Parental Involvement, Poverty, and Student Achievement Essay

Current education reform is intended to influence higher student achievement. According to Hanushek (1997), the development of school reform is largely motivated by economic issues. Education reform becomes a meaningful topic on the national agenda when the National Commission on Excellence in Education issued a report, A Nation At Risk (1983). This report focused on the claim that a steady increase in mediocrity had overcome schools which impacted upon the economic competitiveness of the country. One example of this competitiveness was when the Soviet Union 1957 launched Sputnik. It was concluded that declines in educational performance were in large part the result of inadequacies in the way the educational process was conducted. The findings that follow, selected from a much more extensive list, reflect four important aspects of the educational process: content, expectations, time, and teaching. The United States government responded by beginning reform of how its educational system. As part of this process, all segments, including parent committees, were formed to give attention to the implementation of the recommendations of the report. The report further stated that reform should not only come from students, teachers, school boards, colleges and universities, local, state, and federal officials, teachers’ and administrators’ organizations, but also from parents themselves with interested in and responsibility for educational significance begin with the parent. Moreover, you bear a responsibility to participate actively in your child’s education. You should encourage more diligent study and discourage satisfaction with mediocrity and the attitude that says let it slide, monitor your child’s study; encourage good study habits; encourage your child to take more demanding rather than less demanding courses; nurture your child’s curiosity, creativity, and confidence; and be an active participant in the work of the schools. Above all, exhibit a commitment to continued learning in your own life. Finally, help your children understand that excellence in education cannot be achieved without intellectual and moral integrity coupled with hard work and commitment (p. 26) Henderson and Berla (1994) did extensive research linking parental involvement to student achievement. There are a variety of parenting practices that have been associated with positive student outcomes. Despite this research, Desimone (2001) contends that there is still no clear understanding of how patterns and effects of parental involvement differ across ethnic and income groups. Previous studies have shown that parent involvement patterns vary according to parental social, racial-ethnic, and economic characteristics (Catsambis & Garland, 1997), but the findings have been mixed. Several studies have reported that low income minority parents often have different beliefs about parents’ role in school involvement are less involved in school activities than higher income, non-minority parents (Delgado-Gaitan, 1991; Chavkin & Williams, 1993). Other studies, however, have demonstrated that the level of parent involvement by race-ethnicity (i. e. , Asian, African-American, Hispanic, and white) differs for only a few types of involvement and that minority parents have higher levels of involvement in certain areas than do white parents (Catsambis & Garland, 1997). Previous studies have reported that low-income minority parents often have different beliefs regarding parental roles in school involvement and are less involved (Chavkin & Williams, 1993). Comer and Haynes (1991) have hypothesized that low income and inner city minority students may be more positively affected by certain types of parent involvement than other students. According to them, in order for parental involvement programs to be successful, they need to be focused upon a school improvement process that is designed to create positive relationships that support the total development of children and not the traditional bureaucratic or authoritative school environment which is a less collaborative structure. Other theorists (Devaney, Ellwood, and Love, 1997; Lewit, Terman, & Behrman, 1997) suggests that parental involvement may not be as effective in improving student achievement for low income children as for children from middle class homes. Because the large number of risk factors that impact upon children living in poverty, including health, safety, and housing, the role of parental involvement in schools in explaining academic outcomes for those children may be significantly less than for their peers who do not experience as many negative environment influences. Desimone (2001) suggests that race-ethnicity and other background characteristics can be strong mediators in the effects of various types of parental actions and the impact they have on student achievement. While work in this area is limited, there is little information that compares the effects of multiple forms of parental involvement across several racial/ethnic and income groups. McNeal’s (2001) study investigated the relationships between parent involvement and socioeconomic status. Findings indicated that parental involvement was an important factor in explaining behavioral outcomes (such as truancy and dropping out) but not cognitive outcomes (such as science achievement), with the greatest support for parent child discussion and involvement in parent-teacher organizations. He contends that there have been inconsistencies with the findings linking parental involvement to academic achievement. The contradictions likely were related to one of the following weaknesses in research. The first condition was the use of perception measures by teachers rather than direct reports by students and/or parents. Another was a failure to fully conceptualize parent involvement into its constituent parts. The last was not fully assessing the extent to which parental involvement differently affects academic achievement by social class. The three shortcomings can be improved upon but parent involvement has little effect on student achievement because it is a cognitive outcome and parental involvement affects behavioral outcomes. Reginald Clark’s research shares findings from a body of research on closing achievement gaps in urban school communities (Ferguson, Clark, & Stewart, 2002). In Clark documents the importance of five influential factors for improved students achievement, especially among disadvantages urban students. The first factor is described as the teacher’s expectations and actions in the classroom. The second is amount of students’ weekly participation in high-yield in and out of school activities. High-yield out of school activities include: leisure reading, writing, studying, and participation in community and school clubs or programs, and playing organized sports. High-yield in school activities include participating in classroom lessons as well as structured leisure activities. The third factor is the quality of students’ participation in and out of school activities. The fourth factor is parental beliefs and expectations. The fifth factor is parent-teacher communication. Ferguson, Clark and Stewart, 2002 found that the type and amounts of constructive in school and out of school learning activities contribute to a success-oriented lifestyle. More specifically, Clark found that high achieving activities. Some examples of actions in the classroom include reading, working alone on a lesson, listening to a lecture, solving a problem with classmates, or asking questions. Ferguson, Clark and Stewart, 2002 found that high achievers spent more time during out of school high-yield learning activities than low achievers. Some activities include: weekly time dialoguing with adults, hobby or volunteer activities, or organized sports. Regular study and homework routines, with adult monitoring or support, and reading and writing activities also were seen as practices in the home. Some less structured or unstructured activities include hanging out, playing video games, talking on the telephone, and watching television. Ferguson, Clark and Stewart 2002 found that the beliefs and attitudes of parents had a significant role in student success in becoming competent readers. The analysis of data from parents of 459 students about their expectations for their child’s learning and their perception of whether they had been supported by their child’s teacher showed that students benefit when parents set high standards for their child’s performance in school and feel personally supported by partnerships they have formed with their child’s teacher. Lastly, Clark indicates that parent beliefs are likely to be influenced by parent-teacher communication. In other words, parents may benefits from well-organized teacher-led communications. When teachers take specific actions to cultivate instructional partnerships with parents, those parents are more likely to support their children’s learning at home. Clark’s data showed that students’ scores were higher on the Tennessee Comprehensive Assessment in reading when teachers reported more communication with parents. REFERENCES Bankston, C. L. , & Caldas, S. J. (1998). Family structure, schoolmates, and racial inequalities in school achievement. Journal of Marriage and the Family, 60, 715-723. Braswell. J. S. , Lutkus,A. D. , Grigg,W. S. , Santapau, S. L. , Tay-Lim, B. , & Johnson, M. (2001). Subgroup results for the nation and the states. In The nation’s report card: Mathematics 2000 (pp. 53-181). Washington DC: U. S. Department of Education, Office of Educational Research and Improvement, National Center for Education Statistics.

Concerts Across Time

Music Is the heart of culture and has affected people In more ways than the average person can have on someone. It can take you on a journey or help bring closure to a(n) ending journey. Music has always done this through the changes in time and the persona behind the music. Music will always grasp the changing culture's heart based on the time period. Baroque music is different from what today's culture would call popular music. The role of music concerts is also something to be studied further in the paper as well.People who attended Baroque concerts may very well differ from the people who attend today's rock concerts. Then we cannot forget the impact that technology has had on music of the past and the present. Baroque music can be classified as a dramatic style of music per Webster Dictionary. The concert I chose to listen to was Monteverdi Amour Sacra, Amour Profane. This piece was very beautiful and touching. I enjoyed It much more than I thought I would have considering I Eve never really listened to his music, though I have listened to various other classical composers of the Baroque period.The reason that I enjoyed this concert was because of the ensemble for one. The vocals were very beautiful and relaxing and made me feel at peace with the world around me. Parts of the music made me want to dance in a ballroom wearing a big fancy gown. Other parts of the concert made me think of life as it were back then and wonder what it would've been like to be there in person and watch the actual performance. On another note popular music deals with music that Is popular to today's society. For this concert, I chose a concert performed by Evanescence which was posted on Youth.This concert was definitely not a favorite. Though I am familiar with some of their earlier works, this concert was not exactly something to put the mind at ease, It was more of pumping up the crowd and a little dark. The vocals could not be heard as clearly as the previous concert and the tone was definitely a bit darker. So overall I did not enjoy this concert as much as I did the performers of the Baroque music. There are various similarities and differences amongst the two genres of music. The role of concerts from both the Baroque period and now are similar in that they re for entertainment.Back in the Baroque time period music was performed at churches or for the King and Queens or for anyone who could afford such an event. Almost like concerts today that are held for anyone that will be willing to pay versus just the rich and noble. The people that attend today's rock concerts however are generally classified as memo, Goth, skaters, snowboarders, rock and roll fans and the list could go on. If we look at popular music as a whole however, everyone who Is anyone will attend a concert. The basis for this Is that It depends on what type of USIA a person likes.Someone who attends a rock concert might not attend a Jazz concert, it all just depends whereas in the Baro que period concerts were held to a The instruments from both of these concerts were complete opposite of each other much like the difference between Baroque music and popular music. Though they have many parts that are necessary to the sound of the music, they are very different in the instruments selected. In the Baroque period instruments such as the cello, harpsichord, violin and many others were a major part of the ensemble.In today's music instruments can vary from one essential piece such as the keyboard to a whole band such as in the Baroque period. It very well depends on the style but in the essence of rock music there are only four major players needed such as the bass guitar, electric guitar, the drums and a vocalist. The people that attend these concerts also create a different setting and mood in itself. Other differences include the sound of the music. Baroque music overall offers a sense of peace or excitement. In some cases it makes one want to dance with a partner i n a ballroom setting.Popular music on the other hand can make one want to dance alone or with someone. It can be at home or at a club. The feelings created can range from anger to peacefulness. It cannot be categorized into one overall concept or idea. In general both Baroque and popular music speak to the crowd attending the concert. They can both draw in a crowd and be performed on stage. The locations however may vary. One may be performed in a church setting where another will be performed live at a theater or other venue. Overall one could say that people attend concerts to feel good, to see their favorite artist or to Just go with the in crowd.People attend concerts for many different reasons and each person has a personal reason for attending a concert. With the advance in technology music will always be constantly changing. People today can make music from their homes on their computers and then post it to the web and become an instant hit or a slow moving one. The change in technology has allowed us as a society to count the next big artist from home, to create new sounds with the touch of a button. It has created the ability to download software and share USIA with our friends and family.Technology allows us to be at concerts and share videos of the concerts with anyone we know. Technology will continually have an impact on music because more people are tuning in. More people want music on demand and at the touch of a few buttons can watch concerts live from the consorts of their home. Technology is changing everything and everyone is trying to keep up as music making applications are brought to our mobile phones. Technology has made it possible for music to be everywhere at one time with each person enjoying hat they value most about music.

Competitive Sport teach us about life Essay

Competitive Sport an activity involving physical exertion and skill in which an individual or team competes against another or others for entertainment and victory. As the report of the World Sports Encyclopedia (2003) indicated that there are around 8000 kinds of sport in the whole world. By this, football, basketball, baseball, and volleyball are good examples for expressing more understanding on competitive sport. In each sports, even though leading to play not only by different ways or structures but also by different rules, its purpose of teaching about life to people is similar to one another. Moreover, all of the results from sport can influence people in many ways such as physical, mental and emotional. However, exactly all these results contain its own not only advantage but disadvantage as well. Learning to work as team, Learning to handle with the failure, and †¦Ã¢â‚¬ ¦.. is the main point that people should be consider on carefully. As the same thing, some noticeable disadvantages which strongly against with competitive sport are getting injury, wasting too much time, and gambling illegally. In sport, teamwork is an important part that requires collaborative effort on the part of a group of people who acting as a team to achieve the same goal, and emerge as a champion. As a team, teamwork isn’t an easy thing that you can do it alone. Obstacles as conflict among the teammates or unequal can affect the team’s performance. Teammates need to connect with each other well to give a good performance. As the observation from 40 university students of Dr. Nick Holt, a professor of Faculty of Physical Education and Recreation at the University of Alberta, showed that we can target three life skills such as confidence, leadership, and teamwork from sport. Moreover, teamwork itself reinforced the idea that sport can provide an educational context for acquiring life skills and highlighted interactions with key social agents are crucial components of how people learn life skills through their involvement in sport. In group, however, sometimes there will have one person who acts individuals to create a good performance alone while other may be passively committed. If it has to be a real competition, the person who is passively committed can make a group not in a high level of competition, also in the circumstance that the group in running behind of the score can cause the team lose the opportunity to win the game. Under the situation like these, people who are actively committed  might try to think the best strategy to compete with the opposite team while those who are passively committed may be giving up already. So, to give a good performance during the competition, teamwork is really important and people who can lead the ream well would be learnt that the success of the individual isn’t important as that of the team. Teamwork can teach them humility and selflessness, also will teach them to work with each other well if want to achieve a common goal. Sports are often used as a metaph or for life. It means that in sport you have to train and work hard to success, so do for life. In short, if you want to achieve something, you have to work your butt-off to get that thing just like you want to win the competition in sport. The harder you work the more you will be rewarded. Competitive sports teach us how to get success in life by using your failure. As we can see in competitive sports, there are winners and losers. In some case, you win the games; you celebrate well-deserved wins with your teammates happily. However, in some cases you lose; you might get upset and frustrated or sometime you happen to dread every competition and you start to fear your opponent as well. Basically, Failure is absolutely necessary for success. It’s like that hot and cold type of thing; one would never know exactly what hot is without cold. So the first thing you should do is to accept the gift of failure with a positive way because those failures are a reality of life and it can be your experience to help you grow more powerful. The more experience you get, the more you want to challenge with your opponent. Most successful people will tell you, the moments that affected them the most, the ones that they will never f orgot, were the ones where they failed because in those moments you realize exactly what you are made of. According to National Basketball Association, Micheal Jorden, a greatest basketball player, is a successful player who never let his failure stop him from playing the game he likes the most. The reason why he becomes a successful player is that he always embraces setbacks and failures as fuel and motivation. In high school, he was cut from the team as sophomore but he didn’t get upset or frustrated at all, yet he used that as fuel and trained intensely. He became a popular player in his team as the result. The quote he made is â€Å"I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why  I succeed.† The same is true in life; we’ll need to use these failures to help you refocus your energy on how to win those competitions next time. Although having taught many considerable lesso ns to one’s life, sport has several disadvantages influencing one’s life as well. In this case, there is a question that â€Å"why don’t adult people like their kids to play football?†. First of all, Physical Injury is the main problem they have realized so far. According to the statistic from the National SAFE KIDS Campaign and the American Academy of Pediatrics in the United State of America indicated that there are about 30 million children and teenagers participate in any sports, and more than 3.5 million of them injuries each year. By far, the most common injuries are sprains and strains. Moreover most of the injuries occurred as a result of falls, being struck by an object, collisions, and overexertion during unorganized or informal sports activities. Unfortunately, if the injury was serious, it can be influenced to one’s future because of this physical injury. For example, one of my friends likes to play football so much, but one day he got an accident with his leg. After having checked on his leg for two months, the doctor said that that leg couldn’t cure forever and my friend cannot do any activities with his leg anymore even walking. Secondly, wasting too much time with sport is the noticeable point to consider as well. By football, it will keep the kids from other activities such as social gatherings, communication activities and many others. Furthermore, for students, it will keep them away from learning activities such as reading book, doing homework, and researching. Finally, illegal gambling in sport is also the one of serious concerns such as gambling in football. During the FIFA WORLD CUP fever, we saw many illegal gambling in football has increased rapidly in Cambodia. As reported by The Cambodia Daily Newspaper published on June, 18th 2014 showed that many illegal World Cup betting centers are took place at the crowded cafà © and give out the betting slip. For this result, many teenagers can know how to bet the football match well, so they will try it because of money. Instead, if they lose the gambling, they will find more money to try it again and again that why it can cause many crimes because of their illegal activities. Depending on the Newspaper above added that many kinds of crimes have increased since there has been the betting on FIFA World Cup 2014. Moreover, not only do the losers commit the crime in the society but they  also steal their parents’ money or selling something such motor, laptop and mobile phone for betting the match again. In short, sport have also taught several negative effects to one’s life foll owing by getting injury, wasting time, and gambling illegally. In conclusion, Competitive Sport provides us many useful lessons of life though its own advantage and disadvantage. Instead, to avoid disadvantage of that, before performing that sport, you have to realize deeply and carefully that it will cause the problem for you or not. Although competitive sport has amount of disadvantage which we need to consider, I strongly convince that competitive sport should be performed by every people, especially for the kids and teenagers, because of its most valuable advantage. To support this, I can say that if you yourself play competitive sport, you will taste the way to be a valuable person through learning the necessary advantage of connection between life and sport. So that, there is a quote which say that â€Å"The more sport you play, the more lesson you get†.

Ethics Essay Example | Topics and Well Written Essays - 1250 words - 5

Ethics - Essay Example The public expects professionalism and ethical conduct from those in the criminal justice system. The discipline of ethics focuses on the issue of what comprises appropriate or inappropriate behavior. A prominent specialist on ethics, Dr. Sam S. Souryal, gives a specific definition of ethics for corrections officers (Cronkhite, 2013, 304): Ethics has come to mean behaviors as they relate to a profession. Thus, there are medical ethics, legal ethics, and correctional ethics. All corrections professionals must follow basic ethical guidelines. Ethics boils down to making a choice between right and wrong, and doing what is right. In general, you can use your conscience as a guide. If you use sound reasoning, act in good faith, do your job fairly and honestly, respect the rights of others, and follow the rules and regulations of the agency, you will avoid most ethical problems. As argued by Whisenand (2005 as cited in Cronkhite, 2013, 304), ethics in the criminal justice system involves m oral obligations and how individuals should act with regard to both objectives and behavior. The criminal justice system is an inherently service-oriented field that assesses its people and behavior merely in terms of the actual exercise of power and the realization of objectives. Codes of Ethics and Ethical Dilemmas Therefore, codes of ethics fulfill two main functions. First, they serve as ethical or moral rules for those working in criminal justice. They lay down moral responsibilities that must be fulfilled and moral features that must be followed. Moreover, codes of ethics establish rules of professionalism vital to the organization’s interests (Chipman, 2000). The purpose of such rules is to hold the professionals accountable to the utmost performance level and encourage them to be committed to the rules of integrity, loyalty, and obligation. Second, codes of ethics establish professionalism in the criminal justice system. When employees abide by a code of ethics, the o utcome is a setting favorable for excellence. Employees know how to carry out their duties without too much supervision. They feel a sense of commitment and fulfillment in their work. They behave with respect and acceptance toward one another and in relationship to their fellow workers and clients (Chipman, 2000). They are capable of surpassing ‘petty behaviors’ like backstabbing, distrust, and envy and learn to avoid and detest inappropriate behaviors like favoritism, prejudice, and insensitivity. All codes of ethics aim at promoting two major qualities, namely, professionalism and public service. These are natural virtues, essential and fixed (Pollock, 2011). Without these codes of ethics, an organization loses its moral standing and faces serious ethical dilemmas. So how do people confront ethical dilemmas? Scholars explain that people initially exercise intuitive moral thinking when they confront ethical dilemmas. Intuition gives people quite simple rules learned fr om previous experiences (Braswell, McCarthy, & McCarthy, 2010). Another method of confronting ethical dilemmas is critical thinking. Contrary to intuitive thinking, critical thinking uses rules provided by moral and philosophical doctrines. In making moral choices when confronted with ethical dilemmas, people may at first exercise intuitive thinking, using their intuition to determine potential decisions or

English medium education for people whose first language is not Essay

English medium education for people whose first language is not English - Essay Example The introduction of colonists’ language faced resistance from many parents in Malaysian society as they took it as the return of the colonist and feared the loss of their own language - their national identity. It is note-worthy that the business class parents or those involved in media or politics knew the value of learning the English Language so favoured it. Another issue was the insufficient availability of skilled teachers, especially within rural areas. This led the government to introduce both mediums of education while emphasizing on mastering English as a foreign language, parents were left to choose which way they wanted their children to learn, which in return brought discrimination in society. Mr. Mahathir, the Prime Minister, who introduced this policy showed his sadness over the decision of moving back to Malaya to educate children as it would bring difficulties for the students to cope with scientific developments in the future (Gooch, 2009). In the video clip w e are given a clear idea that the Malaysian government was familiar with the significance of English language regarding the success of the country, but resistance from certain people towards learning English came because of the colonial history and after independence there was a political desire to promote Malaya. Later, when the need to learn English was accepted by Malaysians, there aroused a

Margaret Thatcher and her political career Term Paper

Margaret Thatcher and her political career - Term Paper Example The political career of the formidable Margaret Thatcher began in the voting of the year 1950 and 1951, when she ran for a parliamentary seat on a Conservative ticket. During these elections, she was not only the female candidate in the race, but she was also the youngest, at twenty-five; although she lost in both elections to the Labor party candidate, she managed to reduce significantly their majority in this constituency. Despite not being able to participate in the 1955 general elections, Thatcher, in the same year ran for the Orpington seat in a by-election in which she was also defeated, but in this case, the margin of defeat was quite narrow. This brought a realization that she could only win in a constituency where the Conservative party was downright dominant. To realize her ambition, she went looking for one such constituency, and consequently, she was selected to run as the Conservative candidate for Finchley, where she was elected Member of Parliament in the 1959 general elections. She made her first speech when she defended her bill, which required members of the local authorities to hold their council meetings in public. She displayed her strong will and character by going against the official position of her party by voting for the restoration of birching, which was a form of corporal punishment using a birch rod. From the outset of her career in politics, she declared herself a friend of the Jewish community; moreover, she was not only a founding affiliate of a pro Jewish group in her constituency, but she was also a member of the pro-Jewish association of the conservative party. However, despite this friendship she was of the opinion that Israel had to give up some of the land it had occupied in order to bring peace in Palestine. Moreover, she considered some of the actions of the Israeli government, such as the bombing of Osirak, as a severe abuse of international law. In 1961, Thatcher was agreed an endorsement to the front bench by the Macmillan governm ent of the time, and in this new capacity, she served as the Parliamentary Undersecretary at the Ministry of Pensions and National Insurance. However, when the Conservatives failed to win the elections in the voting of 1964, she developed into the spokesperson for Housing and Land.2 Here, she showed her strong support for her party’s stand on allowing those tenants living in council houses to be allowed to buy their residences. In 1966, she was selected into the shadow treasury lineup where she was strongly in opposition to the policy of the Labor party which set compulsory price and income management, she stated that such policies would not help the economy and that they would, in fact, damage the economy. At a party conference in 1966, Thatcher criticized the high taxation policies of the Labor government, stating that they were going against the established order of British society and turning towards socialism, and perhaps they would later turn towards communism. Her main argument for this position was that low taxes encouraged people to work harder to earn an income. She was among the small number of Conservative MPs to hold up the bill whose purpose was to decriminalize homosexuality in men. Moreover, she was also among those who voted in agreement of a bill to decriminalize abortion. She further gave her support for the maintaining of the death penalty but voted against the easing of the laws concerning divorce. These stances serve to show that while she was progressive in some of her views, she was extremely conservative in others. Edward Heath led the Conservative party to triumph in the 1970 general elections, and this proved to be an opportunity for her, as she was appointed Secretary for Education and Science. In her new position, she came to draw much public attention through her promotion of cutting spending in the education system. One of the most controversial moves during her first few months was the abolition of milk for schoolchildren at no cost3; therefore, because

Synothic Problem Research Paper Example | Topics and Well Written Essays - 1750 words

Synothic Problem - Research Paper Example In the New Testament, one can find 4 Gospels, Acts, 21 Epistles, and the book of Revelation.2 This paper will focus on the four gospels. These gospels are the written by Jesus’ apostles: Matthew, Mark, Luke and John. However, among the four, the gospel according to John has a different chronology, pattern and wording. This is unlike the other 3 remaining gospels. The gospels according to Matthew, Mark and Luke are also known as the Synoptic Gospels. What is the meaning of the Synoptic? The dictionary meaning of the word is â€Å"presenting or taking the same or common view, specifically often relating to the first three Gospels of the New Testament.†3 It is quite redundant that the term synoptic gospels are being used with reference to the gospels of Matthew, Mark and Luke when just by the term synoptic one can already refer to the gospels. The 3 gospels have a sense of parallelism with regard to structure, language, chronology, and even some points of arguments.4 â€Å"The problem of the relationship between the three ‘Synoptic Gospels’ (Mt., Mk., Lk.) posed by the amount of subject matter which they share and the many similarities in wording and order. In modern times most scholars have held (1). that Mk. was the earliest of the Synoptic Gospels and that it was used as a source by Mt. and Lk., and (2). that for the non-Marcan material common to Mt. and Lk., their authors drew independently on a lost common source (or sources) known as ‘Q’ (q.v.). This ‘two-document hypothesis’ (that Mt. and Lk. are based on Mk. and ‘Q’) was developed mainly in Germany in the 19th cent., was given classic expression by B. H. Streeter, and came to be almost universally accepted. In the second half of the 20th century, a few scholars challenged the priority of Mk. and several denied the existence of ‘Q’.†5 When analyzing this statement by Livingstone, the term â€Å"problem† being used is actually not much of a problem. It is more of a clarification of the

Holy Trinity Essay Example | Topics and Well Written Essays - 1250 words

Holy Trinity - Essay Example Lastly, the Holy Trinity is â€Å"immutable and unalterable forever† (Knight). This implies that nothing can ever destroy the Holy Trinity and that it can never be destroyed or the Three Persons ever be separated. The proofs of the Holy Trinity are found in both the Old and New Testaments but mostly in the latter, although these proofs are rather implied than stated directly. In the Gospel of Matthew, Jesus states after His Resurrection, â€Å"Go therefore and make disciples of all the nations, baptizing them in the name of the Father and the Son and the Holy Spirit† (Mt. 28:19, New American Standard Bible). This passage clearly implies the distinction between the Three Persons – the Father, the Son and the Holy Spirit. Furthermore, the fact that the conjunction â€Å"and† connects the names of these Three Persons somehow ascribe to them a sense of equality in terms of Godhood. All three therefore are One God. Moreover, the three words that precede the nam es of the Three Persons – â€Å"in the name† – somehow implies and affirms the God nature of not only one but all these Three Persons. Thus, the Father is not the only Person in One God but also the Son and the Holy Spirit. ... On the other hand, the Third Person of the Holy Trinity – the Holy Spirit – is mentioned by Jesus Christ Himself in the Gospel of Luke: â€Å"†¦the Holy Spirit will teach you in that very hour what you ought to say† (Lk. 12:12). Moreover, Jesus mentions the Holy Spirit again in the Gospel of John: â€Å"When the Helper comes, whom I will send to you from the Father, that is the Spirit of truth who proceeds from the Father, He will testify about Me†¦Ã¢â‚¬  (Jn. 15:26). These aforementioned passages imply only one thing – that the Holy Spirit is the Third Person of the Holy Trinity, and that He is always mentioned to have a divine connection with the Father and the Son. The doctrine of the Holy Trinity, however, met with several oppositions from various individuals as well as other Christian denominations. The first of these oppositions was from the Alexandrian priest named Arius in the year 325. His proposed doctrine, which was known as Arianism , denied the doctrine of the Holy Trinity on the grounds that â€Å"personal distinctions were not eternally present within the nature of God† (Dorman). Moreover, according to Arius, â€Å"Before time began, the Father had created the Son by the power of the Word to be His agent in creation† (Dorman). Thus, for Arius, the idea of the Son being created by the Father means that the Son must not be identified with the Godhead. As a creation of the Father, the Son is therefore, although created before the world, lacks the divine nature of the Father and is therefore NOT equal to Him (Schaff). This heresy, however, was condemned at the ecumenical Council of Constantinople in the year 381 (â€Å"The Doctrine of the Trinity†). The one who faced Arius and the Arians in opposition was Athanasius, bishop of Alexandria during the 4th century

Early Years Foundation Stage Setting Essay Example | Topics and Well Written Essays - 1750 words

Early Years Foundation Stage Setting - Essay Example According to Palaiologou (2010, p4) and the Department of Education (2012, p.1), under the EYFS setting, each and every child must be helped acquire the best possible start in life and this refers to every child early years development. EYFS suggests a standard policy and curriculum that, in the view of the Department of Education, ensures that every child has enjoyed its rights to equal treatment whether the child requires special care or not. EYFS outlines the fundamentals of a child’s early years curriculum that every practitioner, providers and/or responsible carers must be committed to ensuring that children are safe and healthy, children achieve various EYFS goals, equal treatment of the children irrespective of their background whatsoever (Goffin & Wilson, 2001, p12; Palaiologou, (2010, p6); Department of Education, 2012, p1) is observed, the children performance reflects their individual abilities (Pound & Hughes, 2005, p33), and that every child is dealt with as a uni que entity in the context of learning. The respective institutional administrations must ensure that EYFS guidelines are followed to the letter and so are implemented. But, according to Callaway (2005, p.19), Carr (2005, p7), Silberfeld (2009, p27), Glazzard, Chadwick, Webster and Percival (2010, p51), EYFS is a policy just like other existing policies and it is subject to failure especially as it comes to implementation. Important as it is, however, implementation of EYFS is crucial as it concentrates on the welfare of the children, that the efforts used in handling the children, in this context, determine the ways a particular child grows into adulthood and how such a child relates to its environment in the future. In other words, if EYFS could be defined as a policy, then it is a special kind of policy that must be implemented. But uniformity in implementation may not be a reality (Pound & Hughes, 2005, p38). While thus implementation becomes important a subject, this study asses ses how various children handlers implement EYFS curriculum guidelines. By doing so, various observations and conclusions are made as the study advances. Various EYFS guidelines: summary The EYFS supposes that every child must be helped to grow and develop fast and the various early year providers must ensure that this is attained (Palaiologou, 2010, p8; Department of Education, 2012, p1). The key goals of EYFS it to provide quality and consistency, equal learning opportunities at all levels, partnership between carers and academic practitioners, and anti-discriminating practice. EYFS also introduces specific areas of learning, goals and assessment criteria that must always be adhered to. It specifies educator-children ratios under different circumstances and other key requirements such as the essence of a key person for every child and the qualifications of various child educators. All these are coined in as being of paramount and equal importance in the learning and developmental processes of any child (Pound & Hughes, 2005, p53; Palaiologou, 2010, p17). Implementation strategies, analysis and critique of EYFS Curricula The curriculum provides a wide range of guidelines regarding various childhood requirements. The respective authority in the education sector ensures compliance as far as implementation of the curriculum is concerned. For example, all practitioners must make normative assessments and make each child’s profile detailing its abilities, achievements, areas of strengths and those of weaknesses and so on. While such a strategy may prove a cutting edge in this respect, only about 73% of public early years settings and 55% of private year settings fully comply with the curriculum (Goffin &

Stress and Burnout Essay Example for Free

Stress and Burnout Essay Burnout: A Challenge to the Human Services Roxanne Arballo BSHS 461 University of Phoenix Those who work in the Human Services field and nonprofit areas are highly vulnerable to burn out. 2010 provides larger numbers of clientele, forced human service personnel overtime work hours, on-call after hours, and other schedule and work imbalances. World population numbers are escalating as the budget for the health services is on a continual decline. Causes of burnout for the human services rofessional may be individual, cultural, organizational, supervisory, or from lack of social support. According to Johnson and Stone (1987), burnout refers to a state of physical, emotional, and mental exhaustion resulting from involvement with people in emotionally demanding situations. Three major factors of burnout (Maslach, Jackson, Letter, 1996) are emotional exhaustion, a feeling of low personal accomplishment with clients, and a sense of depersonalization (a dehumanizing, uncaring attitude toward clients). According to Maslach Letter, burnout is the egree of dislocation between what people are and what they have to do. Effects of burnout might appear in the form of exhaustion, detatchment, and feelings of ineffectiveness. These results might be from the gradual process of loss during which the mismatch between the needs of the person and the demands of the Job grows ever greater. Maslach and Leiter (1997) have summarized these causes into the categories of work overload, a lack of control, insufficient rewards (from money to joy), a breakdown in community, the absence of fa irness (trust, openness, and espect), and conflicting values. Previously labeled causes of burnout included types of organization, supervision, social support, and culture. More recently, Maslach and Leiter (1997) summarized these causes into the categories of work overload, lack of control, insufficient rewards (from money to Joy), breakdown in community, the absence of fairness (trust, openness, and respect), and conflicting values. To prevent these various stages of burnout, included are individual, Job role, and organizational methods. Some clients might be violent and Jeopardize the professionals safety. Demands for a workers time might prevent taking meal or rest breaks. Steps must be taken to protect them, to the degree possible, from some of the work-related stress that can lead to burnout. Cherniss (1980) suggests that a number of positive steps can be taken to lessen organizational stress and prevent burnout. These include a change in the way Jobs are structured. Flextime, part-time work, Job sharing, new program development, and new career options might help modify the routine patterns of the human service professional and lessen likelihood of burnout. In eference to the organization, members who share a sense of excitement, strong purpose, clear goals and objectives help create preventative measures for burnout. ensure that workers are doing meaningful work (Cherniss, 1995). Also monitored are overload with impossible demands and a feeling of decision-making autonomy appropriate for human service professionals. Support, information, and some degree of structure might be needed along with feedback and an understanding of their own importance as role models. A number of factors can stand in the way of good job performance and cause well-earned productivity to decline. These can include job-related stress and personal concerns. When it becomes a concern of the organization, it affects on-the-Job behavior. Employee assistance programs (EAPs) for workers experiencing such problems (Van Den Bergh, 1995) have been developed to include services like counseling and referrals as well as crisis management services. These programs enhance employee wellbeing, offer supervisor training, and create employee problem-solving task forces that are part of the EAPs used by an increasing number of organizations. One method l, as a student and human services worker, se to reduce personal and work-related stress is to spend at least 10 minutes alone each day. Whether I spend this time at home, the library, or driving in the car, this alone time seems to put me in a better mood. I find that regular exercise is another way to reduce stress and prevent burnout. I notice that the less I exercise, the higher my stress level is. I try to get outside, thank my Higher Power for everything including the hardships that might be potential for burnout, and share the success in these measures of prevention. Due to personal changes in my life, I am taking on new esponsibilities and find it hard to adjust to these added tasks in my daily routine. Therefore I am working to decrease stress and possible burnout through a growing passion and thanks for my family, future career, and faith. My belief that personal struggles are ways to learn and be a power source for other human services students and professionals are certain preventative measures I do and will continue to take against the threat of burnout. References Cherniss, C. (1980). Professional burnout in human service organizations. New York: Praeger. Cherniss, C. (1995). Beyond burnout. New York: Routledge. Johnson, M. , Stone, G. L. (1987).

Developing Electoral System in Uganda Villages

Developing Electoral System in Uganda Villages Electoral system for two villages in Uganda Introduction The electoral system of a new democracy emerges in two stages. In a comparatively short time the electoral rules are concocted and espoused. Then, over several elections, voter an politician learn how to apply these procedures within the sociopolitical setting. The selection of early electoral rules is a multifaceted practice where the actor’s self-interest elucidates everything and henceforth nothing, surpassed as it is by arbitrary events, compromises and misperceptions which bring inadvertent consequences. Preferably, the electoral rules should be founded on measureable theory verified by universal experience and attuned to local conditions, however, knowledge on the operation of electoral rules under numerous situations is still extremely limited, even though it is expanding. Thus the major advice for the villages is to maintain simple electoral rules in order to facilitate the global use of empirical and analytical knowledge to obtain foreseeable outcomes and to make informed incremental changes whenever required. Upon selection, the same procedures should be maintained for some time in order to give time for the development of an electoral system. In order to sustain some flexibility, the electoral rules should be clearly stipulated in the constitution taking note of the smallest details as much as possible. This paper recommends an electoral system which the two villages of Uganda might adopt in electing its first councilors. Analysis The electoral system cannot be designed by individuals, since the designing of a party system is close to chimerical process. According to the systems theory, the system infers partitioning of the world into internal and external. The system has the power to restore some internal equipoise when bothered by external aspects. The electoral system emerges in two stages. But how are electoral procedures selected in new democracies like the case of the two villages? Frequently they are not designed in a sequential manner, as fabricated by the design. All too often they are a collaged of incongruous concessions. It may seem hard-boiled pragmatism to assert that self-interest of the novel decision-makers defines the choice. The distress is that the assertion is as non-falsifiable as â€Å"all things take place as God desires† Such declarations retroactively elucidate every conceivable effect and thus forecast nothing specific. The individuals’ perception of self-interest is difficult to stipulate even for himself or herself much less for other people. Individuals make a decisions on what is in their interest concerning the conflicting and varied and regularly fleeting grounds. The self-interest of the politicians, who in the case would be the aspirant councilors, cannot be demarcated only as winning the forthcoming election. The objective might clash with long term interest, comprising maintenance of steadiness. It can clash with philosophical preferences, counting the advice of external advisors which belong the same ideological strain. The force of familiar examples and habit in a foreign country also enter. Furthermore, the mechanism used to attain the presumed self-interest of an individual, can be counterproductive and misinformed. Taking in the assumptions that, for old systems in socialist dominated areas, winning the forthcoming election was area, winning the next election was prevailing all other contemplations. Such systems frequently wished keeping the Socialist electoral procedures, which errand the largest village, not only by power of habit but also since they expect to become the largest electoral college. This turned to be a calamitous misjudgment in various countries. The predominant powers may stick to the procedures inherited from previous political rule either by inexperience of substitutions or by attempting to poise reasonably the advantages of the prevailing procedures against the risks and costs innovation. Thus almost all ex-British colonies implemented SMP without comprehending that congress size matters. As given by the SMP, the operative number of parties have a tendency to be significantly larger in the large legislature of UK than in the legislative assembly of a small nations. As an alternative to the vigorous two-party system, the legislatures in small societies frequently end up with an excessively strong largest party and an entirely decimated opposition party. This was not the intention of the decision makers of the electoral system, and in retrospect it difficultly served the interests of these decision makers. The procedures chosen at the commencement of democratization create a difference, however sometimes in unforeseen direc tions, since there are worried political philosophy and party constellation. Negotiations between numerous proposals all too frequently result to complex rules, nonetheless complexity improves impulsiveness and the probability for receiving the worst of both cases. The major decision distresses the poise between representation and governability of minority opinions. Governability may be indorsed by having two main parties and single party council, which in turn frequently emerge from the SMP decree. Proportional representation (PR) of the views of the minority, is best attained by utilizing a single electoral district in the villages. If the political culture of the villages spontaneously advance only two electoral parties, despite the use of PR electoral rules. Distant from the balance of governability-representation, several other considerations come in, such as the cohesion amongst parties and an individual. In the new villages, two facets emerge sturdier between them since one has a larger capacity. One is legality of electoral procedures, or rather discernment of it. If for any reason either, wrong or right, these procedures are considered to be illegitimate, then democracy is in trouble. Secondly, the cost of elections both in labor and money is another factor. The villages are strapped for skilled administrators and funds so that excessive allocation of these resources to the process of election may result in economic or social gaps elsewhere. In a dispassionate impression of the numerous electoral systems and their constituents all the way across the world, both the claimed shortcomings and advantages of the countless approaches. They emphasize on the issue of the cost of elections both in terms of perception of legitimacy and money of legitimacy. Simple procedures may be projected to maintain the costs down, however what looks modest on the surface may comprise costs elsewhere. For example, SMP might appear like the meekest of all allocation procedures, but the preliminary illustration of electoral boundaries is expensive, and so is the registration of voters, since, according to SMP the result relies much on the place the voter cast his or her vote. Two-round rules twice over the fee of polling stations, vote counting and ballot papers. There is also voter disappointment and fatigue, if a swarming first round leaves advances a choice amongst two poorly buttressed finalists. On the other hand, multi-seat wards may be costly to conduct voter education and edification. Voter disappointment may harm stability, if excess ballots are spoiled as a result of ballot intricacy or if the consequences look enigmatic because of a byzantine allocation formula. Qualms about the legality of election results may focus solely on the electoral procedures and the dogmatic operators explicitly held liable for the supposedly partial or inappropriate rules. However, such qualms can also extend to the complete â€Å"political course† or even democracy, imperiling cessation of democratization. Reasonably, there is an impulse to appraise the procedures after the initial elections, however it might be too early. Party constellation and political culture are still in flux. The steady characteristics of the results of electoral procedures cannot yet be measured, because voters and politicians are still getting acquainted how to these procedures might be used to their advantage. There is enticement to fine-tune the electoral procedure instead of waiting or for the learning process to occur. However if the procedures are continuously changed such learning may ever take place. A major measure to determine if the electoral procedures count is whether derisory procedure have obviously led to failure of democracy, or a severe crisis. Infrequently have electoral procedures been the sole motive in the past, however they have underwritten the crisis. Ideally, electoral procedures should be premeditated with progressive self-interest, utilizing all the available knowledge which can be offered by political science. Progressive self-interest infers taking a long-range opinion. For example, a large electoral party may not expect to remain great at all times, therefore it would be misguided to endorse procedures which that a large seat advantage to the largest village, merely on the foundation of the present popularity of the individual, utilizing the rich knowledge of political science though in a stickier proposition. Conclusion In conclusion, a stable electoral systems is comprised of not only electoral rules however, thy also involve the mechanisms with which these rules are applied in the given villages. This culture includes informed self-interest, meaning some concern for stability and tradition, and avoidance of gross miscalculations resulting from limited understanding of the effect of given electoral rules. This experience emerges with time. A steady electoral system contains of electoral procedures which have endured some tests of the time. These times would be summarized, if the resident learning experience can be supplemented by the general academic knowledge concerning the things of electoral procedures and their collaboration with other aspects. To some degree each electoral scheme is sui generis, since similar electoral procedures are entrenched in dissimilar sociopolitical and historical contexts. If this triumphed totally, then no guidance to newly democratizing villages would be conceivable separately from ill-defined, which differs from one consultant to the next. However, this is not the case, some hard, transferable knowledge previously exists, to an incomplete degree. Therefore the two villages should adopt a simple electoral system which allows them to be modest about their ability to predict the effect of electoral rules. Even for stable systems, one finds substantial disagreement of opinion and variability of data. Extension to newly democratizing villages such as the two should be more cautious, in the perspective of unstable and different political cultures. Recommending multifaceted electoral systems, in precise, infers pretentiousness of knowing more than the people do. Containing electoral procedures in constitutions might make it worse. This inclusion should be withheld until theory is put on a much steadier foundation than is the present case with the villages.

Challenges of change facing British airways

Challenges of change facing British airways Chosen Question: Select a London-based organisation and analyse the challenges of change facing it and how it is approaching the process of change. Where possible do so by reference to theories of change management. LEADERSHIP AND MANAGEMENT: Executive Summary: Airline business is a difficult company. It has been well-known in the direction of being the mainly economical company in all over the world. Marketing executive must also be ready for action on the way to manage through the challenges of this variety of business. British Airways is one of the market influential within the airlines industry in U.K. The corporation has it huge opportunity. The airline is dedicated towards quality-service. In count, it has its aggressive advantages. British Airways has enormous opportunity of increasing and getting better of its services. In this we discuss about the various challenges of change faced by the British Airways and in what way it is approaching the procedure of change. Introduction: British Airways is one of the leading airlines in the world. This case traces the airlines history and discusses the process of turnaround during the 1980s under the leadership of Lord King and Colin Marshall.   The case also discusses the subsequent turbulent period under CEO Bob Ayling and the challenges faced, including recession, competition, terrorism and the Gulf war. The case closes with an outline of the tasks ahead of the incumbent CEO Rod Eddington. The case can be used to illustrate the importance of leadership in bringing about cultural change. Challenges faced by British Airways: The economic conditions that prevailed throughout 2009/10 were the most severe they have ever encountered. As a result of the worst recession for 60 years, their industry has faced a series of permanent structural changes that have drastically reduced their revenues in the short term and have permanently changed the economics of running a premium airline. These problems are in themselves formidable. But, in addition, British Airways faced a list of daunting challenges of its own. These included the need to: à ¢Ã¢â€š ¬Ã‚ ¢ Raise finance at a time of continuing crisis in the debt markets; à ¢Ã¢â€š ¬Ã‚ ¢ Radically reduce their historic cost base; à ¢Ã¢â€š ¬Ã‚ ¢ Change working practices; à ¢Ã¢â€š ¬Ã‚ ¢ Complete their planned merger with Iberia; à ¢Ã¢â€š ¬Ã‚ ¢ Win an acceptable anti-trust agreement to cooperate with American Airlines and Iberia on North Atlantic routes; and à ¢Ã¢â€š ¬Ã‚ ¢ Tackle their  £3.7 billion pensions deficit successfully. Twelve months on, they can feel satisfied that on every one of these issues, they have either tackled or made significant progress in overcoming the challenges they faced. Permanent change They entered the recession financially strong and with their fleet replacement plans fully financed to 2013. In August 2009, they successfully raised  £350 million through a convertible bond issue, providing them with the finance to keep investing in their business and maintain their focthem on excellent service as the recession runs its course. Over the year they reduced their unit costs by 6.5 per cent. Their fuel bill fell by nearly  £600 million, accounting for a large element of this decrease. Unit costs excluding fuel also fell by 1.8 per cent. This was truly a remarkable achievement. It is hard enough to cut costs when capacity is rising; to do so when capacity is in sharp decline is very difficult indeed. Their cost base is now far more competitive, meaning they are well placed to achieve more profitable growth in the future. They successfully carried the majority of their workforce with them in making changes to working practices, including their pilots and engineers. A number of staff have left the Company on voluntary terms. They have succeeded in introducing permanent cost reductions across the airline, including reductions in crew complements. Regrettably, these changes were met by unjustified strike action by Unites cabin crew branch. BASSA misrepresented the Companys position to its members, failed to represent the views of the majority of cabin crew and has been intent on a confrontation with the airline. The vast majority of their employees recognise the need for permanent change and have shown great commitment to British Airways during this difficult year. Their relationship w ith Iberia is very strong and they have now signed a merger agreement that they know will bring real benefits to their respective customers and shareholders and protect the brands of the two airlines. If remaining technicalities are successfully dealt with, as they fully expect, the merger should be concluded by the end of 2010. Similarly, all the signs are that they can win anti-trust immunity from the THEM Department of Transportation along with regulatory approval from the EU competition authorities, to operate a joint business with American Airlines and Iberia over the North Atlantic. When in place they will be able to operate on equal terms with Skyteam and Star Alliance that already enjoy immunity. Their agreement will mean more competition not less, and greater choice for travellers on these busy routes. Finally, they are progressing with negotiations to agree a way to fund their  £3.7 billion pension deficits that satisfies the Trustees and meets their requirement that they will not have to increase their contribution to the schemes in the short term. Whilst the valuation has been agreed with the Trustees, it is currently under review by the Pensions Regulator. If they can keep the schemes open for existing members it will be a significant achievement and one that has eluded many other businesses in recent years. I hope you can see how huge an agenda of change they have tackled. In that sense, 2009/10 was a year of great achievement. Financial results Their progress is all the more remarkable at a time when all their principal business customers changed their travel olicies at the same time, turning their back on premium shorthaul travel and reducing their revenues by  £1 billion. Against that backdrop, they recorded another year of heavy losses in their business. They recorded their biggest ever half year loss of  £292 million. Early and far-reaching action on costs began to show through in the second half of the year and they were even able to post a small operating profit in the third quarter. For the year as a whole their pre-tax losses stood at  £531 million compared with a loss of  £401 million in the preceding year. They cannot afford to lose sight of the scale of their losses in the last two years, even though they came on the back of record profits in 2007/08. Their business simply will not survive long term unless they stop losing money on this scale. Dividends and executive pay The programme of change they are pursuing in the business is all about making sure they have the resources to deliver outstanding service to their customers, secure and rewarding employment to their staff and strong returns to their shareholders. Given the state of their market they have frozen pay across the airline for two years. They have once again decided it would be inappropriate to pay a dividend or executive or staff cash bonuses. Customer focus Their primary focthem must remain on their customers no matter how severe the economic conditions they face. The customer is at the very heart of their plans to build an efficient global premium airline and to achieve lasting and sustainable profitability for this business. During the year, they continued to outperform in their punctuality scores, not just at Terminal 5, but across the network. Maintaining that record has involved some magnificent work by people right across the business and they take immense pride in their achievements. Their customer service scores remain strong despite significant operational disruption. An industry in transition Consolidation will be a growing theme for their industry for the foreseeable future and they are pleased with their own progress in building new partnerships and alliances. But progress on liberalising the global industry remains painfully slow, nowhere more so than in the recent protracted Open Skies negotiations between the THEM and Europe. They had hoped that the conclusion of the EU-THEM second stage negotiations would have resulted in the immediate removal of THEM restrictions on ownership and control and the protectionist Fly America policy. Unfortunately, instead of the ambitious agreement that had been promised by both sides that would have acted as a template for further global liberalisation across other trading blocs, they have ended up with an agreement that fails to deliver a truly open market for aviation. This represents a missed opportunity to create a healthier and more efficient industry for the future. Indeed, the only hope for progress may lie in moving the issue to a more powerful arena such as the Trans Atlantic Economic Council where Europe could offer wider trade concessions, i n sectors such as agriculture, in return for progress on air transport. These restrictive ownership and control requirements that prevent cross-border airline mergers, need to be consigned to the history books and fast. Only then will they see the true benefits that normalisation of the industry can achieve as is already the case with other sectors of the global economy. Climate change As a company they have led the way in searching for real and radical ways to tackle climate change. Not only have they set ourselves industry-leading targets to cut their own emissions, they are also strong advocates of carbon trading and believe aviation should be part of a global emissions trading scheme. The Climate Change Summit in Copenhagen in December presented the industry with an ideal opportunity to come together and make this a reality. For many reasons the outcome from the summit was disappointing not least as no reference was made to the airline industry. However, it is clear the governments of the world recognise the airline industry is taking a responsible position and is indeed ahead of its regulators in wanting to tackle climate change. The industry continues to work closely together to develop and promote its position. Its now down to the regulators and Governments to show commitment to the industry and to allow them to play their full part in contributing to the gl obal reduction in greenhouse gas emissions. Economic outlook The worst of the recession seems to be over. Unemployment in the UK, for example, seems to have peaked and at lower levels than had been feared. In their own business, February saw them record the first increase in premium traffic since August 2008. But recovery is precariothem and it would be foolish to assume they are out of the woods yet. The new UK Government will be forced to make some very unpopular decisions in the weeks and months ahead. Tackling the deficit remains the biggest priority. The new coalition Government plans to make immediate cuts in the deficit, they believe this threatens real dangers, not least that increased taxes and hasty spending cuts could throttle consumer confidence and trigger a double dip recession. It is vital that the UK develops a credible, measured plan to reduce the deficit, spelling out the reductions that are needed and the timescale in which they will be achieved. With election grandstanding now out of the way, this must be a priority for the new administration. A tremendothem effort Its been an immensely difficult year for my colleagues across the business and I want to thank them for the tremendous work they have done. The spirit theyve shown in supporting the business through one of its most difficult periods has been unbelievable. Its involved a lot of hard work and considerable personal sacrifices. Their prospects Their own recovery depends very much on how fast the general economy returns to growth. They remain cautiothem on that. They expect the climb out of recession to be a relatively slow one. However, I am convinced that the work they have done over the last 18 months to restructure their cost base and the progress they have made on the challenges they faced at the start of 2009/10, mean they are a far more resilient business today. That means they can be confident about surviving through further economic uncertainty. More importantly, it means they will be in a position to achieve higher levels of sustainable profitability when conditions improve. That is very good news for their customers, their staff and their shareholders. Approaches for the variothem challenges faced by the British Airways: One of the significant ways to distinguish one airline from another is in terms of the quality of its decisions. They use operational systems to run the business and business intelligence, delivered by Business Objects query and reporting tools, to manage it. British Airways Improves Customer Relationship Management and Maximises Revenues with Information Delivered by Business Objects The airline market is fiercely competitive with strong demand for lucrative business traveller routes due to capacity restrictions at major European airports and low cost entrants offering cheaper flights for the leisure passenger. Leading UK airline British Airways, is underpinning its strategic operations with business intelligence (BI) delivered by Business Objects solutions. British Airways use BUSINESSOBJECTSà ¢Ã¢â‚¬Å¾Ã‚ ¢, the integrated query, reporting and online analytical processing tool (OLAP) to access, analyse and share information stored in British Airways data warehouse. British Airways is also currently in the process of extending the decision making process worldwide via WEBINTELLIGENCE ®, the internet BI solution from Business Objects. Strategic Decision Making British Airways is one of the worlds most successful airlines, carrying over 48 million passengers a year. Peter Blundell, Knowledge Strategy Manager, British Airways, says One of the significant ways to distinguish one airline from another is in terms of the quality of its decisions. They use operational systems to run the business and business intelligence, delivered by Business Objects query and reporting tools, to manage it. BUSINESS OBJECTS is used throughout British Airways, with dozens of applications taking information from a central data warehouse. These cover all aspects of the business from CRM applications supporting the frequent flyer programme, through yield management and revenue analysis to catering supply chain management. Blundell explains, With BUSINESS OBJECTS they have been able to provide any line manager with the capability to assess relevant business information without requiring an army of data specialists. British Airways primary challenge is to make the airline as a whole and each route profitable. This is complicated since the company is unable to change product offerings very quickly. With the capacity restrictions in many airports, routes have to be negotiated and published some six months in advance. BUSINESS OBJECTS supports their long term planning, analysing the number of flights per day, routes and aircraft types that are most appropriate, says Blundell. This drives their negotiation for capacity constrained routes. Maximising Yield Every airline has to achieve a balance between availability of higher priced business seats and filling the flight with cheaper leisure fares. British Airways is using BUSINESS OBJECTS to analyse customer behavitheir and flight sales to maximise yield on each route. The business and leisure traveller have very different needs, with the business traveller looking for frequency of flights, punctuality and good customer service, while the leisure traveller is looking for value for money. Customer service also provides an area of differentiation. British Airways promotional activity tailors offers based on customer preferences and travel history. The costs the market will bear are different on each route, at different times of the day and week and depend on the level of competition on that route. BUSINESSOBJECTS enables them to better understand booking and customer profiles and use that information to maximise yield on each flight by creating the right promotional offer to each customer group. British Airways Leads Punctuality League Two of the most successful BUSINESS OBJECTS applications have addressed punctuality and baggage handling. Analysing sources of delay, by type, route and reason has enabled British Airways to significantly improve its position in the punctuality league of European airlines. For business passengers, punctuality and efficient baggage handling are critical factors that drive the choice of airline. British Airways wanted to improve its punctuality and BUSINESS OBJECTS was part of that solution. By analysing any problems with BUSINESS OBJECTS they have become one of the top rated European airlines for punctuality. A similar analysis using BUSINESS OBJECTS to look at baggage handling enabled the company to highlight reasons for baggage failing to connect with the right flight. While there was time for passengers to make the connection it was not always possible for their luggage to make the same journey. They have overcome that problem and significantly improved our baggage handling as a re sult, says Blundell. Worldwide Business Intelligence Having created a business intelligence infrastructure that is underpinning decision making throughout the British Airways head office, the company is now looking to broaden its user base from one thousand to potentially ten thousand worldwide via its intranet. Blundell explains, They plan to use Business Objects WEBINTELLIGENCE internet BI solution to deliver the business intelligence functionality they have developed to airports and offices around the world. By leveraging the intranet and WEBINTELLIGENCE, they can deliver key business information in a cost effective manner. Using WEBINTELLIGENCE, British Airways will be able to provide local managers with secure access to the local information pertinent to their operation, underpinning the drive to maximise revenue and market share and minimise costs across specific routes. Blundell explains, British Airways business goal is to broaden the decision making ability by providing pertinent information. Empowering people to make decisions on behalf of the company leads to better customer relationships. By making information available via the intranet they can ensure improved consistent customer service worldwide. By analysing any problems with BUSINESS OBJECTS e have become one of the top rated European airlines for punctuality. Conclusion: British Airways remains cautiously optimistic about its future prospects. However, it is certain that considerably more work lies ahead if the airline is to succeed. The FSAS plan incorporated by BA resulted in considerable cost savings, and divestments also raised funds to pay off debt. The goal of the FSAS plan was to achieve a 10% operating margin and hence more recent cost cuts and job loses have been made by Willie Walsh order to accomplish this.

Life of Pi (Unabridged) by Yann Martel Essay -- Life of Pi Unabridge

The son of a zookeeper, Pi Patel has an encyclopedic knowledge of animal behavior and a fervent love of stories. When Pi is sixteen, his family emigrates from India to North America aboard a Japanese cargo ship, along with their zoo animals bound for new homes. The ship sinks. Pi finds himself alone in a lifeboat, his only companions a hyena, an orangutan, a wounded zebra, and Richard Parker, a 450-pound Bengal tiger. Soon the tiger has dispatched all but Pi, whose fear, knowledge, and cunning allow him to coexist with Richard Parker for 227 days while lost at sea. When they finally reach the coast of Mexico, Richard Parker flees to the jungle, never to be seen again. The Japanese authorities that interrogate Pi refuse to believe his story and press him to tell them "the truth." After hours of coercion, Pi tells a second story, a story much less fantastical, much more conventional — but is it more true? Pi, short for Piscine Molitor Patel, is a young Indian boy growing up in South India in the 1970's. His father owns a zoo and, with increasing political unrest in India, decides to sell up and emigrate to Canada. They accompany the wild animals on board the ship on their journey to the new zoos in North America. The ship sinks and Pi finds himself the only human survivor onboard a life raft that contains, rather remarkably, a zebra, a large motherly orangutan, a frenzied hyena and a 450-pound Bengal tiger. Of course, the law of nature eventually rules and Pi ends up as the tiger's last remaining occupant. He must use all his knowledge of zoology and animal behavior to create boundaries and survive. Which he does for 227 days. In Pondicherry, India, Piscine â€Å"Pi† Patel enjoys his childhood as the son of the local zookeeper means plenty of fun things to do. In that role, Pi learns a great deal about the wild beasts that his father keeps. Though a Hindu, Pi also finds pleasure in learning about Christianity and Islam and willingly practices the three belief systems over the objections of his family and religious leaders. Now sixteen, Pi's father decides to relocate to Canada. His dad sells most of the animals, but takes a few with them on their sea voyage. However, disaster strikes with the ship sinking. Pi accompanied by a hyena, an orangutan, a zebra and Richard Parker the 450-pound Bengal share a raft. Richard eliminates the other animals leav... ...mingly endless sea. Soon after, at long last, he reaches land. He attains Enlightenment. The tiger bounds off into the jungle-- Pi's suffering is released completely. He is nursed back to health and lives a relative normal life, with the distinction that his experience has fully awakened him. He walks as a true adult among the many spiritual children of the world. He still has the normal problems, challenges, and disappointments of life; Enlightenment does not mean everything is perfect. But Pi can bring forth what is needed in each moment, and does not suffer from the pains, failures, and sorrows of being human. He lives through them without getting caught in them. (Similarly, he is fully awake for all the wonderful pleasures and intimacies of life. And in all occurrences, he brings a deep compassion and love for all beings). The best part of the story is the end. (Stop reading if you don't want to know). This is a true story. It doesn't need all the longwinded interpretation you just read. It stands on its own as truth. Maybe it's just a story of a boy and a tiger on a boat. Either way, Pi Patel shows us the compelling power of the human spirit in the face of deep suffering.

Dime Store :: essays papers

Dime Store I Can’t Hear a Damn Word You’re Saying â€Å"‘Those who deprecate the free supply of such ficticious works as the public demands, are generally in favor of the entire exclusion of fiction of a sensational cast, a course which will unavoidably result in alienating from the library the very class most needing its beneficial influence’† (Denning, 49). It is obvious here that William Fletcher attached more significance and importance to dime novels than most â€Å"serious intellectuals† did in the late 1800’s. In fact, most people, particularly in the middle class, thought dime novels were vulgar and that they caused young children to imitate the actions of the likes of Buffalo Bill and Deadwood Dick. But both the production and the popularity of dime novels (especially) among the working class suggest that something more profound than cheap entertainment compelled them to read these works of fiction. Contrary to what many literary scholars and those in the middle class believed--and perhaps as indicated by the various reactions to them, these plotlines and characters were appealing to the working class on more than just one level. The rate at which dime novels were produced is astounding. â€Å"William Wallace Cook began by receiving a title and synopsis for a serial, and would then write, adapt and revise installments to meet the ever-changing specifications of the publisher. Almost all the accounts tell the story of novels written at exceptional speed in marathon sessions, and all emphasize the sheer quantity of writing† (Denning, 21). It was not uncommon for authors to write entire pieces in one week or less, some not bothering to edit their work. Many admitted that their motivation for writing stories at such a pace was money, but most maintained that the material contained in their stories was not immoral or vulgar, but rather, useful. It is interesting to note here that, while the adverse reaction against dime novels eventually became a reflection of the class that was supposedly reading them, the authors themselves were not from the working class. In fact, the dime novel â€Å"was a commercial product of a burgeoning industry employing relatively educated professionals--writers who also worked as journalists, teachers, or clerks† (45). The judgments passed on those reading the dime novels was limited to the working class; but the very material that was thought to be immoral was invented in the minds of middle class people.

Conveyer belt project parts Essay

The work breakdown structure essentially is a decomposition of the work to be completed by the project team in order to successfully accomplish the project objectives and deliverables. It’s a very practical tool to visualise the work that needs to be done, however that is about all it’s useful for. The information provided by the work breakdown structure is not enough to allow the project team to identify any milestones or points of significance in the project. At this stage each element of the project has only been identified, none of them have been time scheduled, cost estimated or placed in a definitive chronological order, making it difficult to identify any significant milestones. Network scheduling refers to the graphical representation of activities that define the sequence of work in a project. It is an important tool used to visualise the chronological order of activities needed to be completed in order to meet the project deliverables and objectives. The project team decided to use Microsoft project to develop the network schedule for the conveyer belt project. However before a network schedule could be produced it was necessary to enter some important information into Microsoft project. Firstly the work calendar had to be customised. It was necessary to ensure that work was only completed from Monday to Friday during an 8 hour work day and that all relevant public holidays which would affect work were accounted for. Below in Figure 1 is the work calendar in Microsoft project. Following this the project team could enter the estimated duration of each work package and place them in chronological order. With the conveyer belt project set to begin on the 4th of January 2010, Microsoft project estimated the project would be complete on the 2nd of February 2012 and would take a total of 530 days to finish. On the following page in Figure 2 is a gant chart produced by Microsoft project which illustrates the schedule of each activity in the project. It is quite clear that the network of the project isn’t very sensitive. Both the gant chart on the previous page and the network diagram at the end of this section show a clear critical path in red. Although there are some activities with only a few days slack, namely the assembly of preproduction models which only has 5 days slack, the remaining activities in the project not on the critical path have 30 or more days slack. If some of the activities were to delay it isn’t very likely that a lot of critical paths would develop since majority of the activities have a reasonable amount of slack. Utilities documentation is easily the most flexible of the activities since it has the largest amount of slack adding up to 115 days. Now that the project team had successfully developed a valid network schedule it is more convenient to identify significant milestones in the project. Besides the start and end dates, 4th January 2010 and 2nd February 2012 respectively, the project team was able to identify two other milestones listed below: †¢Integration First Phase and †¢System Hard/Software Test The first phase of integration was identified as a milestone since its start date is heavily reliant on so many other activities. Before integration first phase can even begin, six other activities preceding it must also be completed. In addition to this integration first phase is on the critical path, meaning if there were to be any delays which affected the start date of this activity then there would be a delay in the entire project. In contrary to this the system hard/software test was determined to be a significant milestone because it had so many activities reliant on its successful completion. Four other activities could not start until the system hard/software tests were completed. Similarly to integration first phase, the system hard/software tests also fall on the critical path, thus if there any delays on this activity it will delay the overall project and delay the start of other activities. Whilst creating the network schedule for the conveyer belt project we have been able to produce two useful graphical representation of the project schedule. Both a gant chart and a network diagram have been included in the report. Both are extremely useful tools to visualise how the project and its activities are scheduled but both are also inherently different. The Gantt chart is more useful in representing the timing of various tasks which are required to successfully complete the project where as the network diagram is more useful in identifying the various tasks of the project and ordering them in their chronological order. Both charts have their own advantages and disadvantages respectively. Below in Table 1 is a summary of both network schedules advantages and disadvantages.

Value Investing: Predicting Long-Term Pro?tability Based on Fundamental Data

Value Investing: Predicting Long-term Pro? tability Based on Fundamental Data An Empirical Study in the Manufacturing Industry by Vital Schwander (05-609-136) Master’s Thesis supervised by Prof. Dr. Andreas Gruner University of St. Gallen May 23, 2011 Master in Law & Economics Abstract Warren Bu? ett (1992) classi? es the discussion about value and growth stocks as fuzzy thinking. With that statement, he argues that value investors must consider growth in their value calculations. This thesis shows in a ? rst step that growth is only valuable if the company enjoys a durable competitive advantage.By examining the fundamental characteristics of companies with a durable competitive advantage, this thesis intends in a second step to assess the predictability of long-term pro? tability. The DuPont Identity serves as framework for that purpose. The objects of this investigation are companies within the manufacturing industry (Primary SIC Code between 2000-3999) that were listed in t he United States between 1979 and 2009. The results show that companies with a durable competitive advantage exhibit speci? c characteristics in operating e? ciency, asset use e? ciency, and in the ability to meet short-term obligations.Furthermore, the thesis shows that long-term pro? tability, based on the investigated characteristics, is predictable to some extent. This thesis concludes by assembling the insights to a value strategy that is applied to manufacturing companies listed in Switzerland. The strategy exhibits an outstanding SMI-adj. compound annual growth rate of 13. 19% over a period of 17. 5 years. ii Acknowledgement I would like to express my gratitude to Prof. Dr. Andreas Gruner for supervising this thesis and his assistant Lucia Ehn for her conceptual advices. I have furthermore to thank Mr.Hans Ulrich Jost for giving me insight into the daily business of a value fund at UBS AG. My sister Daria introduced me to R and Latex. I want to thank her for her help and supp ort. I want to thank my great family who has been always supportive and motivating. Finally, I also would like to thank friends and colleagues for making life such an enjoyable experience. iii Contents 1 Introduction 1. 1 1. 2 Issues, Goals and Limitations . . . . . . . . . . . . . . . . . . . . . . . . . Structure and Empirical Approach . . . . . . . . . . . . . . . . . . . . . . 1 1 2 4 4 5 7 7 8 2 Value Investing—An Investment Paradigm 2. 2. 2 2. 3 The Origin of Value Investing . . . . . . . . . . . . . . . . . . . . . . . . . Value and Other Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . Four Value Strategies by Illustration . . . . . . . . . . . . . . . . . . . . . 2. 3. 1 2. 3. 2 2. 3. 3 2. 3. 4 2. 4 2. 5 Piotroski’s F_Score . . . . . . . . . . . . . . . . . . . . . . . . . . Walter and Edwin Schloss . . . . . . . . . . . . . . . . . . . . . . . Warren Bu? ett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 UBS EMU Value Focus Fund . . . . . . . . . . . . . . . . . . . . . 12 Value vs Growth—Fuzzy Thinking! . . . . . . . . . . . . . . . . . . . . . 13 Value Anomaly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2. 5. 1 2. 5. 2 2. 5. 3 Behavioral Approach . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Risk-based Approach . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Competitive Advantage Based Approach . . . . . . . . . . . . . . . 16 17 3 Literature Review 3. 1 3. 2 3. 3 Competitive Advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Pro? tability Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Research Gap and General Approach . . . . . . . . . . . . . . . . . . . . 21 22 4 Analysis of Long-term Pro? tability 4. 1 4. 2 Data Sample . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Analysis of Return on Equity Measure . . . . . . . . . . . . . . . . . . . . 26 4. 2. 1 Superior Performers . . . . . . . . . . . . . . . . . . . . . . . . . . 26 iv 4. 2. 2 4. 2. 3 4. 3 4. 4 4. 5 4. 6 Analysis of Performance Persistence . . . . . . . . . . . . . . . . . 28 Analysis of SPP Deciles in respect of ROE . . . . . . . . . . . . . . 30 Analysis of SPP Deciles in respect of other Financial Measures . . . . . 33 Predictability of Long-term Pro? tability . . . . . . . . . . . . . . . . . . . 41 Discussion of the Interim Results . . . . . . . . . . . . . . . . . . . . . . . 43 Market Analysis 4. 6. 1 4. 6. 2 4. 6. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Subdivision-speci? c Market Analysis . . . . . . . . . . . . . . . . . 45 Analysis of SPP Deciles in respect of Market Multiples . . . . . . . 45 Market Performance Analysis . . . . . . . . . . . . . . . . . . . . . 46 48 5 Value Strategy 5. 1 5. 1. 1 5. 1. 2 5. 1. 3 5. 2 Strategy Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Sample Descriptives and Strategy Composition . . . . . . . . . . . 48 Portfol io Formation . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Performance Measurement . . . . . . . . . . . . . . . . . . . . . . . 49 Portfolio Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 53 6 Conclusion and Further Research 6. 1 6. 2 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Further Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 56 i v x xv Bibliography A Data Input B Financial Measures C Subdivisions D Market Analysis List of Tables 4. 1 4. 2 4. 3 4. 4 4. 5 4. 6 4. 7 4. 8 4. 9 5. 1 COMPUSTAT Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Distribution of Firm Years Distribution of Superior Performance Years . . . . . . . . . . . . . . . . . 27 Probability Distribution of Superior Performance Persistence . . . . . . . 29 ROE Distribution for each SPP Decile . . . . . . . . . . . . . . . . . . . . 31 RO E Distribution for each SPP Decile (Subdivision-adjusted) . . . . . . . 32 Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 . . . . . . . . . . . . . . . . . . 47 Predictability of Future Pro? tability . . . . . . . . . . . . . . . . . . . . . 42 Market Performance for each SPP Decile Portfolio Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 . . . . . . . . . . . . . . . . . . . . . . . . i ii v A. 1 Data Input for US Companies A. 2 Data Input for Swiss Companies . . . . . . . . . . . . . . . . . . . . . . . B. 1 Calculation of the Financial Measures . . . . . . . . . . . . . . . . . . . . B. 2 SPP Deciles (Subdivision-adjusted) regarding Financial Measures . . . . vii x xi C. Overview of Subdivision . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. 2 Subdivision Comparison regarding ROE . . . . . . . . . . . . . . . . . . . C. 4 Composition of SPP Deciles regarding Subdivisions C. 3 Subdivision Distribution in respec t of SPP Deciles . . . . . . . . . . . . . xii . . . . . . . . . . . . xiii D. 1 Average Price-Earnings Ratio per Subdivision . . . . . . . . . . . . . . . . xvi D. 2 Average Book-to-Market Ratio per Subdivision . . . . . . . . . . . . . . . xvii D. 3 Average Price-Earning Ratio per SPP Decile D. 4 Average Book-to-Market Ratio per SPP Decile . . . . . . . . . . . . . . . xviii . . . . . . . . . . . . . . . xix vi List of Figures 3. 1 4. 1 4. 2 4. 3 5. 1 Three Slices of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 . . . . . . . . . . . . . . . . . . . . . . . 33 . . . . . . . . . . . . . . . . . . 47 Mean ROE for each SPP Decile SPP Deciles in terms of Financial Measures . . . . . . . . . . . . . . . . . 40 Market Performance for each SPP Decile Performance of the Value Strategy . . . . . . . . . . . . . . . . . . . . . . 51 . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv C. 1 Subdivision Distribution vii List of Abbreviations vg. B/M CAP CAGR CAPM COG S DA EBITDA etc. e. g. EV FCF IE i. e. IPO LT p. a. P/E ROA ROE SGA SMI ST US average Book-to-Market Competitive Advantage Period Compound Annual Growth Rate Capital Asset Pricing Model Cost of Goods Sold Depreciation and Amortization Earnings before Interest, Taxes, Depreciation and Amortization et cetera exempli gratio – for example Enterprise Value Free Cash Flow Interest Expense id est – that is Initial Public O? ering Long-term per annum Price-Earnings Return on Assets Return on Equity Selling, General, and Administration Swiss Market Index Short-term United States iii Chapter 1 Introduction 1. 1 Issues, Goals and Limitations Every investor is looking to buy low and sell high. This does not yet characterize a value investor. Although value investing has become a widely used term, it has been stamped in particular by a small group of academics. They associate stock-speci? c fundamentals such as a low P/E ratio, low cash-? ow-to-price ratio, and high B/M ratio to va lue stocks. These stock-speci? c fundamentals have become characterizing for value investing and embody the basis for many research studies about value investing (see Damodaran, 2011).For example, Piotroski (2000) developed the F_Score to separate losers from winners among value stocks (i. e. high B/M-stocks). On the other hand, research has been conducted on growth stocks (i. e. high P/E ratio, high cash-? ow-to-price ratio, and low B/M ratio). Mohanram (2005) developed the GSCORE to separate losers from winners among growth stocks, for instance. As a consequence, many investors feel compelled to decide between value and growth stocks. However, in the heated discussion it is often ignored that growth has an impact on the value of a company.This impact of growth varies according to the particular company from negligible to very important, and its impact can be negative as well as positive. Growth is valuable in particular if a company enjoys a durable competitive advantage and remai ns very pro? table over a long period of time. There are many books about the competitive advantage (e. g. Porter, 1998; Shapiro, 1999). However, it has never been discussed related to value investing. Only Mauboussin and Johnson (1997) have raised a discussion about the competitive advantage period within the valuation process of stocks.They point out in their paper „Competitive Advantage Period: The Neglected Value Driver† that the persistence of competitive 1 advantage has a huge impact on the value of a ? rm. Yet there is little literature on this topic (see Fritz, 2008) and the bulk of academics as well as practitioners still rely mainly on the di? erentiation between value and growth stocks. This thesis gives priority to the competitive advantage, though, and intends to lay the groundwork for valuing competitive advantage. It is important to understand how a competitive advantage can be captured and if it is possible to predict long-term pro? ability, before starti ng to value the growth potential of a company. Hence, the aim of the thesis is con? ned to the predictability of long-term pro? tability and does not intend to value the competitive advantage as such. The ? rst question that arises in this context is whether it is possible that a company can exhibit long-term pro? tability. The answer to this question is of interest, as most economists maintain the contrary. According to economic theory, pro? tability is mean reverting in a competitive environment (Chan, Karceski and Lakonishiok, 2003). However, reality teaches us the contrary every day.Mircrosoft’s products, for instance, are everything else but innovative. Nevertheless, the company earns excessive returns for decades, and so do others like The Coca-Cola Company. Thus, this thesis investigates the possibility that a company is able to sustain its competitive advantage over several years. Thereupon, the second issue addresses whether companies with a durable competitive advan tage exhibit stock-speci? c fundamental characteristics. Therefore, the DuPont Identity serves as framework. The companies are classi? ed into deciles in terms of pro? tability (i. e.ROE) and persistence. Upon this, the companies are tested for the characteristics regarding various measures, which are derived mainly from the DuPont Identity. All companies that are objects of the investigation are listed in the United States and constrained to manufacturing companies only. The third question addresses whether it is possible to identify companies with a durable competitive advantage based on the observed characteristics. Finally, a simple strategy is composed that implements the investigated characteristics of companies with a durable competitive advantage.The strategy is conducted on manufacturing companies that are listed on a Swiss stock exchange. 1. 2 Structure and Empirical Approach The present thesis is structured in mainly four parts: Chapter 2 reviews literature on value inves ting and points out the broad range of value strategies by the mean of four examples. The reader shall gain an overview of value investing (i. e. the origin of value investing, dissociation from other investors, and current value discussion). Additionally, 2 this chapter shall point out the link between value investing and the competitive advantage period.Chapter 3 contains a literature review about competitive advantage, pro? tability measures and the persistence of pro? tability. Moreover, chapter 3 shows the research gap as well as the general approach to ? ll this gap. The empirical part in chapter 4 deals mainly with three issues: (1) persistence of superior performance, (2) characteristics of companies with a competitive advantage, and (3) predictability of future long-term pro? tability. Finally, in chapter 5 a value strategy will be composed that builds on the insights of chapter 4. 3 Chapter 2 Value Investing—An Investment Paradigm 2. 1 The Origin of Value InvestingV alue investing is an investment paradigm that derives its origin from the ideas on investment and speculation subsequently developed and re? ned by Benjamin Graham and David Dodd through various editions of their famous book Security Analysis. Starting in 1928, Graham began to teach a course on security analysis at Columbia University. The book emerged from that course, and appeared in 1934. Graham and Dodd mainly summed up lessons learned from the previous economic crisis in 1929 and provided readers with inevitable principles and techniques by focusing on the analysis of fundamental ? gures to estimate the value lying behind securities.By publishing the ? rst professional book about investing, they laid the foundation of value investing. In 1949, Graham published his second book, The Intelligent Investor, which was described by Warren Bu? ett (Graham, 2003) as „by far the best book on investing ever written. † It contains mainly the same ideas as in its predecessor Sec urity Analysis, but focuses more on the emotional aspects of stock markets, rather than on analyzing techniques. The techniques to determine investment opportunities that Graham and Dodd have developed are based on two fundamental assumptions about the market: 1.Market prices of securities are sometimes subject to signi? cant and unforeseeable movements. 2. As opposed to the e? cient market hypothesis, which assumes that all stocks are correctly priced by the market at any one point in time, market prices of some 4 securities deviate from their intrinsic values from time to time despite the fact that their underlying economic values do not justify such signi? cant deviation. Hence, an intelligent investment is characterized as paying less for a security then its intrinsic value. Paying more for a stock than its intrinsic value in the hope that it can be sold for a higher price is speculative.In other words, an intelligent investor should not attempt to forecast future stock market m ovements; instead, such movements provide opportunities to purchase undervalued stocks. Moreover, investors are encouraged to purchase securities only when the market price is su? ciently below its intrinsic value. Graham (2003) referred to this signi? cant gap between price and intrinsic value as the margin of safety, and quali? ed it as central concept of investment. In practice, investors lay down di? erent margins of safety that are appropriate to their fundamental analysis. A super? ial analysis requires a higher margin of safety than a deep and broad analysis. Additionally, market conditions as well as the sizes of funds gives reason for di? erent margins of safety. Bu? ett states in his letters to the shareholders of Berkshire Hathaway, Inc. in 1992: „We have seen cause to make only one change in this creed: Because of both market conditions and our size, we now substitute ,an attractive price’ for ,a very attractive price’ (p. 12). † Yee (2008) sugg ests a margin of safety between 10% and 25% of the share price. Larger margins are justi? ed for especially risky stocks.Accordingly, the margin of safety is not a rigid safety net but rather a ? exible net with meshes, which must be properly adjusted to the speci? c needs and conditions from time to time. 2. 2 Value and Other Investors Classic value investors—in the sense of Graham and Dodd—are rare. Every investor is looking to buy low and sell high, but what exactly di? erentiates a real value investor from all the other investors? According to Greenwald, Kahn, Sonkin, van Biema (2001), investors can be di? erentiated into two main categories. The ? rst category pays no attention to fundamental analysis.Instead, these investors analyze charts; in particular they construct charts to represent trading data (e. g. price movements and volume ? gures). In other words, they intend to predict future price movements referring to previous events regardless of its fundamental value (pp. 5-6). Graham and Dodd qualify these investments as highly speculative. 5 Although the second category focuses admittedly on fundamental analysis, Graham and Dood value investors are still a minuscule minority. Greenwald, Kahn, Sonkin, van Biema (2001) divide these fundamentalists into those who ocus on macroeconomics and those who deal with the microeconomics of securities. Macro-fundamentalists often pursue a top-down approach by considering ? rst broad economic factors such as interest rate, in? ation rate, exchange rate, unemployment rate, and the like. They forecast economic trends on a broad national or even worldwide basis. Upon this, they decide whether a group or even a speci? c security is a? ected by this trend. They do not calculate the value of individual securities, though. In particular, they monitor policy makers, such as the central bank, and try then to determine the impact on a speci? industry or group of securities. As any other investor, they attempt to forecast price movements before other investors recognize them and subsequently buy low and sell high, but they do not calculate the intrinsic value of an individual security directly (pp. 6-7). Graham and Dodd originally established value investing as a comprehensive analysis of securities in order to estimate the intrinsic value as accurately as possible, but in the group of micro-fundamentalists, traditional value investors are still a minority.According to Greenwald, Kahn, Sonkin, van Biema (2001), a more common approach takes the current price of a stock as the point of departure. These investors analyze the history of a security, considering how the stock price was in? uenced by changes in the underlying economic factors. In a second step they then attempt to predict the probability and impact of such changes in order to forecast future development of the speci? c security. These kind of investors often forecast future earnings or free cash ? ows. If they ? d that their pre dictions are more optimistic than the market’s expectation, they buy the security; if they ? nd that the market’s overall expectation is to high compared to their forecast they sell the security (p. 7). Indeed, most value investors—in the sense of Graham and Dodd—start their analysis from the bottom up by calculating ? rst the intrinsic value of a ? rm and subsequently they estimate the macroeconomic exposure of the ? rm—similar to the micro-fundamentalists. Although there are some similarities, Graham and Dodd value investors distinguish themselves from micro-fundamentalists in many ways.Greenwald, Kahn, Sonkin, van Biema (2001) mention two reasons why most micro-fundamentalists are not value investors: First, they focus on prior and anticipated changes in prices, and not on the level of prices relative to underlying values. The second and even more decisive di? erence is the absence of a margin of safety to safeguard investors from unpredictable market movements (pp. 7-8). Accordingly, a true value investor in the classical sense is one whose point of de6 parture is the fundamental data of a company. Although macro-economic factors play a signi? cant role in the analysis, they are of secondary importance.Furthermore, this investor does not predict future developments of key factors that cause price changes. Instead, a classic value investor values a company based on current fundamentals and buys a security at a bargain price. In the following section, four value strategies are outlined in order to give an idea by the way of illustration. 2. 3 Four Value Strategies by Illustration The range of value strategies is broad enough that it makes it impossible to sum up all of them. Thus, the following selection intends to show the large variety of aspects that these strategies characterize. These aspects range from fundamental analysis only (e. . Piotroski) to more sophisticated investigation of companies (e. g. Bu? ett), from con centrated portfolios (e. g. UBS EMU Value Focus Fund) to diversi? ed portfolios (e. g. Schloss). 2. 3. 1 Piotroski’s F_Score Piotroski started his career as a professor at the University of Chicago Graduate School, and since 2007 he has taught accounting at the Stanford University Graduate School of Business. In April 2000, Piotroski published a paper in the Journal of Accounting research titled „Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers. In this paper, Piotroski classi? es distressed companies in winners and losers by means of nine fundamental criteria. Four criteria (ROA, ? ROA, CFO, and ACCRUAL) re? ect the pro? tability, three criteria (? LEVER, ? LIQUID, future debt obligations, and two criteria (? MARGIN, and ? TURN) measure changes F_Score is composed as follows: F _Score =F _ROA + F _ ? ROA + F _CF O + F _ACCRU AL + F _ ? LIQU ID + EQ_OF F ER and EQ_OFFER) measure changes in capital structure and the ? rm’s ability to meet in the e? ciency of the ? rm’s operations (Piotroski, 2000, pp. 10-14).The equation of the + F _ ? M ARGIN + F _ ? T U RN + F _ ? LEV ER (2. 1) where a low F_Score signals a ? rm with less recovering potential and a high score indicates the ? rm as having mostly good prospects to recover. If a company ful? lls a criteria, 7 the F_criteria equals 1, otherwise 0. With that, Piotroski translates the criteria into binary signals. The sum of all F_criteria subsequently leads to the F_Score, which can range from a low of 0 to a high of 9. Due to the fact that it is very di? cult to obtain the maximal score, companies with a minimum score of 8 will be classi? d as high F_Score whereas as companies with a score of 0 or 1 are classi? ed as low F_Score (Piotroski, 2000, pp. 14-18). Piotroski (2000) reevaluates the stocks every year and decides whether a stock belongs to the losers or to the winners. Finally, the investment strategy buys high F_Score and sel ls short the low F_Score. This simple strategy generates over two decades an astonishing 23% average annual return. It appears that the strategy is also robust in crisis. In 2008, the American Association of Individual Investors tested the strategy among 50 other investment strategies.With a performance through to the end of 2008 of 32. 6%, it was not only the only stock strategy that would have generated positive returns but has also outperformed the median performance (-41. 7%) of all tested strategies by far (Thorp, 2009). Due to the fact that the portfolio is construed each year on actual data, it is often the case that the portfolio is turning over correspondingly. Once a ? rm is recovering and the market has recognized the improvements the B/M ratio increases and the stock does not appear any more on the screen, although the company has even more growth potential. That is why many ? ms remain no longer than one or two years in the portfolio. Admittedly, buying winners and shor t-selling losers is one big advantage of the strategy. Companies that are classi? ed as losers may transform in a subsequent period from a low F_Score to a high F_Score ? rm. Therefore, the strategy makes double use of a company’s development or business cycle. But the strategy also implies a disadvantage; why should an investor sell an excellent business that bought at a bargain price? Based on a competitive advantage, the business could thrive to a superstar and yield high returns on the initial investment.A top manager also keeps the good business also when others o? er more than its current value because the manager knows that the business will contribute also in the future to the ? rm and its shareholders. 2. 3. 2 Walter and Edwin Schloss Walter Schloss and his son Edwin are very conservative value investors whose motto is to keep things simple and cheap. Walter Schloss attended a course of Graham’s and worked for the Graham-Newman Partnership until 1955. Afterwar d, he ran his own investment ? rm and in 1973 his son Edwin joined the partnership. From the formation of the limited 8 artnership until 2000, the Schloss have provided their investors an annual compound return of 15. 3%. They outperformed the S&P Industrial Index by 4. 2% annually. In other words, they have created a return of 66,200% while the S&P Industrial Index performed 11,800% (Greenwald, Kahn, Sonkin, van Biema, 2001, p. 263). Walter Schloss has been titled by Warren Bu? ett as „superinvestor† (Forbes, 2008). What distinguishes the Schlosses from other value investors is their simple, and almost rudimentary method choosing stocks. They are among the few investors that stick to the principles of the father of value investing.Like Graham, they seek for stocks that are priced lower than their working capital (net assets minus current liabilities). They start their investigation by putting their feelers out to stocks that are unloved, distressed, and unheeded from ot her investors. Most of these stocks are in a downward trend either by a rapid plunge or a continually decreasing price. The longer the company has gone through such hard times, the more they call the Schloss’s attention. Once they have invested in such a unloved stock they hold it on average for four to ? ve years until the stock has recovered. Sometimes they also sell a stock earlier when they ? d a better opportunity (Greenwald, Kahn, Sonkin, van Biema, 2001, pp. 266-269). Edwin Schloss focuses on asset values, but is also willing to buy a company that has a strong earnings power. Greenwald, Kahn, Sonkin, van Biema (2001) describe the investment philosophy of Edwin Schloss as follows: „Edwin Schloss pays attention to asset values, but he is more willing to look at a company’s earnings power. He does want some asset protection. If he ? nds a cheap stock based on normalized earnings power, he generally will not consider it if he has to pay more than three times b ook value. [†¦ Depending on his estimate of what the companies can earn, Edwin may still ? nd the stock cheap enough to buy (p. 268). † Although Edwin pursues a more liberal value approach by taking the earnings power value into account, he is still very conservative. Both father and son do not include in their valuation process other than fundamental data. In their analysis, they rely entirely on annual and quarterly reports—they keep things simple but with a relatively high margin of safety. The diversi? cation of their portfolio also varies. They do not determine a threshold in advance to which they stick.Similar to Warren Bu? ett, their approach leads them to industries, which are not exposed too much to rapid changes that can undermine the value of these stocks (Greenwald, Kahn, Sonkin, van Biema, 2001, p. 269). 9 2. 3. 3 Warren Bu? ett Warren Bu? ett, who is doubtless the most famous student of Graham and one of the most successful investors, too, pursues a s imple strategy, which is complex and di? cult in its execution. Bu? ett started his career in Graham’s investment ? rm. In 1964, he then bought shares of Berkshire, when its book value per share was $19. 46 and its intrinsic value even lower (Bu? tt and Cunningham, 1997, p. 6). In the period from 1964 to 2009, book value per share increased at an annual compound rate of 20. 3% that is an overall gain of 434,057 %. Adjusted by the S&P with dividends included, Berkshire has a compound annual growth rate of 11%. During the period, Berkshire reported only twice a negative change in book value—in 2001 and 2008—compared to the S&P that incurred during the same period eight negative results (Bu? ett, 2009, p. 2). Unlike other investors, Bu? ett feels obliged to share his knowledge that he gained mainly from Graham.Moreover, and opposed to the bulk of successful investors, he teaches his wisdom to the world of investors—and those who are interested in his activit y— by an annual letter to the shareholders of Berkshire Hathaway, Inc. To attain this knowledge it is not necessary to buy a share of Berkshire Hathaway, Inc. —which costs currently over $125,000, nor is it necessary to pay any money for it. Bu? ett gives access to his letter on the Berkshire’s website for free. Additionally, in the book called The Essays Of Warren Bu? ett—Lessons For Corporate America, Cunningham organizes the information in Bu? tt’s letters in a thematic way. This book is also accessible online and can be downloaded for free. Bu? ett is aware that he creates potential investment competitors by passing his wisdom to everyone but imitating Bu? ett’s strategy is everything but simple. His explanations are logical and easy to understand, but the execution requires much experience and a distinctive comprehension of the industry and costumer behavior. In contrast to what Piotroski and other academics and money managers postulate , Bu? ett buys not only high B/M stocks. This amazes readers in many ways. In particular, because Bu? tt refers in several passages of his letters to Graham’s conception. It also contradicts the conceptions of most academics, which assign a high B/M ratio to value stocks. Nonetheless, Bu? ett puts emphasis not only on the book value of a company but more on the competitive advantage that a company enjoys. Like Graham, he is looking primarily for very cheap businesses, which are traded far under their intrinsic values. As opposed to Graham, Bu? ett buys not every stock that Mr. Market o? ers him for a bargain price. Additionally, he seeks for businesses with a high competitive advantage.While most ? rms in Graham’s portfolio are distressed, Graham diversi? es the risk. Bu? ett, on the other hand, holds that an investor should not buy second-class stocks 10 in the hope that they will recover. The awareness of less investment opportunities does not bother Bu? ett; au cont raire, he avoids purchases that he will regret later. According to him, every transaction that is based on a wrong decision is unnecessary, and thus, to be avoided. One could say that transaction costs (e. g. trading costs) are tiny, that they carry no weight. But what most people disregard are taxes.With every transaction, book value is going to be reevaluated and governments levy taxes on the new value. Holding a share does not cause any taxes, as long as the investment will be sold. Therewith, Bu? ett did not pay taxes as much as his colleagues that trade frequently. Either way, Bu? ett’s preferred holding period is forever. This strategy particularly bene? ts private investors that have bought stocks of Berkshire Hathaway. At least in Switzerland, the government does not impose taxes on capital gains. In the shareholder letter from 1992, Bu? tt breaks his strategy down to a few cornerstones of the valuation process: „We select our marketable equity securities in muc h the way we would evaluate a business for acquisition in its entirety. We want the business to be one (a) that we can understand; (b) with favorable long-term prospects; (c) operated by honest and competent people; and (d) available at a very attractive price (p. 12). † First, Bu? ett never buys a business that he does not understand entirely. This requires a full comprehension about the industry such as competitors, value chain, costumers, and so on. For this reason, Bu? tt avoids industries with a high rate of change (e. g. technology industry). The second criterion that a business must live up to is a competitive advantage. Preferably, he is looking for businesses that have potential to improve their competitive positions within the industry. Third, but less important, Buffett is looking for competent management. It is less important, because according to him a company with a durable competitive advantage can even operate with ordinary managers and generate extraordinary r eturns (Bu? ett and Cunningham, 1997, p. 21). Finally, a margin of safety prevents Warren Bu? tt from mistakes or unforeseeable developments. It seems that soft factors play an important role for him in the valuation process. Correspondingly, fundamental analysis is only half the battle. The following quote from Warren Bu? ett in the context of the hostile takeover of RJR Nabisco outlines the kind of business Bu? ett likes: „I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty (Burrough and Helyar, 1991, p. 218). † 11 For this reason, Bu? ett also accepts businesses that do not always have a high B/M ratio.Moreover, he seeks for businesses that have potential for improvements and buys them at a relative bargain price in the hope the business remains its advantage and yields high returns in the future. 2. 3. 4 UBS EMU Value Focus Fund The UBS EMU Value Focu s Fund is a highly concentrated and actively managed European equity fund, which holds maximally ten stocks, where each has an initial weight of 10%. The investment process is divided into seven steps (Screening process; Short list; Pre due diligence; Full due diligence; Watch list; Entry, increase/reduce position; and Exit).First, the stock universe is screened by a quantitative approach (EV/EBITDA, P/E, B/M, FCF yield) and by a qualitative approach. Second, in the due diligence process the team meets the management of the target company, they compare the company within the peer group, and determine the fair value and entry level. The team gives particular importance to the within-industry comparisons and a margin of safety of 30%. After the stock is over the due diligence, the stock is deposited on the watch list until the entry level is reached. The stock remains in the portfolio until the stock has recovered and the calculated air value is reached and the weight of the stock is less than 15% of the portfolio. If there is a more promising investment opportunity, a position will be changed. Based on the high portfolio concentration, a sector limitation makes sure that stocks which are stemming from the same sector do not surpass the threshold of 33%. If a stock’s price plunges after its purchase more than 15%, the management also pulls the trigger for safety reasons and sells the stock (UBS, 2010). The strategy of the UBS EMU Value Focus Fund equals in some aspects Warren Bu? ett’s strategy.Both distinguish themselves from Piotroski’s and Schlosser’s strategy insofar as they include a due diligence process that goes beyond a fundamental analysis (e. g. valuation of the management). Furthermore, both strategies do not strive for diversi? cation, although the UBS EMU Value Focus Fund includes some risk management factors that compel the management to exit in certain circumstances. Warren Bu? ett, on the other hand, restricts himself by avoiding complex businesses. The two strategies also di? er insofar as the UBS EMU Value Focus Fund has a relatively short investment horizon of 18 months, whereas Bu? tt holds a stock over decades. 12 2. 4 Value vs Growth—Fuzzy Thinking! Although there is a broad variety of value strategies, it seems that the discussion about value investing leaves little room for interpretation. Nowadays, the bulk of academics di? erentiate between value and growth (glamour) stocks. They ? nd that stock-speci? c fundamental attributes such as a low P/E ratio (Basu, 1977; Ja? e, Keim, and Wester? eld, 1989), low cash-? ow-to-price ratio (Chan, Hamao, and Lakonishok, 1991), and high B/M ratio (Rosenberg, Reid, and Lanstein, 1985; Fama and French, 1992) earn substantially higher returns than glamour stocks.Hence, often one feels compelled to decide between value investing and growth investing. In particular, academic work has upheld the distinction, and thus, has had a strong impact on inv estment professionals. Furthermore, academic research developed style-speci? c benchmarks (Chan and Lakonishok, 2004, p. 71). In that sense, value stocks are referred to a high B/M ratio, a low P/E ratio and a high dividend yield, whereas opposite characteristics—a low B/M ratio, a high P/E ratio and a low dividend yield—are assigned to growth stocks. Some professional investment managers even see a mix of the two approaches as a smart cross-dressing.Among others, Warren Bu? ett labels this classi? cation as fuzzy thinking. Bu? ett argues that growth is always a component in the calculation of value. Nonetheless, he does not neglect that the importance of the growth component varies from negligible to very important and its impact can be positive as well as negative. Thus, a low B/M ratio, a high P/E ratio, and a low dividend yield is not per se inconsistent with „value† purchases. Business growth has often a positive impact on value but tells us little abo ut the intrinsic value of growth (Bu? ett, 1992, p. 12). All growth is not created equal, and thus must be di? erentiated.There is also value-destroying growth, which is not worth a penny. Bu? ett goes even further and scrutinizes the term value investing as such. According to him, the term is redundant because investing implies to pay less then the value of something (Bu? ett and Cunningham, 1998, p. 85). The origin of this fuzzy thinking constitutes the value anomaly that will be discussed in the following section. 2. 5 Value Anomaly Already Graham and Dodd (2008) hint at the discrepancy between market price and intrinsic value and the fact that the market often underestimates value stocks. This mispricing is called in the literature Value Anomaly.In the following section three explanations are outlined: i) a behavioral approach, ii) a risk-based approach, and iii) a competitive advantage based approach. 13 2. 5. 1 Behavioral Approach According to Graham and Dodd (2008), the irrat ional behavior of market participants can drive the price of a security in the wrong direction. As Graham outlined in his book the Intelligent Investor, emotions take part in the participant’s decisions, thus he rejects the E? cient-Market Hypothesis as well as the assumption of Homo Oeconomicus. Market participants are swayed either by positive emotions pushing up prices, or uncertainty and ? rce emotions cause a decline in prices. In general, both results in ine? cient and undesirable market upshots. De Bondt and Thaler (1985) already ? nd evidence that markets overact to unexpected and dramatic news events. Moreover, contagion ampli? es this process of counter-productive behavior, taking a central part of the game, especially in crisis when panics gain the upper hand and investors disinvest despite of existing reasons to act to the contrary. 1 Not only irrational behavior induces a discrepancy between market prices and intrinsic value. Discrepancies can also result from ? ms of little interest, and thus, small liquidity. In particular, small companies fall through the screening raster of professional investors. Once a professional investor manages a fund of a certain size, small investments are out of range. First, small companies are like gold dust, as a consequence thereof di? cult to ? nd, and second, the monitoring costs come along with the number of investments, which makes such companies unappealing. 2. 5. 2 Risk-based Approach Whereas Graham showed that behavioral aspects distort markets and cause a gap between intrinsic value and market value, many academics hold that the di? rence does not necessarily contradict the e? cient-market hypothesis. Some argue that higher returns simply compensate higher risk (Fama and French, 1994). As basis of this argumentation line served the Capital Asset Pricing Model (CAPM), which was developed independently by Sharpe (1964) and Linter (1965) in the 60’s based on Markovitz’s portfolio theory. The model shows the coherence between the expected return of individual securities and systematic risk (market risk). Whereby ? of a security is a parameter describing the relation of its return with that of the overall market.The equation of the CAPM can be summarized as follows: 1 Cella, Ellul, and Giannetti (2010) write in their paper about „Investors’ Horizon and the Ampli? cation of Market Shocks† that stocks which are held in a large part by short-term investors are more likely to plunge under their intrinsic value. They also instance that fund managers often follow restrictions, which do not lead to optimal purchases or sales. 14 E(Ri ) = Rf + ? i (E(Rm ) ? Rf ) (2. 2) where E(Ri ) is the expected return of a speci? c asset, Rf is the risk-free return rate, and E(Rm ) is the expected return of the market.Already Rosenberg, Reid, and Lanstein (1985) give rise to the assumption that the CAPM can not fully explain the correlation between expected returns and t he risk of an individual security. As a one factor model implies, the CAPM oversimpli? es the complex market. Therefore, Fama and French (1992) introduced a three-factor model that is an extension of the CAPM. Basically, they improved the CAPM by adding two more factors: (i) they distinguished between high and low B/M ratio, and (ii) classi? ed stocks according to market capitalization (price per stock times number of shares outstanding).The equation of the extended CAPM can be summarized as following: r = Rf + (Km ? Rf ) + bs ? SM B + bv ? HM L + ? (2. 3) where Rf is the risk-free return rate, Km is the return of the entire stock market, SM B (small minus big) is the di? erence between small and big ? rms according to their market capitalization, HM L (high minus low) is the di? erence between high and low B/M ? rms, bs is the corresponding coe? cient to SM B, and bv is the corresponding coe? cient to HM L. Based on this, Fama and French (1992) argue that high B/M ? rms’ pr ospects are judged relative poorly to ? ms with low B/M ratios. As already postulated by Chan and Chen (1991), Fama and French also interpret high B/M ? rms as ? nancially distressed (see also Piotroski, 2000). They adduce the explanation that a high B/M ratio inheres in a relatively high ? rm’s market leverage compared to its book leverage. Furthermore, they ? nd that during some periods (at least ? ve years) low B/M ? rms remain more pro? table than high B/M ? rms. Fama and French (1992) argue that more risk is inherent with a higher B/M ratio. In other words, value stocks are riskier than „glamour† stocks. Opposed to this, Gri? and Lemmon (2002) show that large returns of high B/M ? rms are inconsistent with a risk-based explanation. Arshanapalli et al. (1998) show 15 that value stocks generally have a risk-adjusted performance superior to that of growth stocks (p. 23). Thus, the value anomaly can be traced back to a mispricing of stocks due to overly optimisti c valuations of „glamour† ? rms. Once this mispricing is revealed, these ? rms earn negative excess returns. According to Chan and Lakonishok (2004), investors, in particular professional investment managers, focus their attention on apparent „glamour† stocks while stock prices of high B/M ? ms plunge under their fundamental value. Hence, investing in high B/M ? rms is likely to be a rewarded long-term investment strategy (p. 85). Moreover, Anderson and Smith (2006) ? nd that a portfolio of the most admirable companies substantially outperforms the market, and thus contradicts the e? cient market hypothesis. As a consequence, the risk-based explanation has lost many of its supporters over the last years and the value anomaly remained unexplained. 2. 5. 3 Competitive Advantage Based ApproachAlthough it is probably the closest explanation, academics rarely make the competitive advantage of a company accountable for the superior performance and excess returns of a company. According to them, competitive advantages must theoretically fade away. But in reality this is not always the case. New academic research indicates that the risk driver refers more to the riskiness of losing the competitive advantage (Mauboussin and Johnson, 1997; Greenwald, Kahn, Sonkin, and van Biema, 2001). This could be the case if new competitors enter the market and/or in industries where the rate of technology changes is high.On the one hand, new technologies open up new opportunities for existing players, but on the other hand, they also carry the risk that entrants come up with new products and technologies that force existing players to keep up with the changes. This kind of competition is often quite expensive and indicates that excess returns can be wrest away easily. Therefore the risk of businesses, which are exposed to such changes, is higher than of businesses that sell products with marginal changes. Of course, some companies even maintain their competit ive advantages in fast-changing industries over decades (e. g. Microsoft, Inc. r maybe Facebook) due to customer retention and network e? ects, which create switching costs on the demand side and enormous costs to enter the market on the supply side. The mispricing of such companies that exhibit a durable competitive advantage originates from the complexity in identifying such companies in advance. The following chapter elaborates a bit more on this and points out the state of the art as well as the existing research gap. 16 Chapter 3 Literature Review 3. 1 Competitive Advantage Competitive advantage is a central theme in value investing that has often gone forgotten in the heated debate about the value anomaly.Although an immense number of books and papers have been written about competitive advantage, it has not found proper entrance into the value discussion. Nonetheless, it is an essential part in the valuation process of a company. Greenwald, Kahn, Sonkin, and van Biema (2001) break the Graham and Dodd framework down to three main sources of value (see Figure 3. 1): (1) the asset value, (2) the earning power value, and (3) the value of growth. All three elements must be involved in the calculation of value—also growth (pp. 35-47). The asset value equals the reproduction costs of the assets and is therefore the most reliable source of value.The second most reliable measure of a ? rm’s intrinsic value is the value of its current earnings (earning power value). The earning power value equals current earnings divided by the cost of capital, assuming that the growth rate is zero. The deviation between the asset value and the earning power value equals the franchise of a company. What they call Franchise is referring to the competitive advantage and describes the same phenomenon—the ability to earn more on a ? rm’s assets than it is possible under perfect competition (p. 41). The least reliable source of value is growth, because it i s the most di? ult element of value to estimate and therefore obtains last priority in the valuation process. According to Greenwald, Kahn, Sonkin, and van Biema (2001), growth is only valuable if it is within the franchise. Correspondingly, growth that only increases revenues, earnings or the assets of a ? rm does not create additional value. Growth is valuable only if a company can extend its pro? tability by the means of its competitive advantage. 17 Figure 3. 1: Three Slices of Value Nevertheless, excess returns, which exceed the cost of reproducing a ? rm’s assets, are under the assumption of perfect competition not possible (see Mankiw, 2004, pp. 4-65). As soon as a company earns more on its assets than its reproduction cost, it will attract new competitors, and thus, erode the excess returns until the earning power value equals the value of assets. However that may be, economic theory about perfect competition is seldom the case in reality. Some companies have enjoyed a competitive advantage even over decades (e. g. The Coca-Cola Company or Microsoft, Inc). There have been many research studies conducted on competitive advantage and a huge number of drivers have been found. 1 Without going too deeply into the di? rent drivers, it might be worth to mention the most common: searching costs, switching costs, and economies of scale. By the means of switching costs, a company can create a lock-in: once somebody has chosen a technology, switching can be very expensive (Shapiro 1999, pp. 11-13). Microsoft, Inc. is probably the best example to illustrate a lock-in e? ect. Changing from MS O? ce Word to another writing program is costly. It raises the annoying problem that the formats are not compatible, and thus requires much e? ort that is more costly than remaining with MS O? ce Word. Switching costs can hange over time as buyers alter their products Thomas Fritz (2008) has conducted an extensive literature review of over 140 empirical investigations p ublished between 1951 and 2007. He comes to the conclusion that the di? erent drivers for a competitive advantage are as manifold as the number of studies and that there is no such as a universally valid driver as one could assume. 1 18 and processes (Porter, 1998, p. 296). Another kind of lock-in occurs by search costs. Search costs occur as buyers and sellers attempt to ? nd each other and establish a business relationship (Shapiro, 1999, p. 26). Finally, a competitive advantage arises by economies of scale. Porter (1998) describes economies of scale as the ability to produce more e? ciently at a larger volume (p. 70). But one should note that economies of scale by themselves do not constitute a competitive advantage. In addition to economies of scale, it needs a demand advantage, which does not have to be big. Once a demand advantage exists, economies of scale in the cost structure will transform superior market share into lower costs, higher margins, and higher pro? tability (Gr eenwald, Kahn, Sonkin, and van Biema, 2001, p. 0). Correspondingly, products or services that pro? t from high purchase frequency often enjoy a demand advantage that derives from a habit (e. g. the cigarette industry). Still, it is not written in stone that a competitive advantage lasts for an in? nite period if once achieved. Although a vast number of studies examined the attributes of a ? rm with a competitive advantage, considerably less studies have elaborated on the sustainability of a competitive advantage and the reason why some ? rms enjoy a competitive advantage for decades and other only over a short period. The in? ence of the Competitive Advantage Period (CAP) on the valuation of a ? rm’s shares has also been largely ignored by the literature, although the notion derives its origin from Miller and Modigliani (1961). The term itself appeared in the 90’s in numerous writings. The concept that was developed in Miller and Modigliani (1961)’s seminal pape r on valuation can be summarized as follows: V alue = N OP AT I(ROIC ? W ACC)CAP + W ACC (W ACC) (1 + W ACC) (3. 1) where NOPAT represents net operating pro? t after tax, WACC represents weighted average cost of capital, I represents annualized new investment in working and ? ed capital, ROIC represents rate of return on invested capital, and CAP represents the competitive advantage period. The CAP can be identi? ed, as shown in Equation 3. 1, as a fundamental value driver among risk and cash ? ow. In order to get the CAP we can rearrange Equation 3. 1 as follows: CAP = V alue (W ACC ? N OP AT ) (1 + W ACC) I (ROIC ? W ACC) (3. 2) As Mauboussin and Johnson (1997) assert correctly, this equation has some shortcomings that constrain its practical scope, but it illustrates how the CAP can be con19 ceptualized in the valuation process.According to Mauboussin and Johnson, the key determinants of CAP can be captured by a handful of drivers. The ? rst key determinant is ROIC that re? ects the competitive position within an industry, whereas a high ROIC indicates a strong competitive position. Generally, it is costly for competitors to snatch competitive advantage from high-return companies. The second key determinant is equally important, and measures the rate of industry change. High returns in a fastgrowing industry do not have the same signi? cance as returns created in a stagnated or even shrinking industry. The third driver re? cts the barriers to entry, which is essential for sustainable high returns on invested capital (pp. 68-69). 3. 2 Pro? tability Measurements High-return companies, which have returns in excess of the cost of capital, also capture Warren Bu? ett’s attention. As Mauboussin and Johnson (1997) note, a constant CAP is contrary to economic theory, but it might be achieved through outstanding management. However, companies with a stable CAP are everything but simple to ? nd (p. 71). As mentioned above, Equation 3. 2 has limited practical s cope; thus, in order to evade this problem other performance measures have to be found.In practice, there are many di? erent performance measures, but this thesis will focus in particular on ROE. Fritz (2008) shows in his investigation that ROA and ROE are two of the most frequently applied accounting-based performance measures (p. 31) regarding competitive advantage investigations. Both are pro? tability measurements and capture the relation of return on applied capital. ROE measures how much pro? t a company generates for shareholders while ROA states how e? cient the asset management is. The higher the pro? tability, the better is a ? rm’s economy and the stronger its competitive advantage.Nowadays, less attention is paid to the ROE. Sharpe, Alexander and Bailey (1999) mention the ROE only marginally and Spremann (2007) devote less than one page to it. Nonetheless, ROE has not lost its usability entirely, but Spremann sees the reason for the decreasing importance in the fa ct that shareholders orient themselves more toward market values instead of book values. Provided that, market ratios (e. g. P/E ratio) gained increasingly attention. But since superior earnings are generated based on a competitive advantage, it must remain a core theme in the valuation process, in particular for the long-term investor.Pro? tability measurements tend to change over time; thus, forecasting future profitability is a task that many practitioners and academics would label speculative. On 20 the other side, pro? tability is mean reverting in a competitive environment. Thus, nothing is simpler than predicting long-term pro? tability, which must be zero in the long run. Freeman, Ohlson and Penman (1982) already found evidence that ROE follows a mean-reverting process. Almost twenty years later, Fama and French (2000) found strong evidence of mean-reverting process in terms of pro? ability and estimated a rate of mean reversion of 38% per year. Assuming a ? rm’s ROE of 20% above mean will shrink below one percent after ten years and therefore lose its competitive advantage—,this corresponds to 38% reversion rate. This is also in line with Chan, Karceski and Lakonishok (2003)’s expectation that superior operating performance cannot be sustained for more than ten consecutive years. Furthermore, Fama and French (2000) show that mean reversion is faster below its mean and when it is further from its mean in either direction. However, Penman (1991) scrutinizes ROE regarding its su? iency to predict future pro? tability. According to him, ROE indeed exhibits a mean-reverting tendency, but it proves a too-strong persistence over time. Hence, he suggests that B/M multiples are better indicators of future ROE than current ROE, and a combination of both increases persistence in ROE even further. 3. 3 Research Gap and General Approach Some research has been conducted about predicting future pro? tability. Though these studies deal in particu lar with the issue of predicting the near future. Thus, this study claims high expectations by predicting long-term pro? ability, with the notion that „longterm† means in this study a period of ten years. There are several papers that postulate a mean reversion of pro? tability measures (Freeman, Ohlson and Penman, 1982; Penman, 1991; Lipe and Kormendi, 1994; Fama and French, 2000; Nissim and Penman, 2001). Soliman (2008) forecasts out-of-sample future changes in RNOA ? ve years into the future by applying the DuPont analysis. All these studies have in common that they investigate one ? nancial measure (or two) in time. Thus, this study intends to close these two gaps. In the following chapter, ? rst, several ? ancial measures will be considered regarding companies with a durable competitive advantage, and second, it will be hypothesized that predicting long-term pro? tability (up to ten years) is possible. 21 Chapter 4 Analysis of Long-term Pro? tability The following c hapter aims to determine indicators in order to forecast long-term profitability. Thus, the chapter is structured in four sections: Section 4. 1 describes the data sample and the adjustments. Section 4. 2 deals with the classi? cation of superior performers in terms of ROE and analysis of the persistence of superior performance.Subsequently, the analysis of ROE performance deciles according to persistence is centre stage. Section 4. 3 involves the analysis of further ? nancial measures regarding the ROE persistence deciles. The starting point of this section is the DuPont Identity, which breaks the ROE measure down into further ? nancial measures. The aim of this section is to ? nd speci? c characteristics that will serve in Section 4. 4 to separate ? rms in advance according to future superior performance years. Finally, Section 4. 6 investigates the ROE persistence deciles according to market ratios (i. e. B/M ratio and P/E ratio). . 1 Data Sample A reliable analysis depends to a great extent on the size of the data sample. The size, in turn, is determined by company years (i. e. number of companies times number of years) that are considered. All data in this study originates from COMPUSTAT if there is no explicit mention of it. COMPUSTAT provides historical data of US companies with available historical annual data from 1950. For this study, the dataset on COMPUSTAT was screened for all companies that were listed on any stock exchange in the United States (including inactive companies) with a primary SIC classi? ation between 2000 and 3999. The data was selected at the end of each calendar year between 1979 and 2009. Hence, historical data for the following investigation is available for thirty-one years. Similar to McGahan and Porter (2002), all records from the dataset that do not 22 contain a primary SIC designation after extraction or any that were not within the stated range were dropped out of the sample. The restriction to companies containing a prim ary SIC classi? cation between 2000-3999 corresponds to the manufacturing division, which contains twenty subdivisions (see Table C. ). Focusing on one division has the advantage that the ? rms have a similar value chain. All manufacturing ? rms have in common that they purchase raw materials or components and manufacture these materials to more mature products, which will be sold to a seller or for further processing. Seldom, do these companies sell the product directly to the ? nal consumer. Drawing comparisons among ? rms with similarities regarding their value chain is simpler and also more reliable. Given this restriction to manufacturing companies, 3844 companies are available. It is art of a dynamic industry process that listed companies disappear and new companies appear on trading lists of stock exchanges. This fact leads to certain problems, which were not always considered properly in prior studies. For the sake of convenience, some researchers have considered only compan ies with available data for the entire sample period. Thus, they have excluded companies that were passing through either a delisting or an initial public o? ering (IPO). Others have ignored in their investigation only inactive companies. In this category fall two cases, in particular: Either a company did not survive the entire period due to ? ancial distress and subsequent bankruptcy or it was the target of an acquisition by another company. Ignoring inactive companies would distort the relative ? nancial performance of other companies in the same group in the same period. Not least, since pro? tability depends on competition, it is important to include inactive companies to reduce the e? ect of survivorship bias as it is important to take new competitors into consideration. COMPUSTAT provides the option to also include inactive companies into the sample. Many researchers assume that newly-listed companies show high growth rates that are not economically signi? ant for the compari son to other companies, and thus, lead to distortions (see McGahan and Porter, 2002; Rumelt, 1991; Schmalensee, 1985). Hence, they exclude all companies from the data sample that exhibit less than $10 million in sales. Following these researchers, the sample in this study contains only companies with sales of at least $10 million during the entire sample period. All companies that come below this threshold for any year in the sample period were excluded. After these adjustments, the sample comprises 1905 companies.In order to avoid the possibility that companies distort the calculation of growth rates through short-term measurements, companies with less than ? ve years of ? nancial history were excluded. There is evidence that suggests that window-dressing before an IPO a? ects the performance of subsequent years after the IPO. For instance, Jain and 23 Kini (1994) ? nd that IPO ? rms exhibit a decline in post-issue operating performance (see also Degeorge and Zeckhauser, 1993). The refore, only ? rms with at least ? ve years of ? nancial data on COMPUSTAT items listed in Table 4. 1 were included. Table 4. 1: COMPUSTAT Items This table shows all items hat are downloaded from COMPUSTAT. A more detailed description is given in Appendix A. Companies that have missing data on one of these items are excluded fr