Accounting Essays Comparability of Financial Statements

Accounting Essays Comparability of Financial Statements Comparability of Financial Statements. 1.0 Financial Statements and its Significance. In recent times, we have witnessed tremendous policy reforms and recommendations being made to tackle and control the manner in which businesses carry out their accounting work. Numerous accounting mismanagement and malpractices have only added to the urgency to bring regulations that seek to keep a check on accounting procedures followed by the corporate world. The failure of companies such as Enron due to inappropriate accounting tactics stands out as a perfect example. Investors in the form of shareholders and stakeholders provide huge sum of capital anticipating higher future returns. Firms are known to tamper with financial data in order to attract prospective investors to finance their capital requirements and debt elimination. Recently, Shell, one of world biggest energy and oil producing companies was accused of overstating oil reserves to attract investments and had eventually admitted to have tampered with its financial data. Therefore, proper scrutiny of financial statements is essentials especially since various individual and business interests are developed citing information provided in these statements. Countries such as the US have come up with regulations such as US GAAP1 to assess financial policies pursued by corporates and the format to be followed in publishing financial statements. Countries have adopt accounting procedures and guidelines framed under the International Financial Reporting Standards (IFRS) to eliminate discrepancies in financial analysis, improve investment opportunities and to make financial information available. By 2005, all companies registered in the EU have to adhere by new accounting standard. Countries such as UK have come under immense pressure to replace UK GAAP with the new IFRS scheme. Investors often depend on various financial ratios to determine when and where to invest. Such complexities and the presence of diverse interests groups make it essential to develop financial mechanisms that determine the financial health of a company. Companies have to publish Annual Reports that summarise its financial status and act as a medium of information to its shareholders. An important and significant step in determining the health of a company is to analysis its historical financial statements. These historical data provides a picture of the financial health of a business and a roadmap outlining the direction the business is heading. The financial data are covered under various headings such as the Balance Sheet and Income Statements. Each of these has a particular format and is based on the principles of financial regulation framework such as the GAAP. We shall look at them briefly in the following chapter and also look at other techniques developed due to the shortcoming some of these financial ratios are known to show. 2.0 Understanding Financial Ratios Ratio is nothing but the comparison of one figure with another and is normally depicted as a percentage. Financial ratio is an analytical tool used to analyse trends, strength and weakness of a companys assets and its liabilities. Financial ratios are compared overtime on a year to year basis. The basic source for these ratios comes from the companys financial statements which contains information on the assets, liabilities, profits and losses and dividends accruing to its shareholders.2 The most common ratios can be classified under the following headings: Profitability Ratios Liquidity Ratios Capital Structure Ratios In the financial world, firms rely on investors to raise funds for its short and long term needs. This is done by floating shares in the stock markets or by issuing debentures or bonds (loans). The funds may come in the form of short term, medium or long term loans. An investor will only invest if he is fully convinced that his investment will gain higher returns/dividends. He may look at the balance sheet to analyse how much the company is worth. Liquidity is an important criterion that influences investor decisions. The company must be able to pay back its loans on time and doing so will only raise its reputation in the capital market for future borrowings. The company that relies heavily on borrowing its expenses will obviously find it difficult to service its liabilities. Besides, customers spending habit has a larger impact on the companys sales and liquidity. Purchase affects the companys stock of goods which, in turn, affects its liquidity. Since stocks cannot be sold in short notice, it has a direct impact on the firms capability to raise fund to finance short term debt financing. The current liabilities have to be settled in cash within short period of time. The presence of large stocks will artificially inflate the total current assets which may make it appear as if the company has enough resources to meet its short term liabilities. We shall look at some popular ratios that, though informative, cannot be used as an ideal tool for financial analysis. Lets see how. The annual report 2004 of The EMI Group suggests that group has current assets (including stocks) worth  £1107 million and current liabilities worth  £1403.5 million. The resultant current ratio is 0.78:1.3 This figure suggests that the Group does not have enough short term resources to meet its short term requirements. It has only 78 pence to meet a pound of debt. If we deduct the stocks ( £36.4 million) from its current assets to see its immediate liquidity, the quick ratio shows an even poor debt financing capability. The quick ratio is 0.76:1.4 This figure suggests that the Group has only 76 pence to meet every 1 pound worth of debt.5 Analysing the results suggest that it would be inappropriate to rely on the current ratio as it does not explain how much the company real assets are readily convertible into cash in short notice. Stocks are not highly liquid and therefore must be excluded in assessing the companys liquidity in the short period. Therefore, current ratio cannot be used as a reliable means to make investment decisions and that it essential that we look at other ratios and their merits and demerits to determine which of these is appropriate in the capital market. The Gross Profit Ratio is the ratio between the Gross Profit and the Sales Revenue. The Gross Profits is arrived at by deducting the Cost of Sales from the Sales Revenue.6 To analyse this ratio we shall look at the Income Statement of The Sandvik Group.7 The Consolidated Income Statement suggests that the group had an Invoiced Sales of  £4010.2 million and Cost of Sales equalling  £2742 million. The GP ratio between these two figures is 1.46:1 meaning that the group is able to make 46 pence extra from every  £1 of sales. It may look appealing but it must be noted that the Cost of Sales does not include other expenses that may significantly reduce the gross profits.8 If we deduct other expenses worth  £741.9 million, the operating profits drop to  £526.3 million. The Shareholders and the companys future investment plans and its dividend policies depends on the Net Profits. It is arrived at by deducting the interest payables. The Sandviks Net Profits for the year after tax de ductions are equivalent to  £327million. We can see that though the Gross Profit ratio is a useful ratio it does not shows the companys financial position and does not influence any investment decisions. The real true figure that matters is the Net Profits after taxation. The ratio categorised under capital structure ratios are more elaborate and descriptive. However when using ratios such as gearing and interest cover, factor such as market structure, consumer preference and taste, economies of scale, product type have considerable influence. For example, payments from debtors depends of consumer income and preference. These factors have its affect on the current assets (cash) which will in turn affect the company ability to pay its creditors. The points here is that though some factors cannot be measured and may not have direct consequences (market structure) it cannot be ignored. The ideas highlighted above are very important in performing financial analysis of a company. The accounting professionals have introduced techniques that are more accurate and explicable. We shall look at one such technique in the next chapter. 3.0 Improvement in assessment of financial statement. We have seen the technical failure of various financial ratios and the difficulty in using them as a tool to make investment decisions. Comparing financial results from different periods has its own drawbacks because there are no independent frameworks to assess whether the companys current results are good or bad. It is very important that care must be taken when comparing results between two different companies in terms of products, size, market share etc. For example, company A may have a significant market share (turnover) compared to company Bs but smaller net profit due to its bigger operational costs. Such discrepancies can influence wrong investment patterns and decisions. Another major drawback of ratio analysis is that accountants indulge in creative accounting techniques where ratios calculated from published financial statements show favourable figures. For example, sale and repurchase agreements manipulate liquidity figures and off-balance sheet finance which distorts return on capital employed and thereby influencing companys gearing. It is therefore essential that new approach to assessing financial statement must be devised and changed to suit to new market conditions. One such technique was developed by Professor Altman who devised a new technique popularly known as the Z-Score.9 The Z-Score is a statistical model that incorporates the use of five different ratios which serve to predict the health of a firm.10 The Z-Score is used to predict bankruptcy of the business using traditional financial ratios and statistical method known as the Multiple Discriminant Analysis. The Z-score is considered to be 90 % accurate in forecasting business failure one year into the future and 80 percent accurate in forecasting it two years into the future.11 By selecting various financial ratios and applying weight to each ratio it is possible to estimate the financial position of the company. In his study, he analysed over 22 such financial ratios and selected 5 distinctive ratios that focused on the balance sheet and performance ratios. Weights were assigned by establishing appropriate coefficients to show how each of these ratios influenced the dependent Z-Score. Altman Z-Score equation: Z = X1 (a) + X2 (b) + X3 (c) + X4 (d) + X5 (e)12 Where, X1 Working Capital/Total Assets. X2 Retained Earning/Total Assets. X3 EBIT/Total Assets.13 X4 Market Value Equity/Book Value of Total Debt. X5 Sales/Total Assets a, b, c, d, e are respective coefficient assigned to each ratios (X1,X2 ¦Ã‚ ¦..X5). Z Overall Z-Score. Now, companies expand their reach in the global market by producing goods that belong to different markets. Firms engage in horizontal and vertical integration to expand their market and also to reduce risk by spreading their resources in different activities. It is therefore illogical to do a financial comparison of firms from different industry. Professor Altman overcame the problem of comparing companies that specialised in different industries by altering the above equation by eliminating certain ratios. For example, Ratio X5 for non-manufacturing companies. This is done because sales/total assets ratio greatly varies from industry to industry. Z = X1 (a) + X2 (b) + X3 (c) + X4 (d) He modified the equation for a privately held company by implementing book value of equity as a private companys stocks are not publicly traded. He further devised Z Score table to determine a financial healthy company from a sick company in various industries. The companies in the grey area were considered misclassified. Unhealthy Gray Area Healthy Private Companies < 1.23 1.23 2.90 > 2.90 Public Companies < 1.81 1.81 2.99 > 2.99 Non Manufacturing Companies < 1.00 1.11 2.60 > 2.60 The Z Score technique is gaining popularity in the financial world as an efficient and accurate method to predict financial health of a company and also it is less likely to be manipulated as Ratio Analysis are known to be. In the next chapter I shall focus on the International Financial Reporting standard and look at ways it can be improved to promote comparability and facilitate globalisation and movement of capital. 4.0 Financial Reporting and Applications. The International Financial Reporting Standards also known as the International Accounting Standard are a set of accounting standards companies must follow when formulating financial policies and publication of financial statements. In the EU, new regulations require EU companies to adopt International Accounting Standards by the year 2005. Questions have been raised as to whether we need international standards with massive movement towards free market. As Mr. Andrew Crockett puts in advances in IT and the ascendancy of free market principles have underpinned government-led to market-led financial system ¦.the period saw the emergence of financial instability 14 Mr. Crockett also stress on the fact that we need to develop, seek global acceptance of, and implement a set of codes or standards that pertain to key elements of financial system infrastructure . It was felt that certain regulations on financial prices, financial statements framework, and accounting principles pertaining to domestic and cross border transactions were hindering market forces. These factors combined with the shift towards greater fiscal and monetary prudence laid the foundation for a system that controlled capital movement across borders and international standards that improved global accounting principles. The steps taken to achieve efficient financial mechanism must be able to address two factors firstly, it must be able to identify the most economic way of utilising resources and secondly, it must be able to control the manner in which these resources are utilised. It forms the basis for the allocation of income among various claimants on the company and to bring in financial discipline. The major advantages of such reporting standards are:- It helps in poverty reduction by reducing the risk of financial crisis and their impact on the global poor. It achieves significance because the scope of globalisation has reached almost every single country. It helps in creating investor confidence by improving investment climate, eradication of loopholes affecting direct and indirect investments. Its helps by eliminating barriers on free movement of market information and sentiments. It assists local governments to implement taxation regulations and also unwanted barriers to trade. Despite the advantages of having international standards for financial reporting, it is quite evident that certain factors act as a barrier to accounting standards. For e.g. the UK banking sector has been in the forefront of this conflict between the international standards and the national standards. Lets very briefly look at two such regulations that will have an impact on the banking sector the Basel II capital accord and International Financial Reporting Standards (IFRS), which apply to all companies listed in the EU.15 Basel II requires banks to link their capital to risk. It is likely to have consequences on all types of lending to SMEs and large companies. Despite the advantages in terms of better risk management and accurate pricing of loans, the complexity involved in switching will cause some problems. The eventual replacement of UK GAAP with the IFRS comes with the complexity of changing over, cost involved and bad debt provisions. According to an article published in the Business Money magazine by Mr. Mike Imeson, the HSBC bank incurred $ 400 million in expense to bring regulatory changes in accounting standards world over in 2003. Similar sentiments were expressed by Mr. Stephen Pegge, Lloyd TSB in this article by saying that when a business approaches you for a loan, you wont know for certain which legislation applies .16 Considering the above statements, it is essential to look at national concern towards the development of an international standard on financial regulation. It is true that it will improve investment opportunities by elimination of unwanted barriers and it is also likely to create expenses that may prove as a hindrance to an already volatile and underdeveloped financial systems in most countries. As Mr. Pegge puts in, it will create confusion in the mind of investors and lenders as to what legislation applies and bureaucratic delays in understanding and applying them. 5.0 Conclusions In the preceding chapters, we have seen the importance of financial analysis in investment choice and decision making. The ratio forms a very important aspect in making financial choices and also acts as a medium for companies to assess their business performance. Financial analysis of these ratios influences the interests of various groups of individuals and organisations such as Individual shareholders, Employees, Managers, Directors, Governments. Considering these interest groups and affects on each of these entities, the need for an international framework for accounting standard has being increasing felt. It acts as a medium of information for the investors who would assess the basis for making further investments and also to see how well the company is performing. The managers stand to benefit as their remuneration and income are directly linked to the company performance. The governments policy towards economic development and need for further reforms are based on these financial analysis and financial statements. It forms the basis for taxes on trade and tax benefits and exemptions. While the importance haves been highlighted, it is also essential to note that drawbacks are not ignored. As Mr. Pegge points out there must be a clear understanding of the legislations and it must work towards reducing costs rather than increasing it. To conclude, financial reforms and regulations are an essential component in todays global economy. Financial statements must as an informative source free from manipulations of date and figures. References and Bibliography Chartered Institute of Management Accountant (CIMA), (2005 Edition), Financial Accounting Fundamentals Paper C2. Chartered Institute of Management Accountant (CIMA), (2005 Edition), Management Accounting Fundamentals Paper C1. Annual Report, 2004, The EMI Group. Annual Report, 2004, The Sandvik Group. Internet Sources: The EMI Group www.emigroup.com/financial.html The Sandvik Group www3.sandvik.com/pdf/annualreports/sandvik2004_eng_web.pdf Vercor The Global Resource for Business, Sales, Merger and Acquisitions www.vercoradvisor.com/articles/companyscore.html Bank for International Settlement www.bis.org/speeches/sp020227.htm BusinessMoney.com http://www.business-money.com/features_mike_imeson_jan05.html Ventureline www.ventureline.com/SampleOneIndustry.asp

Speak Noah

Bogeyman Mrs.. Johnson February 14, 2013 English Honors Period 3 An Untold Story â€Å"There is no greater agony than bearing an untold story inside you. † (Maya Angelo) The novel Speak details the life story of Melinda Sordid, a freshman in high school, and how both the traumatic and happy events of her life shape her character. In the summer before entering high school, Melinda is invited to a party that changes her life; and it is not for the better. A senior in high school named Andy Evans rapes her, and since she is so scared, she calls the police, they arrive shortly, and proceed to reek up the party.Throughout Speak, Melinda is reassured by a poster of Maya Angelo, who was also raped as a child, but went on to become a successful public figure and author. A major theme that echoes throughout the novel Speak is that all people are made smarter not by aging, but by the experiences they have been through. This fact that experience defines a person is evident in Melanin's l ife by both the traumatic experience she has of rape and the enjoyable experience she has attending Mr.. Freeman's art classes. These two opposite influences wage war and, in he end, Melinda decides to emerge from her shell.When she speaks to her middle school friend-turned-enemy Rachel about the event at the summer party, Melinda is accepted with open arms and forgiven of her accusations. Through the symbol of the white couch and the metaphors of the seasonal change and the tree, which is each effectively inserted into Speak, one can tell that a person grows through learning from his experience rather than by mere aging. Most trees are a symbol of life when they are full of leaves in the summer, or a symbol of death when they have lost all heir leaves in winter.In Speak, however, as shown on page 12 by Mr.. Freeman and Melanin's brief conversation, the tree actually represents Melanin's life story, â€Å"By the end of the year, you must figure out how to make your object say somet hing, express an emotion, speak to every person who looks at it. † This introduction to art by Mr.. Freeman turns out to play a big role in Melanin's life because the object she chooses mirrors the Journey of her life. Melinda thinks to herself, â€Å"Some people groan. My stomach flutters. Can he really let us do this? It sounds like too much fun. Tree?It's too easy. I learned how to draw a tree in second grade. I reach in for another piece of paper. † Just as she is about to grab the second paper, Mr.. Freeman dissuades her by saying, Mimi Just chose your destiny, you can't change that. † This quote is the beginning of a book-long metaphor for the progression of Melanin's life; as Melinda improves her drawing of the tree, her life improves. Throughout the rest of Speak there are many other references to the tree metaphor; with each successful encounter of Melanin's tree project, her artistic ability has shown improvement.This correlates with her life improving t hrough the experience she has gained. On page 15 of Speak, Melinda returns home from school, sits down on her white couch, and orders pizza. The white couch symbolizes Melinda; this is shown by the following trick to eating on it is to turn the messy side of the cushions up. The couch has two personalities: ‘Melinda inhaling pepperoni and mushroom' and ‘No one ever eats in the family room, no ma'am. ‘ Flip, flip, flip – cushions reversed to show their pretty white cheeks† (15).This quote is a symbol of Melanin's life because the hidden underside of the couch is symbolizing Melanin's secrets that are buried and not visible to people on the outside. Although, what makes the couch such a great example, is that the visible exterior of the couch is white, which symbolizes purity. On the contrary, the white couch looks repulsive if it is dirty; this relates to a possible reality for Melinda because if she does not speak up, but instead buries her abuse under neath a clean exterior, she cannot be fully clearness of her burden.Thus, by not peaking up to the world about how she was raped at a party last summer, she can never reach her true potential of the beautiful, white couch. Melanin's reasoning behind hiding the real couch and the truth behind the party is that she fears that people will Judge her for her imperfections. Through the experience she has gained in her freshman year of high school, Melinda realizes that the only way for her to conquer her fear is to use those various positive and negative incidents to help her grow in maturity through experience.A final example of metaphoric language append to occur on the final page of Speak. It is the last day of Melanin's freshman year and the person she must talk to is Mr.. Freeman. Melinda ideates, â€Å"The tears dissolve the last block of ice in my throat. I feel the frozen stillness melt down through the inside of me, dripping shards of ice that vanish in a puddle of sunlight on t he stained floor† (198). The ice in this quote represents Melanin's secrets that are weighing her down, not allowing her to speak up for herself, and harming her physically (Andy hurt Melinda after she told Rachel Andy raped Melinda).The tears signify the experiences she has undergone in high school and how those experiences allowed her to mature. The sunlight on the stained floor symbolizes Melanin's artwork of the tree; how the tree emanates warmth to cure Melanin's ailment of a frozen mind. Without the experience Melinda had by communicating with Mr.. Freeman, she would never have been able to face her fears and come out of her shell. Speak is overflowing with metaphorical expressions, but many readers do not understand the implications behind the author's use of a particular metaphor in a even situation.People think, â€Å"Oh, I know this is a metaphor,† and then move on reading. This ignorance of the meaning behind symbolism is actually a symbol for how those indiv iduals live their lives. The following quote by Maya Angelo shows this ignorance of symbolism in a real world sense, â€Å"Most people don't grow up. Most people age. They find parking spaces, honor their credit cards, get married, have children, and call that maturity. What that is, is aging. † For example, whenever a person attends a party, the driving factor behind that party's success is the quality of inversion.If everyone there was one of the â€Å"most people† that Maya Angelo mentions, the party would be dull and boring, and it would only age the people rather than provide them with new experiences. In summation, if one is to truly live and contribute to society, he must be so overflowing with experiences that he will use metaphors to describe accurately a situation that he has encountered; without wasting the time that could be spent living through more life Journeys and garnering experience, rather than aging by merely passing through life.

Case on Air Deccan

Case Study Strategic management Evaluation II AIR DECCAN: REVOLUTIONISING THE INDIAN SKIES Air Travel in India For decades, air travel in India was meant for the most elite and powerful in society. An overwhelming majority of travellers who could not afford the prohibitive air travel fares, preferred to journey on trains and buses. The revolutionizing effects of liberalization swept India with dynamic changes in the aviation sector. From being a service that few could afford, the sector has now graduated to being a fiercely competitive industry with the presence of a number of private and public airlines and several consumer-oriented offerings. In ten years of competition in the aviation sector, private airlines have changed the rules of the game, and they now account for more than 60 % of the domestic aviation market. More and more middle class families in India now prefer air travel to the more traditional travel by train. In 2003, 10 million Indians travelled by air domestically. In 2004, 25 million took to the skies within India and 6 million Indians travelled abroad. The Centre for Asia Pacific Aviation estimates that the domestic Indian market will add 5 million passengers every year for the next five years, growing to 45 million passengers by 2010. Today, the relationship of domestic to international travel stands at 40:60 whereas in 1994 it stood at only 25:75. But taking into account a growing middle class with increased and increasing purchasing power, there are 200-210 million potential spenders. The Indian population grows at a rate of 8% per year. Around 100 million travellers every day on state-owned Indian Railways, If air travel bites into even a small percentage of this huge pie, that’s still clearly a tremendous growth opportunity. The entry of budget airlines like Air Deccan, the introduction of cheap airfares by other domestic carriers, combined with rising incomes and consumption of the middle class as also their growing aspirations, have created this new paradigm: Air travel is no longer for the elite. Air Travel Market The new entrants have caused a shift in the market share for the old hands. The three legacy airlines, Jet Airways, state-owned Indian and Air Sahara, saw their market share slipping in first quarter of this year. Jet Airways, still the leader, found its share of market volumes slipping with 34. 9%. Indian at 23. 9% and Air Deccan at 10% followed suit. Low-cost airlines are certainly giving a tough time to full service carriers whose market share has dipped, as has their revenue. Fares have been slashed drastically and both Jet Airways and Indian are wooing the consumers with special schemes and promotions. Several new entrants such as Air Deccan, SpiceJet, GoAir, Kingfisher and Paramount have begun to dot Indian airspace, garnering a market share of more than 31% in the first quarter of 2006. The leader among this brat-pack is clearly Air Deccan – the airline has doubled its market share to 15. 2 per cent. Kingfisher and SpiceJet have captured a market share of 8. 3 per cent and 6 per cent respectively. Coimbatore-based Paramount Airways has publicly confirmed garnering 0. 3% of the market. Jeh Wadia’s GoAir is also going great guns by cornering 1. 6% of the air traffic in a short time span. These airlines took to the skies after the first quarter of last year. All the airlines have seen an increase in the number of passengers carried in the first quarter. With all the start-ups planning significant increases in capacity this year — Kingfisher (fleet may go up to 20 planes), Deccan (38 planes), SpiceJet (12/14 planes), Go (7/9 planes) and Paramount (10 planes) — the market is set to sizzle. The market is gearing up for an adventurous ride of price wars as six more low-budget airlines waiting in the wings – Jagson Airlines, King Air, Mega Airways, Indus Air and Megapode Airline. IndiGo has made its entry as well, with ambitious plans to induct 100 aircraft into its fleet. According to analysts, airfares will continue to nosedive, as nearly 200 new aircraft will be added to the existing 250 aircraft in the country. All this translates to further downward revision of fares and packaged offers for passengers. Lessons The case is replete with illustrations of how Captain Gopinath crafted the company from scratch. He went on a ‘boot strapping' mode, which is the hallmark of a successful entrepreneur. The constancy of purpose, focus and humility are evident. His ability to sense opportunities from chance encounters (such as a visit to the USA or the Southeast Asian countries) are out of the ordinary experience. These and many other qualities are a ‘must have' list of qualities of a successful entrepreneur. Anyone aspiring to succeed in an entrepreneurial venture will do well to emulate these qualities, among others. Rise of Air Deccan â€Å"It hit me like a ton of bricks. This country has a population of a billion, but only 15 million air passengers. May be the time is right. If one billion people can fly, and we get a miniscule percent of the market, imagine how big that will be? It's not an impossible dream. † – Captain Gopinath, in The Hindu, Sunday, August 15, 2004 Air Deccan, India's first Low-cost Airline (LCA), started off with more of a whimper than a bang in September 2003 with an aborted maiden flight from Hyderabad that didn't quite make it off the ground when a fire broke out in one of its engines. Adding to the embarrassment was the presence of the then Union Minister of State for Civil Aviation, Pratap Singh Rudy and other senior Indian politicians on the flight. The press had a field day criticizing the ‘maestro behind the mayhem ‘Captain Gopinath, the Managing Director of Air Deccan. There were many prophesies of doom by competing airlines and industry analysts who were convinced that the bad publicity with which the airline took off would drive away customers. Captain Gopinath, however, remained unfazed and calmly went about doing what he did best succeeding at the task that he had set out to do. Making a shaky start with just two ATR turbo-prop aircraft in September 2003, Air Deccan now operates 75 flights a day to around 32 destinations in India and has increased its fleet to three Airbus 320's and seven ATR 42's. This flock of aircraft is constantly growing. As of March 2004, Air Deccan has recorded annual revenues of $120 mn (Rs. 5520 mn) with a passenger load as high as 83% across sectors and some routes like Bangalore-Hyderabad and Bangalore-Goa, recording 100% loads (Exhibit 1 and 2). In December 2004 Captain Gopinath cut a deal with Airbus, the world's largest manufacturer of civil aircraft, for the purchase of 30 A320 aircraft valued at over $1. 4 bn. The delivery of these new aircraft will commence in 2007. While the airbus will operate on trunk routes, the smaller airports will be connected with ATR's. The company has signed a deal with ATR for supply of 30 aircraft over the next few years, of which half will be on lease and the rest will be purchased. A distinctive strength of Air Deccan vis-a-vis any of the big three airlines in the country (Indian Airlines, Jet Airways and Sahara) is its ability to penetrate into the small towns of India. This provides the company almost an exclusive access , to 75% of the population of the country that lives in small towns and rural areas. Air Deccan has been instrumental in getting the Government to open up many of these small town airports, some of which had fallen into disuse over the years. In contrast to the swanky airports of the big cities Such as Mumbai and Chennai, these more modest cousins need very little investment on the part of the government to recommission them and the ‘airport terminal’ is often no more than a tin shed or a thatched hut. But according to Captain Gopinath, ‘What the hell, they serve their purpose’. This obsessive focus o costs and functionality is perhaps what best epitomizes the philosophy of the main behind Air Deccan. The Low Cost Business Model: A popular mantra Air Deccan triggered the race to the bottom in the low cost sector. Their model forced the industry to move from having simple economy, business and first class fares, to multiple slab tariffs such as apex fares, internet auctions, special discounts, bulk purchases and last day fares. Some of the tariffs offered are so low that they have brought airline fares neck-to-neck with upper class railway fares. This low cost model is two-fold: offering connectivity between smaller cities and major metros and making air travel a feasible option to a new class of passengers. The features and benefits of the model are listed in the table below: Features| Benefits| Ticketless travel & Online ticket sales| Reduction of huge costs of printing| No international offices| and processing tickets. | Use of secondary city airports| Lower landing and parking costs in| No frequent flyer points| secondary city airports| No free food & beverages/in-flight magazines| High seat capacity due to nil storage of food| No club lounges| Minimal training (of pilots) and| Same aircraft types | maintenance (of spares for different types of aircrafts) costs. | Separate ticket for each sector/flight|   | No premium class|   | Short haul flights| Quicker turnaround and higher aircraft utilization | Challenges and constraints still persist: * India is a very cost conscious society, hence market is very sensitive to air fares * Internet based solutions limited-Bandwidth restrictions and low internet penetration * Changing needs of the business traveller puts more pressure on the travel agents to offer wide variety * Travel agents still the first choice for air bookings * While aviation is centrally managed, the regional structure of India’s government and regulations, combined with the often regional management of airline companies, has created a fragmented market for corporate travel. STRATEGY The challenges that the company has to face are now only beginning. In the initial stages of the company, many of the established players (Indian Airlines, Jet Airways and Sahara) would have trivialized the company and not expected it to reach the level it has reached now . Suddenly, the company has appeared as a big dot on the radar screen of  these well-established players. The existing paradigm is that running an airline requires large funding, something that Captain Gopinath lacked. Hence, the existing players would have concluded that this venture was bound to fail. However, there was a lot of  entrepreneurial creativity manifested by Captain Gopi that helped him make his dream a reality, and today Air Deccan is a force to reckon with. Besides, many other ‘me too' low cost airlines are already on the anvil. The Government and the realities are also things to reckon with. Participant teams may identify other challenges as well. How Captain Gopi and his team will deal with all these identified challenges will make observation interesting. Strategy as per the porter’s force model: Kingfisher Red Oct. 17–MUMBAI, India — Kingfisher airlines has signed up with Air-Deccan to buy out the Bangalore-based low-cost airline's extra ASKMs (available seat kilometres) on category 2, 2A and 3 routes. The Vijay Mallya promoted airline will buy about 800,000 ASKMs for the months of October and November, which will enable it to continue its expansion on the metro routes. The DGCA guidelines require airlines flying on the primary routes to fly a certain percentage of their total flights on other, less popular routes. Growth: Indian Travel is on a roll†¦here’s why In India, travel and tourism activity is expected to grow by 8. 0% per annum in real terms between 2007 and 2016. As per World Travel and Tourism Council (WTTC), India will emerge as the second-fastest growing tourism economy globally between 2005 and 2014, second only to by China. Successful promotions such as the Tourism Ministry's hit â€Å"Incredible India† multimedia campaign and the budget air travel boom are reckoned to have contributed to the tourism gold rush. Summary: Indian Skies are experiencing a new dawn: * Rising income and consumer confidence in key markets-personal travel demand on an increase * Travel liberalization gathering pace * Leisure travel increasingly more affordable * Low Cost Carriers are reshaping air travel, leading to regional liberalization * Branded hotels with air routes have discovered India in exotic places like Goa and the North East * Airport privatisation of Mumbai and Delhi progress and confidence develops in creating tourism infrastructure

Psychology Is A Scientific Discipline That Studies The

Psychology is a scientific discipline that studies the mind, how it works and how it affects an individual’s behaviour. Over time, psychodynamic, behavioural, cognitive, humanistic and evolutionary perspectives have been developed for understanding of psychological occurrences (Burton, Westen Kowalski, 2015). They continue to contribute to the way that psychologists, health professionals and others look at human behaviour and mental processes. In an allied health context, it is important to not only be aware of physical problems presented by patients, but to also be aware of their mental and social condition. In fact, â€Å"the biopsychosocial model reflects the belief that biological, psychological, and social factors interact in an†¦show more content†¦In 1974, Baddeley and Hitch proposed that short term memory be replaced with working memory- composed of a central executive to direct attention towards information from a phonological loop for speech based informat ion or visuospatial sketchpad for visual information as well as an easily accessible component for storage, the episodic buffer (Baddeley, 2004). When information is repeated in a process called ‘rehearsal’ and elaborated upon, it is transferred to Long Term Memory (LTM), a type of memory that stores more information, but does not allow it to be easily accessed (Burton, Westen Kowalski, 2015). Long term memory can be further classified as explicit or implicit, also called declarative and procedural. 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