Chapter 12: Setting Product Strategy

Chapter 12: Setting Product Strategy GENERAL CONCEPT QUESTIONS Multiple Choice 1. Marketing planning begins with the formulation of an offering to ________ target customers’ needs or wants. a. undermine b. meet c. capture d. compete with e. comprehend Answer: bPage: 318Difficulty: EasyAACSB: Reflective Thinking 2. The customer will judge the offering by three basis elements: ________, services mix and quality, and price. a. performance b. salespeople c. price d. product features and quality e. none of the above Answer: dPage: 318Difficulty: EasyAACSB: Analytic Skills 3.The five product levels constitute a ________. At each level more customer value is added. a. customer-augmented product b. customer consumption system c. customer value-hierarchy d. customer-perceived value e. customer hierarchy Answer: cPage: 318Difficulty: Medium4. When companies search for new ways to satisfy customers and distinguish their offering from others, they look at the ________ product, which encompasses all the possible augmentations and transformations of the product. a. consumption system b. expected c. potential d. augmented e. basic Answer: cPage: 318Difficulty: HardAACSB: Analytic Skills5. The way the user performs the tasks of getting and using products and related services is the user’s total ________. a. consumption system b. consumable system c. consistent use system d. augmented system e. none of the above Answer: aPage: 319Difficulty: Medium6. Marketers have traditionally classified products on the basis of three characteristics: ________, tangibili ty, and use. a. customer value hierarchy b. expected c. augmented d. durability e. none of the above Answer: dPage: 319Difficulty: HardAACSB: Analytic Skills7. ________ are tangible goods that normally survive many uses. a. Nondurable goods . Durable goods c. Services d. Consumption systems e. Potential products Answer: bPage: 319Difficulty: MediumAACSB: Analytic Skills8. Because ________ are purchased frequently, marketers should make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. a. nondurable goods b. durable goods c. services d. consumption systems e. potential products Answer: aPage: 319Difficulty: Medium9. The consumer usually purchases ________ frequently, immediately, and with a minimum of effort. a. specialty goods b. shopping goods c. â€Å"must haves† goods . personal goods e. convenience goods Answer: ePage: 320Difficulty: MediumAACSB: Analytic Skills10. It was sunny when Jenny went to clas s, but by the time class was over it was raining heavily, so Jenny stopped by the student store to buy an umbrella before she walked back to her dorm. In this case, the umbrella is an example of a(n) ________. a. impulse good b. staple c. homogeneous shopping good d. emergency good e. heterogeneous shopping good Answer: dPage: 320Difficulty: MediumAACSB: Analytic Skills11. ________ are similar in quality but different enough in price to justify shopping comparisons. . Emergency goods b. Homogeneous shopping goods c. Heterogeneous shopping goods d. Specialty goods e. Impulse goods Answer: bPage: 320Difficulty: MediumAACSB: Reflective Thinking12. Products such as insurance, cemetery plots, and smoke detectors are examples of ________ that are products that the consumer does not know about or does not normally think of buying. a. specialty goods b. unsought goods c. heterogeneous shopping goods d. homogeneous shopping goods e. none of the above Answer: bPage: 320Difficulty: HardAACSB: Reflective Thinking13.Industrial goods can be classified as ________, capital items, or suppliers and business services based on their costliness and how they enter the production process. a. service components b. subassemblies c. pieces and parts d. specialty goods e. materials and parts Answer: ePage: 320Difficulty: MediumAACSB: Analytic Skills14. ________ are the major factors influencing the selection of suppliers for natural products. a. Price and delivery reliability b. Product features and customization c. Price and customization d. Delivery reliability and product features e. Customization and delivery reliabilityAnswer: aPage: 321Difficulty: Medium15. Capital items are long-lasting goods that facilitate developing or managing the finished product. They include two groups: installations and ________. a. natural products b. component materials c. operating supplies d. equipment e. none of the above Answer: dPage: 321Difficulty: EasyAACSB: Reflective Thinking16. Supplies and b usiness services are short-term goods and services that facilitate ________ or managing the finished product. a. inspecting b. developing c. building d. creating e. none of the above Answer: bPage: 321Difficulty: EasyAACSB: Reflective Thinking17. Many products can be differentiated in terms of their ________,—size, shape, or physical structure. a. form b. performance quality c. conformance quality d. reliability e. design Answer: aPage: 321Difficulty: EasyAACSB: Analytic Skills18. Most products can be offered with varying ________ that supplement its basic function. a. reliability b. conformance qualities c. features d. forms e. none of the above Answer: cPage: 322Difficulty: EasyAACSB: Reflective Thinking19. ________ is the ability of a company to prepare on a mass basis individually designed products, services, programs, and communications. . Mass customization b. Feature fatigue c. Performance quality d. Conformance quality e. Repairability Answer: aPage: 322Difficulty: Me diumAACSB: Analytic Skills20. ________ is the level at which the product’s primary characteristics operate. a. Design b. Conformance quality c. Reparability d. Performance quality e. Durability Answer: dPage: 322Difficulty: Easy21. Buyers expect products to have a high ________, which is the degree to which all the produced units are identical and meet the promised specifications. a. durability b. reliability c. conformance quality d. form e. performance quality Answer: cPage: 323Difficulty: MediumAACSB: Analytic Skills22. ________ describes the product’s look and feel to the buyer; it has an advantage of creating distinctiveness that is difficult to copy. a. Design b. Style c. Durability d. Conformance e. None of the above Answer: bPage: 323Difficulty: EasyAACSB: Analytic Skills23. Ideal ________ would exist if users could fix the product themselves with little cost in money or time. a. durability b. reliability c. style d. design e. repairability Answer: ePage: 323Di fficulty: MediumAACSB: Reflective Thinking24. In increasingly fast-paced markets, price and technology are not enough. _______ is the factor that will often give a company its competitive edge and is defined as the totality of features that affect how a product looks, feels, and functions in terms of customer requirements. a. Services b. Performance c. Reliability d. Style e. Design Answer: ePage: 325Difficulty: HardAACSB: Reflective Thinking25. When the physical product cannot be easily differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiators are ordering ease, delivery, installation, ________, customer consulting, maintenance, and repair. . customer limiting b. customer orders c. niche marketing d. customer training e. customer marketing Answer: dPage: 326Difficulty: HardAACSB: Analytic Skills26. Delivery refers to how well the product or service is brought to the customer. It includes speed, ___ _____, and care throughout the delivery process. a. length of time for delivery b. type of delivery services c. attributes d. completeness e. accuracy Answer: ePage: 326Difficulty: EasyAACSB: Analytic Skills27. ________ refers to training the customer’s employees to use the vendor’s equipment properly and efficiently. a. Customer training . Internal marketing c. Client marketing d. Customer relationships e. Technical training Answer: aPage: 326Difficulty: Easy28. ________ refers to data, information systems, and advice services that the seller offers to their buyers. a. Sales force relationships b. Customer relationships c. Internal marketing d. Customer training e. Customer consulting Answer: ePage: 326Difficulty: EasyAACSB: Analytic Skills29. Differentiating on ________ is important for companies with complex products and becomes an especially good selling point when targeting technology novices. a. delivery b. ordering ease c. ase of installation d. customer consult ing e. repairability Answer: cPage: 326Difficulty: HardAACSB: Reflective Thinking30. ________ describes the service program for helping customers keep purchased products in good working order. a. Returns b. Ordering ease c. Installation d. Maintenance and repair e. Delivery Answer: dPage: 327Difficulty: MediumAACSB: Reflective Thinking31. Improved handling or storage, better packaging, and improved transportation and forward logistics are methods for reducing ________. a. installation b. uncontrollable returns c. controllable returns d. product families e. ustomer consulting Answer: cPage: 328Difficulty: MediumAACSB: Reflective Thinking32. A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges is known as a ________. a. product type b. product class c. need family d. product variant e. product line Answer: eP age: 328Difficulty: Medium33. A(n) ________ is defined as a distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. . stockkeeping unit b. UPC (uniform product code) c. stock unit d. product type e. none of the above Answer: aPage: 328Difficulty: HardAACSB: Analytic Skills34. A ________ is the set of all products and items a particular seller offers for sale. a. product line b. product mix c. family of products d. product system e. product class Answer: bPage: 328Difficulty: EasyAACSB: Analytic Skills35. The ________ of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. a. onsistency b. depth c. width d. length e. composition Answer: aPage: 329Difficulty: Hard36. The ________ of the product mix refers to the total number of items in the mix. a. width b. length c. depth d. consistency e. height Answer: bPage: 329Difficulty: MediumAACSB: Analytic Skills37. In offering a product line, companies normally develop a ________ and modules that can be added to meet different customer requirements. a. convenience item b. â€Å"best selling† item c. staple item d. product e. basic platform Answer: ePage: 329Difficulty: Medium AACSB: Reflective Thinking 8. The ________ of a product mix refers to how many variants are offered of each product in the line. a. width b. length c. depth d. consistency e. height Answer: cPage: 329Difficulty: MediumAACSB: Analytic Skills39. A company can classify its products into four types that yield different gross margins, depending upon sales volume and promotional costs. The four classifications include all EXCEPT ________. a. core product b. shopping goods c. staples d. specialties e. convenience items Answer: bPage: 330Difficulty: MediumAACSB: Analytic Skills 40.The main point in segmenting products into different classes is that companies should recognize that these items ________ in the potential for being priced higher or advertised more as ways to increase sales, margins, or both. a. differ b. are more elastic c. are less elastic d. respond to advertising differently e. none of the above Answer: aPage: 330Difficulty: EasyAACSB: Reflective Thinking 41. A benefit of product mapping is that it identifies ________. a. market matrices b. target markets c. market segments d. consumers e. none of the above Answer: cPage: 330Difficulty: HardAACSB: Reflective Thinking 2. Product-line analysis provides information for two key decision areas—product-line length and ________. a. product-length new items b. product-mix pricing c. product pricing d. popular pricing e. none of the above Answer: bPage: 331Difficulty: Hard43. ________ occurs when a company lengthens its product line beyond its current range. a. Market reach b. Product reach c. Product adaptations d. Line shrinking e. Line stretching Answer: ePage: 331Difficulty: EasyAACSB: Analytic Skills 44. When a company positioned in the â€Å"middle† market introduces a lower-priced product line, this is an example of ________. . product-line length b. up-market stretch c. down-market stretch d. maintenance e. none of the above Answer: cPage: 331Difficulty: EasyAACSB: Analytic Skills 45. Moving ________ carries risks. The new brand can cannibalize core brand sales and lower the core brand’s quality image. a. up-market b. two ways c. one way d. down-market e. none of the above Answer: dPage: 333Difficulty: Medium 46. Companies may wish to implement a(n) ________ to achieve more growth, to realize higher margins, or simply to position themselves as full-line manufacturers. a. up-market stretch . down-market stretch c. service-market stretch d. consulting-model stretch e. obsolescence strategy Answer: aPage: 333Difficulty: MediumAACSB: Reflective Thinking47. A product line can also be lengthened by adding more items within the present range. There are several motives for line filling: ________, trying to satisfy dealers who complain about lost sales because of missing items in the line, trying to utilize excess capacity, and others. a. responding to senior management wishes b. responding to consumer wishes c. reaching for incremental profits d. eaching for incremental capacity e. responding to sales-force demands Answer: cPage: 334Difficulty: Hard 48. If line filling is overdone, it could result in ________ and customer confusion. a. sales paralysis b. manufacturing inefficiencies c. self-cannibalization d. self-sacrifice e. none of the above Answer: cPage: 334Difficulty: EasyAACSB: Reflective Thinking 49. Price-setting logic must be modified when the product is part of a product mix. In that case, the firm searches for a set of prices that ________ profits on the total mix. a. are ineffective on total b. ave no effect on total c. maximize d. minimize e. capitalize upon Answer: cPage: 335Difficulty: EasyAACSB: Analytic Skills 50. Companies norma lly develop product lines rather than single products and require sellers to establish ________ quality differences between price steps within the line. a. imaginary b. actual c. perceived d. monetary e. none of the above Answer: cPage: 335Difficulty: MediumAACSB: Reflective Thinking51. Some service firms often engage in ________, consisting of a fixed fee plus a variable usage fee. a. pure bundling b. pure pricing c. mixed pricing . captive pricing e. two-part pricing Answer: ePage: 336Difficulty: EasyAACSB: Analytic Skills 52. In ________, the seller offers goods both individually and in bundles and often charges less for the â€Å"bundle† than for the individual products. a. pirating pricing b. captive pricing c. two-part pricing d. pure bundling e. mixed bundling Answer: ePage: 336Difficulty: MediumAACSB: Analytic Skills 53. The main advantage of co-branding is that a product may be convincingly positioned by virtue of the ________ involved. a. branding synergy b. increas ed advertising dollars c. ultiple brands d. bundled package e. none of the above Answer: cPage: 337Difficulty: HardAACSB: Reflective Thinking54. The potential disadvantages of ________ are the risks and lack of control from becoming aligned with another brand in the consumers mind. Consumer expectations about the level of involvement and commitment are likely to be high, so unsatisfactory performance could be very negative for the brands involved. a. co-branding b. primary service features c. values d. perceptions e. pricing Answer: aPage: 337Difficulty: MediumAACSB: Reflective Thinking 55. _______ is a special case of co-branding involving creating brand equity for materials, components, or parts that are necessarily contained within other branded products. a. Component branding b. Ingredient branding c. Advertising branding d. Sales branding e. None of the above Answer: bPage: 337Difficulty: HardAACSB: Analytic Skills 56. We define packaging as all the activities of designing and producing the container for a product. This includes up to three levels of material: primary package, secondary package, and ________. a. retailer package b. design package c. shipping package d. consumer package e. one of the above Answer: cPage: 339Difficulty: MediumAACSB: Analytic Skills57. Various factors have contributed to the growing use of packaging as a marketing tool and include all of the following EXCEPT ________. a. self-service b. consumer affluence c. consumer influence d. company and brand images e. innovation opportunities Answer: cPage: 339Difficulty: HardAACSB: Reflective Thinking 58. ________ are formal statements of expected product performance by the manufacturer. a. Insurance b. Warranties c. Guarantees d. Reputation e. Marketing statements Answer: bPage: 341Difficulty: MediumAACSB: Analytic Skills9. Many sellers offer either general or specific guarantees. Guarantees reduce the buyer’s ________ risk. a. actual b. perceived c. real d. implied e. stated Answer: bPage: 342Difficulty: EasyAACSB: Reflective Thinking 60. Guarantees are most effective in two situations. The first is when the company or products are not well known and the second is when the product’s quality is ________ to competition. a. not known b. different c. inferior d. equivalent e. superior Answer: ePage: 342Difficulty: MediumAACSB: Reflective Thinking True/False 61. Product is the key element in the market offering.Answer: TruePage: 317Difficulty: EasyAACSB: Reflective Thinking 62. A product is anything that can be offered to a market to satisfy a want or need. Answer: TruePage: 318Difficulty: MediumAACSB: Reflective Thinking 63. In planning its market offering, the marketer needs to address five product levels, each of which reduces customer value. Answer: FalsePage: 318Difficulty: MediumAACSB: Analytic Skills 64. The customer-value hierarchy consists of the basic product, core benefit, expected product, augmented product, and the consumption system. Ans wer: FalsePage: 318Difficulty: MediumAACSB: Analytic Skills 65.Marketers have traditionally classified products on the basis of characteristics such as durability, tangibility, and use. Answer: TruePage: 319Difficulty: Medium 66. Durable products normally require more personal selling and service and more seller guarantees than nondurable goods. Answer: TruePages: 319–320Difficulty: MediumAACSB: Reflective Thinking 67. Because they are intangible, durable goods normally require more quality control, supplier credibility, and adaptability than either services or nondurable goods. Answer: FalsePage: 320Difficulty: Medium 68. Carlos always buys bread and milk when he goes grocery shopping.In this case, bread and milk are examples o f impulse goods. Answer: FalsePage: 320Difficulty: MediumAACSB: Analytic Skills 69. A Maserati sports car is considered a specialty good because interested buyers will travel far to buy one. Answer: TruePage: 320Difficulty: MediumAACSB: Analytic Skill s 70. The homogeneity of natural materials limits the amount of demand-creation activity that producers undertake. Answer: TruePage: 321Difficulty: Medium 71. Capital items are long-lasting goods that facilitate developing or managing the finished products. Answer: TruePage: 321Difficulty: MediumAACSB: Analytic Skills 72.Supplies can be classified as two kinds: maintenance and repair items and operating supplies. Answer: TruePage: 321Difficulty: MediumAACSB: Analytic Skills 73. To be branded, physical products must be differentiated. Answer: TruePage: 321Difficulty: Easy 74. To avoid â€Å"feature fatigue,† companies must be careful to prioritize those features that are included and find unobtrusive ways to provide information about how consumers can use and benefit from the feature. Answer: TruePage: 322Difficulty: MediumAACSB: Reflective Thinking 75. Firms should design the highest performance level possible for their products.Answer: FalsePage: 322Difficulty: MediumAACSB: Reflective Thinking 76. As a selling point, durability commands a particularly high pricing premium, especially for products that are subject to rapid technological obsolescence, as are personal computers and video cameras. Answer: FalsePage: 323Difficulty: HardAACSB: Reflective Thinking 77. Design can shift consumer perceptions to make brand experiences more rewarding. Answer: TruePage: 325Difficulty: Medium 78. If the physical product cannot be easily differentiated, the key to competitive advantage lies in the pricing of the related â€Å"services† provided by the manufacturer.Answer: FalsePage: 326Difficulty: HardAACSB: Reflective Thinking 79. Customer training and customer consulting are two areas for service differentiation that manufacturers can use with their products. Answer: TruePage: 326Difficulty: MediumAACSB: Analytic Skills 80. The cost of processing a return can be significantly greater than that of an outbound shipment. Answer: TruePage: 327Difficulty: HardAAC SB: Analytic Skills 81. The product hierarchy stretches from basic needs to particular items that satisfy those needs. Answer: TruePage: 328Difficulty: MediumAACSB: Reflective Thinking 82.A product system is a group of diverse but related items that function in a compatible manner and includes the product mix and product assortment. Answer: FalsePage: 328Difficulty: MediumAACSB: Analytic Skills 83. The four product-mix dimensions (length, width, depth, consistency) permit the company to expand its business. Answer: TruePage: 329Difficulty: MediumAACSB: Analytic Skills 84. Factors that influence product-line length do NOT include company objectives or management aspirations. Answer: FalsePage: 331Difficulty: HardAACSB: Reflective Thinking 85.Every company’s product line covers a certain part of the total possible range of products and consumer levels. Answer: TruePage: 331Difficulty: Hard 86. Companies in the â€Å"middle market† should never attempt to stretch their li ne in both directions. Answer: FalsePage: 333Difficulty: MediumAACSB: Reflective Thinking 87. Line filling, if overdone, may result in self-cannibalization and increased customer loyalty. Answer: FalsePage: 334Difficulty: MediumAACSB: Analytic Skills 88. In the rapidly changing market of today’s world, product lines must be continuously updated or modernized.Answer: TruePage: 334Difficulty: MediumAACSB: Reflective Thinking 89. Price-setting logic must be modified when the product is part of a product mix. Answer: TruePage: 335Difficulty: EasyAACSB: Reflective Thinking 90. Companies normally develop product lines rather than a single product and introduce price steps such as a â€Å"low-,† â€Å"average-,† and â€Å"high-† priced computer system. Answer: TruePage: 335Difficulty: Medium 91. Manufacturers of systems such as razors and ink jet printers use a system of pricing called â€Å"two-part pricing†Ã¢â‚¬â€one price for the disposable products a nd another for the â€Å"hardware. † Answer: FalsePage: 336Difficulty: Hard 2. A pricing system in which there is a â€Å"fixed† fee and then a variable â€Å"usage† fee is called bundling. Answer: FalsePage: 336Difficulty: HardAACSB: Analytic Skills 93. Pure bundling occurs when a firm offers goods both individually and in bundles. Answer: FalsePage: 336Difficulty: MediumAACSB: Analytic Skills 94. Co-branding is when two or more well-known existing brands are combined into a joint product and/or marketed together in some fashion. Answer: TruePage: 337Difficulty: MediumAACSB: Analytic Skills 95. Ingredient branding can take on a form called â€Å"self-branding† in which the company advertises its own branded ingredients.Answer: TruePage: 338Difficulty: MediumAACSB: Analytic Skills 96. Packaging is all the activities of designing and producing the container for a product. Answer: TruePage: 339Difficulty: EasyAACSB: Analytic Skills 97. Labels can identify t he product and must contain legal statements that under various Federal laws cannot be misleading, false, or deceptive. Answer: TruePage: 341Difficulty: MediumAACSB: Reflective Thinking 98. Warranties are formal statements of expected product performance by the manufacturer. Answer: TruePage: 341Difficulty: EasyAACSB: Analytic Skills 99.A guarantee’s greatest contribution to a product’s success is that it decreases the buyer’s perceived risk in the purchase of the product. Answer: TruePage: 342Difficulty: HardAACSB: Reflective Thinking 100. Guarantees are most effective when the product is well known and/or similar in performance to other brands in the market. Answer: FalsePage: 342Difficulty: HardAACSB: Reflective Thinking Essay 101. In planning its market offering, the marketer must address the five product levels of the customer-value hierarchy. Describe the â€Å"customer-value hierarchy† and identify the five levels of product contained ithin.Suggest ed Answer: Each layer adds more customer value, and the five levels are: (1) the core benefit—the service or benefit the customer is really buying; (2) the basic product—the actual product that provides the core benefit; (3) expected product—a set of attributes and conditions buyers normally expect when they purchase the product; (4) the augmented product—the marketer exceeds customer expectations; and (5) the potential product—which encompasses all the possible augmentations and transformations the product or offering might undergo in the future.These five elements constitute the buyers’ consumption system. Page: 318Difficulty: EasyAACSB: Analytic Skills 102. The vast array of products that consumers buy can be classified on the basis of shopping habits and are broken down into four main areas. List these four main classifications of consumer goods and explain what elements are included within.Suggested Answer: The four main areas are: (1) Convenience goods are bought frequently, immediately, and with a minimum of effort; (2) shopping goods are goods that the consumer characteristically compares on such bases as suitability, quality, price, and style; (3) specialty goods have unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort; and (4) unsought goods are those goods that the consumer does not know about or does not normally think of buying.Page: 320Difficulty: MediumAACSB: Analytic Skills 103. Industrial goods can be classified in terms of how they enter the production process and their relative costliness. Identify the three groups of industrial goods. Suggested Answer: The three groups of industrial goods include: (1) Materials and parts are goods that enter the manufacturer’s product completely. Raw materials (farm and natural products) and manufactured aterials and parts (component materials and component parts) compose this group; (2) Capital items are long-lasting goods that facilitate developing or managing the finished product, such as machinery (installations and equipment); and (3) Supplies and business services are short-term goods and services that facilitate developing or managing the finished product; maintenance and repair and operating supplies are included here. Business supplies include advisory services and other â€Å"services† necessary for the ongoing operation of the business.Pages: 320–321Difficulty: Hard 104. When differentiated, products can then be branded. List the possible ways that physical products can be differentiated. Suggested Answer: Products can be differentiated according to form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. Pages: 321–323Difficulty: EasyAACSB: Reflective Thinking 105. When a physical product cannot easily be differentiated, the key to competitive success may li e in adding valued services and improving quality.Identify and discuss the six main service differentiators. Suggested Answer: The six main service differentiators are (1) ordering ease, (2) delivery, (3) installation, (4) customer training, (5) customer consulting, and (6) maintenance and repair. Pages: 326–327Difficulty: MediumAACSB: Analytic Skills 106. Explain the concepts of product-line width, length, depth, and consistency. Suggested Answer: The width of a product mix refers to how many different product lines the company carries.The length of a product mix refers to the total number of items in the mix. The depth of a product mix refers to how many variants are offered of each product in the line and is determined by dividing the total number of items by the number of lines. The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Page: 329Difficulty: H ardAACSB: Analytic Skills 107. Explain the concept of line stretching and the three uses for it.Suggested Answer: Line stretching occurs when a company lengthens its product line beyond its current range. It includes down-market stretch (introduce a lower-priced line), up-market stretch (introduce an upscale line), or two-way stretch (introduce both an upscale line and a down-scale line). Pages: 331–333Difficulty: HardAACSB: Analytic Skills 108. Product-mix pricing can involve a number of pricing strategies for the brand manager. List each of these strategies and briefly define each.Suggested Answer: There are six situations involving product-mix pricing: (1) product-line pricing—low-, medium-, and high-priced products within the same line, such as different priced ties; (2) optional-feature pricing —charging for â€Å"extra† features, such as leather seats in a car; (3) captive-product pricing—when the â€Å"user† has no choice but to use t he high-priced â€Å"disposable† products that make the entire product work (for example, ink cartridges for printers); (4) two-part pricing—consisting of a fixed fee and a variable usage fee (cell phone usage); (5) by-product pricing—the price of the by-products of goods being used for other purposes (oil refining for example); and (6) product-bundling pricing—pure bundling when the firm offers its products only as a bundle, or mixed bundling when the firm offers its products as a â€Å"bundle† and/or individually. Pages: 335–337Difficulty: Hard 109. Various factors have contributed to the increased importance of packaging as a marketing tool. List and briefly describe these events.Suggested Answer: Self-service—an increasing number of products are being sold without any personal interaction, on a self-service basis. Consumer affluence —rising consumer affluence means consumers are willing to pay a little more for convenience, appearance, dependability, and prestige of better packages. Company and brand image—packages contribute to instant recognition of the company or brand. Innovation opportunity—innovative packaging can bring large benefits to consumers and profits to producers. Page: 339Difficulty: HardAACSB: Reflective Thinking 110. Sellers must label their products. Labels serve many purposes beyond just â€Å"naming† the product.List the additional services provided by a product’s label. Suggested Answer: A label identifies the product; a label might also grade the product; a label might describe the product; and the label might promote the product. A label may contain information required by law. Page: 340Difficulty: MediumAACSB: Reflective Thinking APPLICATION QUESTIONS Multiple Choice 111. Marketers must see themselves as benefit providers. For example, when a shopper purchases new shoes, he/she expects the shoes to cover his/her feet and allow them to walk unobstruc ted. This is an example of what level in the consumer-value hierarchy? a. Pure tangible good b. Basic product c. Augmented product d. Potential product e.Consumption system Answer: bPage: 318Difficulty: EasyAACSB: Analytic Skills 112. How a consumer shops for organic foods and how they use and dispose of the product is part of the consumers’ _________ that is important for marketers to consider. a. basic product system. b. customer value system c. potential system d. consumption system e. none of the above Answer: dPage: 319Difficulty: Medium 113. The sellers of ________ goods carry a wide assortment to satisfy individual tastes and must have well-trained salespeople to inform and advise customers. Examples include automobile dealers, furniture stores, and insurance services. a. unsought shopping goods . specialty shopping goods c. homogeneous shopping goods d. heterogeneous shopping goods e. none of the above Answer: dPage: 320Difficulty: MediumAACSB: Analytic Skills114. ___ _____ are major purchases and are usually bought directly from the producer with the typical sale preceded by long negotiation periods. a. Raw materials b. Materials and parts c. Business services d. Capital goods e. Installations Answer: ePage: 321Difficulty: MediumAACSB: Analytic Skills 115. Most products are established at one of four performance levels: low, average, high, or superior. For example, mountain bikes come in a variety of sizes and physical attributes.When a consumer purchases a mountain bike costing $1,000, she/he expects the bike to perform to specifications and to have a high _________ meeting the promised specifications. a. features b. durability c. conformance quality d. performance quality e. reliability Answer: dPage: 322Difficulty: MediumAACSB: Reflective Thinking 116. If the Porsche 911 is designed to accelerate to 60 miles per hour within 10 seconds, and every Porsche 911 coming off the assembly line does this, the model is said to have high ________. a. re liability b. conformance quality c. durability d. repairability e. style Answer: bPage: 323Difficulty: MediumAACSB: Analytic Skills 117.Realizing that although household products is a huge category, taking up an entire supermarket aisle or more, it is an incredibly boring one, the founders of Method Products designed a sleek, uncluttered dish soap container that also carried functional advantages. Method is competing in the crowded market for household products on the basis of superior ________. a. design b. durability c. conformance d. reliability e. performance quality Answer: aPage: 325Difficulty: MediumAACSB: Reflective Thinking 118. When Baxter Medical supplied their hospitals with computer terminals directly linked to Baxter’s ordering system, this was an example of a company differentiating itself versus competition in terms of ________. a. customer relationships b. customer training c. installation d. delivery ease e. ordering ease Answer: ePage: 326Difficulty: HardAA CSB: Reflective Thinking 119.Using the ________ level of the product hierarchy to market its soups, Campbell Soups feature the company name first, then the soup variety on their packaging. a. item b. product-type c. need-family d. product-family e. product-line Answer: ePage: 328Difficulty: Hard 120. A consumer products firm manufacturers and sells over 200 different sizes and varieties of jams and jellies. We can say that this manufacturer’s product mix has high ________. a. consistency b. depth c. height d. product assortment e. width Answer: bPage: 329Difficulty: MediumAACSB: Reflective Thinking 121. Happy Home Products produces detergents, toothpaste, bar soap, disposable diapers, and paper products. This company has a product ________ of five lines. a. depth b. ength c. consistency d. height e. width Answer: ePage: 329Difficulty: MediumAACSB: Analytic Skills 122. When Jack bought his new laptop, he also bought a laptop bag and a spare power cord through the same retailer . These items are considered to be ________. a. core products b. staples c. convenience items d. specialties e. emergency items Answer: cPage: 330Difficulty: MediumAACSB: Analytic Skills 123. A manufacturer of hiking boots looks at data that indicate that their subsegment of the market called â€Å"serious hiker† is declining and is predicted to decline into the future. The firm decides to enter the â€Å"low-price† segment with its new items.This is an example of a firm’s ________ to reach a new market. a. down-market stretch b. up-market stretch c. two-way stretch d. marketing research e. capitalizing Answer: aPage: 331Difficulty: MediumAACSB: Reflective Thinking 124. Marriott Corporation now contains hotels and motels from the â€Å"budget† end of the consumer spectrum to the â€Å"premium† end with their JD Marriott flagship locations. This is an example of a firm that successfully performed a ________ to reach more consumers and ventures that are more profitable. a. marketing diversification b. two-way stretch c. up-market stretch d. down-market stretch e. cross-stretch Answer: bPage: 333Difficulty: MediumAACSB: Analytic Skills 125.When shopping for tires for your automobile, you notice that the manufacturer you have selected has tires for your car priced low, average, and high, based upon performance and features. This is an example of what type of product-mix pricing? a. Captive-price pricing b. Product-line pricing c. By-product pricing d. Two-part pricing e. Optional-feature pricing Answer: bPage: 335Difficulty: MediumAACSB: Reflective Thinking 126. Purchasers of theatre tickets receive a 20% discount if they purchase and pay for the full season at one time. This is an example of what type of product-mix pricing? a. Mixed bundling b. Pure bundling c. Cross-promotion d. Captive pricing e. None of the above Answer: aPage: 336Difficulty: MediumAACSB: Analytic Skills 127.McDonald’s restaurants inside Super Wal-Mar ts and Starbucks inside Super Targets are examples of ________, whose main advantages are that the products can or may be convincingly positioned by virtue of the associated brands. a. cooperative marketing b. co-branding c. retail co-branding d. ingredient branding e. none of the above Answer: cPage: 337Difficulty: MediumAACSB: Reflective Thinking 128. Betty Crocker cake mixes using Hershey syrup in its cake mixes and â€Å"Lunchables† lunch combinations with Taco Bell tacos are examples of what special type of branding? a. Mixed branding b. Ingredient co-branding c. Co-branding d. Self-branding e. None of the above Answer: bPages: 337–338Difficulty: MediumAACSB: Analytic Skills 129.Sales of luxury goods such as perfumes, colognes, and aftershaves depend heavily upon their initial response by the consumer. A well-designed package can create convenience and promotional value. It has been called the â€Å"silent salesman. † Which of the three levels of packaging is this â€Å"silent salesman†? a. Retailer b. Consumer c. Shipping d. Secondary e. Primary Answer: ePage: 339Difficulty: MediumAACSB: Reflective Thinking 130. A new product is advertised on the â€Å"infomercials† as being â€Å"the best cleaner money can buy† and â€Å"if not completely satisfied, return the product for a full refund, including shipping. † The strategy of using a strong guarantee in this instance is sound because ________. a. t is an example of a misleading or false advertising and is illegal b. the product is so superior to competition that there will be no claims for refunds c. it is just â€Å"advertising fluff† and the manufacturer has no intentions of refunding money d. for a product that is not too well known, it is â€Å"good advertising† because the claims will be a small percentage of sales e. for a product that is not too well known it reduces the buyer’s risk in purchasing Answer: ePage: 342Difficulty: Me diumAACSB: Reflective Thinking Short Answer 131. A manufacturer is contemplating introducing a product that is inferior to its competition in its performance, design, and functionality.However, the manufacturer believes that â€Å"good brand marketing† can overcome these shortfalls. Why is this thinking incorrect? Suggested Answer: At the heart of a great brand is a great product, the product is a key element in the market offering. Customers will judge the product (offering) on three basic elements: product features and quality; services mix and quality, and price. Not having a competitive product cannot be overcome by marketing. Pages: 317–318Difficulty: HardAACSB: Reflective Thinking 132. Studying how consumers shop, how they use a particular product or service, and how they dispose of the product when consumed is important for marketers. This information forms the basis of product strategy.First, define the consumption system and second, identify the two upcoming p roduct strategies that are affected by this knowledge. Suggested Answer: This is called the user’s total consumption system, defined as the way the user performs the tasks of getting and using products and related services. This is important because it will contain information useful in the product-augmentation strategy and the potential product strategy. Page: 319Difficulty: Hard 133. You know that marketers have traditionally classified products based on characteristics of durability, tangibility, and use. You also know that each product type has an appropriate marketing-mix strategy attached.In analyzing your company’s products, you decide to list each of these products and the appropriate marketing-mix strategy to understand where your products â€Å"fit. † List these products and their appropriate marketing-mix strategies. Suggested Answer: (1) Nondurable goods—the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference. (2) Durable goods—tangible goods that normally survive many uses. Durable products normally require more personal selling and service, command a higher margin, and require more seller guarantees. (3) Services—intangible, inseparable, variable, and perishable products. They require more quality control, supplier credibility, and adaptability.Pages: 319–320Difficulty: HardAACSB: Reflective Thinking 134. Convenience goods, products purchased without much thought, can be classified as impulse goods and emergency goods, and this constitutes one of the four classifications of goods based on shopping habits. The purchase of a Mercedes automobile, life insurance, homogeneous shopping goods, and heterogeneous shopping goods are examples of the other classifications. Identify these â€Å"goods† classifications or segments. Suggested Answer: The vast array of goods purchased by consumers can be clas sified as convenience goods, shopping goods (homogeneous and heterogeneous), specialty goods, and unsought goods. Page: 320Difficulty: Easy 135.Industrial-goods classifications based on terms of how the products enter the production process and their relative costs include such segments as materials and parts and capital items. Window cleaning services, consumable office supplies, personal computers, desks, paint, nails, and buckets are included in the classifications of industrial goods. List the other â€Å"classifications† including subclassifications for industrial goods. Suggested Answer: Industrial-goods classifications include material and parts, farm products, natural products, manufactured materials and parts, and component parts. Capital goods include installations and equipment.Supplies and business services include maintenance and repair items, operating supplies, and business advisory services. Pages: 320–321Difficulty: HardAACSB: Analytic Skills 136. In y our position as a marketing manager for a small industrial company, you have been asked by the president to help differentiate the company’s product from its competitors. In reviewing your marketing management notes, you note that the text stated that physical products could be differentiated in nine ways. These nine areas comprise the â€Å"meat† of the memo you are writing to the president of your firm. What are the nine ways that physical products can be differentiated?Suggested Answer: The nine ways that physical products can be differentiated are form, features, customization, performance quality, conformance quality, durability, reliability, reparability, and style. Pages: 321–323Difficulty: MediumAACSB: Analytic Skills 137. You know that your small firm cannot compete with the â€Å"big boys† in terms of price and promotion. Instead, you have decided to â€Å"outdesign† them. What is necessary for this strategy of â€Å"outdesigning themâ⠂¬  to succeed? Suggested Answer: Design offers a potent way to differentiate and position a company’s products and services. Design is the factor that will often give a company its competitive edge. Design is the totality of features that affect how a product looks and functions in terms of customer requirements.The designer must figure out how much to invest in form, feature development, performance, conformance, durability, reliability, reparability, and style. To the company, a well-designed product is one that is easy to manufacture and distribute. To the consumer, a well-designed product is one that is pleasant to look at and easy to open, install, use, repair, and dispose of. Page: 325Difficulty: MediumAACSB: Reflective Thinking 138. As the marketing manager for a product often referred to as a â€Å"commodity,† you know that incremental sales and profits lies not in physical differentiation but in â€Å"service† differentiation. As you compose a memo to your boss regarding the concept of â€Å"service† differentiation, you note the six areas where service differentiation can make a difference.List these six areas for service differentiation. Suggested Answer: The main service differentiators are: ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. Pages: 326–327Difficulty: EasyAACSB: Analytic Skills 139. You have been asked to create a product system for your company’s personal digital assistant. Before starting, you must define the term â€Å"product system† to the engineers to enable them to start design and production of the aligned items. Define the concept of a â€Å"product system. † Suggested Answer: A product system is a group of diverse but related items that function in a compatible manner. Page: 328Difficulty: Easy 140.You have been asked to prepare a product-line analysis for your company’s stable of products. Why is it imp ortant for product-line mangers to do a product-line analysis? Suggested Answer: Product-line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest. They also need to understand each product line’s market profile. Page: 329Difficulty: MediumAACSB: Analytic Skills 141. How do the four product-mix dimensions (width, length, depth, and consistency) affect a firm’s product and corporate strategies? Suggested Answer: These four product-mix dimensions permit the company to expand its business in four different ways.First, it can add new product lines, thus widening its product mix. Second, it can lengthen each product line. It can add more product variants to each product line and deepen its product mix. Finally, a company can pursue more product-line consistency. Page: 329Difficulty: MediumAACSB: Reflective Thinking 142. As the newest member of the marketing department, your immediate boss asks you to comment on the company’s proposal to add two new shoes to the company’s middle-of-the-road pricing and product-line strategies. The first pair will retail for $ 40. 00 and has as its target market the â€Å"bargain† shopper. The second pair will retail for $ 200. 00 and is targeted at the â€Å"sophisticated shopper. In relation to product-line strategy, what is the company trying to accomplish with these two new items? Suggested Answer: This is an example of the company trying a â€Å"two-way stretch†Ã¢â‚¬â€introducing products at both ends of the consumer market simultaneously. Page: 333Difficulty: MediumAACSB: Analytic Skills143. During a meeting, you were asked by the vice-president of marketing, to comment on the company’s pricing strategy for its products. Recalling your marketing management course in college, your comments define the six situations involving product-mix pricing. List these six product-mix pricing strategie s. Suggested Answer: Product-mix pricing includes product-line pricing, ptional-feature pricing, captive-product pricing, two-part pricing, by-product pricing, and product-bundling pricing. Pages: 335–336Difficulty: Medium 144. Your firm is contemplating a bundling strategy for its line of products. In a memo to your boss, you outline the three guidelines for correctly implementing a building strategy. Suggested Answer: Do not promote individual products in a package as frequently and cheaply as the bundle. Second, limit promotions to a single item in the mix if you still want to promote individual products. Third, if you decide to offer large rebates on individual products, it must be the absolute exception and done with discretion. Page: 337Difficulty: HardAACSB: Analytic Skills 145.As the marketing manager for your firm, you have been approached by your key component manufacturer suggesting that your two firms â€Å"ingredient brand† a new item. What are some of the requirements for succeeding in ingredient branding? Suggested Answer: First, the consumer must perceive that the ingredient matters to the performance and success of the product. Secondly, consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior. Third, a distinctive symbol or logo must clearly signal to consumers that the host product contains the ingredient. Fourth, a coordinated â€Å"pull† and â€Å"push† program must help consumers understand the importance and advantages of the branded ingredient.Page: 339Difficulty: HardAACSB: Reflective Thinking 146. Your research shows that over 53% of all purchases are made on impulse. As you sit down with your packaging design team, you tell them that the package must communicate many of the sales tasks. List the sales tasks that packaging must now incorporate due to the increase in self-service sales. Suggested Answer: These tasks are: attract attention, describe the produ ct’s features, create consumer confidence, and make a favorable overall impression. Page: 339Difficulty: MediumAACSB: Analytic Skills 147. In discussions with the packaging design team, you note that they do not have a firm design objective for the final package.In an internal memo to your boss, you outline the objectives (both company and consumer orientated) that you wish to see implemented by the design team. List these objectives. Suggested Answer: The objectives of packaging are to identify of the brand; convey descriptive and persuasive information; facilitate product transportation and protection; assist at-home storage; and aid product consumption. Pages: 339–340Difficulty: HardAACSB: Analytic Skills 148. In discussions with the packaging design team, it seems that they are unclear as to what should be included on the final product (consumer package) packaging. You list these objectives in a memo. List these objectives here. Suggested Answer: Labels must first identify the product or brand; the label might also grade the product.The label should describe the product and promote the product; and finally the label must contain all required government information. Pages: 340–341Difficulty: Medium 149. Your service firm is contemplating adding a â€Å"guarantee† component. Members of senior management are unclear as to the marketing advantages of a guarantee. How would you convince members of senior management that a guarantee can provide a marketing advantage? Suggested Answer: Guarantees reduce the buyer’s perceived risk. They suggest that the service/product is of high quality and that the company and its service performance are dependable. Page: 342Difficulty: EasyAACSB: Reflective Thinking 150. As you contemplate the introduction of your company’s newest services, ou think that the offering of a service guarantee would be a â€Å"marketing coup† and completely surprise your competition. You remember tha t your marketing management text stated that guarantees are most effective in two situations. What are these two situations? Suggested Answer: Guarantees are most effective when either the company or the product is not well known, so a â€Å"money-back† guarantee in that case would reduce the buyer’s perceived risk and provide them with confidence in purchasing the product. The second area is when the product/service is superior to competition in quality and performance. Page: 342Difficulty: MediumAACSB: Analytic Skills

Impacts of Casinos

The Negative Impact Many people do not want the casinos in their town and feel that having one will only bring chaos and criminal activity. Some of the misconceptions how a casino will affect a town range from addiction to industry centralization. In the website that Greg Saris has written he states that â€Å"we don't want to get into slot machines and hard-core gambling because it is addictive and destructive in people's lives† (Saris, 2003). It is believed that the impact of a casino coming into a town would be morally ND ethically irresponsible.The people that go to this facility are sometimes categorized as gambling addicts with alarming numbers of them. In California back in 2002 it is said that there were over 1. 2 billion addicts in that state. It is a widespread belief that with the casinos will increase the â€Å"crime, suicide, addiction and human misery' (Saris, 2003). In the article that Kevin Fagan has written it can be seen the comparison between gambling addic tions and a drug (crack-cocaine) (Fagan, 2007). A person may start out n Bingo (class Ill in Nevada) or a simple form of gambling and then may be introduced to slot machines.It is believed there is a great need for medical help since it is referred to as â€Å"a medically designated psychological disorder in its most severe, pathological form† (Fagan, 2007). Douglas Walker has written a book to help us to understand the economics of gambling and the arguments presented. It is general misconception that casinos are an â€Å"industry centralization, the â€Å"factory-restaurant† dichotomy, export base theory of growth, money inflow (mercantilism) (Walker, 2007). Positive Argument There many positive impacts on a towns economics that have been proven over history.Will the positive affects be greater than the negative? Through studies and research it can be seen how beneficial casinos can affect the economic industry. It is believed that casinos will be able to draw in to urists and more income to a city through marketing and incentives to those across the U. S. It will bring more income to a town that otherwise would not have had visitors (Walker, 2007) (peg. 36). Both revenue and income for a small town is greatly increased when a casinos are created. (Ask. Com, n. D. )

Chesapeake Energy Corporation

Chesapeake Energy Corporation (NYSE: CHK), headquartered in Oklahoma City, Oklahoma, â€Å"owns 1.1 trillion cubic feet equivalent (tcfe) of proved oil and gas reserves, one of the largest inventories of onshore U.S. natural gas† {Chesapeake Annual Report, 1998, p. 1}. Recently, Chesapeake finished the transformation from an aggressive exploration company focused on developing short-reserve life, to a lower-risk, longer reserve life natural gas producer. Chesapeake†s operations are focused on â€Å"developmental drilling and producing property acquisitions.† These operations are â€Å"concentrated in three major areas: the Mid-continent, the onshore Gulf of Mexico and far northeastern British Columbia, Canada† [Chesapeake Annual Report, 1998, p. 1]. Aubrey K. McClendon is Chesapeake†s Chairman of the Board, Chief Executive Officer and Director. Tom L. Ward is the President, Chief Operating Officer and Director. â€Å"McClendon met cofounder Tom Ward in the 1980†³s. Both were independent oil producers; they teamed up in 1983† [Morgenson, p. 2]. They each have more than 16 years of experience in the oil and natural gas industry. All other members of the management team have multiple years of experience in the industry. Chesapeake has concentrated on expanding its holdings in natural gas since the company†s incorporation in 1989. Chesapeake thinks that natural gas will be the fuel choice of the 21st century. The company has been highly competitive in both its exploration activities and efforts to increase its inventory of undeveloped leasehold land. This combination should enable Chesapeake to remain a competitive force in the energy producing industry. New technology in the oil and gas industry has made exploration and production more profitable. This is key for the survival of American businesses that compete with OPEC and other foreign cartels that have very low production costs. New technology, including three-dimensional imaging, which has greater resolution than the previously existing technology, will enable Chesapeake to detect reserves more accurately. Also, horizontal drilling has enabled companies to drain more than one reserve at a time. With profits continuing to be squeezed within this industry, new technology is necessary to help American businesses compete on a global scale. The oil and gas industry is truly a global market. The industry boosted gains in 1999 from increased production efficiency and a decrease in the current supply. U.S. firms, along with OPEC, have voluntarily reduced their total production, which has increased the price. OPEC currently supplies approximately 40% of the world oil production. If OPEC chooses to produce at a lower output, Chesapeake could easily increase production with its low production costs and huge reserves. Many other nations are emerging as competitors, such as the former Soviet Union and Latin American countries. The continuing increase in supply from other nations would potentially saturate the market, causing lower prices and lower profits. Demand is expected to rise only slightly more than two percent through the year 2005. The outlook for this industry is for increased competition domestically (from smaller companies) and internationally from emerging nations. The U.S. has superior technology, which will help keep profits up as supply increases and demand remains relatively constant. Natural gas makes up 72% of Chesapeake†s revenue. They usually sell the product to third parties and are not dependent on any one buyer. Less than 10% of their revenues are generated from two buyers. Governmental Regulations – Operational and Labor Relations The oil and gas industries are subject to considerable government regulation. These laws and regulations are primarily directed toward â€Å"the handling and disposal of drilling and production waste products and waste created by water and air pollution control devices† [Chesapeake 10-K, 1998, p. 10]. The oil and gas industry is accountable to numerous government agencies, including the Environmental Protection Agency, the Department of the Interior, the Department of Energy, the State Department and the Department of Commerce. Virtually every aspect of operations is subject to complex and ever changing regulations. The oil and gas industry is tightly regulated in regard to labor relations by government department and agencies, including the Occupational Safety and Health Association (OSHA) and the National Labor Relations Board (NLRB). Some states have their own state sponsored occupational safety plans, while the remainder must comply with federal OSHA regulations. Some of the topics covered under OSHA include personal protective equipment, hazardous communication (HAZCOM) and safety process training. Chesapeake had 453 employees as of March 15, 1999. None of these employees were represented by organized labor unions. The company considers its employee relations to be good [Chesapeake 10-K, 1998, p. 13]. Unocal (NYSE: UCL) employed 7,880 people as of December 31, 1998, of which 575 were represented by various U.S. labor unions [Unocal 10-K, 1998, p. 12]. Both companies are subject to new laws and regulations regarding the environment and labor. Chesapeake and Unocal cannot predict what adverse financial conditions the new laws and regulations will bring. However, short-term and long-term costs will increase as companies improve existing operations to become and remain compliant with government regulations. As a result, all companies in petro-chemical industries are experiencing tremendous difficulty operating profitable businesses. Several businesses have ceased operations as a result of increased regulation coupled with poor profit margins. Chesapeake is at a higher risk regarding this scenario since most of its operations are domestic. Unocal, although a U.S. based company, operations are concentrated primarily overseas, and therefore experience increased leniency regarding environmental and labor regulations. During the last two years, Chesapeake Corporation took a significant hit in terms of earnings, stock price and credit ratings. Positive 1996 earnings turned to a loss in 1997 and tumbled to a bigger loss of $10 per share in 1998. This earnings decline caused the stock price and credit rating to plummet. The company also faces a class action lawsuit stemming from alleged violations of federal securities laws. Top management and directors are accused of using insider information to sell personal holdings in the company at artificially inflated prices. Chesapeake had very disappointing years in 1997 and 1998 as evidenced by the fall in the stock price. The company underwent a substantial repositioning to increase natural gas holdings and reduce risk. As a result of this repositioning, Chesapeake incurred considerable debt and is dependent on the market prices of oil and natural gas to increase, and in effect, improve profit margins. Additionally, in 1997, Chesapeake changed their fiscal year end from June 30th to December 31st. As part of the repositioning, Chesapeake increased long term debt over $400 million to a total of $920 million, coupled with a short-term indebtedness of $25 million. This increased borrowing drastically reduced the company†s ability to obtain additional financing. Standard & Poor†s and Moody†s placed Chesapeake on review with a negative outlook. The ability to meet obligations for this additional debt will depend on the production and financial performance of the company, market prices of oil and natural gas, and general economic conditions. Common Size Income Statement Analysis Chesapeake had an extremely large write-down of assets (impairment) as a result of reduced oil and gas prices during the past few years. This charge increased operating costs by over $1.2 billion during 1997-98 with 72% of that cost coming in 1998. The asset write-down, combined with expense increases in production, marketing and interest, were the main contributors of total operating costs to be over three times total revenue. The result was 1998 EBIT of ($920) million, and a non-existent ROE, since the company had a net loss approaching $1 billion. Unocal†s ROE was 5.9% in 1998 and 25.1% in 1997. The impairment cost reported by Chesapeake is questionable because of the very large amount that was charged. In perspective, Unocal with over $5 billion in property assets recorded an impairment charge of $97 million during 1998. If oil and gas prices rise in the near future, the impairment costs may be reversed giving the impression that the company is doing very well. Future investors of Chesapeake equities should consider this fact prior to making any investment decisions. Chesapeake had a $140 million reduction to both sides of the balance sheet. The repositioning of the firm focused on increasing inventory of natural gas reserves, â€Å"the fuel of choice for the 21st century† [1998 Annual Report, pg. 18]. Oil and gas properties nearly doubled from 1997 to 1998, totaling $2.2 billion. However, nearly $1.6 billion was depreciated, depleted and amortized. Additionally, cash decreased nearly $100 million, short-term investments were liquidated, and paid-in capital exceeded $1.1 billion over the past two years to provide additional cash for purchases of gas reserves. As a result, total property, plant and equipment was 85% of total assets in 1998 compared to 77% in 1997. In comparison, Unocal†s PP&E was 66% and 64% of total assets respectively. Long-term debt increased over $400 million in 1998, totaling $920 million compared to $510 million in 1997. The $920 million was 113% in relation to total liabilities and owners equity of $813 million. In 1998, current liabilities were $131 million compared to current assets of $118 million. This resulted in a reduced current ratio of .90 from a 1997 ratio of 1.42. The Unocal current ratios during 1998 and 1997 were 1.01 and 1.29 respectively. Chesapeake has relied primarily on cash flow through financing activities during the past few years. Cash flow from operations was approximately $95 million in 1998 and $180 million in 1997, while cash flow from financing was $365 million and $278 million respectively. Sales accounted for $378 million in 1998 and appear to be rising approximately 35% annually from 1996 and 1997. However, an accurate comparison is unavailable because of the change in the company†s fiscal year end. Low oil and gas prices forced Chesapeake to borrow, sell equity, and liquidate short-term investments in order to continue operations and invest in oil and gas properties. The company is dependent on the rise of prices during 1999 to continue operations and provide shareholder wealth. The company has several restrictions from being able to borrow additional funds. Additionally, the price of stock has dropped from a high of $34 in 1996 to a low of $.63 in 1998. This has further reduced the company†s ability to generate cash. The current ratios for Chesapeake Energy are as follows: 1.00 (June 96), 2.03 (June 97), 1.42 (December 97), and .90 (December 98). Current liabilities remained constant over this period, ranging from a high of 19% (June 96) to a low of 15% (June 97), with the current level at 16% of total assets. Extreme levels of change in current assets caused the current ratio to fluctuate drastically. Current assets declined from a high of $297 million (31% of total assets) to a current low of $117 million (15% of total assets). This decline in current assets caused the deterioration of the current ratio. The acid test ratios are as follows: .94 (June 96), 2.00 (June 97), 1.37 (December 97), and .81 (December 98). As previously mentioned, current liabilities remained constant. Net accounts receivable remained flat as a percentage of total assets: 9% in 1996, 7% in 1997 (Both June & December), and 9% in 1998. Marketable securities were sold off during the past three years, decreasing from 11% ($104 million) of total assets to zero. Cash decreased from 13% ($124 million) of total assets in 1997 (both June & December) to 4% in 1998. The combination of severe decreases in both cash and marketable securities are the reasons that the acid test ratio decreased so dramatically. The quick ratios are as follows: .96 (June 96), 2.00 (June 97), 1.38 (December 97), and .86 (December 98). As mentioned previously, current liabilities remained constant and current assets declined. As with the current ratio, the main reason for the deterioration of the quick ratio is the continued loss of current assets. The above ratios and the reasons for their poor trends indicate Chesapeake is currently in a liquidity crisis. This, in combination with the increased debt liabilities, is an extreme warning to both investors and management. This condition also adds to the suspicion that assets are being sold off to fund current debt obligations. The firm†s ability to meet its obligations with cash, as they come due, is approximated by the cash flow liquidity ratio. As previously mentioned, solvency improved and then deteriorated as indicated by the current and quick ratios. The trends are confirmed when looking at cash flow. From 1995 to 1997, Chesapeake†s cash flow liquidity improved from 1.47 to 1.8. 1997 to 1998 showed a large drop in liquidity from 1.8 to 0.95. The company†s financial statement data gives an indication as to why. From 1995 to 1997, short-term solvency improved from 1.47 to 1.8. When looking at the data, cash from operations rose from $55 million in 1995, to $139 million in 1997. The 1997 rise was due to a change in the accounting period. During this same period, cash on hand rose from $56 million to $123 million and marketable securities rose from zero to $13 million. While cash was increasing, current liabilities rose from $75 million to $153 million. Current liabilities doubled during this period, while cash flow increased 150%. The larger increase in cash flow, relative to short-term obligations, accounts for the improvement in solvency during the 1995 to 1997 period. During the 1997 and 1998 periods, liquidity deteriorated as shown by the decrease in the cash flow liquidity ratio from 1.8 to 0.95. The data indicates that cash from operations dropped approximately 32% to $95 million. When looking at the Cash Flow Statement, the large decrease in operating cash is mainly due to the large net loss incurred during the period. At the same time, cash dropped 76% to $30 million while marketable securities fell to zero. Much of the cash appears to have gone to fund the company†s payables and accrued liabilities. Current liabilities were reduced 15% to $131 million. The larger reduction in cash flow relative to current obligations accounts for the deterioration in short-term solvency. The cash flow data confirms that Chesapeake†s liquidity suffered severe deterioration. A reduction in current liabilities is a good sign, but the little amount of cash generated and being used to fund current obligations is not enough. Cash assets are being used to fund these obligations as well. In comparison to the industry debt ratio of .31, Chesapeake ended with a debt ratio of 1.31 in 1998 compared to .71 in 1997. The long-term debt to total capitalization ratio increased from .64 in 1997 to 1.37 in 1998, while the industry average was .44. The tremendous increase in debt was attributable to significantly lower oil and gas prices during the past three years, and a failed drilling venture known as the Louisiana Trend. The company was forced to liquidate assets and take on a substantial amount of debt to meet operational expenses and increase oil and gas field reserves. Chesapeake was added to the Standard & Poor†s â€Å"CreditWatch with negative implications† [Yahoo Finance, Nov. 14, 1999] in December of 1998. The low price of fuel during fiscal years 1996 through 1998 was the primary reason for Chesapeake†s troubles. The debt incurred has covenants restricting the company from seeking additional debt and from paying dividends to preferred stock holders. Principal on a large portion of the outstanding debt is not due until 2004 allowing the company time to improve operations. This will also give fuel prices a chance to rise, which is determinant to the company†s survival. The industry average for times interest earned is 5.2, while Chesapeake†s operating profit was ($856) million. The ratio equated to well below zero in 1997 and 1998. In 1998, interest payments were more than $68 million. The financial leverage index could not be computed since there was not a return on equity. Chesapeake overextended their credit by substantially financing with debt and has jeopardized their ability to make obligated payments for their debt and fixed costs.

Changes in recent years to private health insurance Essay

Changes in recent years to private health insurance - Essay Example people reported that they could not afford to purchase a health insurance or the costs of these insurances is too expensive.1 Aiming to encourage more people to acquire a health insurance, the Australian government took the initiative in offer a 30% rebate on the cost of private health insurance premiums for people between the age bracket of 0 – 64; a 35% rebate for people aged 65 to 69; and a 40% rebate will be given to people ages 70 and above.2 The said rebates is claimable either as a reduction on the insurance premium as soon as the payment is made to the private insurer or as a rebate through the individual’s tax return. In line with the new structure set by the Australian government, this study will focus on discussing several issues which will serve as strong evidences that the 1/3 rebate strategy has been ineffective and unsuccessful in increasing the sales of private health insurance as well as maintaining the quality of the overall all health services in the country. The main goal of Australian Federal Government for implementing a 30 – 40% rebate system in private health insurance is to improve the health of Australian citizens through payments and information.3 In line with the said goal, Medicare works with the Australian Government Department of Health and Ageing to improve its connection with the health sector. In September 2002, a total of 79.4% of the medical services that was performed in the hospitals was fully paid by the Australian government. This increased to 82.7% in December 2005.4 As a control measure, the local authorities implemented a ‘co-payment agreement’ to those who wishes to avail the medical services in the hospitals. According to Tracy Schrader, â€Å"any transfer of payment for health care from taxation to user-fees only benefits the wealthy.†5 This is primarily because of the fact that wealthy people will have a better access to the health facilities at a much lower costs. On the other hand, people belonging to

Paliament and Public Law Essay Example | Topics and Well Written Essays - 1000 words

Paliament and Public Law - Essay Example In every democratic organization or country, the role of parliament is to legislate, examine policies and activities of the executive and put the executive into the task to account for its actions. In addition, the parliament provides a democratic platform for the participation of all members of the society. In this regard, parliament is mandated to conduct legislative, executive oversight, and provide a representational forum for public debate. Moreover, it acts as Electoral College for the office of the president in case the office becomes vacant (IPU, 2009). The European Parliament (EP) consists of directly elected members from European Union member states. The European parliament in conjunction with the Council of the European Union and the Commission are solely responsible for legislative functions. The European Parliament consists of a 736 Members of European Parliament, who are democratically elected all the members states of the union. The members in the European Parliament a re elected after serving for a period of five years. However, unlike the parliaments of the member states of the European Union, the parliament does not possess legislative authority of the countries (EP, 2007). The European Parliament shares legislative and budgetary roles of the European Union budget with the council of European Union. The European Parliament examines the policies and activities of the European commission, which is the sole executive body of the European Union.

PERSONAL LETTER Essay Example | Topics and Well Written Essays - 250 words

PERSONAL LETTER - Essay Example The entertainment and communication field is not something that I am unfamiliar with since I grew up exposed to the various facets of the field as my mother worked as an editor. I have always dreamed of completing higher studies in this field because of my mothers inspiration. This dream has a solid basis in my internship at Phoenix Satellite Television where I learned the intricacies of film editing and how it applies to the concept of program production. The SI program and internship will only last for one semester and will offer me the opportunity to put my Economics class theories into practice as I work in the highly competitive and notable entertainment offices in Los Angeles. By doing so, I will be able to further hone both my Economics know how and communication ability. After having spoken to my Economics course adviser, I have discovered that it would be highly possible to merge my current studies in economics and the entertainment courses I shall be taking online by seekin g an internship in the accounting or finance departments of music, television, or movie studios. I consider the opportunity to apply for acceptance at SI to be the perfect opportunity to merge my two highly different fields of interest into one. This is a once in a lifetime opportunity that anybody who has the same interests as I would not dare to pass up. I am highly confident that I shall return to our College of Economics a much more rounded and better skilled person because of the opportunities the program offers that are not readily available to simple Economics students. Part of my plan upon my return to our college is to share my new found knowledge and experience with my classmates so that they too may benefit from my more advanced and intricate studies of Economics and Communication in real world applications. Thank you for taking the time to read my

Final Exam - Case Analysis Essay Example | Topics and Well Written Essays - 1250 words

Final Exam - Case Analysis - Essay Example It is imperative that these professionals understand that once they incorporate the organization it will be operating under the laws regulating any other business entity and this therefore calls for critical scrutiny of the advantages and disadvantages of such a move. The group is likely to derive a number of benefits from the incorporation that include; Separate Legal Entity: an incorporated organization has a distinct legal personality from its members. In this respect it is can sue and be sued in its individual capacity. This is important to these professionals since they will be provided by a formal legal status. Incorporation will also lead to Limited Liability on the part of the members of the organization (Hopkins, 1417). In this case the professionals will not be personally liable for the debts and obligations of the organization with exception of some circumstances where the directors may incur personal liability. The organization is entitled to perpetual existence and in th is case even if members change, this noble organization will continue to exist unless dissolution is to be executed in line with the Companies Act. Once the members incorporate the organization they will be able to own property in the name of the organization’s name. ... s organization is likely to enjoy is eligibility to be exempted from some federal and state corporate income taxes in addition to other taxes (Hopkins, 21). Other miscellaneous benefits that can be derived from incorporating this group into a nonprofit making organization is possible real and personal property taxes exemptions, cheaper advertising rates, relatively cheaper postal rates and broadcast announcements and advertisements. The professionals also need to look into the demerits of incorporating this organization as a not for profit entity. Among the challenges the organization is likely to encounter are a lot of paper work in various forms. There is the cost of hiring legal officers to help in preparing the incorporation papers, energy and time required for compliance with the legal regulatory guidelines to grow the organization. The team will also have to grapple with restrictions on nonpayment of directors, no lobbying or engagement in political campaigns and when the organ ization is to wind up all the property are to be transferred to another nonprofit making entity (Hopkins, 21). The team of professionals in this case need to analyses and compare the merits and demerits and make an informed decision. This is a team of professionals offering educational services to various people in different social settings. As a nonprofit making organization it would be advisable to incorporate it as educational and literacy society. This will fit the educational and literacy services they offer as professionals in different disciplines in the society. This would be suitable and a viable venture since they have already undertaken field test and proved able with positive client feedback. It is mandatory that for them to incorporate the organization some legal procedure must

Greendex Essay Example | Topics and Well Written Essays - 750 words

Greendex - Essay Example ers through a common measurement scale of variables to every raster and weighting all separately according to their importance and placing them together to come up with an integrated analysis (Symington and Dunford 44). It has been noted that the Greendex has employed all the comfort, dexterity, fit, and toughness expected from the N-DEX disposal glove with integration of the eco best technology that is noted to accelerate biodegradation especially in landfills thereby boosting environmental performance. The Greendex system empowers consumers across the world to employ sustainable consumption. The system achieves this through its feedback system that provides consumers and their consumption patterns of compatriots. Moreover, the Greendex has a GlobeScan system that works directly in supporting the mission of the National Geographic that inspires people to take care of their plant by changing not only their leadership system but also the nature of their human behaviors. Therefore, unlike the old conceptual where human behavior was never monitored in relation to the environment conservation, the new conceptual framework or the Greendex has initiated mechanism for environmental conservation through changing human behavior as well as assessing progress on such human behavior change and the progress of sustainable consumption across major world economies. Notably, before this new model, consumer had never developed behaviors that were environmental friendly and their consumption habits were never stainable, but rather led to enormous production of carbon dioxide into the environment. Carbon dioxide among other greenhouse gases has been known to be injurious to the environment especially on their effect of ozone layer depletion. It should be noted that the depletion of the ozone layer has since led to numerous changes to the world climate especially leading to global warming that have since has diverse and devastating effects to the environment (Symington and Dunford

Duration of technology licensing Research Paper

Duration of technology licensing - Research Paper Example mination of the actual technology transfer charge and the actual duration of the charge, certain factors such as the type of technology, the type of industry and competitive environment contribute to the consideration of the appropriate charging method. Licensing considerations available to innovators highlight the various technology leakage impacts and the effect that the irregular transfer of the innovation has on the monopoly impact that a company enjoys in the market with several competitors. The basic assumption in the considerations is that there are many companies competing for the technology and the innovator seeks to find the most appropriate method to continue making revenue from the technology once sold (Raspudic 6). As mentioned above, the two types of contracts widely employed in licensing innovation to companies include fixed-fee and royalty payments. Despite the fact that the two licensing contracts have several similarities, distinctions however, stand between them in various fundamental perspectives. In the fixed fee alternative, the technology owner charges a fixed fee on the product and makes it available to all competing companies on take-or-leave basis of offer. In this contract perspective, meeting the initial fixed fee implies that the company agrees the offer and effectively gives the company the rights to use the technology as a licencee. In the determination of the fixed fee, the number of companies competing to take up the offer forms an integral determinant force. The concept of royalty arrangement finds shape on the unit output analysis where the innovator charges a specific predetermined royalty fee (Raspudic 4). Licensees become beneficiaries of the technology if they meet th e royalty fees. As employed in fixed-fee contracting, the number of licensees determines the amount of royalty charges. The determination of the active duration of a license depends on the type of contract up to when the technology utility reduces to an outdated

Hyperinflation in Zimbabwe Essay Example | Topics and Well Written Essays - 1250 words

Hyperinflation in Zimbabwe - Essay Example Two major events precipitated inflation in Zimbabwe and that is, involvement in Congo civil war in 1998 and the land expropriation of 2000. The Zimbabwe government entered into war on the side of Zaire’s dictator Laurent Kabila without having budgeted for the war, without any reserves for the war or any arrangements to raise the funds. The land expropriation program of 2000 saw the government forceful take 4,500 farms from white settlers and give it to war veterans and politicians (Coomer and Gstraunthaler 312). This led to reduction in foreign investment from 400 million US dollars in 1998 to a mere 30 million in 2007. The productivity of the land was also reduced by half between 2000 and 2007. This government policies also led to imposition of sanctions by the IMF, US, UK and EU. The government in order to win public confidence provided initiatives such as purchase of farm inputs for the farmers who had been given land. The farmers also used the land as securities for securing loans. This unforeseen expenditure compounded with the four year expenditure in Congo war led the Reserve bank of Zimbabwe to adopt inflationary policies such as printing more money and employing more staff. This led to devaluation of the Zimbabwean dollar and the central bank responded by printing more money and even increasing the face value. This is the origin of hyperinflation in Zimbabwe. By March 2007 the inflation rate in Zimbabwe was 2,200% while by October 2008 it rose to 3,840,000,000,000,000,000%! (Noko 347). Hyperinflation led to lose of value of the Zimbabwe dollar. Wealth was lost within months as millionaires were no longer wealthy. The prices of commodities went up leading the government to regulate the same. (Federal Reserve Bank of Dallas 11). This led producers to opt for other markets which led to an acute shortage of various products. The industries were dissolved, unemployment was at the highest level, poverty escalated and some citizens fled to other countries. The next section gives methods through which this hyperinflation could be solved. Solutions to Zimbabwe’s Hyperinflation Hyperinflation was brought about by the practices of Reserve Bank of Zimbabwe. Replacing the Reserve Bank of Zimbabwe is a sure way of ending hyperinflation (Hanke1 23). Some countries such as Angola have contained their high inflation rates without replacing their central bank through change of policy. The question is why could this be implemented in Zimbabwe? This could not be adopted in Zimbabwe because from historical perspective policy change has never checked inflation in Zimbabwe. Moreover, all over the world hyperinflation has been linked to the issue of currency by the central bank or the concerned country’s treasury. Central banks can easily end inflation as they fuel them. One of the sure ways is to stop the printing of currency. This solution reduces money in circulation and contains hyperinflation, but it is a long process because it takes time for the central bank to regain its lost credibility. During this time interest rates on loans normally escalate and it is very difficult to get a long term loan because there is less money in circula

Windows Server Deployment Proposal Rubric Paper Research

Windows Server Deployment Rubric Paper - Research Proposal Example The answer to this question is simple and straightforward. By creating VLAN it is possible to create smaller broadcast domains within layer 2 switched internetworks by assigning different ports on the switch to different sub networks. A VLAN is treated like its own subnet or broadcast domain, meaning that frames broadcast onto the network are only switched between the ports logically grouped within the same VLAN. A router is also needed in this network for inter-VLAN communication. VLAN Trunk Protocol (VTP) is also useful in updating the databases of the switch with the VLAN information and on how trunking is applicable sending information from all VLANs across one link. Thus VLAN helps in the network management in the following aspects Before the new network was established IDLEWILD had the Wide Area Network. The network of IDLEWILD is was put up with the WAN links to the new location in the Houston Region. IDLEWILD has 2 regions as San Francisco and Derver in the present meaning that the 2 regions were merged together. The merging of the 2 regions caused nightmare in managing the IP addresses of the 2 regions all together. This is due to the reason that managing the IP address statically results in IP conflict and broadcasting. This led to complications of slow network connection and the staff can hardly communicate. The main purpose of this project is to resolve broadcast by sub netting and using VLAN. Sub netting allows the creation of multiple logical networks that exist within a single like Class A, Class B and Class C. In this scenario of IDLWILD we are using Class B network which we will subnet to have network 172.16.0.0. The natural mask is 255.255.0.0 or 172.16.0.0/16. Extending the mask to anything beyond 255.255.0.0 means you are sub netting. When you subnet you will have the ability to create a lot more subnets than with the Class C network. Using five bits from the original host bits for subnets will allow, to have 32 subnets

Life and Crimes of Harry Lavender Essay Example for Free

Life and Crimes of Harry Lavender Essay The Life and Crimes of Harry Lavender is crime novel about contemporary Australian life, written with all the ambiguity and moral sophistication of most â€Å"who dun-nits . It looks like crime, and sounds like crime, and sells like crime, but it’s Literature! Its Opening is a subversion of the genre a reversal of expectation as we are duped into believing this is your typical male private eye (P. I. ). The role reversal a female in a traditional male dominated field; women can do everything men can do challenges the stereotypes of traditional crime fiction. Purpose: (themes, concerns, issues main ideas.) 1. To create a sense of place — Sydney. Marele Day had spent four years travelling the world and when she came back to Sydney recognised its special charm and atmosphere. She became determined to write a book about it and its special appeal. a) Find references to Sydney, favourable and unfavourable. * what aspects are emphasized? * In totality how does Day present Sydney? * what are the links with the past? * what is meant by the â€Å"facade of Sydney’? 2. Corruption and suspicion vs probity and trust. 3. Effect of technology — have we become dehumanised? Will technology take over from humans? * What is the relationship between humanity and technology? 4. Isolation — Most of the characters are isolated in one way or another. * Find as many examples of isolation as possible. * What overall comment is made about isolation? * Is there a connection between it and technology? II. TECHNIQUE 1. Day uses a lot of the technique of modern day films especially the â€Å"black and white† scenes on Harry Lavender. How is he portrayed? He is very detached and aloof. We the audience get to see and hear what Claudia is not privy to. Are these extracts from the book Mark Bannister was writing? 2. Comment on Claudia Valentine’s PhrasingÃ'Ž Claudia speaks in the manner of a hard-boiled worldly wise Private Investigator (P. I. ). slick, glib, swaggering, at times sassy (cheeky) and sometimes tongue in cheek. â€Å"Live fast, die young, and leave a good looking corpse† (22) â€Å"I was changing cars more often than I changed my underwear† (101) â€Å"But it’s one â€Å"It’ll be dead end if you don’t. Now move† (162) Word Play Double entendre (meaning) â€Å"It must have been a plant. † â€Å"A lavender plant. † (126) â€Å"Terminal illness† (6, 17, 20, â€Å"Alter, (141 â€Å"curse, cursor (143 heart ( 55, â€Å"waiting for the developers to give them a new lease of life, or maybe just a new lease. † (69) Humour â€Å"wit† â€Å"I wait for bald men to pass by and ash on their heads (23) one of the former and two of the latter, and the former is former† her reply to Steve regarding her marital status. ( 27) â€Å"You put it away, Otto, you don’t know where it’s been. † â€Å"That’s the trouble,† he moaned, it hasn’t been anywhere lately. (53) social commentary â€Å"Divorced? † â€Å"Isn’t everyone? † (27) â€Å"I had made a mistake getting into a car with a law-abiding policeman† â€Å"You young folk are always in a hurry,† she said managing a smile. (45) â€Å"pollution and syringes (54), women (54), fast food (68)Ã'Ž

Tourism Impact On Bali

Tourism Impact On Bali Tourism has long being considered as one of the biggest incomes for Indonesia. Rich cultural diversity and the natural beauty of the lands is the main tourism attraction. The country realize their potential and try to promote it internationally, especially to neighboring countries such as; Malaysia, Singapore and Australia. Other than the natural and cultural attraction, Indonesia is considered have a strategic location for business development. With millions of natural resources available in the country. Indonesia can attract business tourists to come and visit the country. However the Bali bombing in 2002 makes the international tourist to be alerted and therefore damaging to the Indonesia tourist industry. Since then, the trauma of the Bali bombing continues to haunt the visitors. The heavy drugs laws and death penalty as the worst punishment will also frighten and deter the visitors that come to Indonesia. The report below will explain the impact of Bali tourism on Indonesia econ omic and demographic factors. Furthermore it will analyze how the Bali bombing and harsh law will affect tourist decision when visiting Indonesia. Historical account of Tourism and Bali Rich local culture, great food, shopping, arts and craft and pulsating nightlife is some of the factor that makes Bali an interesting destination for Australian tourist (Bayes, 2007). Other than several reasons mentioned above, great surfing spot also have a significant role in luring the tourist to come to Bali. In addition; cheap prices of accommodation and services in Indonesia also supporting the tourist decision when visiting the island. Large amount of tourist that arrives in Bali will increase the economic growth in the island even before they arrive in Bali; by paying the tax. The development of tourism sector will also affect the development of the infrastructure in Bali. The tourism and hospitality facility will absorb numerous workforces and will create a number of available jobs in Bali. Furthermore, Bali GDP has increased by 10% from 2010 to 2011 and its recorded as 6.49% growth in regional GDP. Amongst the increase; service, trading, hotel and restaurant is up by 18.62% (Balivillaholydays, 2012). Statistical information Total foreign tourist arrivals to Bali in May 2012 hit 215,868 indicating a farther rise than May 2011 (204,489). On a cumulative basis, Bali foreign tourist arrivals for January through May 2012 1,131,462 demonstrating growth of 9.71% over the same period last year with 1,031,316 foreign tourists. http://www.balidiscovery.com/images/827/graff1.jpg www.balidiscovery.com Now five months into the year, Bali can now project more than 3 million foreign tourists for all of 2012. Bali should maintains its current year-to-date of growth at 9.71% through to the end of the year. The performance from major source markets that arrived in Bali on January-May 2008-2012 showed the biggest amount of tourists is from Australia. Australian tourists continue to visit Bali with month-on-month arrivals up 9.3% at 61,266 for the month of May 2012. While this is a respectable growth, Australias ability to generate double digit improvement in arrivals month after month maybe ending. From 2011 to 2012, Australian arrivals for the first five month of the year changed by 10.37%. If the rate of growth is sustained, the numbers of Australian tourist will stay up for the entire year. http://www.balidiscovery.com/images/827/graff2.jpg www.balidiscovery.com There are two big issue in Bali that affected Australian people greatly; The Bali bombing and Schapelle Corby cases. The Bali bombing happened on 12th October 2002 and its categorized as an international incident; as the death toll is effected many nationalities. The incident destroyed 400 buildings and injured 300 people, the final death toll was 202 bodies and most of them from Australia (Henderson, 2003). deaths by nation http://maximosweb.com/2011/12/04/terrorism-and-poverty/ Moreover, the incident leave deep trauma to any tourist at the time, and greatly reduces the quantity of tourist coming to Bali. bali numbers http://maximosweb.com/2011/12/04/terrorism-and-poverty/ The graph shows the demand of tourists arrivals to Bali slumped dramatically following Bali bombing. In September 2002 the foreign arrivals to Bali stood at 15,747. In November, it dropped down to 31,498 arrivals. Indonesias Center Statistics Agency spokesperson, Sudarti Surbakti observed that The decline is a continued impact of various shock of occurring in late 2002 and early-to-mid 2003 (Russell Darnley, 2011). Schapelle Corby is an Australian citizen that has been convicted and imprisoned for 20 years because of drug smuggling. The case is biased because Corby claimed that she knows nothing about the drugs that were kept in her possession. The effect of Corby being in custody; include the sentiment of the Australian to Bali, which lead to a boycott threat. The boycott has labeled Indonesian Justice as corrupt and it will leave a bad impression any visitors to Bali or any other destination in Indonesia (Lindstrom, 2005). Account of the current situation Even terrorism death penalty or Australians imprisoned make the images of Bali turn negative. Australians still spend money to visit this island and the amount of tourist year by year are still growing, giving a clear understanding of the question why Bali remains a good choice of Australians holiday destination in this current time. Firstly, the landscape of natural scenery and uniqueness of culture still attract Australian tourists and also give plenty of activities for them to do on their holiday such as swimming, surfing and snorkeling are the most preferred actions in Bali. Enjoying nature and tropical climate are the next preferred attractions. Interestingly, religious ceremonies sites and Balinese villages are also considered attractive by Australian tourists than before. Secondly, Bali Island offers affordable and acceptable prices to foreign tourists all over the world including Australians of all ages. The good value for money becomes a second reason for tourists to decide to travel in Bali. This also maybe because of a big difference of exchange currency rate of Australian dollars to Rupiah makes Bali an affordable and cheap holiday destination for Australians. On the other hand, the fear of terrorism is the biggest factor that makes Australians feel insecure and avoid visiting Bali. This also may become an important consideration for Australians before making a decision to travel to Bali. Anyway, the rate of Australians travelling to Bali increase year by year and this fact was supported by the graph above (Bali major source markets January-May 2012). Conclusion As the result, Bali is the most attractive destination for tourists and especially for Australian tourists. The main attractions; including natural beauty, traditional culture and affordable prices emphasize the reason why Bali is the most popular destination in the world. Even though the terrorism has affected the image of Bali in a negative way, the tourists still interested in travelling to Bali as the positive out way the negative reason. Dr. Hill said Tourism is one of the fastest growing sectors globally and Bali has already established itself on the map (Dr. Hal Hill, 2012). This fact has confirmed the status of Bali which continues to grow in relation to a perfect destination.