Business plan

Introduction

The purpose of this report is to provide a business plan for marketing purpose in order to outline how Bistecca Restaurant can attain an improved customer service. It shows the importance of training the Restaurant’s staff in good customer service so that the firm can improve on its sales and overall profits, and become competitive in the industry.

Bistecca Restaurant customer service

The environment of Bistecca Restaurant is quite remarkable although the restaurant lacks the best customer cares service that should be provided to its client. The firm does not provide the best atmosphere that will make the clients to feel comfortable and appreciated and this is a factor that makes the restaurant not to perform at its maximum level in terms of sales and profit making. If the restaurant can provide thorough customer service, it will be able to capture many of the customers in the area and thus have a competitive advantage over its rival businesses. Though the restaurant manages to an extent make the customer feel appreciated there are areas that are wanting and should be improved. Due to weather pattern that are harsh especially at night the clients arrive late at their lodging, when markets and most restaurants are closed. They thus need the services of the Bistecca Restaurant but are not given the best treatments in terms of communication and available products. Some of the staff including the waiters lack good communication skill seen their looking down and appearing disinterested while speaking to clients while at times no introduction is made. In addition, some staff members use robotic and rushed gestures, which may seem effective but in essence they appear discourteous and can easily dismiss any welcoming feeling. Whenever there lacks a feeling of appreciation and welcoming, the clients feel uncomfortable and start questioning their choice for the hotel. They end up being uninterested in spending more money and coming back to the restaurants, which makes it impossible for them to refer other customers.

Though the restaurant staffs are punctual in serving customers meals and drinks, many a times they are made to wait for long. Though the meals are good the clients are already hungry irritated by the time they are served. The bartenders are sometimes not enough to serve the clients on time and those present fail to inform the clients early enough in case their meal takes longer to prepare and cook. Some of these customers end up being disappointed and this makes it very difficult to win them back. 

Even where there is adequate communication with the customers, there lacks a good mechanism or system of dealing with customer complaints. Though it’s hard to avoid things goes a miss times , there lacks the understanding  among some of the restaurants staff fail to understand that no matter how hard it becomes , the goal is please the clients and make them feel comfortable. They seems to lack the knowledge that working out solutions immediately and having not to waiting to managers results to clients anger and frustration. Most of these problems are caused by failing to avail enough information to the clients in the menu, failure to frequently use comment cards for customers which would show them that their opinions are valued. The customer complaints also arise from failure by staff to possess the information about all the meals or drinks available at specific points. Thus when the clients such bartenders, they end up getting into arguments or leave out of disappointment. This makes it hard for the staff to market the restaurant as a good brand upon which the customers can rely and better than other restaurants from the locality. The staff while trying to market the restaurant and its products fail to understand the need to pay keen attention to the customers’ needs who mostly want to be pampered and made feel important.  Though the sales are relatively high, absence of strong personal touch with the clients makes it hard for the restaurant to utilize it market potential and thus obtain high sales and profitability. Servers who can manage to obtain the highest sales are those who will maintain a good personal touch with clients through understanding their needs, products available and the best way to offer the service.

Recommendations

This report is meant for the management of Bistecca Restaurant on whom all the responsibility for the business rests. They wait staff should be trained to attain great communication skills so that they can attentively listen to the customers , and to seem interested in whatever the clients have to put across. The training on communication should extend to accommodation of customers’ requests the best way possible. Appearing detached or distracted amounts to poor customer service and will finally be rewarded as such (Vanhamme, 2016). Of more importance is the need of learning how to use the power of understanding as a key strategy of the business and more specifically for service delivery. To do this will involve recognition of ways to make the customers feel welcome. By use of eye contact and sincere words at the various points of contact, emotional responses that are positive will be generated and customers will instantly feel comfortable.  The introduction part is very important specifically by use of name, since it gives welcome by itself, and makes the guest feel relaxed and comfortable. There should also be constant devising of ways to make customer welcome before their arrivals, which is possible through team work between the servers, general staff and the restaurant management (Hayward, 2000).

In order to serve them better, the restaurant has to make the customers feel that their opinions are valid, they should ensure that comment cards or customer notes are used. Being given an opportunity to leave comment on the services offered makes the customers feel that they are cared for. The comments can provide information on where the restaurant is supposed to improve on foods, drinks and the overall services and exactly where the services offered are excelling. Use of polite language and showing the willingness to provide solutions to customers’ complaints will make the customers feel that their services are worth the payments and this will improve on sales (Vanhamme, 2016).

Conclusion

If Bistecca Restaurant want to achieve maximum sales and thus profitability, it has to come up with ways of challenging the industry norms through good customer service. It has to result to creative application of welcoming power an aspect that has the potential to make customers coming back and making referrals. Customer service has to be at the highest notch for the firm to be the leader locally.

References

 Vanhamme, J. (2016).Memorable Customer Experiences: A Research Anthology .CRC Press.183-185

Hayward, P. A. (2000). Leisure and tourism: Compulsory units. Oxford: Heinemann.123-125

Persuasive advertising creation of desire and autonomy.

The persuasive advertising is argued to have an overriding effect onautonomy of customers by manipulating them for no good reason. It is argued that all customs of a definitecollective type of publicizing are ethically wrong due to the aspect of overriding the customers’ autonomy. One of the effects of this advertisement is that it creates yearning for the advertised product (Roger, 1987). This makes customers to buy items not really because they liked them and decided to buy, but only because they were subjected to subliminal suggestions. This suggestion is the very extreme form of adhering to popular contradiction and persuasive advertisement as opposed to informative (Roger, 1987).

Arrington argues that the first-order yearning is the self-directed desire accepted by the second-order desire which is fulfilment of the first-order desire. This self-sufficient desire is the first-order want that we accept. According to Arrington all first-order longings that were encouraged through cogent advertisement are non-autonomous. He also argues that for the second-order desire often people are manipulated by others without their consent though for a good and acceptable reason. However, he argues that manipulation might be applicable in cases like acting for from it there is entertainment but where there is need for decision making; manipulation diminishes it completely (Roger, 1987).

According to Arrington the argument that desires induced by advertisement are irrational fails. He says that desiring to know all facts about a product before buying it as irrational. All that is required in an advertisement is the relevant information about the product to fulfil only the prior desires. This together with other techniques of persuasive advertising is what leads to decision making whether or not to buy the product. This is where the free choice comes in where the individual should justify his or her act in their mind. Persuasive advertisement does not really prevent people from making free decisions but rather they remove the very conditions of choice. There also is a criteria that Arrington offers to control manipulation which behavior control. This is where a person causes another to act in a way that was not acceptable to the person as right and good or even justifiable (Roger, 1987).

This argument is totally against the Nelson’s squabble which errands persuasive advertisement. It is proved in this article that his argument is not convincing and resonances the argument of Santilli in some way. Arrington wishes to inform advertisers that they ought to consider whether the conceptualprotests often made to their demeanor has any weight. The article major concern and question to advertisers is how they can be able to avoid these techniques of persuasive advertisement (Roger, 1987).

Reference

Roger C., (1987) Persuasive Advertising, Autonomy, and the creation of desire D. Reidel Publishing Company

Data management case                                                       

Response to student 1

The McCain French fry supply has several levels of the organization. The global food manufacturer integrates data in every area of the business to ensure that it remains relevant due to the high level of competition. The food chain embraces different analytics to transform the way the conduct business. The food chain also endorses convenient store decisions as one of its strategy that helps it have a competitive advantage over its competitors (Lindström, 2012). By the use of micro-strategies such as online demos and videos, the McCain food has been able to convince its customers that they are the best in the market. Holding a special reception in their stores also gives its customers a philanthropic feeling that they matter. By the means of using dashboards on the factory walls executives are able to drill down anytime making management easier (Leblanc et al, 2015). This also contributes to a healthy that is able to achieve its objectives. Through the adoption of these strategies the business able to lower costs, meet its demand resulting to customers satisfaction which in turn relates to high profits.

Response to student 2

McCain food has a clear understanding of business intelligence as it is capable of adapting to the drastic changes. The food Cain is able to analysis the most productive goods that it can produce in its environment in order to maintain a competitive advantage. On the other hand, IBM utilizes both the intelligence of the business and performance towards its employees (Cokins, 2013). This makes its employees work harder as they know that their efforts will be recognized. Through the reliance of business intelligence, better decisions can be made creating value for the organization and customer satisfaction (Sople, 2012).

Reference

Cokins, G. (2013). Performance management: Integrating strategy execution, methodologies,      risk, and analytics. Hoboken, N.J: Wiley.

Leblanc, P., Moss, J. M., Sarka, D., & Ryan, D. (2015). Applied Microsoft business intelligence.

Lindström, M. (2012). Brandwashed: Tricks companies use to manipulate our minds and persuade us to buy. London: Kogan Page.

Sople, V. V. (2012). Supply chain management. New Delhi: Dorling Kindersley (India).

Staples company

2. The company’s internal strengths and weaknesses

Strengths refers to something that is capable of implicating an organisation positively , in that it adds value and provide to an organisation a competitive advantage. It involve the tangible assets like the equipment, capital available, credit, loyal customers who are established, information systems and good channels of distribution. Weakness refers to those characteristics relating to a products or service or things in the organisation that affect its growth negatively or places the organisation at disadvantage when compared with their competitors (Hill, Charles, and Jones, 369). Staples strengths stems from a management team that is highly competent and experience in the supply business, which was gathered by the founding investor Stemberg. While creating the company, he turned to the managers he knew and who had risen through the ranks quickly in the retail business like Myra Hart from Jewel Corporation, who was later to become the Vice president of Merchandising, Henry Nasella from Star Market who later assumed the presidency of the company(Hill, Charles , and Jones,593. Stemberg understood this as the first strong because for the company to succeed in implementation of the established plans it needed experienced management. The training of the staff was also a stronghold for the company since they could give advice to the customers when asked. Another strength of the company was the plan to offer a broad variety of merchandise in the setting like that of a warehouse but whose prices were discounted deeply so that the small businesses that were generally overlooked by the manufactures, who also did the supply work, could be catered for (Hill, Charles, and Jones,593).

The company’s management team also decided to employ the used of the right information system which allowed a close tracking of sales and stock at individual item’s level and simultaneously provide the gross profit on each item that was sold and the adjustment of the merchandising mix appropriately. This differentiated the company from other existing retailers majority of whom lacked the means of calculating profit on every item sold but cold only do the calculation for the average gross profit for a range of products. This system was also useful for collection of customers’ data at the selling point which would provide a lot of assistance in market research and marketing efforts to customers. In addition  is the adoption of an accounting system that would could , apart from calculating the average profit margin , it would ensure that inventory turnover would be for at the minimum of 12 times per year because this would enable Staples to reduce on the requirements of working capital (Hill, Charles , and Jones,595).

The strength of the company also stems from the establishment of the independent unit of business found within the company which handles the telephone or mail order together with delivery services. This establishment helped to serve the company’s already established customers owing small businesses and could also be useful in serving other clients.  Through this establishment, the company was able to acquire various stationary firms and keep the owners of the business as their employees so as to utilize their vital relationship that they had established with key accounts with big firms like Ford (Hill, Charles, and Jones, 600). The company then established a stable brand image, product line, and accounting and computer systems for all the small stationery companies that it acquired. This serve as a major strength for the company. The efficient distribution network is also an important strength for the company which has helped in deal with the increase in the sales volume and thereby assisted in reducing the cost of operations through such a channel. The company also used a regional distribution network for the purpose of holding a stock of 15,000 SKUs for delivery in comparison with 8000 SKUs in a normal store (Hill, Charles, and Jones, 600). The inclusion of Staples.com to Staples Direct, which was web-based element added a lot of value to the organisation as seen in the case where the customers could access a lot of 130,000 SKUs of which large portion was delivered, with Staples playing the role of consolidator and intermediary, directly from the manufactures. This way this channel served as an internal strength of the company. Another internal strength came in the way of acquiring Quill Corporation which had differentiated itself through a thorough and outstanding customer service. The company thus decided to have Quill keep its original organization and thus it was set up as a separate division within the commercial and contract unit of the business (Hill, Charles, and Jones, 600).

An addition internal strength stemmed from the adoption of a new store design that had different design – Dover- from that of its rivals, OfficeMax and office Depot. This new design gave the customers a different experience while shopping since it was based on a customer centric philosophy referred to as “Easy”. It is meant to give the customers an easy shopping experience as much as possible through the store’s layout and design that emphasized a selling strategy that will make sure that the items are not out stock at any time by a greater in-store customer service. The strength comes arises from the fact that this layout allows the customer to move in and out of the stores as conveniently as possible (Hill, Charles, and Jones, 601).  Moreover, the company has invested in an upgraded level of knowledge for its sales associates and improved the management process of its supply chain. The strength is thus obtained from the better information system, to have good connection between its suppliers and the extensive application of the cross-docking techniques at various centres of distribution. Due to these strengths the company has been able to increase its inventory turnover, has decreased its inventory holdings and has managed to improve its customer’s in-stock experience. These strengths were further enhanced by the decision of the new CEO, Ron Sargent, not to engage in further opening of new stores after they had reached 75 a year. The slowdown allowed the company to direct its focus and attention towards the efficiencies in internal operations. The rationalisation of the product lines within the stores further enabled the company to cut down on stock of those items with little margins like personal computers. These strengths were very instrumental in putting the company in a strong position that enabled it to face its competitors head on even while venturing in the international market like Canada and European countries (Hill, Charles, and Jones, 601).

The major weaknesses of the company stems from the stated need to improve on the supply chain process, which involves the better use of the information system in order to better connect the suppliers to the distribution centres. There is also the need to level of knowledge among the company’s sales associate. Another weakness is the exclusion of various expenses from the cost structure which the new CEO identified as needing to be brought on board (Hill, Charles, and Jones, 601).

3. The nature of the external environment surrounding the company

The external environment refers to the factors that are outside an organization but which influence the ability of the firm to function effectively. These factors consist of the ones the efforts of the organization such as marketing can influence and others that are outside its control. The external environment of staples is quite dynamic as seen in the changing demographic trends, the customers’ needs and specifications, the changing status of the United States economy and the change in competition strategies. The dynamism is clearly shown in the market growth whose driving factor according to research was various demographic trends that were quite favourable. The economy of the United States is also dynamic since at the time the company was being created, it was recovering from the recession that hit the country in the early- 1980s and late-1970s and growth was very strong. Fast forward, the growth receded in the period of 2007-2008, which also so the company’s sales decline (Hill, Charles, and Jones, 592). The technological environment is also show as changing with the introduction of new personal computers, faxes, printers, small copiers, that was initially the driving force for the demand for office supplies but later the change in technology touched on the improvement of the information systems and the internal control systems (Hill, Charles, and Jones, 592).

The competition environment initially include small firms, wholesalers, retailers and the manufacturers who also did the work of supplying products to the final consumers.  The competition later intensified with the emergence of other large scale stores such as Office Depot that later became the big rivals of Staples. The nature of the completion became stiff to the point of engaging in price wars, which had a detrimental effect on the performance on the rival firms involved profit wise. The expansion of the company was hindered by lack of available land for expansion which forced the company to result to taking defensive aspects through bidding for various prime sites to wade of competitors (Hill, Charles, and Jones, 592). The nature of financial market made it easier to access capital and credit.

Question 5

The first reason why the company was able to raise enough capital was the presentation of a business concept that was easily understood through a well thought and applicable business plan. The concept was quite straightforward and had ways of implementing it. The plan was aimed at providing a variety of merchandise in the setting of a warehouse that would give items at prices that were greatly discounted. This differentiated the company plan from the other retailers and this convinced the venture capitalist that the company had good prospect of entering the market strategically. Furthermore, a well carried out market research played a major role in convincing the potential financiers to buy the idea and offer the credit. The market research showed that the existing suppliers focused their attention on the larger consumer firms and largely ignored the small and medium consumers, which was enough proof that there was unsatisfied market. Moreover, a team of reputable and experienced management team convinced the financiers that the business plan was well thought out (Hill, Charles, and Jones, 601).

Works Cited

Hill, Charles W. L, and Gareth R. Jones. Strategic Management. Cengage Learning, 2012. 590-602

Planning our future

The website is entitled “Planning Our Future” which indicates that the entire content is about planning. Planning is the core element of any business operation because it charts the course through which an organization will follow in order to achieve its goals. There are numeral aspects of a successful business planning which can be deducted from the provision of CDRPC. First, communication is a factor that this commission focuses on (CDRPC, n.d).

The page also mentions collaboration which ensures teamwork within an organization. The commission also facilitates the regional initiatives which are commonly considered as the heart of creativity and innovation. The process of finding and implementing solutions which is also carried out by the commission is also an important point to note because all businesses are inclined to challenges and finding solutions remain to be the most pillars of business success and progress (CDRPC, n.d).

As a resident of the capital district, I am adjacent to many helpful activities of this commission such as the Regional Permits. Updates of the current trends especially in the issuance of the residential units would help me to meet any required standards and new strategies that aim at improving the capital district. I am also able to benefit from the more building of family units which is a long term planning process (CDRPC, n.d).

Finally, among the many important aspects I can borrow from this site, community data could be the most useful in my job some day. Community data will help me to identify the nature, population and the needs for the people in the capital Region (CDRPC, n.d).

References

Outline critique

The introduction of the outline gives the reader the information about what the plan is about and the purpose of the entire document. This outline thus follows the basic requirement of a good SMEP plan. An SMEP should provide an outline of the technical plans and the various activities of system engineering that will be used in the development, integration, testing, validation and the deployment of the entire system (Rodriguez, 2009). The document outlines the primary purpose of the plan which is an important element that assist in the preliminary description of the project.  The outlines also highlights the requirements and the expectations of the organisation as seen in the mentioned in the main organisational interfaces, a structure of the work breakdown , how the system will be maintained and the overall production requirements.

After letting the reader understand the content of the document and thus the plan , the outlines proceed to show how plan will be implemented and the control measures  that need to be in place after the projects is complete. This is evident in the inclusion of the task, configuration management, performance measurements, the cost of the program, communication needed and the inclusion of monitoring and control requirements.  The outline is thus well organised in such a manner that the content are well structured so as to show the step by step process of the system development so that after every step , the next one can be anticipated. Thus after implementation stage the support plan for operations is shown in terms of mission analysis, performance parameters and specifications. It also outlines the final stages of the system development which include the plan for test and evaluation and management of possible risk. Thus an overview of the outline gives the reader a general idea of the whole document.  

References

Rodriguez, R. (2009). Systems Engineering Management Plans. Retrieved from: http://prod.sandia.gov/techlib/access-control.cgi/2009/097836.pdf

Making business case – MIS

Starting a business is an achievement and maintaining one is a big challenge. Building a brand that people can trust is a task that most business aims to achieve. By doing so demand of the product is created since people can trust it (Hobson, 2008). For example a food chain restaurant such as burger fast aims at making sure that the burgers are tasty to the customers. This means that they have to consider their taste and preference. Research has to be carried out in order to know what people want. Once this is identified the business has to make sure that people are aware of their products.  By so doing the business faces sales problem. This means that something has to be done in order to increase revenue. This will happen if the demand of the products is created (Hobson, 2008). Due to technology, this can be made easier by advertising online. This means that a large number of people will be aware of the product, the benefits to gain from it and its cost.

           Advertising online at a very minimal cost many people will know about the existence of the products. This means that demand for the products will be created.  The initial cost of starting the online advertisement will be high but the will be a growth of revenue over time (Hobson, 2008). The overall cost of running the business will be reduced as there will be a few employees managing the online advertisement. By an increase in the number of sales made every day the business will realize great profits.

Reference

Hobson, R. (2008). An investor's guide to small companies. Petersfield: Harriman House.

Business

            Response 1

An intended strategy refers to the theoretical type of strategy that is applied in an organization basing on the motive of the organization. It is the strategy that is kept on hold and is basically fully detailed in the strategic planning of the organization. This can also be viewed as a business plan especially to new enterprises (Andersen et al 2009). It is, therefore, important as it ensures that the organization follows the right track towards its success. How does these intended plans relate to one’s life? This relates to one’s life as there are intended plans that are established in one’s life but they are however important in molding and directing a person to be a successful person. These intended plans in one’s life are especially important when one is starting their lives. In terms of career line, one must have an intended plan that he/she has set so as to act as a guideline towards a better career. These plans are in most cases not implemented but in the long run, they are often implemented.

Response 2

Realized plans are the practical strategic plans that are often used and they are basically real. These are the actual plans that an organization uses. They are basically derived from the intended plans in the organization (Weigl et al 2008). How does these realized plans relate to one’s life? This somehow relates to our lives since we all have those plans that we implement in our day to day lives and in reality so as to attain success. These are the plans that we also practically apply in our careers as they help us to develop as well as to grow our skills within the organization that we are practicing our plans.

Response 3

Performance review process involves the evaluation carried out so as to measure human resources’ job performance over a certain period of time. This helps to identify some of the goals, skills interests, and competence amongst some of the employees that may be used better in another department (Kurtz 2010). This process, however, has some of its weaknesses that make it unsuitable to be carried out. What are some of the experiences of the weaknesses that are involved in performance review process? From experience, this process is subject to nepotism to some organizations. This is because some of the managers who are the superiors may evaluate their subordinate unfairly without having to evaluate their actual potential but rather basing on their likes and dislikes. The process also results to eroding of motivation amongst the workers. This is because the organization may solely use this process to add on salaries to the employees which may only be limited to only a few employees as the managers are aware that only limited funds are allocated for the same. However, the managers, in this case, are only interested in making the employees improve their skills but in the end, only a few are rewarded and a large group is disappointed and this act as a form of de-motivation.

Response 4

How can these weaknesses be prevented? To prevent all these weaknesses, all workers should be awarded fairly according to their responsibilities while they should be encouraged throughout the period to perform better. Actually, those organizations that treat their employees well and all employees at all levels work together in collaboration and cohesion, the performance measure and review process gives back a good report as everyone in the organization feels valued. Fairness is also important as each stakeholder in the organization is as important as the other as the roles are quite many to be carried out by only a few. Hence the issue of nepotism should not be an issue to occur but rather justice should be applied so as to attain success (Phillips et al 2013).

References

            Andersen, T. J., & Nielsen, B. B. (2009). Adaptive strategy making: The effects of emergent and intended strategy modes. European Management Review, 6(2), 94-106.

            Kurtz, D. L. (2010). Contemporary business. Hoboken, NJ: Wiley.

            Phillips, J. M., & Gully, S. M. (2013). Human resource management. Mason, Ohio: South-Western Centage Learning.

            Weigl, T. (2008). Strategy, Structure and Performance in a Transition Economy: An Institutional Perspective on Configurations in Russia. Wiesbaden: Betriebswirtschaftlicher Verlag Dr. Th. Gabler / GWV Fachverlage.

Part 1

The stages of life can be correlated with the organizational stages of development since when it started until it is stable. I know a certain electronic company which was founded in my presence and have been monitoring it while young until it grown to national level. The first stage is birth also known as a stage of existence. This marked the start of the company at which the entrepreneur’s thoughts were put into action.  At this stage the organizational structure was very simple with a centralized management system. The company sold only power cables, data cables, power banks, bulbs and other small commodities (Nelson & Quick, 2012).

The next stage is growth or survival when the company started to build up its capabilities. A systemized framework was established through the expansion of the business into a wider variety of electronics dealt with. Components like loudspeakers, television sets and laptops were gradually introduced. The next stage is maturity. The company is currently in this stage because the current management has become hierarchical. The company is no longer expanding but instead it is focusing on growth. It has now specialized in laptop sales. The company at this stage is very stable because problems are easily combated. The next stage is renewal whereby the restructure of the company is restructured. Lastly, decline is a stage that marks the initial process of death of the company (Nelson & Quick, 2012).

Many companies are freeing themselves from bureaucracy by establishing approaches that promote self dependence and management. An example is Zapoos which is a shoe retailer company. It is first converting to Holacracy which flatters the system of titles. The company is using the approach of ideology which regards the company as private and individual premise (Reigngold, n.d). The approach of business transition is also used whereby the staff is departing and restricting of the company is considered. This has generated much tension for the public.

Part 2

Question 1

Control mechanisms have recently been recognized by most businesses across the globe.  Control mechanisms are advantageous such that they assist companies in upholding high quality outcome of the business operations.  The controls also help in balancing the investments as well as the income made to ensure a safe cash flow. Controls also help the managers to compete with other companies in terms of technology, marketing, pricing as well as in the quality of products made. However, the control mechanisms tend to squeeze the employees in to some unfavorable working conditions. Controlling the expenditure for example means the reduction of wages which commonly leads the subjection of the working force. Control mechanisms are also limited to various boundaries beyond which they should not go. This comes as a requirement of the legal process which moderates these controls to ensure fair competition (Leitch, 2008).

Question 2

It is however healthy for managers to set up the appropriate control degree failure to which various risk of excess control may befall on the company. It is very evident that excessive control develops a bureaucratic kind of an environment which uses up most of the company’s corporate resource. Excess controls also lead to duplicate work whereby the managers keep monitoring the various document flows and other aspects (Leitch, 2008). The repetition of this wastes time and resources as a result. Lastly the controls are inflexible because making changes to controls is very difficult. Less application of controls would whoever brings down the productivity of the business because the employees in many times are not self-driven (Leitch, 2008).

Question 3

Different companies embrace only the control mechanisms that best fit their situation. This is because the control may be based on the strategic and operational planning of the company and therefore the goals of different companies differ. Therefore, there is no any standard control mechanisms that can cover all industries (Leitch, 2008).

References

Leitch, M. (2008). Intelligent internal control and risk management: Designing high-performance risk control systems. Aldershot, England: Gower.

Nelson, D. L., & Quick, J. C. (2012). Organizational behavior: Science, the real world, and you. Mason, Ohio: South-Western.

Reigngold J., (n.d) A move to “self-management” has shaken the online shoe retailer. Can it regain its mojo?

ECON 203 Term Paper

The global oil investors are coming to the realisation that the largest risk to the price of oil is more likely to be the demand being higher than the supply, rather than other factors like unwanted crude overhang. Brent crude oil price has reached $52 per barrel, which is double price for January’s lows of nearly 13 years, and the driving factor has primarily been a reduction in global production which has happened fast enough to cause supply and demand to be aligned quickly than had previously been anticipated (The Economic Times,2016). Over the last year, close to one million barrel a day have disappeared from U.S production that is of a high cost, a key factor that has contributed to the surplus that resulted to the build-up since the voting in late 2014 by Organisation of the Petroleum Exporting Countries. The voting was done for the purpose of sacrificing price strength for share of the market. In addition, unplanned outages resulting high incidences of Canada’s wildfires, economic and political upheavals in Libya and Venezuela that have taken as much as $ 4 million bpd offline in the month of May has resulted to the decline in production (The Economic Times,2016).

The law of demand and supply has the primary effect on the oil industry since it determines the global oil prices. Demand and supply is probably the fundamental theory of economics and is the basis of any market. Demand means the quantity of a certain commodity that the consumers desire. The quantity demanded refers to the amount of a product that consumers are willing to purchase. Quantity supplied is the amount of that commodity which is supplied by the suppliers at a specific price. There is close relationship between the quantity of a certain product that is supplied and, how much of that product is demanded by the consumer and the price of that product (Hirschey, 2009). The price of oil in the global market has been reducing considerably, due to the economic recession that was experienced since the year 2007. However, the above mentioned factors have have seen a reduction in oil production in the mentioned countries. This has had a big impact in the prices in the global oil market where demand for the product is growing though slightly but uncertainty exist about the continuity of supply in the market(The Economic Times, 2016). Over the past two years, volatility, which measures the cost of owning a certain option has reached its highest point on options that are very near-term and deeply unprofitable or those options whose owners have the right rather than obligation to sell oil at a particular price by a given date. This has seen focus shifting to unprofitable put options that have a maturity period of almost a year. This kind of switch would mean that investors have more confidence with a prospect of a higher sustainability in the price of oil and a lot of the concerns about the extent of the crude oil in storage tanks or on ships that represent an unwanted overhang may have evaporated. Everything on this oil market begins and ends with the consideration of whether the supply or demand is excess. If there is an excess in demand, many of the factors that moving time structure and volatility – risk of inventory storage running out or being full to capacity – disappear. There is still economic growth especially in the emerging Asia which means that there will remain a solid oil demand there. This will bring about a balance in the oil market over second half of current year, which can explain possible increase of prices (The Economic Times, 2016).

These changes in the oil supply will lead to the price remaining constant or increasing since the demand will keep growing as the global economy is growing. Both the supply and demand of oil remain moderately inelastic over the short-run. The drilling of more oil in the producing countries to bring more supply online may take time meaning the prices will continue increasing. In the short run demand for this product remain inelastic because there are no substitutes to oil as source of energy. The supply will also remain inelastic in the short run since there will be no more production in those countries that are experiencing economic and political disturbances. This inelasticity in oil supply means that there will be even a higher percentage increase in the price than in the overall demand of the same product (Kroon, 2007). When the prices are high, political and economic situations in those countries becomes better, the producers may increase their level of production since the marginal cost will be high. However, in the current scenario where there is disruption in supply, the production will remain low because of factors that are beyond the control of the producing countries.

In an equilibrium graph, the resulting disruption in supply makes the supply curve for this product to shift to the left which causes the price to increase. As stated earlier, the increasing demand due to growth in the developing countries especially in Asia will influence largely the demand and supply of oil. As these countries become more industrialised so that oil demand remain constant and oil production reduces, the demand curve shift to the right.

                          Increase in Oil Demand

 Increase in the demand of oil makes the demand curve to shift to the right.

                                            Supply

     Price                                                                    New price equilibrium      

                                                 Demand

                         Quantity

In the above figure the, the rise in the oil demand has as similar effect to the decrease in supply , thus the price of oil will respond considerably to a rise in demand.  Due to reduction in the production of oil, the prices increased to a high of $52 per barrel. The equilibrium occurs where demand curve and supply curve intersect which is an indication of no allocative efficiency. In the real market, however, the achievement of equilibrium can only be in theory, hence the price of a product is changing constantly in relation to the fluctuating demand and supply (Hirschey, 2009).  

Conclusion and recommendation

The increase in the price of oil may be good news to the markets that rely on it for economic sustainability. However, further increase may result to negative effects on the economies that rely on crude oil as the main source of energy since it may result to high cost of production and thus high cost living . The political and economic disturbances should that be arrested so as to keep the production level at the acceptable level. This will stabilise both the economies that depend on oil as a main source of income and the ones that utilise oil as a source of energy.

References

The Economic Times (2016). The latest oil bet: From too much to too little.1. Retrieved from: http://articles.economictimes.indiatimes.com/2016-06-09/news/73665748_1_brent-crude-supply-and-demand-hans-van-cleef

Hirschey, M. (2009). Fundamentals of managerial economics. Mason, OH: South-Western/Cengage Learning.131

Kroon, G. E. (2007). Barron's macroeconomics the easy way. Hauppauge, N.Y: Barron's Educational Series, Inc.

                      Gold & Risky Assets

The value of gold cannot be estimated, and this present a risk of constant fluctuation in its value.  This is based on the fact that price of gold fluctuates widely at times regardless of the currency used to measure it. That said, gold can lose a substantial amount of its value within a given period of time and thus it has no significant return on investment (Kramer, 2016). However, the little or below average return of gold are acceptable in a portfolio since it can be used as an insurance to the investor who has his primary assets being financial. It is thus an insurance against potential catastrophic assets facing the assets such as hyperinflation and war (Nathan, 2011). There are varying opinions on the amount of gold and other metals to be included in one’s portfolio which on the length of the investment term one is considering, and an individual’s risk assessment The Market Oracle, (2015). Thus the opinions depend on how one perceives risks and the risk that they are willing to take.

The returns on gold investments have been fluctuating in a similar manner with that of other stocks though overall the return on investment on other assets has increased significantly. Practically, gold is a non-cash asset and thus has no capacity to generate income. However, if the prices of shares in a portfolio falls, one is certain of obtaining between 2 to 4 percent per annum return in dividends, if a company performs well dividends will increase (Kramer, 2016). This cannot be said of gold. An asset with a low historical return can be valuable in a portfolio since an asset that has been performing poorly in a given period is likely to perform well in another period (Kramer, 2016). Thus, it may offset poor performance of other assets in such a time.

References

Nathan, P. (2011). The new gold standard: Rediscovering the power of gold to protect and grow wealth. Hoboken, N.J: Wiley. 48-49

The Market Oracle, (2015).Is Gold Investing Risk Free? Retrieved from: http://www.marketoracle.co.uk/Article49569.html

Kramer, K. (2016). Getting past the all-or-nothing mentality in gold trading. Retrieved from: http://www.cnbc.com/2016/03/16/gold-investing-limiting-risk-in-the-precious-metals-trade.html