Lufthansa Marketing Analysis: SWOT and PESTEL

Lufthansa Marketing Analysis: SWOT and PESTEL This report will take a closer look at the turnaround of Lufthansa airlines which went from near bankruptcy in 1991 to a now profitable airline. The evolutionary patterns of strategy and structure are identified in this report as well as how strategic leadership and German culture contributed to the turnaround. Furthermore, this paper will analyse the airline industry in terms of Porters five forces and will also take an extensive look at Lufthansas current situation by means of a SWOT and TOWS analysis. Additionally, Lufthansas business-level and corporate-level strategy will be identified and the Star Alliance, the worlds most important airline alliance, will be discussed in detail. 2.0 Company Background The Lufthansa Aviation Group is considered to be one of the worlds leading air transport corporations. It includes a number of independent group and affiliated companies with business segments in passenger airlines, logistics, aircraft maintenance, catering, tourism and IT services. Lufthansas headquarter is located in Cologne, Germany and its operational centre for passenger and cargo services is situated in Frankfurt (Key data on environmental care and sustainability at Lufthansa 2002/2003). Lufthansa is 78 years old and has currently about 93,000 employees worldwide and in 2003-reported revenue of about 16 billion Euros (Lufthansa Key Figures 2003- see also Appendix I). In terms of traffic performance, Lufthansa is in third position in worldwide passenger transport. For many years the company has also been the market leader in international cargo traffic. In 2002, Lufthansas 368 aircrafts operated on routes to 327 destinations, carrying 50.9 million passengers and 1.63 million tons of airfreight. Lufthansa was also one of the founding members of the Star Alliance in 1997, when 16 partners joined into the worlds largest airline alliance (Key data on environmental care and sustainability at Lufthansa 2002/2003). 3.0 The Industry Background The organization also has to deal with cyclical risks. General economic fluctuations as well as geopolitical developments can have a large impact on the performance of the Lufthansa Group. As good examples serve the events of September 11, the Iraq conflict and the outbreak of SARS in Asia along with a stagnating global economy which seriously influenced the business activity of the entire airline industry in a negative way (Heerkens 2003). Lufthansa is also confronted with some capital market risks as its international business activities expose it to exchange rate and interest rate fluctuations in the international money, capital and also the foreign exchange markets (Zea 2003). A substantial threat is the price of fuel since fuel consumption remains one of the main cost items for the whole airline industry. In 2003, it contributed 7.6% to Lufthansas total operating expenses. Fluctuations in fuel prices can have a significant affect on the organizations operating result (Lufthansa Annual Report 2003). Furthermore there is the threat of higher costs of insuring Lufthansas fleet. Insurance costs increased dramatically after the events of September 11 and since then stayed at a very high level. The reason for that are the massive additional premiums that are being charged for insuring against war and similar events. In case of more wars and terrorist attacks the premiums are likely to increase even further (Zea 2003). There are also a number of infrastructure risks that Lufthansa will have to deal with. There are plans for an extension of the runway system at Frankfurt Airport, which is a major hub for Lufthansas operations, and is extremely important for the long-term competitiveness of the German airline. The extension project is also crucial for securing Frankfurt Airports future as an international air traffic hub, which also applies to the building of the maintenance hangar for the new Airbus A380 super jumbo that will be used from 2007 onwards. Nonetheless, a range of operational restrictions on extending the airport has recently been debated which would hinder its efficient use. In case a solution cant be found, Lufthansa would have relocate part of their business to alternative hubs. Additionally, bottlenecks in many European air traffic control systems cause many flight delays. The infrastructural limitations are a huge burden on the profitability of all European air carriers. On top of t hat, they are inhibiting the industry to keep up with the growing demand for air transport services (Lufthansa Annual Report 2003). There are also a few risks relating to the development of alliances. One of the foundations for Lufthansas commercial success was its integration into the Star Alliance, the worlds leading airline partnership system. Currently, many of the airlines worldwide are in a loss-making situation which, in the case of a few of Lufthansas partners like United Airlines and Air Canada, reached proportions that threatened their existence and also affects Lufthansa negatively. In regards to the Star Alliance, there are also challenges of coordinating and incorporating strategic activities like the establishment of a common global brand, a shared technology platform as well as joint training and personnel development (Lufthansa Annual Report 2003). Being part of the Star Alliance also poses the threat that Lufthansa might lose its identity. It is vital for them to preserve the Lufthansa brand (Bruch Ghoshal 2002). Labour unions are an additional threat; especially in Germany they have a lot of power. Labour unions can initiate strikes, which in the past have already led to delays of departures and substantial costs to Lufthansa (Steinborn 2003). 4.0 The Company Objectives Structural analysis of an industry is a useful way of determining a companys long-term profitability. Comprehending the dynamics of the competitive forces in an industry can give an insight whether an industry is attractive and whether there are any chances for returns on capital. Michael Porter, a professor at Harvard Business School, created a framework for understanding the structure of an industry. According to Porter, the five competitive forces that can have an impact on an industry are threat of new entrants, bargaining power of suppliers, bargaining powers of buyers, competitive rivalry, as well as the threat of substitutes (Analysis of industries 2003). 4.1 Threat of new entrants The threat of new entrants offers the possibility that new firms are going to enter the industry, which will consequently lead to a reduction of industry returns by generally passing more value to consumers in terms of lower prices and also increasing the cost of competition. Factors like economies of scale, capital requirements, product differentiation, access to distribution channels, switching costs as well as brand value determine the threat of entry (Analysis of industries 2003). From my point of view it currently seems very difficult to enter the airline industry as this area of business as well as the world economy is facing a period of recession. Due to large product differentiation the entry barriers are fairly high. There is a range of flag carriers, charter airlines as well as a number of low-fare airlines in the industry. All these different types of airlines offer an extensive range of products that seem to satisfy most customers needs. Additionally, entering the aviation industry requires very high capital investments because aircrafts, technical support and IT services need to be purchased or leased. This industry is also very labour and fuel intensive which requires a lot of funds. Companies with an interest in entering the market also require access to distribution channels. This means that it is necessary to gain trust within the industry so as to get access to take-off and landing spots. This can be quite challenging as national policies still p lay a major role in the aviation industry. Furthermore it is a requirement to obtain permission from governments to enter airspace. Moreover once the market is entered, it is very difficult to exit which raises switching costs to a high level. Throughout the last decade the market opened due to the deregulation policy, which provided low budget airlines with an opportunity to enter the industry. The first entrants like Ryanair and Easyjet utilized this opportunity and developed strong brand names due to their first-mover advantage. Airlines that recently entered the market that have a similar price and cost structure generally find it more difficult to generate the traffic that is required to fill the seats in their aircrafts (Jacob Jakesova 2003). All in all it can be said that the threat of new entrants is not that high in the airline industry in the current business environment. 4.2 Bargaining power of suppliers Factors that are connected with the bargaining power of suppliers include the threat of forward integration as well as the concentration of suppliers in the industry. Supplier power decreases the ability for competitors in the industry to earn higher profits (Wheelen Hunger 2000, p. 64). The main suppliers within the airline industry are the manufacturers of aircrafts like Airbus and Boeing, fuel suppliers such as Shell, British Petroleum and Chevron Texaco. Furthermore there are technical support and IT services as well as the catering services. Suppliers are very concentrated in the airline industry as Boeing and Airbus supply most commercial fixed-wing aircrafts. The concentration of suppliers makes it difficult for the airlines to exercise leverage over the two manufacturers and negotiate lower prices or play one supplier against the other. Moreover, at the current stage, aircrafts for long distance travel cannot be substituted by any other product, which strengthens the bargaining power of the suppliers even more. Fuel providers have an excellent bargaining position as they can increase fuel prices without regarding the airlines as an important customer group. Forward integration, which is the expansion of a business products or services to related areas in orde r to directly satisfy the customer needs, is fairly low. The reason for this is that it can be assumed that neither aircraft manufactures, fuel providers nor technical support companies will purchase an airline and staff it with flight attendants, commercial pilots, a maintenance crew and operate flights across the world (Jacob Jaksova 2003). Nevertheless, the strong position fuel suppliers as well as the relatively strong position of manufacturers of aircrafts need to be taken into account when operating an airline. 4.3 Bargaining power of buyers Buyers can have significant power, as they are able to push down prices, and negotiate for better quality and service. Buyer power is determined by relative volume of purchase, switching cost, standardization of the product, brand identity, elasticity of demand as well as quality of service (Del Vecchio 2000). Since customers are not very concentrated and generally dont purchase plane tickets in large volumes they do not have a strong bargaining position. A single purchase of an airline ticket does not represent a significant fraction of the amount offered. Switching costs are quite low as consumers have a range of choices when selecting an airline. Due to the Internet, information about prices is also less fragmented and much easier to compare. Quite frequently, a customer can find price differences for the same flight and one seat is generally not any better, since everyone arrives at the destination at the same time. Considering the worldwide recession as well as the psychological effects of September 11, airline companies are under substantial pressure as customers switch to alternative transportation like trains. Vacation travelers also tend to shop around for the best price. Traveling by plane is quite expensive and can make up the largest part of the expense of a family vacation. For that reason, demand is quite elastic for some buyers. As soon as the price drops, the demand increases. However, airlines can move their prices in tandem with other airlines, which forces customers to purchase tickets for the market price until a price war starts (Analysis of Industries 2003). Nevertheless, all in all it can be said that the bargaining power of buyers is relatively low. 4.4 Threat of substitute products The airline industry is threatened by a number of substitutes. This threat is quite substantial within Europe, where Lufthansas main customer base is located. Many European countries have an excellent railway system with high-speed trains like the ICE in Germany and the TGV in France. These trains can travel up to 300km/h fast and can cover large distances within the countries in just a few hours. Trains can be considered the largest threat as they offer a variety of advantages over flying. From my point of view it seems that flying is much faster, but on a domestic flight in a European country there is not much of a difference in comparison to trains. The reason for that is that it always takes a while to get to the airport, as they are mostly located further away from cities; check-in and security checks usually require being there at least an hour before take-off. After the plane has landed, it usually takes at least another 30 minutes to get out of the plane, claim the baggage an d organise transportation to leave the airport. Railway stations on the other hand can be much more easily accessed than airports, there is no check-in and security check required and the destination railway station is generally in a very central location close to hotels or offices that need to be visited on a business trip. Furthermore, trains offer generally great scenery while travelling and also offer more legroom. Most importantly the prices are generally lower than those of prestigious airlines like Lufthansa. Alternatively, travellers could use their own car, which would be more time consuming, but would have the advantage of increased flexibility and having transportation at the destination location and not having to use public transportation or taxis. Depending on the distance, this substitute can be either more costly or less expensive (Jacob Jaksova 2003). Moreover, short international trips to major European capitals are often done by bus and also by ferry if it is a tr ip to the United Kingdom. From my experience this is the most inexpensive way of travelling throughout Europe. However, there is no real substitute to flying if the desired destination is overseas. The only alternative to planes would be ships and unless the customer is looking for a relaxing trip on the oceans, it will just take too long to reach the destination. Recently there is also a tendency of larger companies towards purchasing corporate jets rather than flying first class. According to Costa et al. (2002) corporate jets might reduce first class traveller by 10% by 2005. 4.5 Competitive rivalry Highly competitive industries are generally less profitable as the cost of competition is high or customers are receiving the benefits of lower prices. Competitive rivalry is affected by industry growth, brand identity, fixed costs, as well as barriers to exit (Wheelen Hunger 2000, p. 63). It can be said that the airline industry is highly competitive and that industry growth is fairly moderate with airlines struggling in taking away market share from each other. The barriers to exit are considered to be very high. Planes that are grounded dont earn any returns and it is quite complicated to dispose of these assets. Due to bankruptcy laws, airlines that are in financial stress can often remain competitors for a long time (Del Vecchio 2000). In Lufthansas home market, the European airline industry has seen some recent changes with the development of low budget airlines that compete with the more mature airlines. Additionally, recent airline crises like September 11 put even more pressure on all competing airlines. This leads to a process of consolidation and the creation of strategic alliances. Airlines within one alliance dont tend to compete directly with each other anymore, which lead to a slight decrease of the pressure (Jacob Jakesova 2003). By utilizing a range of strategies a company can have an effect on the five forces of competition and thus reform the attractiveness of an industry. Historically, various strategies shifted the principles of competition and future events like war or new inventions are likely to reshape the airline industry again. Lufthansas ability to be very cost effective is also of advantage. As part of its strategic change, Lufthansa implemented Program 15, a strategic cost management program. The goals of this program included an improvement of the competitive position through a reduction in cost, internationalisation of cost-structure and making staff conscious of reducing costs in their daily work. This cost management contributed substantially to Lufthansa making profits again in 1999 (Bruch Goshal 2000). Generally it can be said that Lufthansas change management during its crisis was outstanding. Its management was able to identify the signals for the potential problems, showed great strategic leadership through CEO JÃ ¼rgen Weber and transformed the organization into a profitable company. This experience in strategic change management is very valuable and will surely help the organization with any challenges in the future (Bruch Sattelberger 2001b). Furthermore, Lufthansas management is very conscious of the need for innovation and customer service. They developed the brand ambassador concept where employees with use of personality and dedication create brand loyalty through day-to-day interactions with the customer (Rubens 2004). They recently also introduced a range of innovations and quality improvements at their passenger airlines and some innovations will be implemented in the near future. A special focus is on the business class on long-haul routes as this segment is the most profitable one. The key feature of Lufthansas new business class is a technically sophisticated seat that converts into a flat bed, which is 2 meters long, the longest bed in this class (Manuelli 2003). Lufthansa is also the first airline in the world that offers broadband Internet access on board its planes (Anonymous 2003). On the ground, they are also improving procedures for their status customers with Lufthansas Priority Service by relying on the Internet, mobile phones and check-in terminals simplify reservations and ticket sales as well as to reduce check-in times. A good example of Lufthansas innovative strength is their new terminal at Munich Airport, which was build to optimise operational procedures. In accordance with the best international standards they reduced the minimum connecting time to 30 minutes (Lufthansa Annual Report 2003). An additional strength of Lufthansa is that it has a policy of operating a young and modern fleet. They recently started a fleet renewal program in 2003 and by 2005 they will replace older aircrafts with ten new Airbus A340-600 jets, as well as ten new Airbus A330-300s. By 2007 the new Airbus A380 super jumbo will go into service that can carry 40% more passengers than the currently largest aircraft. The average age of Lufthansas fleet is just under 9 years, which puts them into a good position in comparison to airline world average of almost 15 years (Lufthansa Annual Report 2003). Another strength, which gives Lufthansa a comparative advantage, is the use of a premium executive jet service on North Atlantic routes like DÃ ¼sseldorf-Newark and Munich-Newark. This involves flights in Boeing and Airbus aircrafts that were remodelled so they fit 48 business class seats only and no economy class. Lufthansa introduced this service, because they identified that these routes were in high demand for business class travellers (Ghazvinian Fragala 2002). Lufthansa also offers a very good website that has a lot of features the customers can utilize. Online bookings have more than doubled in 2003. Lufthansa are also constantly expanding their destinations, which can be reached with etix, the companys electronic tickets that offer convenient paperless travel. The number of passengers that use etix is gradually increasing as it can be used to fly to 70 per cent of Lufthansa destinations (Lufthansa Annual Report 2003). Lufthansas Miles More customer loyalty program is also a great tool to encourage customers to fly Lufthansa again. The program has grown in popularity since it was introduced ten years ago and developed into the leading frequent flyer program in Europe (Miles More). Furthermore, Lufthansa is one of the founding members of the Star Alliance, the worlds leading airline alliance. The alliance was voted Alliance of the Year in 2003 on three different occasions (Lufthansa Annual Report 2003). The Lufthansa group consists of seven independent subsidiaries. Lufthansa centrally coordinates their strategy development process. A principal element of the Lufthansa group is clear customer-supplier-relationships between the seven companies. However, the relationships between the individual companies are a weakness, as they dont function as planned. Lufthansa has not reached the required relationships for a market-based internal coordination. So far, the internal customers dont act as normal customers yet since the demand conditions, which they would never demand with other external business partners (Bruch Ghoshal 2000). Another weakness is that the openness for change has almost vanished since Lufthansas amazing turnaround was achieved. During the turnaround, changes were implemented very quickly, but today it takes a very long time for small innovations to take place. Lufthansa also admits not to be perfect in the areas of punctuality, luggage safety, waiting periods, technical reliability and telephone availability, but is in the process of improving this situation (Bruch Ghoshal 2000). Another weakness could be that Lufthansa does not do anything about their low-budget competitors in the European market. Lufthansas management claims that they would not start a low-fare airline under its name, as it would cannibalize its own traffic and damage its brands (Anonymous 2002). 5.0 Economic strategy of Lufthansa According to Hitt (2003, p. 122), a Economic strategy is an integrated and coordinated set of commitments and actions the firm uses to gain a competitive advantage by exploiting core competencies in specific product markets. The literature suggests that there are a number of different business-level strategies. However, I believe that in the case of Lufthansa an integrated cost leadership/differentiation strategy is used. The reason for this is that Lufthansa operates globally and therefore it is vital for them to implement cost leadership strategies as well as differentiation strategies in order to develop competitive advantages. Lufthansas Program 15 serves as a good example of a cost leadership strategy. After Lufthansa had undergone privatization they implemented this extensive strategic costs management program with the goal of reducing overall unit cost by 20% within five years (Bruch Sattelberger 2001a). In terms of a differentiation strategy, Lufthansa constantly tries to come up with a range of innovative ideas to stay ahead of the competition. A list of these ideas could be seen in the strengths section of my SWOT analysis of Lufthansa. It can be concluded that Lufthansa has made the right decision to implement an integrated cost leadership/differentiation strategy, since the literature also suggests that there is a relationship between the successful use of this strategy and above-average returns (Hitt 2003, p. 135). 5.1 Corporate-level strategy of Lufthansa According to Hitt, a corporate level strategy involves specific actions by a company to gain a competitive advantage by having a group of different businesses competing in several industries (2003, p. 183). In the case of Lufthansa, the organisation consists of seven economically independent subsidiaries that include LH Passenger Service, LH Cargo AG, LH Skychef, LH Ground Services, LH Technical Services, Thomas Cook Travel Agency and LH IT services. The individual Lufthansa companies are quite successful. LH Technical services, LH Skychef and LH Ground Services are number one in their market (Bruch Ghoshal 2000). Product diversification, a primary corporate-level strategy deals with the scope of the industries and markets in which the company competes in addition to how managers buy, establish and sell different businesses to equal skills and strengths. In regards to Lufthansa, the organisation uses a related diversification corporate-level strategy which means that Lufthansa generates more than 30% of its sales revenue outside a dominated business and its businesses are related to each other since Lufthansa centrally coordinates their strategy development process. Lufthansas motives for such a corporate level strategy are likely to be issues such as taking advantage of economies of scope, sharing activities, transfer of core competencies, and an increase in market power as well as blocking competitors through multipoint competition (Hitt 2003, p. 187). 5.2 Strategic Alliances While concentrating on internal costs and structural redevelopment, Lufthansa also worked on its external relationships by implementing the strategy: growth through partnerships (Bruch Sattelberger 2001b). While in other industries globalization triggered a wave of mergers of companies that operate internationally; airlines had to look for alternatives because national ownership regulations do not allow cross-border mergers. No airline worldwide has the capacity infrastructure to offer a suitable network by itself. Only through cooperating and alliances can the industry cater for the mobility requirements of the world economy. Therefore, founding the Star Alliance was a logical consequence and Lufthansa was one of the key-founding members of the first airline network in the world (Global Network Five years of Star Alliance). The purpose of the Star Alliance is to realize higher revenues and decrease costs by exploiting synergy effects. The synergies range from shared use of ground facilities like check-in-counters, a city office in Paris and also airport terminals. At the airports in Frankfurt, Copenhagen, Shanghai and Beijing the Star Alliance has its own check-in area with staff member of partner airlines. In addition the first Star Alliance Lounge went into service 2001 at ZÃ ¼rich airport. Other advantages include common frequent flyer programs, joint travel agency contracts collective market research and joint purchasing of materials and equipment (Economic effects for the airlines). Alliance members can also use code sharing a system by which two or more airlines agree to use the same flight number for a flight in order to attract more business by means of extending their networks through partner airlines (Collis 1998). Besides cost-saving synergies, the combined networks of Star Alliance members also offer many customer benefits. In comparison with other industry alliances, the Star Alliance is the recognized market leader (see Appendix 2). For 82 % of all offered flight connections, the Star Alliance is the fastest network. Every four seconds an aircraft of the Star Alliance starts or lands somewhere in the world and it possible to fly once round the world in 36 hours with Star Alliance airlines. Other fundamentals of its brand value include the presence of its members in important home markets and large international hubs, a high degree of customer recognition, excellent service and good cooperation between the frequent-flyer programs of the individual airlines. Furthermore each airline has its individual strengths with a strong market position in its home bases and regional hubs like Lufthansa in Germany. Due to the good cooperation, a whole network of these hubs was established and regional str engths complement each other (see Appendix 3). Additionally, most members also have regional alliances with smaller airlines, which improve the Star Alliance network even further (Global Network Five years of Star Alliance). Research has also shown that alliances result in lower ticket prices and more flight connections. It is suggested that there is a price advantage of an average 6% in comparison with conventional tariffs. In terms of the Star Alliance this leads to estimated passenger savings of between 50 and 82 million dollars per year. Additionally due to the sharing of terminals service counters of the airlines are more easily seen and found and walking distances are decreased. Having counters in the same area at airports also creates a single contact point and improves changes and baggage loading. Staff members of partner airlines can also help and advise customers with enquiries on behalf of the entire alliance. For the alliance to work properly certain level of quality needs to be ensured. This is achieved through frequent mutual quality checks. Jointly agreed quality standards in the areas of security, services and environmental protection are checked on a regular basis (Global Network Five years of Star Alliance). 5.3 Strategic Leadership and German Culture Strategic leadership, which is the ability to anticipate, envision, maintain flexibility and empower others to create strategic change as necessary (Hitt 2003, p. 386) was extremely important in Lufthansas turnaround. The main responsibility for effective strategic leadership generally rests at the top, especially with the CEO, but also with other recognized strategic leaders like members of the board of directors and the top management team. In the case of Lufthansa, the formulation and implementation of strategies was also in the hands of the top-level management, in particular Dr. JÃ ¼rgen Weber, who was Lufthansas CEO at the time. In 1992 JÃ ¼rgen Weber realized the full extent of Lufthansas problems and called for a crisis management meeting with 20 carefully selected senior managers. The outcome of this meeting was Program 93, 131 key actions aimed at drastically cutting about 8,000 jobs, lowering non-personnel costs, reducing the aircraft fleet as well as increasing revenues by DM 700 million to reduce the losses of DM 1.3 billion. The Executive Board then appointed a number of different teams that had the task to achieve the implementation of these 131 projects. Line management was responsible for the implementation of the staff cuts. It was seen as important for the success of Program 93 that line managers took that responsibility to realize the unavoidable cuts, on the one hand, but also to motivate the remaining employees, on the other hand. JÃ ¼rgen Weber also created the OPS team (Operations Team) as a forceful engine in the process of implementing the 131 actions. They constantly monitored, created activities, advised and supported the line managers who were ultimately responsible for the implementation process. Weber showed his total support for the OPS team and personally supported them in many ways. He also implemented visible actions like a 10% reduction of the salaries of all Executive board members (Bruch Ghoshal 2000). Furthermore, to convey and spread these actions, Lufthansa implemented Town Meetings, which were initially an idea by General Electric. A typical agenda of a Town Meeting would mainly involve a talk with the particular Lufthansa units management about problems and plans. An extensive dialogue then follows with the employees where the top-management explains latest plans and also listens to the concerns and suggestions of staff members. JÃ ¼rgen Weber decided to hold as many

Organisation for Facilitating Globalization †IMF and World Bank Essay

The fund is an autonomous organization affiliated to United Nations Organisation. Starting from the initial membership of 31 countries at the time of inception, the Fund has a membership of 186 countries. It is financed by various participating countries with each country’s contribution fixed in terms of quotas according to the relative importance of the national income prevalent in the country and international trade. The total financial resources of the fund is equal to the quotas of all the countries combined together. The contributed quota of a country determines its borrowing rights and voting strength. The following are the functions of International Monetary Fund: 1.Monitoring economic and financial developments of its members; 2.Providing machinery for international consultations; 3.Providing machinery for altering sometimes the par value of currency of a member country; 4.Functioning as a short term credit institution; 5.Lending institution in terms of foreign exchange; 6.Providing machinery for the orderly adjustment of exchange rates and 7.Functioning as a reservoir of the currencies of all the member nations who can borrow the currency of other nations. 8.Granting loans for financing current transactions other than capital transactions; World Bank: The International Bank of Reconstruction and Devlopment popularly known as the World Bank was formed as a part of the deliberations at Brettonwoods during 1945. It was floated in order to give loan to member countries initially for the reconstruction of their war ravaged economies and later for the development of the economies of the poorer member countries. The World Bank provides its member countries long term investment loan on reasonable terms. World Bank has granted many loans for financing specific projects. During the recent years, it has also been engaged in giving structural adjustment loans to the heavily indebted countries. The World Bank is an inter governmental institution, corporate in form whose capital stock is entirely owned by its member governments. The World Bank group consists of the following: †¢World Bank; †¢International Development Association; †¢Inernational Finance Corporation; †¢Multilateral Investment Guarantee Agency †¢International centre for settlement of Investment disputes. Reference: http://classof1.com/homework-help/international-economics-homework-help View as multi-pages

Discourse Organization on Asian Fashion Blogs

Discourse Organization of Asian Fashion Blobs Introduction Background of the study Blobbing has emerged as one of the most popular forms of online discourse. The ease and lack of expense in setting blobs has raised intriguing possibilities for language learning in social media. The unique nature of its architecture and its low cost have not only affected how different floggers can publish and distribute their work to a wider audience but also how they see themselves as writers.According to Blood (2002), blobs have been used in various ways: as online Journals, a meaner of signing hypertext's, and more radically, to create what calls the first native form of discourse on the internet. She argues that blobbing best reflects the dream of Tim Burners-Lee (2000), who was one of the principal designers of the World Wide Web, to make the Web into something truly interactive both in terms of how texts are read and how they can be easily posted and accessed.The growing interest in blobbing ha s aroused the interest of English as a Second Language and English as a Foreign Language fashion floggers who see blobbing as a simple and low cost way of giving traders an access to publishing, advertising and distributing their writings on the internet as a method of providing them with the experience of writing in a digital format, and as a meaner of discussing issues related to their social and personal lives. According to Fleischman (2002), blobbing is the art of turning one's own filter on news and the world into something others might want to read, link to, and write about.The openness can give the floggers a greater sense of the variety of possible audiences they can reach, both for understanding these audiences and learning strategies to spoon to them. These types of on-line discussions have been referred to as â€Å"gated communities† (Lowe & Williams, 2004). With regards to world English, Karachi (1992) conceived the idea of three concentric circles of the language . The inner circle represents the traditional bases and is composed of native speakers of English (e. G.United Kingdom, the United States, Australia, New Zealand, Ireland, Anglophone Canada and South Africa, and some of the Caribbean territories). The outer circle includes countries where English is not the native tongue but they use it as a second language (e. . India, Philippines, Singapore, Hong Kong) while those that belong to the expanding circle are the rest of the world where English is used as the primary foreign language (e. G. Russia, China, Japan, Korea, Egypt, Indonesia etc. ). This idea has helped to classify the eight Asian countries that will serve as the subject in this study on how they use English as a language.Kaplan (1966) claims that English writing is characterized by directness and deductive reasoning, while other languages (e. G. Oriental languages and Arabic) favor indirectness and inductive reasoning. At the same time, he attempts to link the differences in discourse organization between English and other languages to their respective cultures and thought patterns. He marked the birth of the notion now known as Contrastive Rhetoric. It assumes that different languages had their own specific and culturally bound conventions and patterns of writing.This may also tell if there are such characteristics in Asian fashion blobs. Moreover, with regards to each Asian flogger's writing style, contrastive rhetoric should also be considered. Contrastive rhetoric is an area of research in second language acquisition that identifies problems in imposition encountered by second language writers and, by referring to the rhetorical strategies of the first language, attempts to explain them. As summarized by Connors (1997), some internal and external forces give rise to this change in perspective.The internal force comes from criticism of contrastive rhetoric, which has required it to go beyond traditional linguistic parameters of analysis to consider discursive features, processes and contexts of writing. The external forces come from new developments in discourse analysis and changing focuses in first language composition research. To enrich further the structure of each blob, genre analysis will also be considered. This may identify if fashion blobbing belongs in a specific genre by studying how the SSL and FEEL floggers use the language when writing. The focus of this study is on the discourse organization of Asian fashion blobs.Considering their writing style, comparing the blobs of these particular Asian countries that are categorized into two groups will be done throughout the study. Statement of the problem This study aims to answer the following questions: 1 . What are the structures of a fashion blob? . What are the similarities and the differences between the fashion blobs of SSL and FEEL writers? Significance of the study College students of English Language Related Programs Knowing that blob can also be studied as it is a part of our social world, this study can still be given more attention by giving further enrichment by the future researchers.They can provide new findings supported by different related literatures. As the traditional way of analyzing language data from academic institutions, this paper will thoroughly investigate the language used in fashion blobs. This will further explore the online discourse by plunging into the grounds of computer-mediated-communication (CM). Researchers in the Field of Linguistics This research paper will be able to support future research papers that are related to discourse analysis, world English, contrastive rhetoric and genre analysis.As most of us today enjoy the web 2. 0 which includes blobbing (http://www. Slideshows. Net/ muzzy/blobbing), it challenges the researchers to become more analytical in their field. As language researchers move forward by conducting thorough investigations, here will probably be new ideas that will be contributed to t he field of Linguistics. Teachers and Professors of Language The study on contrastive rhetoric among students has always been limited to the doctorate material for pedagogical purposes which is believed to limit learners' ability to express themselves.The paper will further explicate the online discourse specifically fashion web logging which has been considered as one of the tools to express oneself in social network. This would provide enough knowledge to expand the language teachers' repertoire in different writing styles. Floggers Whether these people are in different forms of blobbing, this study may inform them how important language is. In fashion blobbing, it is inspired with different marketing strategies boxed with pictures that are inviting, description of every detail of it and stories experienced by the flogger.Also, they may be informed that this style of marketing includes certain rhetoric in it. Furthermore, this style of writing can be one of the factors of the incr easing subscribers and viewers. A. Scope and Limitation With the number of studies about the circularity and linearity among the SSL and FEEL argumentative essays, court proceedings, business letters and newspapers, this paper focuses on the discourse organization of Asian fashion blobs. The study will only look into the structure of a fashion blob and to identify the differences and similarities of SSL and FEEL writers.The FEEL countries are Malaysia, Indonesia, Cambodia and Thailand and the SSL countries are India, Singapore, Philippines and Hong Kong. These countries are only limited for each group. B. Definition of terms Blob is another term for web log, a social networking site (http://www. Slideshows. Net/ cubic/blobbing) of discussion or information site published on the World Wide Web consisting of discrete entries (â€Å"posts†) typically displayed in reverse chronological order so the most recent post appears first. Usually, it is being used as an online Journal (ht tp://en. Wisped. Erg/wick/Blob). FEEL stands for English as a foreign language and pertains to how speakers use English for limited utilities, for example, for research references and sign boards. The countries that belong to this group are Malaysia, Indonesia, Cambodia and Thailand while, SSL stands for English s a second language and refers to English speakers who could speak it intensely and intimately. In Cracker's concentric circles, this group encompasses the countries that were colonized by the Western countries such as India, Singapore, Hong Kong and Philippines ( Karachi and Nelson, 2006).

The Alarm Clock Is Vital - 1243 Words

For most people setting an alarm clock is crucial. Being able to stay up late and then be up on time is what saves many people from being fired from their jobs. However, many individuals are unaware of the health factors that are affiliated with the clock. Today’s society has developed a set of rules that neglect sleep. Peoplej believe that it is ok to wake up to alarms, and sleep less and do more work (Kalb). Yet, these individuals not only hurt their sleep but their overall well-beings. Even though it helps wake one up on time, the alarm clock can cause individuals to have health problems. One unnoticed malefactor in the world’s obesity epidemic may be the alarm clock, according to Till Roenneberg, a professor at the University of Munich’s Institute of Medical Psychology. He studies â€Å"social jet lag† from individuals on air planes. â€Å"Social jet lag is the chronic clash between what our bodies need [more sleep] and what our lives demand [being on time]† (Kalb). In a study, Roenneberg and colleagues examined the sleep habits of more than 65,000 adults. Two-thirds of them suffered from social jet lag, experiencing at least a one-hour inequality between how long they slept on workdays and weekends. (Kalb) For every hour that social jet lag augmented, one increased his chances of being overweight by thirty three percent (Kalb). Studies have suggested that privation of sleep â€Å"causes higher secretions of ghrelin, the appetite hormone, and a reduction of leptin, the satietyShow MoreRelatedTechnology : Life Without Technology785 Words   |  4 Pagesquestions and inquiries, especially in our current world. Life without technology would be a real struggle for everyone, given the fact that it is found everywhere. Whether it is something so insignificant and straightforward like turning on an alarm clock on our phones for someone to wake up to, such as myself, to something as advanced as construction or movie production, we can always count on specific technology to help get the job done. Whatever the technology may be, their presence in our livesRead MoreThe Suffering of Native Americans in Native Son (1940) by Richard Wright 1095 Words   |  5 Pagessusceptible. The novel begins with an alarm clock going off in a small and run-down apartment. The alarm clock rings, â€Å"Brrrrrrriiiiiiiiiiiiiiiiiiinng!† (19), waking up Bigger and his family. Wright’s use of onomatopoeia accentuates the sound of the alarm clock and catches his readers’ undivided attention. The use of the rhetoric device places emphasis on the disturbing sound of the alarm and is intended to be a wake-up call for readers. The alarm clock is used by Wright to signal to his audienceRead MoreClocky the Run Away Alarm Clock3016 Words   |  13 Pagesturning the product into a fad, which happened with some other products which were lunched before such as Furby and Tickle-Me-Elmo. b)If clock is positioned as a need product she may raise consumer expectations and would have to shift some of her limited resources by making sure clock was able to consistently deliver on its promise as a more effective alarm clock. a + b = It is also important that targeting e ither if the fun or need segment would not preclude her from selling to the other segmentRead MoreThe Process of Becomng a Service Dog Essay717 Words   |  3 PagesHearing dogs are trained to alert the person of sounds that are vital to the owner’s daily safety. They make physical contact and will direct the owner either toward or away from the noise, depending on the source. This provides someone who is deaf or hard of hearing the awareness of any other person. There are seven main sounds a hearing dog will learn; a ringing phone, doorbells/knocking, smoke alarms, fire alarms, name calls, alarm clocks, oven/microwave timers. In public, sirens or car horns are notRead MoreEnd Stages Of Chronic Kidney Disease1049 Words   |  5 Pagesand excess fluid amongst a few other things. It is said that â€Å"1 in 10 adults have Kidney Disease†. My alarm clock goes off at 3:45am and I shut it off to snooze 10 more minutes. Finally, five minutes till 4am I slide out of bed unwillingly and begin to put on my scrubs and grab my left overs to eat for lunch. I drive down the dark empty roads and park in a empty parking lot by 4:30am. I clock in and make my favorite mocha coconut coffee to get my day started. I go to the â€Å"floor† and start by turningRead MoreRacial Prejudice By The Film Crash Essay2036 Words   |  9 Pagesprejudice is without a doubt a phenomenon, one that isn t specific to one ethnic or social group, instead prevalent in all groups of people that affect or are affected by the institution of racism. Different associations and relationships play a vital role in how we perceive others, at times people view others through the lens of racial prejudice. Crash, a movie directed by (put director s name), shows different ethnic groups that face challenges within their lives as they clash into one anotherRead MoreSleep Is A Common Problem Essay1198 Words   |  5 Pagesexcited to offer you this free guide that can help get you in a better state of mind at night. These are simple solutions that fit just about every mindset and personality. Let s get ready to relax, refresh, and restore. Let s get started. Sleep Is Vital! A good night s sleep plays a large role in your overall health and well-being. It s a fact. According to the National Heart, Lung, and Blood Institute, sleep plays an important part in your overall health and well-being. Asleep, your body supportsRead MoreEssay on importance of sleep979 Words   |  4 Pagesneeded ten or more hours per night. Other well-known people such as Ronald Reagan and Winston Churchill took naps throughout the day. Some experts suggest that the best way to determine personal sleep requirements is by waking up without an alarm clock. The amount of time spent sleeping would be the personal requirement. Other experts suggest that an ideal amount of sleep is the amount needed to feel refreshed and well rested in the morning and alert all day. Contrary to popular belief, theRead MoreSummary Of The Great Grace Hopper 1652 Words   |  7 Pagesof rear admiral. She was a mathematical genius at a time when women weren’t even expected to go to college, achieving honors and degrees that only a few other women of her time managed to accomplish. She was instrumental in developing many of the vital procedures that have made modern computers possible. In this field she has a long string of first and unusual accomplishments, from being the first woman to program the first computer in the United Staes to being the first woman and sometimes the firstRead More Different Types of Stress Essay1251 Words   |  6 Pagesbiologically on your body. To prepare for such an event that may be stressful, the body increases its heart rate and blood pressure; more blood is then sent to your heart and muscles, and your respiration rate increases. In the first stage of stress, alarm, the body mobilizes its fight or flight defenses, either t o resist the stress-causing factor or adapt to it. In this stage, the pituitary-adrenocortical system pours hormones into the bloodstream. The pulse quickens, the lungs take in more oxygen

Literature and Journalism - 1988 Words

REFERENCE American Heritage Dictionary of English Language Fourth Edition. New York Houghton 2009. American Heritage New Dictionary of Cultural Literacy Third edition New York Houghton Mifflin Co. 2006 Glencoe Literature; The Readers Choice Columbus Glencoe/McGraw-Hill 2003 Hudson,W.H An Introduction to the Study of Literature. Harrap 1963 Ousby, I. Cambridge Guide to Literature in English Cambridge Cambridge University Press 1996. Hornsby, A.S. Oxford Advanced Learners Dictionary of Current English. OUP 2005 MASENO UNIVERSITY FACULTY : ARTS AND SOCIAL SCIENCES DEPARTMENT : LINGUISTICS, LANGUAGES AND LITERATURE UNIT CODE: ALI 805 UNIT TITLE: LITERATURE AND JOURNALISM TASK: Difference between Literature and†¦show more content†¦There is nothing wrong with the Nigerian land or climate or water or air or anything else. He uses literary techniques like alliteration (simply and squarely), and repetition of the word wrong to create emphasis. Clarke says that literature and journalism have different criteria for the truth. The ethics of journalism indicate that the main distinction between literature and journalism is based on the contents. Journalists must present facts- whether they are using the genre of narrative journalism or any other journalistic genre. Journalists are required to research their stories (Hvid, 2000). Journalism must be true whereas writers of literature are allowed to lie. What the journalist writes must be true in the sense that it can be documented by reference to a named source or actual circumstances. For instance what Barrack Obama wrote in Dreams from My Father is true and can be documented. It is a story about his life; the places and even people mentioned in the book are real. Fiction writers invent and make up stories. Literature does not have to be true to any outside reality, Hvid adds. In literature, the setting, characters, events and action are all in the writer’s imagination i n as much as they may reflect reality. Sometimes the setting and characters can be out of this world, for example in stories of fantasy that involves the mention of the supernatural as well as in science fiction. Journalists must research theirShow MoreRelated Journalism and the American Renaissance Essay1721 Words   |  7 PagesJournalism and the American Renaissance      Ã‚  Ã‚  Ã‚  Ã‚   The period in American Literature known as the American Renaissance was a time of great change in our country. It was an age of westward expansion and social conflict. Americans were divided on such volatile issues as slavery, reform and sectionalism that ultimately led to the Civil War. Emerging from this cauldron of change came the voice of a new nation - a nation with views and ideals all its own. The social, economic, technological and demographicRead MoreBased on True Events A Glance into the Nonfiction Novel Genre979 Words   |  4 Pagesnovel journey began, beginning with the narrative journalistic qualities of Truman Capote, continuing with the story telling of such authors as Norman Mailer, and then continues to stay constant throughout present day literature with works like Katherine Boo’s display of immersion journalism. Truman Capote is said to have invented this new genre in 1966 with, what some call his finest work, the book In Cold Blood (â€Å"Truman Capote†). In Cold Blood details the 1959 murders of Herbert Clutter, his wife,Read MoreCommunity Journalism as a Synonym for Small Town Newspapers695 Words   |  3 PagesLiterature Review: The notion of community journalism is hardly a new one. However, during the past decade, the concept gained much fascination and interest among industry analysts. 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Digital Journalism has been the go-to research topics for many journalism and writing academics since the rise of the internet and digital modes of communication in the 1980’s and 1990’s. There is always controversy surrounding the legitimacy of digital journalism and whether it will be the demise of traditional media and newspapers. Many articles discuss the differences and similaritiesRead MoreSekaran Bougie Research Process1277 Words   |  5 Pagessteps of the eleven step research process outline by Sekaran Bougie (Sekaran Bougie, 2010). These steps involve observation and the preliminary data gathering. Therefore, this analysis will focus mainly on the introductory information and the literature review that the analyzed study outlines in the article. Introduction In regards to conducting research for use in business, much of the research is geared toward ultimately being used as the basis for decision making. Therefore it is vitalRead MoreWalt Whitman and the Civil War Essay955 Words   |  4 Pagessupport the big family. His first job as an office boy â€Å"opened up the world of literature to him† (Reynolds 6). No longer after that, he became a printer at local newspaper which made him interested in journalism. His interest made him published his first article â€Å"In Olden Times† when he worked for the Star (Oliver 9). When Whitman was 17 years old, he became a teacher for few years before he quitted and returned to journalism. Whitman also tried to publish his own newspaper, the Long Islander, when heRead MoreSocial Media And Its Impact On Journalism1742 Words   |  7 PagesSocial media has had a huge impact on the way that journalism is practiced and the way that the general public perceive news in the present day. This dissertation aims to identify and explore the use of the different social media platforms, focusing on the impact that the rise of social media has had on journalism practices. In addition, this paper will examine the public’s responses to the news that they receive through social media platforms. Examples of social media platforms that this dissertation

Cyp 3.3 Childcare Level 3 Guidelines Essay - 2014 Words

LEVEL 3 DIPLOMA FOR THE CHILDREN AND YOUNG PEOPLE’S WORKFORCE (QCF) GUIDANCE FOR UNDERSTAND HOW TO SAFEGUARD THE WELLBEING OF CHILDREN AND YOUNG PEOPLE UNIT CODE: CYP CORE 3.3 Unit content 1. Understand the main legislation, guidelines, policies and procedures for safeguarding children and young people Current legislation, guidelines and policies regarding the safeguarding of children and young people relevant to own home country: Legislation: Children Act 1989; Children Act 2004; Every Child Matters (England); Education Act 2002; UN Convention on the Rights of the Child (1989) Guidelines: Working Together to Safeguard Children 2010, What to do if you’re worried that a child is being abused 2006,†¦show more content†¦centred approach: the wishes and feelings of children must be identified and taken account of; child at the centre of the process by involving the child or young person in meetings, asking for their opinion when discussing matters relating to them; importance of respecting children and young people Partnership working in the context of safeguarding: the importance of the role of all parties in child protection; multi- agencies involvement in safeguarding; essential nature of communication to ensure the safety and protection of children; prompt action to ensure early intervention; prevention of children/young people not receiving protection; lessons learned from high profile cases; shared competencies; the Integrated Workforce Agenda Roles and responsibilities of the different organisations that may be involved when a child or young person has been abused or harmed: Children’s Social Care (act when concerns raised about a child, carry out assessment of child’s needs, interview child or young person and family, gather information from other agencies, lead Child Protection Conference, take action if child or young person in immediate danger);police (make decision about whether crime has been committed, take emergency action if child or young person is in immediate danger);health professionals, general practitioners, doctors in emergency departments (examine/observe a child or young person thought to be at risk of abuse or who has suffered abuse); health visitors; TheShow MoreRelatedWell Being of Children and Young People7337 Words   |  30 PagesHELEN TANDY: REF No: DG66205 UNIT 3 /CODE CYP CORE 3.3 UNDERSTAND HOW TO SAFEGUARD THE WELLBEING OF CHILDREN amp; YOUNG PEOPLE TASK 1 TO LEARNING OUTCOME 1 ASSESMENT CRITERIA 1.1, 1.2, 1.3, 1.4, 1.5 1.1 The first children’s act was brought out in 1989 to make it easier for the laws which protected children and young adults. It was mad clear that all children had rights and all the children services should work together in the event of any allegations of child abuse. England amp; Wales producedRead MoreLearning and Social Care Essay examples30870 Words   |  124 PagesCACHE Qualification Specification CACHE Level 3 Diploma for the Children and Young People’s Workforce (QCF) CACHE Level 3 Diploma for the Children and Young People’s Workforce (QCF) CACHE  © Copyright 2011 All rights reserved worldwide.    Reproduction by approved CACHE centres is permissible for internal use under the following conditions: CACHE has provided this Qualification Specification in Microsoft Word format to enable its Centres to use its content more flexibly within their ownRead MoreEssay about Dcypw Cyp Core 3.79411 Words   |  38 PagesCYP Core 3.7: Understand how to support positive outcomes for children and young people. 1.1 Describe the social, economic and cultural factors that will impact on the lives of children and young people. Every one is an individual and so everyone has individual needs. It is important that as a practitioner that I always take this into consideration and consider the fact that each child will also experience their own personal situations which are unique to them. These unique situations oftenRead MoreThe Importance Of Safeguarding The Well Being Of Children And Young People Essay1774 Words   |  8 PagesCYP Core 3.3: Understanding how to safeguard the well-being of children and young people Section: 1.1 Outline Current Legislation, guidelines, policies and procedures within own UK Home Nations affects the safeguarding of children young people. The main current legislations and guidelines that apply within own UK Home Nations are: †¢ UN Convention on the Rights of the Child 1989/2003 †¢ Working together to safeguard Children 2010 †¢ Statutory Framework for the Early Years Foundation Stage 2008 †¢ ChildrenRead MoreEssay on Cyp 3.310914 Words   |  44 PagesCYP 33-1.1 Outline current legislation, guidelines, policies and procedures within own UK Home Nation affecting the safeguarding ofChildren and young people. Nspcc Nspcc is providing help and support for children who are in poverty or in danger and make a difference for all children. UK is registered with Nspcc and gets help for children who are in the country. They provide service, advice, support, campaigning and education activities for children. The NSPCCs local services will concentrate onRead Moreunit 025 understand how to safeguard the wellbeing of children and young people12685 Words   |  51 Pagesto play, communicate and socialise with each other in the setting. 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Some childrenRead MoreChild Care Level 311778 Words   |  48 Pagescare or children and young people’s settings (ShC 31) Chapter 1 aC 1.1 1.2 What you need to know the different reasons people communicate how communication affects relationships in the work setting aC What you need to do 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4 3.5 4.1 4.2 4.3 Demonstrate how to establish the communication and language needs, wishes and preferences of individuals Describe the factors to consider when promoting effective communication Demonstrate a range of communication methods and stylesRead MoreChildcare: Education and Subject Code Essay43120 Words   |  173 PagesAscentis Level 3 Award in Supporting Teaching and Learning in Schools Subject Code: 501/1289/2 Ascentis Level 3 Certificate in Supporting Teaching and Learning Subject Code: 501/1706/3 Level 2 Certificate in Cover Supervision Subject Code: 501/1718/X Ascentis Level 3 Diploma in Specialist Support for Teaching and Learning Subject Code: 501/1719/1 Level 3 Award/Certificate/Diploma Level 3 Award in Supporting Teaching and Learning in Schools Level 3 Certificate in Supporting Teaching and LearningRead MoreCashe Level 2 Essay example18123 Words   |  73 PagesCACHE Qualification Specification CACHE Level 2 Certificate for the Children and Young People’s Workforce (QCF) CACHE Level 2 Certificate for the Children and Young People’s Workforce (QCF)  © CACHE 2011 Except as allowed by law, or where specified in the text, no part of this publication may be reproduced or transmitted in any form or by any means without prior permission from the Council for Awards in Care, Health and Education. CACHE has provided this Qualification Specification in Microsoft

Barry Minkow free essay sample

When he was a sophomore in high school, Barry Minkow founded a carpet cleaning company ZZZZ Best Company in his parents’ garage. At that time, the carpet cleaning industry has few entry barriers and all Minkow needed was a small amount of start-up capital. However, he soon found out that his firm was actually tough to survive in the industry as the ease of entry means fierce competition. The young man encountered a series of trouble: bad checks, complaints from customers, urge for payment from suppliers and finally the shortage of working capital. Not surprisingly, the bank refused to loan money to his low profit margin company. Minkow would like to try any method to expand his company and he came up with his own creative idea of financing the business including check kiting, credit card forgeries, committing insurance fraud and stealing grandma’s jewelry. Minkow met the insurance claims adjuster Tom Padgett at a swanky Los Angeles health club and began to step into the field of insurance restoration. With the promised payment of 100 dollars per week from Minkow, Padgett told any interested third parties that Minkow was the recipient of insurance restoration contracts which allowed Minkow to do repairing work on damaged properties. They also set up a fake company, Interstate Appraisal Services, to verify the details of restoration to Minkow’s bankers. In the late 1985, Morze joined the company as a part-time consultant to ask for loans around the country’s banks. At that time, he enticed mainly private investors of any kind: an elderly lady who ran the cigarette concession at a Las Vegas hotel, the wife of singer Tony Orlando, even a reputed local crime figure who delivered 25,000 dollars cash in a brown paper bag. In this way, the ZZZZ Best Company began to be flushed with bank loans expand and several carpets cleaning outlet were established in Southern California. The insurance restoration business, originally the sideline of company, gradually began to play an important role and finally accounted for 86 percent of the whole revenues on the financial statement. The seemingly main business of the company, the carpet cleaning work, actually became the cloak of the lies. As a young man with personal charm, Minkow managed to escape the legal sanction which encouraged him to further exploit such a benefit. â€Å"The sky is the limit† There is no end to human’s greedy desire. Minkow began to entice some wealthy people to invest in his company and soon became not satisfied with the small scale of investment. To maximize the profit, he decided to take his company public. This idea began to be rooted in Minkow’s mind after he had hooked up with a guy from Encino, Maurice Rinda convicted stock swindler but also a man with a reputation as a financial wizard. He helped ZZZZ Best merge with a publicly held Utah shell corporation while at the same time making it possible for the company going public. Taking the company public means that the firm will be under the supervision of SEC and there must be enough profit on the financial statements. In addition to the invention of new restoration jobs, Morze, whose earlier bookkeeping work involved only rudimentary accounting, did new tricks – check knitting. He jotted down notes on every insurance job ZZZZ Best supposedly did. He cut and pasted checks togethertaking the name of a bank from one, a signature from anotherthen smoothed out the edges with blobs of White Out and a copying machine. If you saw me at the end of the night making checks, Id look in the mirror and Id have little white dots all over me, he later remembered. i The finished copies made it look as though ZZZZ Best was paying carpet and lumber suppliers for restoration materials. He drew up phony invoices to coincide with the checks and drafted two years worth of detailed bank statements. In January 1986, ZZZZ Best Company gained a spot on NASDAQ and Minkow, raising 13 million dollars in the IPO and holding 53 percent of the company’s shares, making himself a millionaire overnight and youngest person ever lead an IPO in history. Minkow became a billionaire and an American success story. By February 1987, on paper, the company — which Minkow claimed had about 1,300 employees in some two dozen offices — was worth nearly 300 million dollars. Minkows personal worth reportedly topped $100 million. He began to live a luxury life including driving a red Ferrari with a ZZZZ BEST license plate and appearing on Oprah. Minkows business had been clearly a Ponzi scheme. He promised investors highly returns on the insurance restorations business, but in reality, investors were being repaid with money from new investors. Some of the loans were negotiated at outrageous rates of interest so that they were obtained fast enough to pay off earlier loans. ZZZZ Best did operate its carpet-cleaning business which differed itself from a typical Ponzi and the carpet-cleaning division won high marks for its quality. iii However, its insurance restoration division was totally a phony department and little real business existed. Fooling the auditors As the company went public, ZZZZ Best was subjected to the audit of its financial statement. George Greenspan, the performer of the audit, reviewed the copies of the insurance restoration jobs and then confirmed its existence in the report to SEC. He also calculated various kinds of ratios of the company and concluded that they were in line with the industry averages. However, the auditor did not visit any of the insurance restoration sites where actually located many mailboxes. Later on the court, Greenspan explained to the congressman the reason for not making the on-site inspections was that it was not required. Minkow fired the former auditor Greenspan after he completed his audit to ZZZZ Best Company and retained Ernst amp; Whinney, a reputable accounting firm, to increase the credibility of the company’s financial statements. iv According to the rule, the new accountant should get in touch with the old accountant to acquire the information of the company. As AU section 311. 04 put it, â€Å"Procedures that an auditor may consider in planning the audit usually involve review of his records relating to the entity and discussion with other firm personnel and personnel of the entity. However, as Greenspan later spoke to the congressman, it was a mystery that Ernst amp; Whinney did not contact him. Ernst amp; Whinney argued back that they did communicate with Greenspan but failed to provide the evidence. This shows that Larry Gray, the engagement audit partner for ZZZZ Best of the Ernst amp; Whinney Company, was lack of the basic knowledge and understanding of the client’s operations and business even from the beginning. Larry Gray insisted on inspecting the sites of the company’s insurance restoration business, which accounts for nearly 90 percent of its profit. ZZZZ Best claimed in an SEC filing that it had a 7 million dollars refurbishing contract in Sacramento. As the whole operations were totally fictitious, Minkow tried to discourage the trip but ended up allowing him a visit under the repeatedly requests. To deceive Gray and convince him that the business really existed, Minkow and his conspirators devised a scheme. Two of the associates of Minkow were sent to Sacramento in the late fall of 1986 to find a construction that would be reasonable site for the insurance restoration contract. Coincidently, while visiting Sacramento himself two weeks earlier, Gray thought the same building would most likely be the insurance restoration site. The two confederates also convinced the supervisor of the construction site to provide keys of the building for a weekend using the excuse of â€Å"a tenant wished to tour the facility† and bribed the building’s security officer to greet the visitor. iv Gray recorded his visit to the insurance restoration site in Sacramento in his memo and it was clear that he was totally fooled by Minkow. He was informed by the building manager Mark Roddy, whom was hired by the Assured Property Management insurance company to oversee the renovation activities, that the releasing of water from the water storage on the roof caused the damage of the building. Though noticing that some of the work in the building was not finished by ZZZZ Best, he believed it was not the company’s responsibility. v What Gray failed to realize was that the Assured Property Management Company was fabricated by Minkow for the sole purpose of generating fake insurance restoration contracts for ZZZZ Best.