Research and Review into Crisis Management: Mitigating Disaster

Research and Review into Crisis Management: Mitigating Disaster A crisis is a major occurrence with a potentially negative outcome. However, almost every crisis contains within itself the seeds of success as well as the roots of failure. At a conference in Japan on June 21, 2006, a Dell laptop suddenly exploded into flames, and lucky for its owner the fiery blast occurred while the PC was sitting on a table and not in his lap. An onlooker reported that the notebook continued to burn, producing several more explosions over the course of about five minutes. On August 15th, members of Dell Inc.s Global Corporate Communications/Investor Relations organization were part of a team facing an unprecedented challenge. The team had been working with regulatory agencies in various countries for an announcement of the largest recall in the history of consumer electronics, 4.2 million Dell branded lithium-ion batteries, with cells manufactured by Sony. The announcement was leaked to the press and Dell accelerated its plans by 12 hours, including launching the recall Web site early. The focus of the Corporate Communication/Investor Relations team and key business leaders remained clear: to effectively and efficiently inform customers, employees and shareholders about the recall. The recall, one of the largest in the history of the U.S. Consumer Product Safety Commission, couldnt have come at a worse time. According to a closely watched annual study by the University of Michigan, Dells efforts to improve service, which it only recently acknowledged publicly was inadequate, appear to be paying off. That progress is a key part of a long-awaited turnaround at the worlds largest PC maker, which is struggling with a host of problems, including sluggish sales growth in its core businesses. The news of the notebook computer recall hits just as Michigan released its American Customer Satisfaction Index (ACSI) showing that Dells customer-satisfaction score jumped 5.4% from a year ago, to 78-a point above the industry average. That puts Dell in second place, behind Apple Computer, whose score rose 2.5%, to 83. Dells recent improvements follow many quarters of poorer service that became fodder for countless customer complaints, sometimes publicized on high-profile chat rooms and blogs. Consumers, which account for about 14% of Dells total revenue, have complained of hold times stretching for 30 minutes or more, numerous call transfers, dropped calls, and, perhaps most important, an inability of the call-center representatives to communicate clearly and answer their questions. Indeed, many consumers posting on blogs and chat sites continue to complain bitterly about Dell. Literature Review In contrast to the disciplines of emergency and risk management, which deal primarily with natural disasters, the field of crisis management deals mainly with man-made or human-caused crises, such as computer hacking, environmental contamination, executive kidnapping, fraud, product tampering, sexual harassment, and workplace violence. Unlike natural disasters, human-caused crises are not inevitable. They do not need to happen. For this reason, the public is extremely critical of those organizations that are responsible for their occurrence. Nonetheless, even with the best of frameworks and the best of preparations, it is unfortunately still the case that not all crises can be prevented. This even holds true for those crises that we know with almost complete certainty will occur. But the impacts of all crises can be lessened if one has a thorough understanding of the essential basics of crisis management. While not all crises can be foreseen, let alone prevented, all of them can be managed far more effectively if we understand and practice the best of what is humanly possible (Mitroff and Anagnos, 2001). Effective management of information is vital to the operations of most organizations. Some years ago Wells said Without adequate communication an organization will soon grind to a halt (Wells, 1978). More recently Bakewell has pointed out Communication is the hallmark of good management (Bakewell, 1997). Good communication goes hand in hand with effective management of information. Effective management of information at a time of crisis is even more vital, when damage to an organizations reputation or damage to established goodwill can result in severe damage to operations. An organizations reputation is as important as any other corporate asset, and many organizations have some kind of crisis plan intended to protect that reputation should something go wrong. This is when effective management of information (controlling communications) is so vital and always difficult. A few basic rules have clearly emerged from some recent crises. First of all the importance of telling the truth. Second, rather than let the media network speculate, use the media network as a opportunity to disseminate your information. Leave no room for speculation if you cant tell them something, tell them why you cant tell them (PR Journal, 1995). Perhaps another basic rule to be mentioned at this point is the need to apologize promptly when appropriate. Sir Jeremy Morse, banker and past chairman of the Institute of Bankers, maintains that it almost always pays to issue an early apology. Although this could lead to an organization being blamed for something which is not its fault, he comments: Nevertheless, there are two central reasons why this is usually the right course. First, externally, the public respect an apology freely given rather than one that comes after a considerable period of stonewalling. Secondly, internally, an early apology frees managers to sort out the problems far more effectively than if they are still maintaining an outward front that nothing is wrong (Haywood, 1994, p. 177). However, Black (1993) points out that if a lawyer is present there may be pressure not to express sympathy in case this is taken to imply liability: Lawyers must be told that the consequences to the company of not communicating and showing sympathy in practical terms are sure to be much worse than if an open policy of full information and generosity is adopted. It is vital to realize the speed of media coverage because of new technological developments. Not only can stories be relayed by mobile phones and faxed from cars, but they can also be sent from helicopters and bounced off satellites. Pictures too can be taken by digital computerized cameras and sent down telecommunications lines: When Greenpeace staged its high-profile stand against the sinking of the Brent Spar oil platform, it not only posted information on the Web, but was reported to have airlifted sophisticated filming equipment and a satellite down station on to the rig, so that they could provide their own VNRs direct to news outlets (Nicholas, 1996a). This means that it is unlikely that there will be a time delay between an incident or crisis erupting and the resulting media coverage. This emphasizes the need to react quickly at a time of crisis, and to let all parties know immediately about the action you have taken. Communicating effectively was now more often seen as of t he same importance as putting the problems right. (IPR Journal, 1995, p. 14). Furthermore, the media are in competition and hungry for the most newsworthy stories. Generally bad news is very newsworthy and more sensational (Ashcroft, 1994). If immediate information is not available, this leaves room for speculative stories. Methodology This paper reviews how Dell itself has responded to the challenges raised by bloggers, how it has enhanced its customer services and how it has itself undertaken social media initiatives. We use a proven customer loyalty metric the Net Promoters index to assess whether these initiatives have been successful. We conclude that Dell has made some limited progress in reducing negative consumer commentary about its customer services. Where Dell has been most successful is in creating a conversation about its own social media initiatives: Dell has absorbed in its own product planning and its communications the hard lessons of the Dell Hell experience, and opened a dialogue with its customers, which is directly benefitting its word-of-mouth approval rating. Findings A crisis can be divided into six stages. First, the detection of prodromes is a way for the company involved to predict any potential occurrence. For example, if an organization in the same line as yours is faced with a crisis, then you may start looking out. The second stage is prevention. It refers to how a company can prevent a crisis. That can be done by maintaining public relations programs, or by establishing a corporate culture, or even by including a crisis management plan in the strategic planning process. The third stage is containment. It is a process of limiting the amplitude of the crisis, the impact of the crisis and the spread of the crisis. Then, the next stage is recovery. It consists of two major aspects: getting the organization back to normal, and restoring stakeholder confidence in the organization. The following stage, learning, is a post crisis process consisting of examining the crisis, looking at what was lost and what was gained, and how the organization fun ctioned during the crisis. Finally, the last stage is the adjustment of the crisis management plan and crisis communication team. In view of what was achieved in the learning stage, the crisis management plan and the crisis communication team must be updated and any new risks uncovered by the crisis should be incorporated in them. Detection of prodromes It turned out that this occurrence was not an isolated case. In December last year, Dell launched a massive recall of about 35,000 notebook batteries contained in laptops that were deemed to pose a potential fire risk. The company said at the time it had received three reports of batteries overheating, and while no injuries were sustained, damage to a tabletop, a desktop and minor damage to personal effects had been recorded. The problem is not limited to Dell laptops. According to the US Consumer Product Safety Commission, as many as 43 laptop fires have been reported in the US alone since 2001. It has been almost ten years now since we were first warned about the dangers of the lithium-ion accumulators/storage batteries, the only ones that include a flammable liquid in a pressurized container. In case of short-circuit, they can go up in flames and explode. This is therefore why this kind of battery is rarely used in do-it-yourself tools and hybrid cars. However, they are very popular in IT as they offer an energy density between two and four times superior to those of traditional batteries (nickel-cadmium, hybrid-metal or lead). Also being much lighter, they facilitate the manufacture of miniature devices able to hold a whole day with one single charge. Several cases of explosion have occurred in the past few years, but they were rarely given publicity in the media. At best, these explosive batteries were considered to be isolated incidents. At worst, they were seen as fabrications. In the summer of 2006, the context changed, after several explosions in Singapore in June, and in Utah in July. After an enquiry, we learnt that the problem had been diagnosed more than one year ago. Between 2004 and 2005, Dell analyzed a dozen batteries that had overheated. They detected a fault in the lithium-ion cells of its supplier Sony. Some small particles could infect the cells, provoke a short-circuit and overheat the battery. The fault would have been repaired in February 2006. Sony reviewed its manufacturing process as well as its quality control in order to limit the presence of these particles, and eventually everything was back to normal. But nothing had been done for the batteries already on the market. At the time, we had no serious confirmation of disaster, fire or explosion. There was therefore no reason to launch a substantial operation, added a member of the conception team for the Latitude laptops. We have to wonder: was Dell waiting for a drama to start before making a move? Today, Dell admits having known about these problems for more than a year, but declares that they had trouble in evaluating the seriousness of the situation. They also needed time to find the source of the problem, before launching a modest recall. However, its quite possible that Dell was simply trying to protect itself by sending some information to the Consumer Product Safety Commission, which would have allowed them to negotiate in a better position in case of litigation. The US Consumer Product Safety Commission actually doesnt blame Dell for anything, indicating that the company did its job by acknowledging the problem. It is not the first time that Dell acted this way; it happened three times in five years. Already in 2001, 284  000 computers had been recalled for the same kind of symptoms, and 35  000 others in December 2005. However, during their press conference, the American giant renewed its confidence in Sony, which would keep its status of battery supplier for the laptops of the number one worldwide. Prevention During 2005 and 2006 Dell experienced a series of financial shocks. On November 10th 2005 Dell announced quarterly profits had dropped 28%. On May 9th 2006, and again just a few weeks later on 21st July 2006 Dell announced that its earnings would not meet previous guidance. These profit warnings arose from a combination of continued price pressure on margins in the PC business and also the fall-out from its attempts to strip costs out of the business by a) off-shoring customer support functions and b) ending unprofitable aspects of warranty repair. Dells actions created an outburst of anger from customers on the receiving end of this cost cutting. Jeff Jarviss blog was symptomatic of this criticism. Dell responded to their critics by making two major changes: They began by investing an additional $150m in their customer service operations. The result (according to Dell) is that the average waiting time for support calls has come down from nine minutes to three minutes. They launched an official Dell customer services blog (summer 2006) along with two further social media sites Dell Studio and IdeaStorm. Containment On July 31st, Engadget posted photos of a Dell notebook that had caught fire in Singapore. Its comment: Well keep posting these until we see a recall or a solution, so please, Dell, treat them right. By then, Dell was working closely with the government to figure out the scope of the problem. It turned out that the glitch was the same as it had been the previous year: metal particles inside the battery were causing the problems. Apples problems with overheating batteries had been cropping up in the online media during the spring and summer as well. The CPSCs Stern says Sony connected the dots and figured out which of its batteries and which of its customers were affected. After The Inquirer, a European site for computer hardware news, expressed serious concerns about the batteries, Dell and Sony proposed a second recall to the CPSC. On August 13th, writer Theo Valich reported on The Inquirer site that another recall was on the way. Magee said the leak came from a Dell insider, whom he refused to identify. I attribute being on top of the story to old-fashioned print journalism standards-cultivating, and, if youll excuse the pun, not burning such contacts, he says. The formal recall was announced a day later, on August 14th. Once Dell announced the recall, it, too, harnessed the Web to reach out to the disgruntled computing masses. On August 14th, the company set up a Web site (www.dellbatteryprogram.com) telling customers how to get a replacement battery. On its customer-service blog, (www.direct2dell.com), Dell also published some postings from executives and staffers about the recall (Appendix 1). These included blow-by-blow descriptions of Dells response from Alex Gruzen, senior vice-president of the companys Mobility Product Group, and a detailed explanation of how lithium-ion batteries work from Forrest Norrod, vice-president of engineering. The company also elicited dozens of comments from customers, some of whom were plenty irked. On August 15th, George Johnson demanded to know why Chairman Michael Dell hadnt responded to questions about the battery problems at a press conference the previous day in Sydney, Australia. When he was asked about the recent problems and if there were any developments, he did not volunteer the information that a new battery recall was in the works. If he was so concerned about customer safety, why was the announcement held over until after the press conference was over? asked Johnson.   But most people who commented praised Dell for its response. I commend Dell for looking out for the consumer on this issue, wrote Jim Jones. I have been fearful of leaving my system on while unattended. Its nice that I can leave my system on overnight and not have to worry about my house catching fire.   Dell credits the blogosphere for helping it get through the crisis. Information travels around quickly, says spokeswoman Gretchen Miller. Also, its another channel to get the message to our customers so they can be safe.   On August 15th, Dell received more than 50 million hits on https://www.dellbatteryprogram.com, responded to more than 135,000 phone calls and received more than 150,000 battery replacement orders. Dell shipped the first replacement units the day it announced the recall. Dells Corporate Communication/Investor Relations team played a critical role in the implementation of the recall by developing and executing a strategy based on a key central message: Dell had taken aggressive, proactive action to retrieve and replace all suspect batteries with a clear focus on customer safety. The team worked to help key the stakeholders message to customers that the safety of Dells customers was of utmost importance. This message was supported by articulating the benefits of the companys direct business model including: 1) Dells detailed information on units sold to customers, including the units configuration when it shipped to the customer. 2) Dells records of customer contact information, which enabled Dell team members to reach out to customers immediately. 3) Dells close relationship with its suppliers, such as Sony, which enabled the company to identify the problem, diagnose it and find a remedy. By working so closely with suppliers, Dell was able to respond in a way unlike any other company in the industry. Recovery and Turnaround In February 2007 Dell went further and launched IdeaStorm and StudioDell. IdeaStorm allows Dell users to feedback valuable insights about the company and its products and vote for those they find most relevant. StudioDell is a place where Dell users could share videos about Dell-related topics. IdeaStorm has already been the site of an extraordinary exercise in stakeholder democracy the reprieve of Microsofts Windows XP operating system. Have Dell turned the corner? To answer this question Market Sentinel analyzed stakeholders perceptions of Dell customer service. The analysis compares the sentiment of online commentary before and after Dells commercial slump and their new online customer initiatives. We believe that anyone wishing to track the financial prospects of Dell over the next few quarters could do worse than to watch the key metrics on word of mouth. Using the Net Promoters, we identified five key topics of commentary about Dell customer service and placed each post into one of these categories, according to the most central concern expressed (Appendix 2). à ¢Ã¢â€š ¬Ã‚ ¢ Speed (the length of time it takes to get through to someone at the call centre, to get through to the right person to address callers concerns, to get issue resolved, to get problem fixed, to get delivery of items etc.) à ¢Ã¢â€š ¬Ã‚ ¢ Off-shoring (customers feelings towards technical supports relocation from USA/UK to India and other countries, especially in relation to language problems) à ¢Ã¢â€š ¬Ã‚ ¢ Errors (inaccuracies in dealing with Dell customer service e.g. wrong items sent, orders lost, incorrect delivery details etc.) à ¢Ã¢â€š ¬Ã‚ ¢ Technical Competence (of Dell technical support staff) à ¢Ã¢â€š ¬Ã‚ ¢ New Initiatives (Direct2Dell, Dell IdeaStorm, StudioDell, engaging directly with bloggers) The distribution of comments about Dell customer service between the categories remained roughly constant in the two years, with the largest share accounted for by general comments, followed by comments about the speed or promptness of service, and then comments about off-shoring. A significant change year-on-year was the number of comments, predominantly positive in tone, which were gathered in the second wave about Dells new customer initiatives. Although this was encouraging, the most immediate conclusion to be drawn from the Dell Net Promoters analysis is that negative commentary outweighs positive commentary across almost all categories. This is not at all unusual for a study of customer service attitudes, as people come to message boards or blogs in search of answers to problems they have failed to solve with the customer support services of the company in question. The tone is therefore somewhat negative. Have Dells actions had any noticeable effect upon online feeling on customer service? The good news for Dell is that opinion has improved overall, but there are still areas for concern. There is a slight improvement in customers feelings about Dells speed of service (up +4) and technical competence (up +1). This improvement is offset by increasing dissatisfaction with the policy of off-shoring technical support (down -12) and with the ongoing problem of order, service and delivery inaccuracies (down -8). However, there are two significant positive shifts in opinion about Dell. The first finding is the positive reception given to Dells new customer initiatives. However, the recent deterioration of Dells customer service had eroded much of the goodwill of the online community. Commentators are wary of show without substance. What will be definitely interesting to see is if Dell does anything with these comments or is this yet another example of a company putting all their efforts trying to make themselves look better instead of actually being better à ¢Ã¢â€š ¬Ã‚ ¦as long as they follow through and put some of the ideas in action. If they dont do this, people will realize that they dont actually have the power to influence the company and Dell is just trying to give that illusion à ¢Ã¢â€š ¬Ã‚ ¦if nothing comes out of this youll bring the wrath of khan down on your head The guarded welcome is spelled out clearly by B.L. Ochman on her whatsnextonline.com blog: I dont know if that will make Dells lousy service any better, but it shows they want to listen, and thats where recovery can begin. The second shift in opinion which we found in our analysis is the reduction in the negative comments about Dells customer service. Although the overall mood still appears quite gloomy across all comments, with a Net Promoters Index of -20, this is a considerable improvement on the position 12 months earlier when the Net Promoters Index stood at -38. Changes in the sentiment of commentary seem to lag service delivery. Many of the positive comments which were collected in the first wave of this study traded on the long term legacy of Dell as a provider of best-in-class customer service; the negative comments were more likely to be customers reports of unsatisfactory customer service experiences in the recent past. At the beginning of 2007 negative stories about customer service continued to circulate in message boards and in blogs, but these are now being counterbalanced by those who have more positive stories to tell having benefitted from the effects of Dells re-investment in customer service. It took many years for Dell to establish the reputation for exemplary customer service which it had built up in the years up to 2001, before technical support was off-shored to India and Dell cut back on engineer visits to customers homes. This reputation, as a long term legacy, is still present in some loyal customers minds. But the fallout from Dell Hell means that Dell now has a different and conflicting reputation to deal with poor service from a company which doesnt care about its customers. And it is this reputation which is freshest in the mind. Learning On August 14th, the Associated Press chronicled incidents stretching back to 1999, including, among others, a Lufthansa fire in Chicago, a UPS plane in flames in Philadelphia, and an emergency landing by a plane carrying the then-Vice Presidential candidate John Edwards, all apparently the result of computer batteries spontaneous combustion. It did not require great prescience to anticipate that air flight safety would dominate inevitable coverage of the burning batteries and their subsequent recall. The issue should indeed have been a main component of crisis war games at Dell. Once the recall was inevitable, Dell can reasonably have anticipated the necessity to talk loud and clear about air flight safety, and it should have been prepared to do so at the earliest possible moment. By delaying any announcement, Dell harmed its position on multiple fronts. It allowed the Consumer Product Safety Commission to define the story and cloak itself in the garb of public protector. Nor was the agency shy about describing the recall as the largest computer-related recall in history. The magnitude of the disaster became an integral part of the story reported in the first few paragraphs of both the Austin American-Statesman and Wall Street Journal Online on August 15th. Words like largest or first or worst become the story itself.   At the strategic level, theres a best practice called Bad News All At Once predicated on the time-tested wisdom that full and fast disclosure shortens the life of most stories. In fact, the art of both Investor and Consumer Relations supports this best practice almost every time. Investors want nothing more than closure, a sense that a crisis, no matter how multifaceted, will be resolved in the immediate future. Consumers, meanwhile, can be wooed back, but not so easily if the story drags on indefinitely, a new twist on each front page edition.   Bad News All at Once contains bad news in the exact meaning of the word contain. By stanching the flow of revelations, the story is separated from events that may still lie ahead. There are times when major news, like a terrorist plot or a hurricane, can indeed minimize attention to your story. Its a factor to weigh but not simply assume. In Dells case, the terrorist revelation magnified its crisis to an extent that must have been unimaginable when the company first decided to delay. Now theres the Securities and Exchange Commission account practices probe to further elongate the Dell litany. Unlike the terrorist story, this time bomb has been ticking since last year. There may be good practical and legal reasons why Dell did not reveal this material event. On the positive side, Dell seems to have done a better job working with Sony to coordinate a response to the crisis by avoiding the no-win scenario weve seen in the past when major brands blame each other in the national media. Customers do not care who is at fault. They only care that the problem gets fixed.   Even here, Dells performance was, unfortunately, less than perfect. In the opening paragraphs of those August 15th stories, we read that Dell blamed Sony for the problem. Only further down in the Austin story and nowhere in the Journal story does a Dell spokesperson express confidence in Sony. The fact that many other computer manufacturers may face the same product liability represents an opportunity for Dell to offer some sort of industry-wide support to safeguard products. Such an initiative would underscore Dells public safety leadership even as it reminds the world that it is not the only computer company with a problem. It is a company that is resolved to correct the problem and it deserves the recognition for doing so. Here are some basic lessons learned from the Dell laptop battery crisis:   Predict the future. Play war games. Had Dell done so, they might have anticipated that their exploding batteries were an airline disaster story waiting to happen, even without the terrorist plot that ultimately magnified the story. In determining when to disclose, watch for material events and early warning triggering mechanisms that compel public disclosure as soon as possible. Disclosing Bad News All At Once shortens the life of a negative story and contains it by preempting substantive links to other stories. An industry-wide public safety leadership role generalizes the problem beyond your own company. Adjustment of CMP/CCP Dell is reaching out into the world of blogs and user-generated media. Perhaps the most potent and valuable business lesson Dell has absorbed from its experiences lies in the way the company has taken into its business methods the idea of dialogue with its consumers. In the following blog post by Lionel Menchaca Dell digital commerce manager, he outlines in turn each of the advantages of opening a dialogue with customers online. It is worth reprinting the post in full and highlighting the lessons Lionel identifies: 1. Brands can quickly learn about and address, product bugs and issues; 2. Brands can open an additional communication channel for customer service; 3. Brands have to listen to their consumers and that means monitoring the web; 4. Brands can use blogs to help manage crisis communication; 5. Brands can enhance off-line conversations with consumers based on what they have learnt online; 6. Brands have to be honest and admit it when they get it wrong. Dell said: Our policy [towards blogs] in the past may have been look, dont touch. Today, its more like listen, and join the conversation the right way (Appendix 3). Conclusion The Dell Corporate Communications/Investor Relations teams focus was to engage key media, such as the New York Times, CNBC, and leading regional media, to ensure a wide distribution of the key messages. Within the first 12 hours of the recall, a Dell executive participated in interviews with the Today Show and Bloomberg TV and later in the process worked with global outlets such as BBC World News. Members of the Corporate Communications/Investor Relations team from around the world briefed industry analysts and responded to a number of inquiries from TV, radio, newspaper and wire services. The team faced challenges in responding to the volume of the media requests and with the expected quick turnaround of information. Team members across communications disciplines responded to help. The story shifted when Apple followed Dells recall 10 days later. At that time, none of the other PC manufacturers had made any statement that they could have been impacted by the same contaminated battery packs. Ultimately, Lenovo, Toshiba and Fujitsu also announced recalls, and eight weeks after the Dell announcement, Sony announced the recall of batteries used in its VAIO notebook line. Within 60 days after the recall launch, the story evolved from the initial but inaccurate perception that the battery issue was solely a Dell issue to the accurate story that the Sony battery cells were the sole cause of the issue. In the process, Dell became a model for Performance of Guggenheim Investments: An Analysis Performance of Guggenheim Investments: An Analysis Research Purpose This research aims to analyze and evaluate six different funds and their benchmarks and risk-free rates in order to compare the overall performance of the funds from Guggenheim Investments and the selected funds from three different asset managers. Research Design The research involved 60 monthly observations (from January 2012 to December 2016) to analyze the performance of the Guggenheim Investments and the selected different asset managers, Aberdeen, Wells Fargo, and Pimco, which were selected from the top 500 global asset manager (Towers Watson, 2016).   Three funds from Guggenheim Investments and three more funds from each asset manager, in total of six funds, were selected with similar investment strategies Small-Cap Blend, Mid-Cap Value and Large-Cap Blend for the consistency of the analysis.   The performance would be measured in term of return and risk based on statistical and financial theory.   The performance will be measured in term of return, risk and ratio. Findings All of the fund from Guggenheim Investments, from the results in this research, perform worse than the competitors funds in many ways. The ratios analysis shows lower level of risk rewarding from the poorer management of risk, the funds also generated lower level of return throughout the observation period. Furthermore, the regression analysis shows that all of the fund in this research utilize Fama French model effectively, but the competitors funds also utilized Carhart 4 Factors Model, incorporating the momentum factor which makes them perform better than the funds from Guggenheim Investments. Research Limitations Due to the small observation size, the daily and weekly volatility were ignored from this research.   In term of data quality, using OLS regression may not be efficient to analyze the data as the data consisted with unit-root, which was caused by the price drift. Research Implication The research should provide a good example of how could an investor conduct the statistical analysis of fund performance analysis using E-View 9 and Microsoft Excel.   The result of the research could support the investor, in term of analysis and decision making, to include funds as an asset class into their portfolio. Mutual fund has been around for many decades and is becoming more popular in both developed and emerging markets. As the mutual fund is managed by professional fund managers, it unlock many good features that non-professional investors desire such as well diversified portfolio, access to highly priced securities like bluechip stocks, infrastructure and real estates, or tracking any particular index which required a lot of money. Many mutual funds are provided by asset management companies, some are doing good, some are doing bad. The performance evaluation can be difficult for individual investors that are not specialized in this area of work. This research aim to provide basic knowledge and example of assessing the performance of mutual funds, both in terms of risk and return, to simplify this process for every investor in order for them to effectively and efficiently invest in mutual funds. Data Collection All of the numbers in this research including total return index of each fund and their benchmark, risk free rate are collected from Bloomberg Terminal. The funds fact sheets are directly downloaded from the asset managers website. The benchmarks that are used in this research are selected by using the same benchmark stated in the Guggenheim Investments fact sheets as the main benchmark. Three more supporting benchmark are selected by using the same category from MSCI, Russel, and SP. The Fama French and Momentum factor are collect from the data library of Tuck Business School at Dartmouth. Data Preparation After the data collection, they were processed via Excel Spreadsheet to apply the formulas in order to evaluate the performance of the funds, as well as several statistics.   In addition, the processed data from Excel would be exported to E-View 9 to estimate the regression model to apply CAPM, Fama French and Carhart Model. (Table 1 Funds Overview) According to the funds fact sheets, all the fund is passively managed as the funds objective is to seek long-term capital appreciation. The funds are also investing only in the United States of America. In this research, I additionally use Bloomberg category to match the characteristic of the funds in order to make a more distinctive and more consistent comparison of the similar funds. The main asset manager in this research is Guggenheim Investment and the comparable funds are from Aberdeen, Wells Fargo, and Pimco. The tables below show the statistical data of the funds in terms of simple calculated excess return and log calculated excess return. The returns can be calculated as the followings; The Average Logged Return   The monthly return of the fund and risk-free rate were calculated into logged return in order to calculate time-consistent return. The Arithmetic Mean Excess Return The Arithmetic Mean Excess Return can be calculated by deduct the country risk free rate, in this case US 3-month T-Bill Rate, from the return of the portfolio. (Table 2: Simple Return Statistic) (Table 3 Log Return Statistic) From the tables, we can observe that the funds from Guggenheim Investment generated lower return than the competitors and also have higher downside risk, which is semi-standard deviation. We will further observe the trend of each fund and its competitor and how it performs against the benchmark in these line graphs. (Figure 1 Performance Comparison: SSUAX) This line graph above and the following two graphs are calculated by setting the starting point as 100, and then increase exponentially with the excess return in that period. The illustration shows that both SSUAX and GSXAX effectively track the benchmark from the beginning of 2012 to the end of 2014. After that point, SSUAX started to underperform the benchmark and GSXAX started to outperform the benchmark. The trend tends to persist to the present. (Figure 2 Performance Comparison: SEVAX) The graph above show the strong underperforming trend of SEVAX, while CBMAX can effectively replicate the benchmark since the starting point of the observations. However, both funds still have the same pattern as the benchmark. This should due to difference in the weight of the assets allocation. (Figure 3 Performance Comparison: SECEX) This graph illustrate that PSPAX slightly outperform the benchmark for almost the whole period of the observation, while SECEX still able to replicate the pattern of the benchmark but slightly underperform the benchmark. Standard Deviation and Variance As the widely used mean dispersion or volatility measurement (Lhabitant, 2006), the variance and standard deviation capture the risk of an investment over time.   The larger the dispersion means the greater the value of both variance and standard deviation. With Microsoft Excel, the function STDEV.S() was used to calculate sample standard deviation from the logged return. Semi-Variance and Semi-Standard Deviation Focus only the downside, Semi-Variance and Semi-Standard Deviation present the downside risk of the distribution in term of dispersion to mean. Drawdown Risk Maximum Drawdown simply measures the largest percentage change between the peak price and low price during a specific period of an investment. Shortfall Risk Shortfall Risk measures the downside risk in term of probability that the downside will occur. Value at Risk The Value at Risk measures the maximum loss that a portfolio can be expected within an observation interval at a specified confidence level for example 95% or 99%.   Within this research, two type of method are introduced, the historical VaR and normal distribution VaR, where the confidence level was specified according to the historical distribution and normal distribution respectively. (Table 4 Risk Measurements) For small-cap and mid-cap funds, Guggenheim Investments tend to suffer from higher risk than its competitors as they have higher values in most of the risk measurements used in this research. On the other hand, the large-cap fund of Guggenheim Investments has better risk management than the competitor in all perspective. These risk measurements will affect the risk rewarding ratios in the next section. The ratios shown in this analysis can be calculated as the followings, Information Ratio    average excess return of the portfolio over the market benchmark return    standard deviation of The ratio is used to compare with the Sharpe Ratio of the asset as the Information Ratio is considered as the benchmarks Sharpe Ratio.   By comparing the asset Sharpe Ratio with Information Ratio, the higher Sharpe Ratio in compare to Information Ratio represent that the asset is outperforming the benchmark (Deborah, 2011). Sterling Ratio average excess return of the portfolio over the risk free rate average minimum drawdown over the observation period The ratio has similar meaning to reward-to-risk ratio.   It is used to measure the ability of the fund manager to control their risk to lower the portfolio drawdown. The Sterling Ratio as well as the following Burke Ratio are widely advertised by commodity trading advisors, who wish to highlight their perceived skill in letting profits run and cutting losses. Burke Ratio average excess return of the portfolio over the risk free rate sum square root of the minimum drawdown over the observation period The Burke Ratio assumes an investor to experience an increasing instead of a linear incremenal disutility as reaction to a one unit increase in drawdown. Sortino Ratio average excess return of the portfolio over the risk free rate semi standard deviation of This ratio considers the lower partial moment in the second moment, the semi-standard deviation, to measure the risk-premium of the asset in comparison to the downside volatility of that asset. Kappa 1 average excess return of the portfolio over the risk free rate semi-mean of excess return of the portfolio over the risk free rate Kappa 3 average excess return of the portfolio over the risk free rate semi-skewness of excess return of the portfolio over the risk free rate Treynor Ratio average excess return of the portfolio over the risk free rate sensitivity of the portfolio with the market The ratio considers the risk premium of the asset in compare to systematic component of an assets risk (Spaulding, n.d.). (Table 5 Risk Rewarding Ratios) From the table above, it is clearly shown that funds from Guggenheim Investment are highly inferior to its competitors in terms of risk rewarding return of every aspects, especially the information ratio, which measure how the fund outperform the benchmark. In this case, all Guggenheim Investment fund have highly negative information ratio, this shows that all the funds are underperformed the benchmark, which further confirmed the graph from previous section. We can conclude that the small-cap and mid-cap funds of the competitors can outperform the similar funds from Guggenheim Investment mainly because of the better risk management when the higher return further boost the ratios even higher. For the large-cap fund, although fund from Guggenheim Investments has a better risk management, it still suffer from lower return generated by itself, which make its risk rewarding ratios lower than its competitor. In this research, I run the regression based on the following models using EView, The Capital Asset Pricing Model (CAPM) The CAPM and the SML are included in the research to predict the expected relationship between the risk and return.   Using E-View, if the result from model (see appendix ) in term of ÃŽÂ ±_i or Jensen Alpha shows positive and significant, the asset is said to outperform the market benchmark and vice vesa. Fama French 3 Factors Model By applying some market anomalies to support the model, Fama-French Model included the empirical evidence that small stocks could outperform the large stocks and the high book value to market value stocks could also outperform the low ratio stocks. In this research, two factors that were included in addition to the CAPM model are the SMB (Small Minus Big) and HML (High Minus Low). Carhart 4 Factors Model   By applying more market anomalies to support the model, Carhart Model included the empirical evidence that the winner security will keep winning and the loser will keep losing, one factors that were included in addition to the Fama French model is the MOM (Momentum). (Table 6 CAPM Regressions) (Table 7 Fama French 3 Factors Regressions) (Table 8 Carhart 4 Factors Regressions) (Table 9 Correlation Matrix) From the regression tables above, we can see that most of the intercepts of the model are insignificant, indicate that the fund cannot outperform the benchmark. However, there are some intercepts that are statistically significant, but the value of those intercepts are very less likely to deviate from the benchmark, which make the decision whether the fund outperform or underperform the market becomes more difficult. We can further discuss more about this with the correlation tables, the tables show that the funds, both from Guggenheim Investment and from the competitors, have strong positive correlation (more than 0.95) with its own benchmark. From this point, we can imply that it is very difficult for these funds to outperform or underperform their benchmark due to the highly-correlated characteristic of them. In fact, we can say that these funds are doing well in tracking their benchmark. For Fama French model regression, the values are mostly significant when regress against its own factors, and not significant when regress with the other benchmarks. Furthermore, the regression results from this model confirm each fund objective and strategy. For SSUAX, the values for SMB are positively significant, which means that the small stocks are dominated in the portfolio, the values for HML are slightly positive and significant, meaning that the value stocks are also in the asset allocation of the funds. The Carhart 4 Factors Model regressions for this fund did not show any significant value for the MOM factor. As for GSXAX, the regression results are quite not clear, as we have both positively and negatively significant value of SMB and HML in the different regression. I therefore conclude that Fama French 3 Factors Model cannot effectively explain this fund. After using Carhart 4 Factors Model, the result shows the positively significant values for Market Risk Premium, SMB, HML, and MOM. This may conclude that the fund utilize the same strategies as SSUAX, but by following the momentum of the stocks makes this fund outperform SSUAX, which does not utilize the factor. SEVAX and CBMAX have the similar characteristic to SSUAX and GSXAX, this may due to the funds have closely related choice of investment for being mid-cap and small-cap funds respectively. The regression result still confirm that these two funds mainly invest in small, value stock as SMB and HML are positively significant. However, CBMAX has some evidence of incorporating momentum factor, as the MOM values are negatively significant, indicate that the fund is short selling the loser stocks. This may also help explain why CBMAX outperform SEVAX that does not effectively utilize momentum factor. SECEX and PSPAX can also be explained by Fama French 3 Factors Model, as the values for SMB and HML factors are all significant, but negatively. This as well confirm the investment strategies of these funds that mainly invest in big-cap stocks that lean toward growth style. We can also determine why PSPAX performs better than SECEX by looking into Carhart 4 Factors Model. PSPAX has positively significant MOM value indicated that it incorporated momentum factor in the strategy when SECEX does not. Noted that all model has very high level of adjusted r-squared, which means that the estimates are fitted and reliable. All of the fund from Guggenheim Investments cannot outperform the competitors funds. The funds show poorer risk measurement which result in worse risk rewarding ratio. The regression analysis indicate that the funds also have poorer choice of asset allocation compare with the competitors. The use of Carhart 4 Factors Model clearly shown strong evidence of higher return as seen in the competitors funds. In the funds selection, the investors should not only consider the return, but should also consider the level of risk that one is willing to take in order to match each individual risk profile and maximize ones the utility. Appendix 1: Fund Fact Sheets SSUAX http://fulfillment.marketpowerweb.com/showpdf-sku.cfg?clientcode=rdxsku=SGIFS-SCVA SEVAX http://fulfillment.marketpowerweb.com/showpdf-sku.cfg?clientcode=rdxsku=SGIFS-SMCV SECEX http://fulfillment.marketpowerweb.com/showpdf-sku.cfg?clientcode=rdxsku=GIFS-QTR-SLCC GSXAX http://www.aberdeen-asset.us/doc.nsf/Lit/FactsheetUSOpenSmallCap CBMAX https://www.wellsfargofunds.com/assets/edocs/fact-sheet/equity-fund/cb-mid-cap-value-retail.pdf PSPAX https://www.pimco.com/handlers/displaydocument.ashx?c=693390403wd=Fund%20Fact%20Sheetfn=StocksPLUS%20Fund%20Institutional.pdfid=JJRUIU9YBGygdBZkoxEM7%2b9RTHXIxyZIw0T%2bDne2n4UiurFgvuWSI8U3wKrDgiR8kjwOaIhElyjPQMcsZ%2bacURlLGpyqDSkrerDNZSiUec1YccO167PpDiuxswUDimVQPGA3zF19hjqoyfUcbclAy6QGDvzW7jER5g0rHppMRCXw703Hec%2bRG7KS%2fxoNdq5X%2bSjJwmdqQmUxuiAz3vlHMWzvm6AuGcBMvm21xM%2byPTeKc0imjl19hPI6kgDYi4pvkIWF4XaSXGC0Freoikh1YeOJlv6DRnEAICWDdyOS1bGFTMAt9JLXeE1YpNtVmWJlatcNbvkEsFiINtBzcupchii02oWEi0VYYMm6kkgLZr%2fAWYpymqhkFshcCdH5SgFvTOY9sv5cj6nt9YakDxDe6lTPMwDnUGIKX3H8b39X0JMtY6B3Y6f8HSGl5ylRsRIh Appendix 2: Assets Allocation Bodie, Z.; Kane, A. Marcus, A. (2014) Investments. 10th Edition. New York: McGraw-Hill Deborah Kidd, CFA (2011). The Sharpe Ratio and the Information Ratio. Online at https://www.cfainstitute.org/learning/products/publications/ipmn/Pages/ipmn.v2011.n1.7.aspx (accessed on 16-03-2016) William C. Spaulding (n.d.). Portfolio Performance. Online at   http://thismatter.com/money/investments/portfolio-performance.htm (accessed on 16-03-2016) Lhabitant, F.-S. . (2006) Handbook of Hedge Funds. Chichester: John Wiley Sons Chap 19 20

From a Game of Polo with a Headless Goat Notes Essay

Form/ Text type & Purpose: Travel writing, to inform the reader of unknown tradition and concepts and introducing various issues. Levine chooses to explore this using sports and other traditional forms of entertainment. Audience: Emma Levine does not specify her targeted audience although she hopes to appeal to travelers. Not only does she write to inform travelers, her writing style suggests that she attempts to fulfill her reader’s general interests, promoting her travels and the choices they have. Techniques: Levine generally incorporates an informative tone throughout her narrative. Her narrative draws the reader in while providing factual information to satisfy external interest in various aspects of the culture she is exploring. The extract from â€Å"A Game of Polo with a Headless Goat† also consists of a large build up where Levine experiments with first hand pessimism but also includes reassurance. The extract’s pace is changed to build tension during and after the race. Paragraph 1-3 / Build up Paragraph 1 – Optimism, author promotes her own, Yaqoob and Iqbal’s excitement. ‘We’ll open the car boot †¦ we’ll join the cars.’ à   Brief description of what will happen and Levine’s expectations. Builds immediate excitement and enthusiasm for race and the reader’s expectation of instant action. Works effectively with Paragraph 2 – Contrast in tone between â€Å"The two lads†¦suddenly fired up with enthusiasm† in which Levine narrates the creation of new enthusiasm within locals (her guides) to reflect on the reader and the rest of the paragraph Use of â€Å"eternity† – hyperbole to exaggerate impatience and derived emotions such as boredom â€Å"the only action was †¦ gazed around at us.† Hopeless tone, at the point of giving up, is a let down to the reader The contrast emphasises the climax in paragraph 7 Paragraph 3 – Alternatively, Levine builds hope and optimism in paragraph three, â€Å"coming, coming† the locals replied Line 12: â€Å"I was beginning to lose faith†¦ lads remained confident† holds elements of first hand pessimism/ loss in faith and witnessed optimism in the form of reassurance. The effect creates suspense further building the impact of the Climax. Paragraph 4 & 5 / Climactic Beginning Paragraph 4 – Climax appears as an explosion of activity Choice of diction â€Å"revved† prominent v sound creates imagery and the impression of speed. Develops the moment of frisson Change in tone from narrative to informative and factual, now not narrating their journey but provoking the reader’s interest. â€Å"The Kibla donkey is said to reach speeds of up to 40kph† â€Å"Although not cruelly† at the end of paragraph four seems out of place, this is where Levine reveals that she is conscious of her effect on travelers and corrects the imagery she has introduced. She protects the culture and the tradition in order to promote the sport and the traditions. Paragraph 5 – Change in punctuation to speed up the pace of Levine’s writing, overall generating excitement. She begins to use lists and triads (â€Å"horns tooting, bells ringing, and the special rattles used just for this purpose†) and again incorporates an informative tone in order to introduce different aspects of culture. Long, disjo inted sentences imitate the excitement, pace and disorder of the event: â€Å"men standing on top of their cars and vans† Paragraph 6 / Levine Enters Race Use of analogies like â€Å"Formula One† (fast-paced, seemingly chaotic), â€Å"City center rush hour† relates to reader and creates understanding of speed and â€Å"anarchic† disorder. Paragraph 7 Illustrates danger in order to provoke different kind of excitement, â€Å"Survival of the fittest† à   Creates a life and death situation, introduces the animal, hunt theme. Choice of diction creates a sense of importance, desperation and danger. e.g. â€Å"Depended† creates a sense of necessity Animal theme: â€Å"sharp flicks† â€Å"quick reflexes† â€Å"nerves of steel† all phrases associate with an animal during a chase or a hunt. All instinctive. â€Å"Horn† could be interpreted as a pun – car horn or animal horn/ impression of danger, competition, tension even battle â€Å"Yaqoob loved it.† Tone is enthusiastic, describing the fun, excitement. Link to ending. â€Å"Growing more colourful† Euphemistic impression of tension Paragraph 8 / End of Race Levine describes scenery to reflect the atmosphere.   Ã¢â‚¬Å"Road straightened and leveled† Tone is calmer, pace has been slowed, longer sentences, wider distribution of punctuation. Effective ending â€Å"The race was over.† Mixture of long sentences with short blunt ending implies immediate end of race and excitement. Paragraph 9 / Another Beginning â€Å"I assumed the winner was the one who completed the race but it was not seen that way by everyone.† Emphasis on alien culture and traditions, so exotic that even common reasoning differs. â€Å"Voices were raised, fists were out and tempers rising† Levine reuses lists and triads to speed up the pace, rebuild the excitement lost at the end of the race. Ending Irony, incorporated humour to reflect on the reality of the danger. Links back to â€Å"Yaqoob loved it.† Where the tone was still expressing shared enjoyment and fun, new realization and understanding is born to recreate an adapted impression of the entire extract.

Analysis of present environments Essay

Other factors that may be included in the analysis would be the presence of other alcoholic beverages in each market that may affect the sales of the possible expansion. We have to take into account that Scotch and wines do not comprise the whole market for alcoholic beverages. If the consumer preference would be as volatile as it poses to be, then the other beverage drinkers may switch from their present beverage to another. The scary part of the situation is, we could not determine as of now, if the possible expansion would gain or spell disaster for the company. Another factor to be considered is the indices in the market. This indices are the indicators whether the public would be able to squeeze the purchase of a whisky in their budget. This simply draws out the in demand products that would be dubbed â€Å"necessities† and the lesser needed products, known as the â€Å"luxuries. † The movement of the product from a luxury to a necessity spells success, but the other way around would be a bad sign for the expansion. Couple this factor with the volatility and the result would be a very risky market with high gains and disaster on the other end. The analysis of the present environments is important for a marketing strategy as this would help us understand the environments under the influence of, and that influences the countries in question. However, the factor of bias takes in, which usually has to be negated. The negation process would take place by as the objective part of judging by criteria, comprising half of the decision and the other half, the subjective decisions. First, before any analysis would be made, certain criteria would have to be in order for the comparisons. Considerable weights should be given to the consumer expectations and preferences (30 points), labeled A. This would help us determine the choices of the consumers that we are trying to serve. This weighs heavily since the consumers are directly related to the profits that the company would generate. Next in line would be the rate of acceptance of the market (30 points), labeled B. This is another heavy criterion since this would determine if the country is really suitable for the operations of the company in question. If the results would be heavily low, then we can conclude already that the company would not thrive in that specific country. This greatly helps in the subjective side of the judgment. Another criterion to be judged is the taxation in their country (20 points), labeled C. Taxation may not weigh as much but it weighs significantly at 20 points out of the 100 point total. This is because taxation affects the rate of the profit that a company generates. A higher taxation rate would then lower the chance that a company should invest in the specified country. And the last criteria to be considered would be the performance of the substitute (20 points), labeled D. These criterions would not only let us see the objective part of the problem by looking at the figures that the criteria would present. However, we have to bear in mind that the decision-making of this marketing strategy would depend not only in its objective part, but should also be considering the subjective part of the problem. Some problems cannot be explained by figures and leaves this part to the analytical and subjective mind of the decision-maker. Further statements from the analysis of the criteria would bear the interpretations of the scores. After which would be the ranking of the scores to determine which country scored the most points in achieving the goal of successful expansion for the company at hand. However, the final decision would lie after the subjective part of the theory. Country A B C D TOTAL RANK Denmark 30 25 20 15 90 1 N. Ireland 30 20 20 10 80 3 Austria 25 25 20 15 85 2 Spain 25 25 10 15 75 4 Points to Ponder:? Denmark’s score was due to the (1) good age distribution as the median of the age of males in the 15-64 bracket is just 38, stating a more diverse markets for the old and young drinkers. (Anonymous 2006f) (2) The market would suit the product just fine. In fact, the market in Denmark, in terms of the raw materials seem to give a very positive sign for Denmark as this could lead to further expansions (Anonymous 2006f)(3) The taxation does not bother this country as shown in here. Denmark seems to be comfortable not to be accommodated by the top four of the Union’s Top Four of Taxes. (Anonymous 2002) (4) Substitutes seem to be performing well, but not enough as the growing demand for Scotch whisky is trying to speed up the development of the local supplier of the product. These ratings have put Denmark in the No. 1 spot. ? Northern Ireland bags the second spot easily for a variety of reasons: (1) the lowest median mark was achieved by this country; with just a median of 33 years old, it generally means most of the male population are below the 40 year old mark, a good sign for the company. The company generally caters more to the male crowd, and the flavors of the Scotch whisky have a specific audience. More drinkers are also available for judgment since the younger drinkers are the ones who prefer the other flavors, unlike the older crowd. An example of this would be, many young drinker’s can be the target for the release of the Monreith Malt. Simultaneously, the market for The Torhousemuir Tawny, would also penetrate the older market, such of the 40 years and above since they still have a part of the market, although they may play the minor role in the profit margins. (2) Generally, this is neither good nor bad since the company can be seen as â€Å"one of the others† or â€Å"a new breed†. Either way, the public would remain in the middle of things, making it hard for the determination of the acceptance of the public The product originated in the same country, Another brand’s addition to the market may be viewed as a mediocre thing for the public. This people would really try your brand, just make a good offer in the initial release, sort of a bargain. (3) Tax problems have never plagued the country after the tax involved issues of before where Kings and Queens reign this land. Nowadays, it seemed like the people of Ireland have learned their lessons from the past events. (4)Market substitutes are on the loose, since this is the origin of Scotch whisky. Generally, substitutes would be of great numbers, which definitely pose a bad sign since your product can be swallowed by the market. ? Austria’s rates were affected by (a) since the people of Austria are known to be of good taste, then the consumer expectations would be high; knowing that The Olde Distillerie is from the country of United Kingdom, the country where the brewers of Scotland have originated (b) acceptance was marked as such since the country is sail to have taste in things that are not really rich in its flavor, but also in history. (c) Demography of the country shows a 40 year old median for the men in an evenly distributed country. This result shows an inclination in the stronger brew of the whisky since it says that the composition of men are said to have evenly distributed age, with older men winning the battle of numbers. Other products would have problems in their sales since the market would only focus on the older men market, since the median age was 40. Added costs for extra marketing strategies would be needed to gain the necessary profits needed by the company for the other products. (Anonymous 2006j) (d) Good taxation brings the country on the top four of the European Union (Anonymous 2002) This is a good sign for Austria as this is viewed as a country with less taxes, therefore, more profits. And this could also open doors to the export market, as this has been a very good opportunity for the company. ? The least attractive of the choices given, Spain does not provide any chance to defend itself due to the factors affecting its market. Some problems to the expansion there include: (1) The demographic distribution of the male population is not as diverse as that of Northern Ireland. (Anonymous 2006i) Although this may prove to be a positive sign, let us not forget the male’s sense of pride that they would not readily exchange the wine for a foreign drink, especially of a new brand in the market. (2) Market acceptance is not a problem as Spain is known to be one of the world’s top consumers of alcohol. However, acceptance may just remain to be accepted and not commended. (Anonymous 2006k)(3) Another issue: tax. Spain has been known to be a country brutal on its taxes in order for them to challenge the substitute market for their wine. As they increase the tax, they tend to lower the market consumption of the substitutes for wine, like scotch whisky (4) Lastly, scotch whisky’s only substitute here would be that of the gin, tequila, and beer. Wines are the primary products, making it look like Scotch whisky is really a substitute for the main product, wine.

Adolescent Crime a Result of Socioeconomic Instabilities

The overwhelming increase in crime during the mid-1980s through the early 1990s created a disenfranchisement that placed a great deal of pressure on the juvenile justice system. Pressure associated with increased levels of crime gears conservative believers in social responsibility to implement harsher punishments as an avenue for social protection. Conversely, liberally-minded individuals gravitate toward the social problems perspective, believing that rehabilitation is the only method adequate to protect society. Inherent in the controversial topic of trying juveniles as adults is an increased responsibility to create a functional system geared towards improving society as a whole. The reasons to decrease the practice of trying juveniles†¦show more content†¦Cognitive restructuring should be the first priority for youth offenders, as this may be the only time where such a pursuit will reap any positive benefits. With regard to juvenile offenders, what should the overall goal of imprisonment be? For adult offenders, prison has always been, in this country, a matter of protecting society and deterring potential offenders; however, juvenile offenders present the greatest opportunity for rehabilitation. It seems plausible for the justice system to pursue education and cognitive restructuring for these offenders. Young offenders, particularly adolescents, may engage in â€Å"reckless behaviors,† but they â€Å"may be caused, in part, by age-related physicological changes in brain development† (Hansen). Strangers and peers, especially those within the school system or neighborhood, seem to have the greatest impact on the developing mind. Perhaps the best example of society perpetuating delinquency is the crack epidemic of the late-1980s to mid 1990s. 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