The Glaxosmithkline Merger: Analysis

The Glaxosmithkline Merger: Analysis Introduction Mergers are not new in pharmaceutical industry in the recent years and the same for both Glaxo Wellcome and SmithKline Beecham throughout each others history. Considering the political, social and economic resistance, the general driving forces for these mergers in this industry are, more firms showed interest in using strategic partnerships and joint ventures to develop and market new products. Though pharmaceutical holds a global market, the US market decided the growth of the industry as it holds 45% of the global market. So not surprisingly the US political, social and economic resisted and delivered a strong impact on the growth of the whole pharmaceutical industry. However Pfizers merger pushed Glaxo SmithKline to 2nd rank in the industry, they were number one immediately after their merger. So the business changes of the organisation had a heavy impact on the whole pharmaceutical industry. So this paper had assessed the reason for the merger and extend the aims of the merger is achieved. Background of SmithKline Beecham: SmithKline Beecham resulted from the merger of SmithKline Beckman (SKB) and Beecham. Beecham was well known for its traditional research strength whereas SKB was known for its aggressive sales force in US. Though the process of merger was lengthy, the change from more laid British approach of Beecham to process oriented working was success. The new company tried to keep up with critical mass but they lacked in budgeting RD, which was the real constrain for companys growth. Background of Glaxo Wellcome: Glaxo Wellcomes birth was from Glaxos takeover of Wellcome in 1995. Glaxo was well known for its strong marketing approach, commercial success of its RD efforts and blockbuster product Zantac whereas Wellcome is non-profit medical institution well known for its academic approach to pharmaceuticals. Though there were several clashes between Wellcomes laid back management style and Glaxos hard-nosed, commercial and control driven culture, with the help of economic of scale in RD activities, Glaxo reduced the conflicts and resistance. However the companys growths in producing blockbuster products were lacking. 1. Reasons for the Glaxo SmithKline Merger: Merger of Glaxo Wellcome and SmithKline Beecham was a global one. The merger was a unique all over the world and various divisions of both the companies merged in around 170 countries in 2000, expect Pakistan. The merger came through after UK court order in January 2000; however it happened in Pakistan only on 23rd October 2002. So the merger of Glaxo Wellcome and SmithKline Beecham in Pakistan was the off shoot of the global merger of the companies. There were six reasons which compelled both the legendary companies to go for the merge and to build a leading company in the entire pharmaceutical industry. The reasons for merging up together were: To reduce the Research Development pipeline. To reduce the Research Development cost. Drug reimbursement issues. Political pressures and growing concerns over drug prices. Patent expirations / Generic competition. Recent developments in biotechnology and the mapping of the human genome. The right theme and idea backing the merger was, to improve quality of human life for enabling people to do more, feel better, live longer. As both the companies holds the strength in more similar kind of field that is, developing drugs for infectious respiratory neurological gastrointestinal and metabolic disease, they want to lead the way in providing treatment for the same. Apart from the above field, the join company appeared to be the worlds leading producers of prescription medicine, vaccine and consumer health care products. So they planned for delivering innovative medicines and products that help billions of people round the world live longer, healthier and happier life. The whole pharmaceutical industry was focusing and investing in RD as it delivers modern ways to handle prolonging problems and helps in the long term growth of the industry. The hunger to deliver medicines for new diseases made the join group (GlaxoSmithKline) to pay more attention in RD and wished to reduce the number of products in the pipeline of RD. Though both companies produced similar kind of drugs and so integrating their products line was very obvious, the process demanded more time and efforts. This was mainly because; both had more number of products in the pipeline and hardly had blockbuster products in market. Still the management believed that the time for working on new diseases will be reduces by working together on lesser products. And in general all research and development evolves a risk of failure. Not that each compounds and all research towards developing new drugs for a targeted diseases comes out as success but in turn consumes high time, efforts and money. B ut the RD is the only answer for the long term growth of both the joint company and the industry. So sticking to mission and vision of the new company, GSK has decided to focus of RD but in a different way of approach .i.e. cost saving, economics of scale and licensing from other firms. Apart from these, a PEST analysis on the pharmaceutical industry will give a clear picture and highlight the hidden reason for the recent merger activities in industry and in particular GSK. PEST Analysis on Pharmaceutical Industry: Political: Considering the Medicare in USA and UKs National Health Service, the level of political interest developed in this industry can be determined. In addition USA and European market hold the first and second place of industrys global market respectively. So its very clear that the industry has gained a massive political attention because of the increasing social and financial burden of healthcare and safety. In the increased political attention on the industry, has kept the industry low to live up the expectation and their interference on most moves of the industry was a really worrying the giants of the industry. Also the pressure of civil in rapid delivery of products has kept their quality and the industry finds hard in delivering effective products. Economic: The economic growth of the industry was rapid in recent years and next to IT industry with nine geographic markets account for over 80% of global pharmaceutical sales these are US, Japan, France, Germany, UK, Italy, Canada, Brazil and Spain. Of the above listed markets, US market holds a major one and fastest too however there is down fall in 2009. The US Pharmaceutical Industry is one of the mainstays of the Economy of America. It has been observed that the US Pharmaceutical Industry is growing at a rapid pace and is showing no signs of slowing down. The US Pharmaceutical Industry Growth is also considered as a very significant part in the world pharmaceutical industry as well. Source: http://www.economywatch.com/world-industries/pharmaceutical/us.html According to analysis, in 2009, global pharmaceutical sales increased by only 2.5% ~ 3.5%, reaching a total of about 750 billion-760 billion U.S. dollars, which is lower than in October last year the growth rate of 4.5% to 5.5%, a total of 8200 the forecast 100 million U.S. dollars. This growth rate is the lowest in the past 25 years. Source: http://www.sourcejuice.com/1169843/2009/05/08/Growth-rate-global-pharmaceutical-industry-lower/ Social: Every industry tries to have a good social relation. But this industry is many steps forward than the other industries because; good health is an important personal and social requirement. All the companies of this industry hold and play a vital and unique role fulfilling societys need for good health. And threat of some killing diseases like, AIDS, SWINE FLU, SARS etc. had not only attracted the attention of public and media but developed a more depending and demanding situation on the industry. This immense situation has made the industry to maintain direct relation with the society (consumers) with the help of media and government care. Technological: The advance scientific technologies have increased the need for high spending in research and development in regards to encourage the innovation. The growth of technology drives the industry to responds faster to the expectation of the environment. This technology advancement evolves both risks and rewards. Legal Environment: However in current situation, government involves the industry in the proposal for regulatory outflows to encourage the innovation, these legal and regulatory affairs of US in special was a speed beaker for the development of the industry. European pharmaceutical giants really struggled in this situation. Sykess statement summarized how Europes pharmaceutical companies have been locked in a high stakes multibillion dollar struggle with their US rivals to stay in business in the 21st century. This struggle is associated with increased takeover activity and pharmaceutical companies seeking economies of scale to finance escalating research and development budgets. Source: Case study GSK a merger too far? Exploring Corporate Strategy by Johnson, Scholes Whittington. 2. To what extent have the aims of Glaxo SmithKline merger been achieved? Some of the aims of the newly formed Glaxo SmithKline were, Not to protect future earnings growth but actually to increase critical mass to really outperform the industry. To become the indisputable leader in the industry in terms of conquering the challenges that the industry faces. To deliver innovative products that helps millions of people in the world to live longer, healthier and happier. To achieve the aims, the management formed a new structure for RD, highlighting the cost reductions and breaking of pipeline. However, the lack of focus on general organisational structure and internal management structure resulted in low returns compared to the estimate one. To handle the situation, the all the long terms aims has left unfocused and the management tried to recover the company from the sudden-death syndrome. This clearly gives an evidence for Glaxo SmithKlines downfall form the anticipated growth. The inability of GSK in producing blockbuster products, joint hand with the above described situation made things worse. Focusing on employees and other internal management issues in the later part helped the company to handle the global resisting issues and focus on their long term goals. Analysing GSKs stock market performance (1998 2003), tells that GSK failed to touch the anticipated heights and were only able to sail along with the industry growth. Based on the Lewins force field model, the driving forces of GSK were not too enough to overcome the resistance for change and thus failed to achieve the fixed target. Evidence for GSK loses record: In the first year of post-merger, GSK claimed 12% increase in pharama industry, with the help of cost savings and disposal of assets. The firm anticipated double the level of saving in the next year. The health care grew only 3%. They fail to record returns in RD in spite of combined RD budget and investment. It also failed to deliver blockbuster product to enhance the revenue. Instead to maintain the tempo, the management kept buying 40 licenses from other companies. GSK has shed more than 15,000 jobs; Managers were unable to retain the talent that resides on the firms. Instead of creating a powerhouse, research was split into smaller, autonomous units. (Abrahams, 1992 p.22) GSKs new radical structure was a response to a series of failures in research at the two merger partners. (Dyer, G., 2002 p.3). The new radical structure resulted James Palmer (Head Development) resignation in October 2002. At the AGM on 19 May 2003, GSK shareholders rejected a motion regarding a  £22 million pay and benefits package for CEO, JP Garnier. This was the first time such a rebellion by shareholders against a major British company has occurred, but was regarded as a possible turning point against other so-called fat cat deals within executive pay structure. Source: http://en.wikipedia.org/wiki/GlaxoSmithKline In November 2005, AIDS Healthcare Foundation accused the company of boosting its short-term monopoly profit by not increasing production of the anti-AIDS drug AZT despite a surge in demand, hence creating a shortage that affected many AIDS patients in Africa. GSK announced that it had halted clinical trials of the CCR5 entry inhibitor, aplaviroc (GW873140), in HIV-infected, treatment-naive patients because of concerns about severe hepatotoxicity.[27] In June 2006 GSK said it was further cutting, by about 30%, the not-for-profit prices it charges for some of these medicines in the worlds poorest countries. Source: http://en.wikipedia.org/wiki/GlaxoSmithKline To analyse, extend the aims of the merger have been achieved; SWOT analysis is done on the joint company, Glaxo SmithKline. Remuneration lenient explicitly SWOT Analysis Glaxo SmithKline: Strengths High potential staffs and experienced managers. Wide-ranging set of documents in health sector. Strong platform in health care division. Strong market position Focus to concentrate and develop leadership in Public relations i.e. to strengthen the social context of the environment. Modern hospital system, Clear public health and health care service purchasing Balanced finance in the health sector Strong IT development Product development track record. Weaknesses Lack of clear and wide perspective .goals to achieve the aims Weak bond among health care, public health and social care. Inability to cope with the cost increases. Low brand value for its products. Inefficiency in motivating the experienced leader and thus failing to make maximum use of the potential staffs. Lack of viable training and management skills. Not an efficient HR strategy in retaining key professionals. Lack of right proposition of various competences. Co-marketing agreements can limit GSKs global presence. With mass RD, inability to produce blockbuster products. Opportunities Technological development Social changes and challenges. Economic growth of the industry (immediately next to IT industry). Free movement of goods, services, labour. Developing vaccines for persistent diseases chance to have craic. Empowerment of citizens and their greater engagement Threats Patent expiry on drugs that generate strong income Ageing and demographic change. Safety issues surrounding the products. Ecological and public health threats. Expectations of the raising population As the RD of global rivals work on similar products in most of the cases, the competition is high and much demanding. Emerging of potential regional market like China and India. Political pressure in fixing the price for new drugs, which fails to fulfil even the research cost. Ever increasing cost of drug trials and ever higher standards imposed by national drug approvals bodies (Aspirin would not get approval if invented today!) Conclusion: Thought there are several giants in the industry, similar to the current situation, there was an uncertain situation during the period of early 90s. And to overcome that uncertain situation, most of the firms in the industry move themselves towards the strategy Mergers and acquisition. But, as there is always a saying that not all mergers works, most of the mergers in the industry fail to achieve the anticipated growth and I feel Glaxo SmithKline is the right example for the scenario. GSK believed that bigger the size, bigger the growth and bigger earning. But it failed to realise bigger the size, bigger the expectation, bigger pressure and failing to handle the pressure and keep the expectation will reflect badly. Various merger analyse debated, though GSK claim some success through cost saving and pipeline synergies, the aimed and announced growth was not received in terms of market. So I conclude that, the merger served the company only in short term success and failed to achieve the aims of the merger. Reference and Source: http://www.ucc.ie/quality/INTERNET/PESTAnalysis.pdf www.gsk.com Johnson G, Scholes K and Whittington R (2008) Exploring Corporate Strategy, (Prentice Hall) http://en.wikipedia.org/wiki/GlaxoSmithKline#cite_note-43 http://www.wikiswot.com/SWOT/4_User_Generated/GlaxoSmithKline.html http://www.allfreeessays.com/essays/Gsk-Swot-Analysis/114901.html Mullins L.J. (2007), Management and Organisational Behaviour, Eighth Edition, Great Britain, Pearson education limited. http://www.pwc.com/us/en/issues/business-combinations/publications/snapshot-mergers-acquisitions-business-combinations.jhtml http://www.startupbizhub.com/company-mergers-and-acquisitions.htm

Industry analysis and market trends for Vodafone

Industry analysis and market trends for Vodafone Vodafone PLC is one of the worlds largest mobile communications companies by revenue, operating across the globe providing a wide range of communications services. The companys vision is to be the communications leader in an increasingly connected world. Vodafone was formed in 1984 as a subsidiary of Racal Electronics PLC. Then known as Racal Telecom Limited, approximately 20% of the companys capital was offered to the public in October 1988. It was fully demerged from Racal Electronics PLC and became an independent company in September 1991, at which time it changed its name to Vodafone Group PLC. Following its merger with AirTouch Communications, Inc. (AirTouch), the company changed its name to Vodafone AirTouch PLC on 29 June 1999 and, following approval by the shareholders in General Meeting, reverted to its former name, Vodafone Group PLC, on 28 July 2000. (History Vodafone.2010 [Online]). Group highlights for the 2010 financial year: Financial Highlights: Total revenue of  £44.5 billion, up to 8.4% with improving trends in most markets through the year. Adjusted operating profit of  £11.5 billion, a 2.5% decrease in a recessionary environment. Data revenue exceeded  £4 billion for the first time and is now 10% of service revenue.  £1 billion cost reduction programme delivered a year ahead of the schedule; further  £1 billion programme now underway. Final dividend per share of 5.65 pence, resulting in a total for the year of 8.31 pence, up 7%. Higher dividends supported by  £7.2 billion of free cash flow, an increase of 26.5%. Operational Highlights: Vodafone is one of the worlds largest mobile communication companies by revenue with 341.1 million proportionate mobile customers, up 12.7% during the year 2010. Improved performance in emerging markets with increasing revenue market share in India, Turkey and South Africa during the year 2010. Expanded fixed broadband costumer base to 5.6 million, up 1 million during the year 2010. Comprehensive Smartphone range, including the iPhone, Blackberry Bold and Samsung H1. Launch of Vodafone 360, a new internet service for the mobile and Internet. High speed mobile broadband network with peak speeds of up to 28.8 Mbps. (Vodafone Group 2010 Annual Report, p. 1) Chairmans Statement: The company continues to deliver strong cash generation, is well positioned to benefit from economic recovery and looks to the future with confidence Sir John Bond Chairman, Vodafone Chief Executives Review: In a challenging economic environment our financial results exceeded our guidance on all measures; we increased our commercial focus, delivered our cost reduction targets ahead of schedule and maintained strong capital investment levels. Victorio Colao Chief Executive, Vodafone Telecommunication Industry At a glance: The telecommunication industry has grown rapidly in size to provide essential services that facilitate a fundamental human need to communicate. There are 4.7 billion mobile customers across the globe with growth around 20% per annum over the last three years. Vodafone is a leading company with a 7% share of the global market. The majority of customers are in emerging markets such as India and China. In contrast growth has been more muted in developed regions such as Europe which are relatively mature. ( Vodafone Group 2010 Annual Report, p. 4) On-going competitive and regulatory pressures have contributed to significant reductions in mobile prices which are being partly offset by higher mobile usage. Competition in the telecommunications industry is intense. Consumers have a large choice of communication offers from established mobile and the fixed line operators. The combinations of competition and regulatory pressures have contributed to a 17% per annum decline in the average price per minute across their global network over the last three years. (Vodafone Group 2010 Annual Report, p. 4) Major Trends: The mobile industry continues to evolve rapidly, driven by new source of revenue, raising Smartphone proliferation and new technologies. Services: Around 80% of our service revenue comes from traditional voice and messaging services. The remaining 20% stems from the faster growing areas of mobile data and fixed broadband. (Vodafone Group 2010 Annual Report, p. 5) Network and product evaluation: This industry is undergoing significant technological change, with faster download speeds and product innovation improving the customer experience. They have been a pioneer in a range of new products. These include high speed mobile broadband for Internet and email access and femtocells to enhance customers indoor 3G signals via their household broadband connection. (Vodafone Group 2010 Annual Report, p. 5) Market Trends: If we observe and study the market trends in Europe alone, the trends seems to be improving continuously in Service Revenue, Enterprise Service Revenue, volumes in outgoing voice and data revenue. Vodafone demonstrates a strong economic stability in terms of revenue growth. Major Competitors: According to research by London-based firm IRS, competencies are most often used in: Performance management/appraisal. Personal-development planning. Management training and development. Job descriptions. Role specifications. Management selection. (Sue Dewhurst and Liam FitzPatrick, 2007, How to develop outstanding internal communications, pp: 14.) Vodafone PLC got many a few core competitors and the competency can be measured in terms of marketing strategy, revenue or the services it offer. Here, we are considering three core competitors as Virgin Group, British Telecommunications PLC and O2 Group. Lets throw some light on these companies to know more about the financial and market status. About British Telecom Group PLC: BT (British Telecom) Group PLC is operating in more than 170 countries, is one of the leading providers of communication solutions and services. Their principal activities include networked IT services, local, national and international telecommunications services, and higher value broadband and Internet products and services. (Our Company BT.2010 [Online]) BT Group PLC is listed as BT.A in London Stock Exchange. About Virgin Group: Virgin Group is a leading branded venture capital organization and it is one of the worlds most recognized and respected brands. The Virgin Group was started in 1970 by Sir Richard Branson, which has gone on to grow very successful businesses in sectors ranging from mobile telephony to transportation, travel, financial services, media, music and fitness. (About Us Virgin. 2010. [Online]) Virgin Group is listed as VMED in London Stock Exchange. About O2 Group: O2 Group, also known as Telefà ³nica O2 UK Limited, is a leading provider of mobile and broadband services to consumers and businesses in the UK. O2 is the leader in non-voice services, including texts, media messaging, games, music and video, as well as data connections via GPRS, HSDPA, 3G and WLAN. O2 UK is part of the Telefà ³nica O2 Europe group which comprises integrated fixed/mobile businesses in the UK, Ireland, Germany, the Czech Republic and Slovakia all of which use O2 as their consumer brand. Recently, O2 has established the Tesco Mobile joint venture business in the UK and Ireland. O2 is a completely owned subsidiary of Telefà ³nica S.A. (O2 UK History Telefà ³nica O2 UK Limited. 2010. [Online]). O2 Group is listed as TCEZ in London Stock Exchange.

Sports - For Men ONLY Essay -- Research Essays

Sports - For Men ONLY Many people have the stereotype that males are more aggressive than females. How a person develops this belief is one aspect of the research that I will study. It may be because it is only politically correct to be so. Since this is true, it is also believed that men prefer to enjoy aggressive athletics more than women do. I am a huge fan of almost any type of team sport. You name it, I probably enjoy it. I am not sure why this is true. It could simply be because I’m a guy, or because I was raised watching sports or because I played high school athletics for a year. This is why I decided to choose this interesting topic. I wanted to know if it is true that men enjoy watching physical team sports than women enjoy them. Furthermore, if this is true, I wanted to find out why it is that way. Physical team sports include football, basketball and hockey. Despite this claim, there may be some people who do not find this true. Many females enjoy sports. I am a friend with many women who enjoy football, especially. There are even guys who do not even know that sports may exist. They have more important things to worry about in life. I find this hard to believe, because I was raised following and loving sports. This is why I will prove that men enjoy sports even more than popular belief. Many methods were used in an attempt to prove or disprove my hypothesis. I performed a survey on ten college students, I observed a group of people watching athletic events and I also observed television commercials to determine if advertisers are more biased toward men for athletics. Later, in order to establish further proof to my conclusions, a final interview was used on four college students. For th... ... successfully prove my hypothesis. Surely, more men enjoy watching and participating in physical athletics such as football, basketball and hockey than women do. I was able to prove this through the survey, case study and interviews administered. I also used commercials and advertisements to further assist the research. One can certainly see that through all four methods sports pertain to men a lot more than they do to women. This is believed to be so since there are more professional athletics available to men and also it is only proper for a man to watch sports due to what is ‘politically correct’. Women are ‘supposed to’ tend to the house and believe that there are more important things to life than just sports. I believe that society hopes eventually these stereotypes can be eliminated and sports will not be considered gender specific aimed toward men.

Impact of Self Concept and Self Esteem on Group Communication :: Communication

My paper is about the affects self concept and self esteem have on group communication, through group communication we grow as people because we see how others define us as individuals. Through group communication we can solve a problem better then by ourselves. Self concept is the cognitive thinking aspect of self also related to one’s self-image, it’s the way we see our selves in the mirror. Self concept is the way we told to see ourselves we are grown into our self concept by what we learn when we our young from our parents or our peers. Self concept is changed through out life from how people look at you and tell you what you are to them, if they say a person is nothing then that person will believe it for as long as it takes to get over it. Self esteem is the affective or emotional aspect of self and generally refers to how we feel about or how we value ourselves, also known as one’s worth. Educators, parents, business and government leaders agree that we need to develop individuals with healthy or high self-esteem characterized by tolerance and respect for others, individuals who accept responsibility for their actions, have integrity, take pride in their accomplishments, who are self-motivated, willing to take risks, capable of handling criticism, loving and lovable, seek the challenge and stimulation of worthwhile and demanding goals, and take command and control of their lives. In other words, we need to help foster the development of people who have healthy or authentic self-esteem because they trust their own being to be life affirming, constructive, responsible and trustworthy. Some have referred to self-esteem as merely â€Å"feeling good† or having positive feelings about oneself. Others have gone so far as to equate self-esteem with egotism, arrogance, conceit, narcissism, a sense of superiority, a trait leading to violence. Such characteristics cannot be attributed to authentic, healthy self-esteem, because they are actually defensive reactions to the lack of authentic self-esteem, which is sometimes referred to as â€Å"pseudo self-esteem.

Captain Morgan Original Spiced Rum :: essays papers

Captain Morgan Original Spiced Rum This AD is about an alcoholic beverage called Captain Morgan Original Spiced Rum. When you first see this AD you can clearly see that the focus of this ad is to make you want to drink. It jumps out and says â€Å"drinking is cool†. It’s saying not directly but indirectly. The focus of it is to make you want to buy this beer because those people are drinking it. They’re having a fun and great time, so the ad can get those people that want to have a fun and great time. The tone of this ad is pretty funny. As you can see the headline of this ad says, â€Å"take off your pants and stay a while†. You can make different interpretations of this ad which makes it even funnier. The voice is also very funny, because of that line. The language is quite funny to me, but some people that do not understand it probably would not enjoy this ad. Some people might think the language is ridiculous and inappropriate. Most young people would find this ad very natural to them. I am not saying that old people wouldn’t like this ad, but some of them might not get it or understand the humor of the ad. It all depends what your definition of humor is. The audience is mainly designed for younger people. I can conclude this by seeing that all the people in cabin are young, maybe in there 20’s. Also they could be snowboarding and not a lot of old people snowboard. So this ad is mainly to attract the younger folks. The design of this is pretty thought out. The whole logo is in red, and the ad is in black and white so they try to catch your attention by doing that. You turn the page in the magazine and all of sudden you see â€Å"take off your pants and stay a while† you probably are going to see what the ad is all about. I think its smart advertising that they have the main logo in red and the alcohol colored but the background in black and white.

Economics Essay

And economy is a system that deals with human activities related to the production, distribution, exchange and consumption of goods and services of a country or other area. Lionel Robbins defined economics as â€Å"the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. † (Robbins L. 1932) Economics is based on the principle of scarcity of resources to satisfy human wants. As the resources to cater for the various human needs are limited, consumers have to make choices. Scarcity of resources creates an economic problem that the economic systems try to solve. Economics uses different techniques, tools and theories to carry out analysis and to explain various actions and behaviors in the economic systems. Economics may be studied in various fields including environmental economics, financial economics, game theory, information economics, industrial organization, labor economics, international economics, managerial economics and public finance. The two main areas of economics are macroeconomics and microeconomics. Macroeconomics deals with the aggregate national economy of a country while the microeconomics deals with the economics of an individual firm or person and their interactions in the market, given scarcity of resources and regulations by the government. Micro-economics is much concerned with the behaviors of individuals and firms in an industry and how these behaviors affect supply and demand of goods and services. These behaviors also affect the prices charged to the goods and services. Supply and demand are affected by the prices while price is affected by supply and demand. Hence these three aspects have to balance at certain equilibrium. At this point, the price charged to the goods and services will attain equilibrium between supply and demand of the goods and services. The theory of Demand and supply is one of the fundamental theories in microeconomics. This theory explains the relationship between price of goods and services in relation to the quality sold. It also explains the various related changes that occur in the market. The theory of demand and supply helps in the determination of prices of commodities in a competitive market environment. Demand of a commodity is the amount of goods and services that consumers are willing and able to buy at a certain price. Besides the price demand of a commodity is affected by other factors such as the income of the consumer and tastes and preferences. The demand theory suggests that consumer are rational in choosing the quality of a product that they will consume at a certain price and also considering other factors like their income and tastes. Most of the time, the consumption of goods and services by these customers is constrained by their income. As consumer seek to maximize the utility they obtain from a certain good or service, their income will act as a limiting factor. Thus the demand of a commodity depends on the purchasing power of the consumers. The purchasing power is determined by the amount of income the consumer gets. At a fixed income the demand of consumers will be determined by the price of the commodities. The law of demand suggests that demand and price of a commodity are inversely related. The higher the price of a commodity, the lower the demand of that commodity. When the price of commodity rises consumers will demand less of that good. This is because their purchasing power decreased. This is called the income effect. Increase in the price of a commodity will also result to the customers changing their consumption of the commodity preferring other less expensive commodities. This is called the substitution effect. The demand of the planes I sell will depend on their price and other factors such as tastes and preferences of the various customers in different parts of my market. However their demand will also be constrained by their level of income. If I increase the price of the planes my customers will demand fewer quantities due to income effect. Some other customers may change to other similar products thus causing substitution effect. When the income of the consumer changes, his consumption of the commodity will not move along the same demand curve, his demand curve will shift in proportion to his change of income. If the income increases the demand curve will shift outwards for a normal good. This means that at a certain price the consumer will now consume more goods than he could with his earlier income. If the income decreases the demand curve will shift inwards and the consumer will demand fewer quantities of commodities at a certain price. Supply is the quantity of a commodity that suppliers are able and willing to bring to the market at a certain price. Producers seek to maximize their profits and so will bring to the market quantities of commodity that will result to highest profits. The quantity of goods and services supplied depend on the prices of those commodities. Supply and price of commodities are directly proportional. This means the higher the price of the good at the market the higher the quantity supplied. For the prices of a commodity to be stable, the quantities of the commodity demanded must be equal to the quantity supplied. When demand and supply are equal on equilibrium in price is attained. The equilibrium price is that which results to equal quantities of demand and supply. When the price of a commodity is higher than the equilibrium the quantity demanded will be lower than the quantity supplied. There will be excess quantities in t he market. The price will have to come down until the excess quantities are eliminated. IN the same way if the price is lower than equilibrium the quantities demanded will be higher than quantities supplied and hence the price will have to be increased until the demand equates supply. The demand and supply theory is used to determine prices in perfectly competitive markets. Price is the value paid by the consumers for the utility they receive from a commodity. The price of a commodity affects the demand, supply and the quantities of the commodity sold in the market. The market price of a commodity is the intervention between marginal utility of the consumer and the marginal cost of the supplier. The equilibrium price is the point where these marginal utility and marginal costs equate. Elasticity measures the changes of one thing in relation to another. Elasticity of demand is the rate of change of quantity demanded of a commodity for a particular change in the price of the commodity. Different commodities will change different for the same change in their prices. For example two products may have the same price and the same demand but different elasticities, meaning when their prices change by one unit, their demand will change with different quantities. The commodity with higher demand elasticity will have a greater change in demand for the same change of price than a product with a lower elasticity. This can also happen in the case of supply resulting to price elasticity of supply. Both price elasticity of Demand and price elasticity of supply are the two types of price elasticities. Another form of elasticity is income elasticity of demand which measures the rate of change of demand in relation to change in income (Nelson, Salzmann). If the price elasticity of supply of my panels is high, then a little change in the price will greatly affect the quantity of panels the suppliers will bring to the market. On the other had if the price elasticity of demand of the panels in my market is high, my varying of the prices at which I sell the panels will greatly affect their demand. Monopolies are whereby one firm controls the whole market or a big percentage of the market of a commodity. When a firm have monopoly over a commodity the operations of the market as in a perfectly competitive market will not be possible. The monopoly will set its own prices whether they lead to equilibrium of demand and supply or not. Unless the monopoly is highly regulated the monopoly can manipulate the market by unfair practices like hoarding and price hikes. If I have a monopoly on the sale of the panels in my markets, I will have the liberty to set any price as far as it gives me maximum profits in disregard of the needs of the consumers. However, if there is only one source of the panels then I will have to accept any price the supplier determines. Monopoly is one cause of market imperfections. Market imperfection is where by the market systems are inhibited from operating normally as in a perfectly competitive market. Other causes of market imperfection are externalities, public goods, uncertainties and extreme interference in the economy by the government. Market imperfection can lead to market failure. Macro economics deals with performance of the national economy as a whole. It describes the behavior and structure of the economy using indication such as GDP, unemployment rates and price index (Mark Blaug 1985). Gross Domestic product â€Å"is the sum of the market values or prices f all final goods and services produced in an economy during a period of time† according to Sparknotes (http://www. sparknotes. com/economics/macros/measuring1/section1. html). Gross domestic product (GDP) is calculated by summing all the private consumption in the economy, investment by business or households, government expenditure and the net of exports and imports. The formula GDP = C + I + G + (X-M) is used where C is private consumption, I is investment, G is government expenditure and X is gross exports and M is gross imports (Sparknotes). Unemployment is whereby a person who is willing and able to work has no work (Burda, Wyplosz 1997), Unemployment rates show the performance of the economy as a whole. Unemployment is caused by different reasons. Unemployment rate can be calculated by dividing the number of unemployed workers by the total labor force. Philips curve was a theory that suggested that unemployment reduce inflation stating that unemployment reduces inflation stating that unemployment was inversely related to inflation. Inflation is the percentage rate of change of a price index (Burda, Wyplosz 1997). Inflation leads to general increase in the prices of gods in t he economy. Inflation affects the value of money in that it makes the purchasing power decrease. There are several theories used to explain practices in macro economics. The quantity theory of money is one of these theories that give the equation of change. It explains the relationship between overall prices and the quantity of money. The equation of change is given as M. V= P. Q where M is the total amount of money in circulation on average in an economy. V is the velocity of money P is price level Q is Index of expenditures. There have been different approaches to economics. These approaches differ on their view on certain aspects of economics. Some of the approaches that are there include Keynesian, monetarists, neo classical and the new classical. These different approaches led to up come of different schools of thoughts according to the inclination in the approach. However new developments have been advanced leading to acceptance of some of the aspects that had been disputed before by some approaches. Keynesian economics supported the use of policies to control the economy. The argument was that to reduce fluctuations the government had to base on actions (fiscal or monetary policy) on the prevailing conditions of the economy. The new Keynesian economics tried to provide microeconomic to the older Keynesian economics Monetarism was against fiscal policy as it has a negative effect on the private sector Monetarists argued that government intervention through fiscal policy could lead to crowding out o f monetary policies rules (Mark B. 1985). Fiscal policy is government intervention in the economic operations aimed at bringing stability of affecting certain changes in the economic environment. Fiscal policies are carried out though control of the government spending in the economy and use tax charged Fiscal policies are aimed at influencing the level of economic activities in the economy resource allocation and income distribution. The two tools, that is, Government spending and taxation is used differently to achieve different results. Incases of recession expansion fiscal policies are utilized. In this case the government increases its spending in the economy and reduces taxation. Contractionary fiscal policies are utilized by reducing government expenditure or spending in the economy and increasing tax charged. Contractionary fiscal policies can be used when there are high rates of inflation. Monetary policies are a form of intervention of the government into economic operation through interest rates so as to control the amount of money in circulation. Expansionary monetary policy is applied during recession to increase the amount of money in circulation. Expansionary policy can also be used to curb unemployment in this case interest rates are lowered hence encouraging circulation of money. Contractionary monetary policies are applied by increasing the rate of interest rates in order to reduce the rate of money in circulation in the economy. Contractionary monetary policy can be utilized during high rates of inflation. Economic growth can be achieved by leaving the competitive market conditions to prevail. However the government should intervene where the market is so unstable so that to bring regulation aimed at attaining optimum operation in the economy.

Club Objective in Gym Facility Essay

Member Communication Budget Management Department Management Facility Upkeep Club Objective Our mean goal is to identify the skill and competencies that a fitness professional needs in order to be a successful in fitness owner, or department manager. How to operate a successful business in the fitness industry. Teaching them how business concepts, including purchasing, contractual agreements, risk management and negligence, and other fiscal concerns in fitness facility. Identify how to influences consumers and creates fitness services and cooperating with the customers relationship. Mostly using of sales techniques explore the profession as a potential career by using experience on the field internship and with available resources. Some of the objectives in managing gym facilities are. We need to plan what equipment will be more useful in the gym facility for costumers. You need to make sure the costumers feel comfortable in your facilities and everything there is well organize and clean. We need to do things that will attract them more, for them to always come to your facility. Treating your employees well and your costumers and providing client with good services. Advertising on TV’s, radios and making your cards and available to give it out. Organizing the employees and making sure they doing what are right. Try to listen to your costumers when they bring some ideas of things you need in your gym facilities. You have to help your costumers reach their fitness objectives. The manager works with the membership department to increase monthly goals for new memberships and comes up with ways to better retain current members. We have to spend a lot of time developing personal training to increase its revenue. Interviewing Christian Kettman gym facility she made me know that to get to your goals hire two new trainers 175 clients on contract by the New Year. Education is the secret weapon; all staff must be certified in   and must easily communicate with all clients and staff. The hiring process is most important in the industry it is all about team work and making complete strangers feel comfortable sweating in front of one another. And again to be an owner or reach your objectives sweat, tears and a constant motivation to keep going forward and be passionate about health and fitness by all means.