumer prices (% change pa; av) 2.8 1.6 2.3 2.7 3.4 3.3 Demographics and income Population M 285.1 288.0 290.8 293.6 296.4 299.7 GDP per head ($ at PPP) PPP 35524.2 36352.8 37691.7 39894.3 42023.7 44110.0 Population Population M 285.1 288.0 290.8 293.6 296.4 299.7 Population (% change pa) 1.0 1.0 1.0 1.0 1.0 1.1 Labour force M 143.8 144.9 146.5 147.4 149.3 151.4 Recorded unemployment (%) 4.7 5.8 6.0 5.5 5.1 4.6 Income GDP per head US$ 35524.2 36352.8 37691.7 39894.3 42023.7 44110.0 Private consumption per head US$ 24745.9 25523.4 26491.1 27969.4 29495.1 30960.0 GDP per head ($ at PPP) PPP 35524.2 36352.8 37691.7 39894.3 42023.7 44110.0 Real GDP growth per head (% pa) -0.2 0.6 1.5 2.9 2.2 2.1 Personal disposable income bn  LCU 7486.8 7830.1 8162.5 8681.6 9036.1 9580.2 Personal disposable income (US$) M  US$ 7486840.0 7830080.0 8162530.0 8681560.0 9036100.0 9580150.0 Real personal disposable income (US$ at 1996 prices) M  US$ 6860090.0 7074210.0 7231140.0 7493920.0 7581650.0 7811600.0 Real personal disposable income (% change pa) 1.9 3.1 2.2 3.6 1.2 3.0 Average real wage index (LCU, 1996=100) 107.3 108.9 109.4 108.9 108.1 108.6 Average real wages (% change pa) 1.0 1.5 0.4 -0.5 -0.7 0.5   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Fact remains that US is the world’s biggest media producer as well as consumer. Advertising is the main source of revenue, although some sectors also create revenues from subscriptions. Media concerns with entertainment arms have additional sources of income through takings from gaming, distribution rights, amusement park entrance fees and spin-off merchandise. Also, entertainment is one of America’s top exports. In 1999, in fact, film, television, music, radio, advertising, print publishing, and computer software together were the top export, almost $80 billion worth, and while software alone accounted for $50 billion of the total, some of that category also qualifies as entertainment—video games and pornography, for example. Hardly anyone is exempt from the force of American images and sounds. . . . American popular culture is the nemesis that hundreds of millions—perhaps billions—of people love, and love to hate. The antagonism and the dependency are inseparable, for the media ï ¬â€šood—essentially American in its origin, but virtually unlimited in its reach—represents, like it or not, a common imagination. However, media availability is somewhat disproportionate to the time an average American has to consume information. But the industry is a lucrative one and media spinners are finding new ways to make the public continue to consume media and pay for it. In 2001, companies in the media industry recorded total revenues of $261.7 billion. Although this was a growth over 2000’s $255.2 billion, operating income had been steadily falling since 1998. This can be attributed largely to the fact that cable and satellite providers experienced rising maintenance costs and were investing heavily in new technology. The decline in income is expected to ease over the next few years as investments on new delivery channels start to bear fruit. Because of this, many companies started holding back on advertising activities following the recession in 2001. The 9⠁„11 tragedy, the subsequent wars in Afghanistan and Iraq and their accelerator effect on the economic downturn, brought increased uncertainties to the stock markets and exacerbated the advertising slowdown. This downtrend was reversed throughout most of 2002 as many believed a swift end to the Iraqi invasion would emerge. Market jitters returned in the third quarter of 2002 and earlier in 2003, which somewhat stalled advertising expansion as the Iraqi situation refused to look as good as the President’s claims. However, tentative cheers on US trading floors and moderate improvements in the job market slowly built up advertising momentum in the third quarter of 2003. For example, Time-Warner’s strategy has insisted on managing their costs aggressively. In 2005, they undertook difficult, but necessary, restructurings at a number of our divisions to ensure that their costs are aligned with their long-term business needs. At Warner Bros., for example, they streamlined their management to create a single Home Entertainment Group to oversee the digital delivery of entertainment to consumers. Looking ahead, they plan to reduce costs by $1 billion across their businesses in 2006 and 2007. Trade disputes with the EU and China and persistent trouble for US interests in Europe and the Middle East are forming grey clouds over the economic horizon. Also, big budget media advertising, with the exception of outdoor advertising, is invariably sparse at year-end when readership and viewership are traditionally down due to a lack of new programs and major sporting events. Consumers are usually on vacation or out holiday shopping at year-end, rather than at home reading or sitting in front of ‘the box’, giving media advertising less reach. However, prudent companies are aware that a prolonged advertising drought can adversely affect brand recall and consequently spell slower product movement. Thus, although advertising revenue increases were more modest than expected in 2003, with the exception of cable television, syndication and Spanish network segments. This income source is predicted to grow in 2004. As Time Warner moves forward with these external challenges, the foundation of their strategy is to invest our financial resources in a disciplined manner to provide the best possible return to their shareholders. This means focusing on the right businesses. Their board of directors and management continuously evaluate Time-Warner’s businesses to ensure that they meet their standards for financial performance, growth and return on investment. Industry Overview The United States market for cable and satellite TV services has grown by 6.5% since 2003 to reach a value of US$57.6 billion in 2004. Over 2001 to 2005, value sales increased by 36.5%. Over 73 million American households subscribed to cable television services with 34% of them having digital service in 2004. In 2004, the average monthly price for expanded basic programming packages was US$38.23. Satellite TV services are expected to continue to increase in popularity. Satellite TV is offering aggressive pricing packages relative to cable, an increasing number of special interest channels and local channels in all markets. Local channels were previously unavailable to subscribers. Despite the spate of satellite TV, Time Warner’s networks and cable segments have been posting consistent revenue growth in recent years. Revenue from the networks segment increased from $8,434 million in 2003 to $9,611 million in 2005, representing a growth rate of 7%. Revenue from the cable division increased from $7,699 million in 2003 to $9,498 million in 2005, representing a growth rate of 11%. These two segments together contribute more than 42% of the total revenues of the company. Increasing segmental revenues have contributed in the company’s overall revenue growth of 3.7% in fiscal 2005 over fiscal 2004. This is why cable television will likely continue to generate healthy revenue growth for owners of those networks, though gains may well be slower than over the past several years. Beneficiaries of ongoing strength in cable include Viacom, Time Warner, News Corp. and Disney. The most significant changes in the media industry in the past decade have been in its adoption of the internet technology. The internet has evolved from being just a communications tool to becoming an important entertainment, business and marketplace platform. Catching up is the cable segment, which is embracing broadband technology in earnest and is rapidly overtaking the role of traditional dialup technology in supplying telephony and especially internet services to North American homes. From 1996 through 2003, the US cable industry spent $75 billion in private capital on plant and equipment as well as infrastructure upgrades, according to NCTA. The cable industry in its totality is moving from analog to digital technology to compete with the high-quality, low-interruption signal transmission broadcast by DBS companies, which have been offering high quality, encrypted digital transmission almost since day one. The competition between cable and satTV is becoming more intense. Apart from normal TV programs and movie line-ups, both offer interactive (cable TV being a recent entrant) and internet technologies on their systems. Both are taking the TV experience to new heights. Not only can the viewer play interactive games on TV but they can also interact with programs they are watching, for example responding to interactive surveys or making immediate purchases on shopping channels via the remote control. Latest technological advancements also allow viewers to record, pause, forward and reverse live programs or watch them in slow motion or instant replay using digital⠁„personal video recording (DVR or PVR) and video on demand (VoD) devices for satTV and cable TV, respectively. Unfortunately, the digital revolution is bringing problems to some in the industry. Content and program providers are anxious over the dent DVRs and VODs may make in their earnings. How serious their concerns are remain to be seen, but observers of the industry are noting that a predecessor of DVRs and VODs, the VCR, was greeted with the same disquietude, which was soon replaced with blithe indifference as the technology propagated a new earning capacity, that is, the sale of videos. An issue that bothers media executives is their loss of control over viewers. Viewers can replay scenes they like during a commercial break, thus effectively bypassing messages from advertisers, who happen to be program sponsors. This could force advertisers to see TV as a less effective advertising channel than it used to be and give them better leverage at commercial slot price negotiation or cause them to adopt other advertising media. As viewers become more discerning, they are demanding greater viewing variety and higher quality programs. They are also getting hi-tech, seeking a greater, more interactive TV viewing experience much as they have come to expect from their personal computers. The FCC, the federal regulator for the media and telecommunications industry, is aware of this and is pushing the industry to hurry the digital transition. The FCC has mandated that all TV broadcast stations have High Definition TV (HDTV) broadcasting capability by 2006. This will mean a bigger outlay for broadcasters and cable companies in the coming few years: Broadcasters and program networks will have to invest in new cameras, titling and editing equipment and tape machines that support the digital TV (DTV) format and revamped rigs for DTV friendly TV vans. Cable operators need to convert all their equipment and set-top boxes. However, for viewers with HDTVs, the set-top boxes are bypassed. Time Warner had responded to this challenge through Warner Bros Entertainment, a subsidiary of the company when it tied up with CBS Corporation to form a new broadcast network. This new network, The CW, to be launched in late 2006, can significantly expand Time Warner’s customer base. Time Warner’s Cartoon Network channel entered into a joint venture with VIZ Media to form Toonami Jetstream, a new broadband service to provide streaming episodes of animation series. Toonami Jetstream will allow users to view episodes of Cartoon Network in their own time and also provide an alternative distribution vehicle for Time Warner. These alliances and joint ventures can provide Time Warner with a competitive advantage over its peers and enable it to enhance its revenue position. Expanding broadband market Most players in the cable industry have begun the digital journey but consumers may still need to dig into their pockets to enjoy the digital experience and make the analog age a thing of the past. They have to either buy new set-top boxes, which convert digital signals to analog, or buy HDTV sets, which range between just under $1,000 to almost $10,000. Early in June 2003, when the FCC eased its decades-old restrictions on the size of media entities, controversy erupted. Large media companies hailed the move. Consumer groups condemned the decision as bad news for democracy and local content. The new rule, which allowed media companies to have US penetration cap of 45% instead of the old 35%, was good news to media giants who were operating at close to the 35% limit. They had been lobbying hard for the lift, including Viacom, whose $40.6 billion purchase of CBS makes it the US’ largest single operator of TV and radio stations, reaching 41% of the total national broadcasting market. The 45% rule looked set to open the floodgates for other media liberalization that would allow TV, radio and newspaper owners much more room for consolidation. If a large TV station acquired a small, one-paper town market, the community would be dominated by that entity. This would threaten local content in the community’s media. However, the 45% rule was blocked by Congress in a massive 400 to 21 vote in July 2003. This was followed by a stay order by a federal court some few weeks later. Should the FCC fail to appeal to have the new cap reinstated, media giants who have exceeded the old limit will have to shave off their access assets and those nearing the demarcation point will need to strike out expansion as a way to increase income. Time Warner, which garners some revenues from films, should grow its studio profits well. It is releasing several DVDs of popular titles. Film profits generally sway on the timing of releases. Viacom, Disney, and Dreamworks Animation also have large stakes in the sector, which will likely move further towards home viewing via digital cable and the Internet. Having many cities that are highly cosmopolitan, the US has various minority and ethnic groups which are looking for more than just generic programs that do not necessarily depict their lifestyles or cater to their tastes. Many minority group communities have been addressing these issues by producing their own newspapers, TV programs and radio broadcasts. As their respective populations grow, so has the amount of business of their specialty media. Having long observed the growth of these niche markets, bigger players are now making moves toward grabbing a slice of the ethnic specific media pie that serve large minority communities. Previously, being culture sensitive meant placing non-Caucasian actors in supporting roles but, belatedly, major media companies are dedicating whole TV and audio channels to specific ethnic groups. In the media industry, the basic services were the largest sector, accounting for 53.1% of sales in 2004, worth US$30.6 billion. Advertising was the most dynamic sector. Growing from US$8.5 billion in 2000 to US$15.9 billion in 2004, this sector achieved 87% growth. Pay-per-view movies grew by US$400 million over the review period, to account for 2.8% of sales in 2004. In 2004, premium channels accounted for US$9.5 billion, or 16.5% of the market, realizing 13% growth. Cable TV continues to dominate the premium TV market with 76 percent of households and its market penetration is still increasing. Table 2. United States – Media Market Sectors US$ billion 2000 2004 Advertising 8.5 15.9 Basic services 24.1 30.6 Pay-per-view movies 1.2 1.6 Premium channels 8.4 9.5 Source: Euromonitor International In terms of performance, Comcast Corporation was the leader of cable and satellite TV services in the United States in 2004 with 32% market share. It maintained its leading position through product innovation and differentiation including its ON DEMAND offerings, increased regional sports programming and its leading Comcast.net portal. Time Warner Inc had the second largest market share in 2004 at 17.2%. This was an increase of 9.5% in 2003. AOL Time Warner was able to increase its position by taking a lead role in offering new products to its customers including High Definition Television, the Digital Video Recorder, Wireless Home Networking, and Digital Telephony service. Through expansion of its US market, Cox Communications Inc. increased its market share by 7.7% from 2003 to 9.7% in 2004. Charter Communications saw its market share decrease to 9.3% in 2004. Table 3. United States – Media Market Share % value of market sector 2004 Comcast Corporation 32.0 AOL Time-Warner Inc 17.2 Charter Communication 9.3 Cox Communications Inc 9.7 Adelphia 8.2 Source: Euromonitor International In the global arena, Hollywood’s long-standing tensions with China has taken its toll as Time Warner is pulling out of an ambitious, four-year theater venture in the country because of tightened restrictions on foreign ownership. The decision was announced in November 2006 came after its Warner Bros. unit tried unsuccessfully for more than a year to negotiate a compromise with the Chinese government over a July 2005 ruling requiring outside investors to cede control in ventures to their Chinese partners. Warner’s decision underscores Hollywood’s frustrations operating in China. Although studio executives consider China to be the world’s best growth opportunity for U.S. entertainment, they also are wary of expanding there, in part because of what they believe are burdensome government rules. Although the media market is fraught with competitors, Time Warner had been a formidable competitor because it offers diversified, yet complimentary products and services. The company operates in print media, television, cinemas, internet, cables services and wired broadband segments. Leveraging its operations in complimentary segments the company has been able to reproduce the same content in various formats to generate additional sales. Its wide product portfolio has also allowed the company to offer superior bundles to the customers. Company Analysis – Time-Warner Time Warner is one of the world’s leading media and entertainment companies. Its major businesses encompass an array of respected and successful media brands. Among the company’s brands are HBO, CNN, AOL, Time, Fortune, People, Sports Illustrated, and Time Warner Cable. CNN operates in nearly 200 countries, while AOL is the world’s leader in interactive services with 19.5 million subscribers in the US and 6 million in Europe at the last count. Time Warner’s cable business, Time Warner Cable (TWC), is the second-largest cable operator in the US while Warner Bros is one of the worlds leading studios. These are well established brands with global brand recall. The company can leverage the equity of its brands to generate sales. New developments continue to stream in Time-Warner. In 2004, Time Warner Cable announced the creation of a new business unit, Time Warner Cable Voice Services. This creation was responsible for overseeing the rollout of its residential telephone service, known as Digital Phone. During the same year, AOL Europe, and Google, announced a new multi-year agreement to provide targeted advertising from Google’s AdWords advertisers for the subscribers of AOL Europe. In February 2005, Warner Home Video announced the formation of CAV Warner Home Entertainment Company, a joint venture with China Audio Video. The company entered into a joint venture with New Line Cinema to form Picturehouse. AOL announced the acquisition of Weblogs, a blogging company. AOL also acquired an online digital music subscription company called MusicNow in November 2005. During the same month the company, along with several other cable companies concluded an agreement with Sprint. According to the agreement, the companies would form a joint venture for providing wireless and wireline entertainment product. AOL acquired Truveo, a pioneer in internet video searching in January 2006. In the same month Time Warner entered into an agreement with CBS to launch a new television network, The CW. Cartoon Network formed a joint venture with VIZ Media to create Toonami Jetstream, to provide broadband video services in April 2006. Time Warner has been continually profitable. The company recorded revenues of $43,652 million during the fiscal year ended December 2005, an increase of 3.7% over 2004. For the fiscal year 2005, the US, the company’s largest geographic market, accounted for 79% of the total revenues. Time Warner generates revenues through its five business divisions: filmed entertainment (26.4% of total revenue during fiscal year 2005), networks (21.3%), cable (21%), AOL (18.3%), and publishing (12.9%). During the fiscal year 2005, the filmed entertainment division recorded revenues of $11,924 million, an increase of 0.6% over 2004. The networks division recorded revenues of $9,611 million in fiscal year 2005, an increase of 6.2% over 2004. The cable division recorded revenues of $9,498 million in fiscal year 2005, an increase of 12% over 2004. The AOL division recorded revenues of $8,283 million in fiscal year 2005, a decrease of 4.7% from 2004. The publishing division recorded revenues of $5,846 million in fiscal year 2005, an increase of 5% over 2004. By geography, the U.S. remains Time Warner’s largest geographical market, accounted for 79% of the total revenues in the fiscal year 2005. Revenues from the US reached $34,469 million in 2005, an increase of 2.7% over 2004. Other international countries accounted for 6.7% of the total revenues in the fiscal year 2005. Revenues from other international countries reached $2,907 million in 2005, an increase of 4.5% over 2004. The UK accounted for 6.6% of the total revenues in the fiscal year 2005. Revenues from the UK reached $2,886 million in 2005, an increase of 15.1% over 2004. Germany accounted for 2.8% of the total revenues in the fiscal year 2005. Revenues from Germany reached $1,233 million in 2005, an increase of 6.2% over 2004. France accounted for 2.2% of the total revenues in the fiscal year 2005. Revenues from France reached $941 million in 2005, an increase of 7.1% over 2004. Canada accounted for 1.4% of the total revenues in the fiscal year 2005. Revenues from Canada reached $625 million in 2005, an increase of 24.3% over 2004. Japan accounted for 1.4% of the total revenues in the fiscal year 2005. Revenues from Japan reached $591 million in 2005, a decrease of 13.7% from 2004.    Financial Statement Analysis Company Posted Sales Fiscal Year Total Sales 2003 39565 2004 42089 2005 43652   Profitability Ratios 2007* 2006* 2005 2004  Ã‚  Ã‚  Ã‚   2003   Sales Gross Margin Operating Margin (%) Pre-Tax Margin (%) Net Profit Margin (%) Accounts payable Net Expenses Inventories Revenues per share Cash-Flow per share Earnings per share 46500 0.4 30    8.3          12.9 3 1.1 44900 0.4 30    11.4          11.8 3.12 1.35 43652 0.043 26.06 9.37 6.65 1,380,000 13,676,000 1,806,000 9.705 1.374 0.62 42089 0.042  Ã‚  Ã‚      32.008 11.66  Ã‚  Ã‚   7.99 1,494,000   13,094,000   1,737,000   9.354 2.076 0.68 39565 0.041   30.68 11.42   6.67   1,629,000 12,559,000 1,390,000 9.03 2.024 0.68 *Projected (Source: Valueline Investment Survey). Time-Warner remains to be an otherwise bright entertainment conglomerate. The company’s networks and cable segments have been posting consistent revenue growth in recent years. Revenue from the networks segment increased from $8,434 million in 2003 to $9,611 million in 2005. Revenue from the cable division increased from $7,699 million in 2003 to $9,498 million in 2005. These two segments together contribute more than 42% of the total revenues of the company. Increasing segmental revenues have contributed in the company’s overall revenue growth of 3.7% in fiscal 2005 over fiscal 2004. After trying to devise a way to maintain AOL’s subscription service in a high-speed world, management finally threw in the towel and decided to give AOL’s services away for free, focusing on advertising revenue. The move may have been late, but not so late that it won’t help stem AOL’s user base. The big concern is if advertising revenues will be sufficient to offset subscription losses. Still, this property is an important part of the company’s overall collection of media-related businesses. Moreover, the performance of the filmed entertainment segment and AOL segment has been weak in the past three years. Revenue from the filmed entertainment segment grew by as little as 0.6%. Revenues from the AOL segment declined from $8,598 million in 2003 to $8,283 million in 2005, representing a growth rate of -2%. The two segments contribute around 45% of the total revenues of the company. A weak operating performance by these segments indicates that the company has been losing ground to its competitors. The reason for this projection and forecasts is that TWX remains to be garnering operating profit. Although net profit have declined in fiscal 2005 compared to fiscal 2004, operating profits and net profits declined 26.7% and 13.6% respectively in fiscal 2005. The company’s operating margin declined from 14.6% in fiscal 2004 to 10.4% in fiscal 2005, while the company’s net profit margin declined from 8% to 6.6% in the same period. Declining profit margins indicate increasing costs and can adversely affect the company’s long term financial position. Declining cash from operating activities Time Warner’s cash flows from operations have been declining in recent years. Cash from operations have declined from $6,601 million in fiscal year 2003 to $4,965 million in 2005. Declining cash flows can force the company to borrow external capital to fund its growth plans, which could prove to be expensive. TWX Dividend Rate Per Share ($) Shares Outstanding (M) Ave. Daily Volume (M) Beta Shareholders Market Cap ($M) Institutional Holdings (%) Yield (%) 12-month P/E   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   0.22 3972.58 23.44 2.0329 56,500 83066.5 72 1 24.6 We can use the dividend discount model to estimate the cost of common stock. The difference between common stock and preferred stock is in our assumption about the growth pattern of future dividends. With common stock, we typically assume that dividends grow at a constant rate into perpetuity. Then we can write the present value of the assumed dividend stream as P 0   = D 1 ————————- ( 1 + k s ) where, P0 = the common stock price per share. D 1 = the dividend per share one year from now. ks = the required rate of return on common stock. If we solve for ks, we get: ks   = D 1 ————————- P0 At present, TWX’s stock price was at $20.14. TWX has historically paid out about 40 percent of its earnings as dividends. Therefore, with a forecast of about $0.55 per share in earnings for next year, TWX’s dividend would be forecast to be $0.55 Ãâ€" .40 = $0.22 per share. So, the dividend yield, defined as D1/P0, is $0.22/$20.14 = .0109, or 1.09 percent. TWX’s Key Growth Rates and Averages Past Growth Rate (%) 1 Year 3 Years 5 Years 9 Years Sales 3.71 2.56 29.05 49.46 Net Income -9.47 Ratio Analysis (Annual Average) Net Margin (%) 6.65 7.41 LTD of Capitalization (%) 19.48 21.01 20.71 21.15 Return on Equity (%) 4.71 5.32 8.18 Pricing/Earnings Recent Price 20.14 P/E Ratio 15.612 P/E (Trailing) 14.183 P/E (Median) NMF Rel. P/E Ratio 0.724 Ratings Financial Strength B++ Stock’s Price Stability 40 Price Growth Persistence 20 Earnings Predictability 20 Relative Value Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 Free CFs 11.8 12.8 13.5 13.9 16.0 17.9 20.1 22.5 PV of FCFs 10.17 9.58 8.65 7.68 7.62 7.36 7.10 WACC = 16% Long run g = 12% MV of Debt = $202 million No. of shares = 50 PV of FCF1-7   = 50.97 TV at Year 7 of FCF after Year 7 = FCF8/(WACC – g) = $448.00 PV at of TV at Year 0 = TV/(1+WACC)7 = 183.88 Sum = Value of the Total Corporation = $234.85 million Less: MV of Debt and Preferred = $202 million Value of Common Equity = 32.85 Divide by No. of Shares = 50 Value per Share = Value of Common Equity/No. Shares = $0.66 Assuming that beginning in the fourth year, the free cash flows are to grow by 10% less than previously predicted:    Year Old FCF New FCF 1 2001 $11.8 $11.8 2 2002 $12.8 $12.8 3 2003 $13.5 $13.5 4 2004 $13.9 $12.5 5 2005 $16.0 $14.4 6 2006 $17.9 $16.1 7 2007 $20.1 $18.1 8 2008 $22.5 $20.2   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   We will assume that the long-term growth rate and WACC will be the same as previously assumed. From this information, we can do the following calculations. Total PV of New FCF’s, Years 1-7 =$55.09 FCF 8   = $20.23  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   $20.23 TV   at Year 7: $505.76  Ã‚  Ã‚   = ——————- PV of TV: $178.95  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   4%  Ã‚   = WACC- gL Market Value of Total Company =   $234.05 Less: MV of Debt = $202 Market Value of Equity = $32.05 No. of Shares = 50 Value Per Share = $0.64 versus $ 1.37 under original assumptions. Therefore, a 10% reduction in some of the cash flows leads to a 53.28% decline in the value per share. As of September 30, 2006, TWX had net debt of $202 billion (including $11 billion on the Adelphia deal), and a net debt/EBITDA ratio of about 3.0X. In 2005, TWX paid out $2.8 billion related to a government settlement. Including the acquired systems, management sees low double-digit adjusted EBITDA growth in 2006 (off a restated base of about $10 billion in 2005), with 35% to 45% conversion of EBITDA into free cash flow. Management plans about $1 billion of cost cuts in 2006 and 2007 (excluding the $1 billion of cuts at AOL as previously mentioned). We project free cash flow of over $11 billion in 2006 and 2007 combined. Pursuant to a $20 billion share buyback program, TWX plans to repurchase about $15 billion of its shares in 2006, and the remainder in 2007. Over the longer term, the company targets a 3X leverage ratio. TWX began paying a quarterly cash dividend of $0.05 per share on its common stock in the 2005 third quarter (about $900 million a year), raising it to $0.055 in July 2006. TWX would also receive about $600 million in cash from the dissolution of its cable joint venture with Comcast. TWX undertook several asset divestitures in the past few years to enhance its financial flexibility, notable among which are the 2004 sale of its Warner Music Group (for $2.6 billion in cash), a 50% stake in Comedy Central ($1.2 billion), a DVD/CD manufacturing business ($1 billion), and two NBA and NHL professional sports teams (undisclosed). Also, in 2006, TWX sold its book publishing business for $532 million in cash, and its Turner South network for about $375 million in cash. TWX also raised $239 million from the sale of stock in Time Warner Telecom.