Beer Advertising Values Essay

Stephan Dahl Cultural Values in Beer Advertising in the UK, the Netherlands and Germany Presented at the Research Day, Intercultural Discourse Group, University of Luton , UK– July 2000 Available Online: http://dahl. at/ Introduction Is it possible to persuade consumers in different markets with the same advertising message? Will they respond favourably? Or should the advertising message be customised to reflect local culture? This question is one of the most fundamental decisions when planning an advertising campaign in different cultural areas, and, not surprisingly, one of the most frequently discussed issues in advertising today. One fraction in this debate emphasises that the world is growing ever closer, and that the world can be treated as one large market, with only superficial differences in values (Levitt, 1983). In their view, advertising and marketing can be standardised across cultures, and the same values can be used to persuade customers to buy or consume the product. Another fraction is content with the fact that the basic needs may well be the same around the world, however the way in which these needs are met and satisfied differs from culture to culture. Any marketing (and advertising) campaign should, in their view, reflect the local habits, lifestyles and economical conditions in order to be effective. In 1985, Woods et al. concluded in a study of consumer purpose in purchase in the US, Quebec and Korea, that â€Å"important differences are found in the reasons why they [the consumers] purchase products familiar to all three countries†. Central to this debate, are two issues: The product position and usage within the culture of the market, and the decoding of the advertising message. Both are, obviously, linked to some extend. An advertising message encoded in one culture has to be decoded in another culture in the case of standardised marketing. This process may be subject to severe distortions, as the receiver will decode the message in his/her own cultural context. A standardised approach could hence run into the danger, that the message will be unconvincing, as it does not meet the psychological â€Å"triggers† required to evoke a purchase decision with the consumer. Given Woods et al. research , this appears to be a problem that marketers should be clearly aware of. In order to understand the decoding process in the target market, it will be essential to study the product perceptions and reasons for purchase, as well as the product’s place in the target culture. An example of this would include wine, perceived as a relative â€Å"special occasion† drink in most northern European countries, however understood as an every day drink in most Southern European countries, where it is seen similar to the beer’s perception in Northern Europe. To market a table wine as † add a touch of luxury to every day† (German advertising) would undoubtedly appear strange and possibly confusing to Southern European consumers. Conversly, when advertising washing powder, consumers in both northern as well as southern European markets may expect information on the effectiveness of the product to dominate the commercial. As an increasing number of researchers has pointed out (Caillat & Mueller, 1996), that it is important not only to study advertising in general, but to concentrate on differences in product categories in order to find prevailing differences in advertising style and values. Caillat & Mueller (1996) themselves published a comparison for beer advertising in the UK and the US, concluding that the â€Å"differences between British and American advertising were significant, indicating that consumers of the two countries are currently exposed to distinct styles of commercial messages based on different cultural values†. Equally, Cheng & Schweitzer (1996), after examining Chinese and US television commercials, concluded: â€Å"We also found that cultural values depicted in Chinese television commercials have much to do with product categories†¦Ã¢â‚¬ . This paper focuses, like the Caillat & Mueller study, on the values portrayed in beer advertising. The countries studied are the UK, the Netherlands and Germany, all of which posses a long tradition in brewing and the consumption of beer. Equally, in all three countries, beer is similar in market positioning, i. e. it is viewed as an every-day drink, consumed dominantly by males. No assumptions were made which values were to be expected in any one country to be dominantly displayed in beer commercials, but all commercials were studied a priori empirically to identify dominant themes. Additionally, the use of humour and the occasion for product usage were recorded in all three countries. The Market for Beer Beer is the most popular alcoholic drink in all three countries, and the per capita consumption is higher than the European average of around 70 l /p. a. p. c.. In 1998, the per capita beer consumption was the highest in Germany, with 127. 4 l, followed by the UK, with 99. 4 l and the Netherlands, with 84. 2 l (World Drink Trends, 1999). The beer consumption in all three countries has declined steadily over the last years. This development has put additional pressure for effective marketing communications on the breweries. Table 1: Evolution of beer consumption per capita in selected countries Rank Country 1995 1996 1997 1998 1 Czech Republic 156. 9 157. 3 161. 4 161. 8 2 Republic of Ireland 138. 6 145. 4 152. 0 150. 5 3 Germany 135. 9 131. 9 131. 2 127. 4 7 United Kingdom 100. 9 101. 9 103. 6 99. 4 12 Netherlands 85. 8 85. 5 86. 3 84. 2 13 US 83. 6 83. 5 83. 2 82. 0 39 Italy 25. 4 24. 0 25. 4 26. 9 Litres p. c. / Source: World Drink Trends, 1999 Advertising regulation Advertising for alcoholic beverages is heavily regulated in all three markets. In the UK, advertising of alcoholic beverages is regulated by a self-imposed code of conduct of the Advertising Association, as well as the regulations of the Independent Television Commission (for television). In Germany, the Zentralverband der deutschen Werbewirstchaft and the Deutscher Werberat have published similar rules governing the advertising on television. In the Netherlands, the Stichting Stuurgroep Reclame and the Vereniging van Communicatieadviesbureaus has also published appropriate guidelines. An overview of the legal environment, and the restrictions imposed by these guidelines, is given in the table below. Methodology The primary objective of this study is to determine weather or not the same advertising themes and appeals are used in all three countries to persuade customers to buy (or consume) beer, and to identify the dominant appeals used. In order to achieve that objective, television commercials for beer have been collected in all three countries. In order to minimise distortion, only advertising for beers originating from the country have been selected. The commercials were recorded during March/April 2000 from the following television channels: 2 Table 3: Channels used for collection of television commercials Country UK Netherlands Germany Channels ITV-Carlton Channel 4 Channel 5 Sky One Granada Plus Nederland 1/2/3 RTL 4 RTL 5 Veronica SBS 6 Net 5 ARD ZDF RTL Plus Sat 1 Pro 7 Kabel 1 During this time, a total of 25 unique television commercials were recorded: 9 for the UK, 6 for the Netherlands and 10 for Germany. Although the population in this study is fairly small, it is hoped that the results are sufficient to establish an exploratory overview of advertising appeals used. The commercials were then qualitatively content analysed to establish the dominant appeal used in each commercial. In order to be as open minded as possible, no list of expected appeals or themes were identified prior to the analysis. Once the dominant appeal used in each commercial had been identified, these appeals were combined to form five categories of dominant appeals: friendship, sex, sport, tradition and relaxation. The category friendship included all commercials that focused around drinking beer in a group of friends, or with a friend, where the consumption of beer was depicted overwhelmingly as a social activity, or implied as such. A commercial was judged to use â€Å"sex appeal†, if it depicted members of the opposite sex making advances towards the main character, if they spoke seductively or were dressed in a manner that may be interpreted as erotic. Sport includes all commercials that make a clear reference to sports of all forms, show main characters involved in sporting activities or after sports. Commercials focusing on the tradition of the brewery or the product, showed historic buildings or images or were set in a historical background were judged to have â€Å"tradition† as the dominant appeal. Finally, commercials showing the main character in a clearly relaxing situation, where the main character consumed beer primarily as a way to unwind and relax ( mostly alone), were judged to use â€Å"relaxation† as the dominant appeal. Mueller (1996) reported a large number of British commercials used humour to advertise beer. In order to see if this was equally true for Dutch and German commercials the use of humour was equally coded as present or not present. Alcohol commercials, particularly in Britain, have often been criticised that they imply that the consumption of alcoholic beverages may enhance sexual attractiveness. In order to establish if this appeal is used, special attention was given to the role of characters of the opposite sex to the main character(s) in the commercials. This appeal is especially 3 complicated to establish, particularly as the UK-code of conduct rules this appeal out, and an open display of this appeal would lead to the suspension of the commercial. However, as anecdotal evidence of this theme was evident, it was included in the study. If these characters appeared to display any form of erotic symbol or gesture to the main character after or during consumption of beer, or if their dress was found to be explicitly erotic in nature, the appeal was judged to be present. This was particularly upheld if these characters were shown full screen. If they appeared merely as present, alongside other secondary characters, this appeal was judged not to be present. The occasion for product usage was also recorded. As Mueller (1996) described a significant difference between the usage of beer in US- and British commercials, the product usage was coded using Mueller’s coding procedure. This involved to scan the commercials for either regular (or every-day type) usage, special occasion usage or usage not shown in the commercial. Each commercial was analysed by a resident native of the country, and by the researcher, who is fluent in all three languages. Each coder coded the respective commercials independently, and later conferred with the researcher. All differences in coding were discussed, and finally resolved. Results Humour Humour was analysed by trying to identify a joke or some funny twist in the commercials, and was classified as either present, or absent. Typical examples of humorous advertising include where the commercial tells a funny story, uses irony or makes fun of typical situations. Humour dominated British commercials, whereas it was more sparingly used in German or Dutch commercials. Table 4: The use of humour UK NL D Used 88% 33% 10% Not Used 12% 66% 90% Occasion for Product Usage The occasion for drinking beer was analysed by either being an everyday event, a special occasion or not shown/inconclusive. An everyday-event included drinking beer in a pub, in a bar, while being with friends or while watching television. A special occasion included drinking as a special reward or celebration. A commercial was coded as â€Å"Not shown/inconclusive† if none of the characters consumed (or was about to consume) beer, or no characters were shown at all. Everyday-usage dominated the British commercials to a large extend, and also was dominant in Dutch advertising, whereas it was relatively infrequently used in German advertising. Table 5: Occasion for product usage UK NL D Everyday 77% 50% 20% Special Event 11% 33% 40% Not shown 11% 16% 40% Dominant Themes Each commercial was coded for one dominant theme, and those themes were then grouped into a list of 5possible themes: friendship, sex, sport, tradition and relaxation. Friendship and affiliation were the most dominant themes in both German and Dutch beer commercials. Whereas 55% of British commercials were found to have some sexual appeal, none of the Dutch or German commercials were found to use this appeal for the promotion of beer. 4 The link between sport and beer was highlighted only in the Netherlands and in the UK, it was however not used in any German commercial. A trend of advertising beer using the history and tradition of the beer or brewery was observed exclusively in Germany, whereas beer was presented as a drink for relaxation in both the UK and the Netherlands. Table 6: Dominant Themes UK NL D Friendship – 50% 60% Sex 55% – Sport 22% 16% Tradition – – 40% Relaxation 22% 33% Discussion The results clearly support the argument, that different values are used to promote the same product in the three markets, and that different associations and techniques are used to convey the advertising message. In the UK, the use of humour in advertising is a long standing tradition, and is also dominant in beer advertising, with 88% using this feature. This result supports Mueller’s claim, that the majority of British beer advertising uses humour to sell its product. In Germany, beer is not directly associated with humorous advertising, and only 10% of the sample used humour. In the Netherlands humour was more frequent, however it was less dominant (33%). Equally in support of Mueller’s study is the result for the occasion for product usage. The every-day drink, as beer is portrayed in British advertising, is clearly dominant, however it is less frequent in the Netherlands (50%), and even in the minority in Germany. Although the portrayed product usage has little in common with the real-life product usage, it demonstrates a desire to position the product differently in the various markets. In the German market, beer consumption is depicted as a social phenomena. It goes hand in hand with meeting friends, going out for the day or having a picnic, a day at the sea etc. , where the reunification of the friends is celebrated with a beer. Alternatively, beer is positioned to be a high quality product with a long tradition. This appeal is unique to the German market, and can not be found in either Dutch or British advertising. There may, however, be some explanation in the abolition of the Reinheitsgebot, an antique law ensuring the purity of the beer, by the EU in the late 1980s. Although this is certainly not the only possible explanation for the use of this particular appeal, consumers will understand, that the beer in question is brewed in line with the regulation of the Reinheitsgebot. This theory is supported by the fact that 3 out of the 4 commercials using this type of appeal state that they brew according to the Reinheitsgebot. In the Netherlands, the friendship appeal equally dominates the beer advertising. Beer is consumed with friends – however much more in an everyday situation than in Germany. Equally, beer can be consumed at home, even alone to relax – a depiction that is not at all used in German advertising. Another link found in the Netherlands, and not used in Germany, is the link between beer and sport events, where beer is consumed accompanying the activity of watching a game of football. This appeal is however somewhat different from the sports-appeal used in the UK, where beer is positively connected with either achievement in sports or as a â€Å"creator† of sport. Another appeal used in both the UK and the Netherlands is display of beer consumption as a relaxing activity. However most dominant in the UK is the use of female characters in beer commercials. A majority of beer commercials has at least one female â€Å"main supporting character† (i. e. not actually the main, beer consuming, character – however someone with a key role). Whereas there are virtually no female characters to be found in Dutch or German beer advertising, or if so, they are depicted as just another person with no major impact on the 5 advertising as a whole, the female characters play a relatively dominant role in a majority of British commercials. Nearly all female characters are lightly dressed or are depicted wearing tight dresses, and a majority of them seems to be(come) attracted to the main character. The results of this study have very clear limitations, particularly as the amount of data is extremely small. Equally, only one dominant appeal per commercial was coded – whereas many commercials display a number of appeals. Although some more clarification of the appeals is given above, the variety and different flavour of certain appeals used should not be underestimated. However, the results suggest, that anecdotal difference in advertising strategies is not merely a myth, and clearly demonstrates that different values are used to promote the same product in three geographically close countries. Clearly, such a clear difference may not be observed in all commercials for all product categories, as beer is a culture bound product. However, differences in persuasion techniques and advertising appeals are to be expected in a variety of product categories, whereas in others, there may be little or no variation in appeals used. Further research is required to identify these categories, and more clearly establish the appeals used. References: Albers-Miller, N. D. (1996). â€Å"Designing cross-cultural advertising research: a closer look at paired comparisons. † International Marketing Review 13(5): 59-75. Alden, D. L. , W. D. Hoyer, et al. (1993). â€Å"Identifying Global and Culture-Specific Dimensions in Humor in Advertising: A Multinational Analysis. † Journal of Marketing 57(2): 64-75. Caillat, Z. and B. Mueller (1996). â€Å"The Influence of Culture on American and British Advertising. † Journal of Advertising Reserach(May/June): 79-88. Levitt, T. (1983). â€Å"The Globalization of Markets. † Harvard Business Review 61(May/June): 92-102.

Behaviour and experience which in nearly all situation affects Essay

The studies carried out by Milgram, Piliavin, Haney and Gardner & Gardner, have unearthed some very important as well as surprising details about human behaviour and experience which in nearly all situation affects it. This question looks at the various forms of human behaviour, which make us what we are and also looks at ‘experience’, something we all seem to rely on heavily. Firstly, in Milgram’s study of obedience, it was found that under pressure or authority we sometimes do what we normally would not have done, therefore showing that others influence our behaviour, particularly those who we think are more superior to us. â€Å"Carry on †¦Ã¢â‚¬ ¦ â€Å", one of the main prods the experimenter used on the teacher to make the teacher carry on with the shock treatment. This shows that not only the presence of some authority figure, but also what they do and say can influence human behaviour. One of the reasons, which make us think that a person is superior to us, is because we think of the experience he/she has in that particular field or area. Because of this we assume that they are superior to us and that what they tell is the only option we can follow. Of course this is not always the case. Hitler did have some men in his army who did not follow his instructions and did try and betray him, but the majority of his army did do as he commanded. The effect of an authority on human behaviour is demonstrated clearly in Milgram’s study as the ‘teachers’ ask the so called experimenters, who they think are an authority over them, whether or not they should continue giving shock treatment to the subjects and they also turn to them for support and advice during a very tough emotional and moral battle that they are fighting within themselves. Therefore we turn to people who we think have more experience than us and our decisions are affected by what others say and do, especially those who we see as an authority above us. Similarly, in Pilavin’s study, human behaviour when helping people revolves particularly around three main factors. These are: Cost Reward Analysis, Plurastic ignorance and the emotional arousal. It was discovered in the experiment that people only went to help if the situation appealed to them and if they thought it was serious enough to help. This resulted in the drunk getting less help than the cane victims. Also people used the cost reward analysis before helping. This in simplified terms means the advantages and disadvantages of helping and also the advantages and disadvantages of not helping. This shows another part of the human behavioural patterns. Another, which can be added to this, is that of plurastic ignorance, which means that people do not know what to do, and therefore look at others near them and assess the genuineness based on what they do. Therefore if most people would not help, neither would that person. Also another reasons for humans not helping during certain situation is because of the Diffusion of Responsibility which means that the more people we see around us, the less we help out as we think that someone else will do so. There is also emphasis on ‘experience’ in the experiment as it can once again have effect on human behaviour. In this particular experiment if passengers on the train had themselves been a victim (i. e.  cane victim, or drunk), or even if they had helped others before, it will most probably have an effect on their behaviour. Those people, who got help from others when they themselves were victims, might help out, whereas those who got no help when in a similar situation might not help. Also if a person has helped before and had not had the best of times helping, may decide to stay away from he incident this time around. Zimbardo’s Prison Stimulation experiment was another experiment during which human behaviour and experience paid an important role. It was thought that prison life would have an effect on the behaviour of the prisoners as well as that of the guards. It was discovered that prisoners started to behave in degrading ways because of them being trapped in a prison environment and also because they always had to follow orders from the guards and also because of the fact that they had no choice in the matter. Similarly the guards started to behave in cruel ways once they knew that they were powerful. They then started to punish guards whenever they felt like it. Zimbardo’s experiment proves the fact that when we have power and are see as an authority figure by others, our behaviour changes drastically and we become on some occasion very unfair and cruel to those below us. Experience once again can affect behaviour. This is because those who have been in a prison before will feel that it is not that bad as they have been there before and know what to expect whereas those who haven’t been before find it as a shock. Those who have been in prison before may behave in a more civilised manner than others who haven’t. Finally, the experiment carried out by Gardner and Gardner did not really uncover anything about human behaviour apart from the fact that language is something we are innately programmed to do. In this experiment a chimp named ‘Washoe’ was taught ASL(American Sign Language), but even after 4 years of training, only 132 signs were learnt. In comparison with that human children learn much more as they grow older, therefore showing that humans are innately programmed to do so. It also shows that we have a much more complex form of communication which animals like chimps cannot learn. Experience is again a relative feature in this experiment. The experiment shows that with adequate experience even animals can learn features of our communication, therefore if they were to continue to be taught for many hundred of years they too may be able to communicate in the complex form that we are now able to communicate in. Therefore all these various studies show a close relationship between experience and our behaviour.

Car history Essay Example | Topics and Well Written Essays - 3000 words

Car history - Essay Example Steam cars had been built in America since before the Civil War. In 1871, Dr. J. W. Carhart, professor of physics at Wisconsin State University, and the J. I. Case Company built a working steam car. That was enough to encourage the State of Wisconsin to offer a $10,000 prize to the winner of a 200 mile race in 1878. In 1873, Karl Benz developed a successful gas-powered two-stroke piston engine. After this he focused on developing a motorized vehicle. His Patent Motorwagen, introduced in 1886, is widely regarded as the first purpose-built automobile that is a vehicle designed from the ground up to be motorized. Benz unveiled it officially on July 3, 1886 on the Ringstrase in Mannheim, Germany. Henry Ford had an engine running by 1893 but it was 1896 before he built his first car. By the end of the year Ford had sold his first car, which he called a Quadracycle, for $200 and used the money to build another one. With the financial backing of the Mayor of Detroit, William C. Maybury and other wealthy Detroiters, Ford formed the Detroit Automobile Company in 1899. A few prototypes were built but no production cars were ever made by this company. It was dissolved in January 1901. Ford would not offer a car for sale until 1903. Today it has been 100 years of the advent of electric cars. It has an interesting history of development and its still carry on. It was first developed in France and England during the last quarter of 19th century. During late 1890s and early years of 20th century, a lot of innovations were made in motor vehicles industry. Till 1895, Americans didn't begin to devote attention to electric vehicles. It was the first commercial application in America which established as a fleet of New York City taxis in 1897. The early electric vehicles were little more than electrified horseless carriages and surreys. For example, in 1902 Wood's Phaeton which had top speed of 14 mph, a range of 18 miles and cost $2,000. The years 1899 and 1900 were the sky-scraping point of electric vehicles in America, as they outsold all other types of cars. With the passage of time, the car industry got prosperity and the motor vehicle used to be turned into steam, electric, or gasoline versions. Most early electric cars were ornate with massive carriages and designed for the upper class with cost under $1,000. However, by 1910, they had fancy interiors, with expensive materials, and averaged $3,000. Electric vehicles enjoyed success into the 1920s with production peaking in 1912. At the start of its advent in 20th century, electric cars got popularity as it had many advantages over their competitors. They did not have the noise, smell and vibrations associated with gasoline cars. Unlike gasoline cars, electric vehicles did not require gear changes. Also, steam-powered cars suffered from long start-up times of up to 45 minutes on cold mornings. The steam cars had less range before needing water than the range of an electric car on a single charge As compared to steam-powered and gasoline cars, the electric cars was the preferred choice of many because it did not require the manual effort to start. With other cars there was a

Argument about he resumptive pronoun in relative clauses in English Essay

Argument about he resumptive pronoun in relative clauses in English language - Essay Example Based on the above examples, the major function of resumptive pronouns is to block breach of syntactic restraints. However, this is not the only role of resumptive pronouns (Frank, 23). Previous arguments have seen a resumptive pronoun as ways of saving a sentence that has been stated by a speaker without noticing that it is difficult or impossible to grammatically finish (Frank, 23). For a sentence that is syntactically complicated to be clarified, English speakers employ the use of these resumptive pronouns. In several languages, English inclusive, resumptive pronouns are essential if a sentence is to be grammatical (Frank and William, 89). They are hence needed to assist interpretation as well as performance in certain syntactic forms. According to previous arguments, linguists believe that these pronouns come about due to syntactic processing (Frank and William, 89). On the basis of grammatical processing, resumptive pronouns are used by speakers in clarifying sentences that are syntactically complicated (Frank and William, 89). In this case, these pronouns are used as hook backs to the precursor (Frank and William, 89). This indicates that according to this point of view, these pronouns are perceived as a type of helper which is introduced into the sentence for the purpose of making the comprehension of these sentences simpler. In relative clauses, resumptive pronouns are normally not seen as grammatical though their point of grammaticality increases as they move away from the head. Consequently, (4b) appears better than (4a). Some development in whether resumptive pronouns are judged as grammatical may also come about when these pronouns are embedded, as shown in (4c). Grounding my argument on the aspects that seem to impact on the distribution of English resumptive pronouns, and owing to the fact that distance is not relevant to the principles of syntax, building a grammatical report of resumptive pronouns in similar

China Economic Growth Since 1949 Research Paper

China Economic Growth Since 1949 - Research Paper Example In 2010 Republic’s per capital GDP was $7, 544. The coastal areas of china are being the major part of its economic importance rather than hinterlands which are under developed. After the founding of Republic of China in 1949, the first three decades carried out under planned economic targets. Whereas the last three decades, mainly the result of the radical reform of its economic system. While watching through lens, China’s economy is facing major challenges. For every country being powerful, It should have improved technologies, far better resources, war technology, competent laborer, a small amount corruption and crime. This stuff isn't only with china but additionally through India that has enormous natural assets, many experts, and India being the largest consumer of arms and ammunition among all of the developing countries, but even then the fact India lagging behind and why china is at front of each developing country? How come china a much more powerful economy? Here are a few within the basic causes of china being the fastest growing economy (Carsten, 2003). Economic strategy within the first 30 years following the founding of PRC in 1949, the Chinese government completed quite organized economy; goals and proportion for a number of spheres of economic progression were established through the "planning committees" from the state. Industrial facilities produced goods based on state plans, and farmers planned and planted crops also based on state plans. Commercial sectors replenished and sold their stocks based on state plans, and also the qualities, quantities and costs of the goods fixed by organizing departments. This technique added towards the stable, planned growth and development of China's economy, it organized the introduction of the economy and sapped its vitality. During last 30 years when private possession of companies rarely existed once these reforms began, private firms currently take into account about 60% of overall product ion. As ownership, is just one aspect of the financial system? China’s financial system has transformed significantly in different ways too. Decision-making about consumption and production has typically been decentralized to individual households and firms, respectively; financial incentives, markets, competition, and internationalization need to a substantial extent replaced command, management processes, monopoly, and autarky. In most cases, China’s reform period is a marked contemporary instance of the traditional lesson that unleashing individual effort has a tendency to strengthen economic development . The question â€Å"why china is growing so fast?† is easy to answer while looking critically at the state control of all productive assets. In 1978, Chinese government embarked on a great program of economic reform.  In an effort to awaken a dormant economic giant, this motivated the formation of rural enterprises, private businesses, liberalized overseas trade and investment, peaceful state management over a few prices, invested in industrial production and the education of its labor force. By nearly all accounts, the tactic has worked spectacularly. During pre-1978 China saw annual development of 6%, while in post-1978 China spotted actual median development of more than 9 % annually. In a number of peak years, the economy increased a lot more than 13 %. Per capita income has nearly quadrupled within the last many years, and some analysts are even predicting how the Chinese economy is going to be higher than those of America in two decades. Such growth rate can compare very favorably to the particular "Asian tigers" Hong Kong, Korea, Singapore, and Taiwan Province of China, which likes a group, had a typical rate of growth of 7-8 % during the last many year

Video Analysis 4 Essay Example | Topics and Well Written Essays - 250 words

Video Analysis 4 - Essay Example At the commencement of 1990s, the company digressed from its dealings with other services and concentrated on telecommunications. Currently, the company leads in mobile communications with sales being approximated to be higher than $31 billion and still offers job opportunities to 56,000 individuals. The company has straightforward mission that is realized through consumer feedbacks thus ensuring consumer contentment. The company focuses on product design, network security and technological advancement experienced within the global environment. The information offered allows readers to understand how the background or foundation of Nokia was established, in order, to make certain that people within different contexts manage to communicate through utilization of its diverse phone brands. Nokia company has undertaken in diversified business ventures, to reach the current state that has enabled connection of billions of people around the globe. The mission that the company utilizes have considerably assisted in ensuring that the company acquires competitive advantage, with relation, to other mobile companies. Companies can easily switch activities provided the substitute has considerable potential and opportunities for receiving enormous sales (Kerin, Hartley & Rudelius,

Assignment about management & strategy Essay Example | Topics and Well Written Essays - 1500 words

Assignment about management & strategy - Essay Example TQM has been adopted by many organisations worldwide and has been defined in multiple ways that suited their businesses. A generalized definition is that of Evans and Dean, which states, ‘TQM is a comprehensive, organisation-wide effort to improve the quality of products and services’ (as qtd in Cooney & Sohal, 34, ch.3). The British Railways Board (1989) defined TQM as ‘the process which seeks to meet and satisfy customer requirements throughout the whole chain of internal and external customers and suppliers’ (Pike and Barnes, 25). The International Organisation for Standardization (ISO) defines TQM as a management approach for an organisation, centered on quality, based on participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all members of the organisation and to society (Gupta, 113). Emergence of TQM may be traced back to period before the World War II and with American influence on quality assur ance principles. Although first put forth by Edwards Deming, who was known as the ‘father of the quality movement,’ TQM principles did not receive much attention at the time. These principles are said to have gained great significance after they were adopted in Japanese management theories, which modified the principles to suit their industries. TQM concepts have reinforced the Japanese management and businesses greatly and have helped the Japanese products enter the world markets. The United States recognized Japanese progress during 1980s and 1990s, and realized the significance of TQM concepts. Since then, the US industries have embraced TQM and re-emerged as global competitors (Daft & Marcic, 33). Deming’s contribution to the elaboration and development of TQM has been profound after advancing Stewhart’s statistical studies through the PDCA cycle (plan, do, check, act), which provided the base for continuous improvement. These statistical methods devel oped by Stewhart and Deming came to be known as the Statistical Process Control (SPC). The SPC in combination with Elton Mayo’s human relations movement eventually became the theoretical base for TQM (Sallis, 7). From these studies it is clear that TQM is a quality concept that must be applied to every aspect of the business and should be measured and controlled statistically. This means it would also require involvement from all members associated with the business. In short, TQM needs to be applied to the organisational systems, structure, and culture; it would require commitment from management and staff at all levels; it should involve all stakeholders including the external suppliers and vendors. With this concept coming in, quality is seen as a strategic issue and can play a major role in saving huge costs for the company. It involves everyone associated with the organisation. It focuses on continuous improvements, maintaining zero defects, build quality and enhance cus tomer satisfaction. All these achievements become benchmarks for others and help the organisation in sustaining their competitive position in the market and with their customers. TQM has been applied by many organisations with different names, like Leadership Through Quality (Xerox); Quality the ICL Way (ICL); Quality Service Programme (Nat West); Total Quality Culture (Texas Instruments); Total

Forces Initiating or Inhibiting Change in Organizations Essay

Forces Initiating or Inhibiting Change in Organizations - Essay Example The coming of new technology, Robins said, affects the jobs and the organization. There was a time when pagers were in vogue. It was a necessary communication tool for sales and field personnel, but cellular phones took them out of the picture. Computer knowledge is an added requirement for new employees, a necessity in almost all business outfits. Technology, likewise, affects a company or industry, especially the music industry with online downloads and sharing. He commented that genetic technology allows pharmaceutical corporations to produce drugs for particular individuals, which in turn produces a dilemma for insurance companies on who would be insured or not. With competition no longer confined within a geographic territory but globally, new products and services should be introduced for survival. With business deals being transacted and concluded online, technical and support units became part of the structure.

You Might Forgive, but Forgetting is not Always Possible Essay Example for Free

You Might Forgive, but Forgetting is not Always Possible Essay There are many different responses to this statement, and different people hold different opinions, both for and against it. I agree with the statement, because Christians are taught that to sin is human, to forgive is divine, proving that it is difficult even to forgive, never mind forget. An argument in favour of the statement is, as human beings, we do not possess the capability to completely wipe out memories from our minds, no matter how hard we may try. Also, memories involving pain and suffering are nearly always fresh in our minds, and it is the thoughts of this kind that we are told to forget, which is extremely difficult, and very rarely possible. see more:to forgive is divine In addition, some sins are so serious that to simply forgive and forget is not an option. Even Jesus himself enforced this point, when he told his disciples that one of them was going to betray him. He used the words it would have been better for this person had they never been born, which may sound a cruel thing to say, but what Jesus really meant was that it was going to be difficult to forget what Judas was about to do to him. Another point strongly agreeing with the statement is, human beings can learn from their mistakes, and if sins and crimes were erased from our memories we would never learn. This is true, as we are not perfect, and we need to learn from our mistakes in order to make ourselves a better person. On the other hand, it could be argued that forgetting is central to the forgiving process, and true forgiveness involves being able to move on and forget what was done in the past. If people keep bringing up what has been done in the past, and dwelling on it, then this suggests that forgiveness has not truly been granted, therefore, reconciliation does not occur. Also, by refusing to forget what has been done, a person becomes consumed with regret, bitterness and anger, all of which are all destructive characteristics resulting in their lives becoming focused on mourning and revenge, and the motivation and ability to move on is lost. Constantly reminding someone of past feelings is un-Christian behaviour. In conclusion, I believe that it is possible for a person to forgive, but I agree that it is not always possible to forget what they have done. Are we supposed to forget every time a person sins? Maybe we can forget the odd venial sin, but what about mortal sins, like somebody killing someone close to you? It is just not possible to forgive and forget about somebody who commits mass murder such as Myra Hindley, and we know that a victims mother, Anne West, can never forgive what Myra Hindley did to her daughter, and cannot bring herself to say the words, forgive us our sins, as we forgive those who trespass against us, in the Lords Prayer. As Christians we all do our utmost to forgive and forget none of us are without sin, let those who have committed no sin cast the first stone.

Assessing Corporate Culture Essay Example for Free

Assessing Corporate Culture Essay 1. Scheins approach to assessing organizational culture a. Strengths of scheins approach to assessing organizational culture Schein defines and describes culture as any one of many elements of organizational culture. The culture of an organization can be viewed and treated like other structures within an organization. Certain organizations such as by-laws, committees, and chain of command flow charts, may serve to answer basic questions such as â€Å"how do we interact with the external environment?† and â€Å"how do we order ourselves internally?† As an organization responds to these questions, the responses become core assumptions. These core assumptions become the frames through which the organization interprets the world round it. In place of questionnaire or instrument that utilizes typologies, Schein prefers clinical research model of assessing organizational culture. In this model of organizational culture investigation, the researcher gets much more directly involved within the organization by acting as participant observer or ethnographer. He suggests that members of the organization will more openly respond to the researcher and the investigation because the members of the organization think they have something to gain by collaborating with the researcher. Schein believes that valid data on the culture of the organization will only be collected when the researcher is perceived as the consultant who is seeking to help the organization and has the best interest of the organization in mind. Schein admits that the clinical model of evaluating organizational culture assumes that the researcher intervenes in the culture of the organization. If the organization perceives that the researcher is helping to make changes that will benefit the organization, then the research will accurately yield the cultural dynamics of the organization. b. Weaknesses of Schein approach to assessing organizational culture The results gained from qualitative result are limited to specific cases under investigation. Direct comparison cannot be made between the results from other studies unless the research is specifically designed in that manner. Furthermore, results cannot be generalized to other settings and links to organization’s performance are rarely explored. One significant weakness to Schein’s approach (qualitative method) is the time needed for data collection and analysis which makes the research more costly and time consuming 2. Cameron and Quinn approach a. Strengths of Cameron and Quinn approach to assessing organizational culture Cameron and Quinn provide an evaluation tool called the organizational culture assessment inventory (OCAL). The OCAI is a survey instrument established on a theoretical model called the competing value framework. This framework is valuable for organizing and interpreting various phenomena within an organization. The competing values framework refers to whether an organization strives for flexibility and individuality or stability and control, whether or not an organization is focused externally or internally. The purpose of the OCAI is to discern the relative strengths of these culture types within a given organization. Used over time, the OCAI can measure culture changes within the organization. Cameron and Quinn observe many cases in the business world where culture change is the key to increasing organizational effectiveness. The four major culture types proposed by Cameron and Quinn embody these competing values: clan-internal/control; adhocracy-external/flexible; market-external/control; hierarchy-internal/control. In fact pure control (hierarchy), compete (market), collaborate (clan), or create (adhocracy) are extremely rare. Most of the company cultures that have been diagnosed using Cameron and Quinn’s organization culture instrument indeed have a strong secondary component. Cameron and Quinn identify the cultural and organizational competencies that give rise to value creation. It explains how cultural and leadership competencies can be profiled which, in turn, can lead to a diagnosis of culture gaps, cultural congruency and cultural strength. 3. London first united church Cameron and Quinn’s model is appropriate for this church. This approach is built around clan, adhocracy, market and hierarchy. These four maps themes were also used in the analysis of how organizational culture of London first united Methodist church chances with structural inventions. The church is both an organization and an organism. As such, the church has a lifecycle development built into it: birth, growth, reproduction, decline, and death. The church itself historically has through several changes. Change as renewal is a major aspect of the Methodist movement. Much of the rise and fall of the Methodism can be traced to how the church was willing, or not, to change. Oftentimes, organizations experience growth and/or renewal because of structural changes within the organization. The four maps themes therefore fit this church.

Watteaus Fêtes Galantes: Style and Meaning

Watteaus FÃ ªtes Galantes: Style and Meaning Discuss the content and the possible meanings of Watteaus FÃ ªtes Galantes The FÃ ªtes Galantes is derived from a genre of paintings produced in the eighteenth century, depicting aristocratic scenes of mirth and merriment set in the mythical world of Arcadia, where humanity and nature live together in harmony. The reasons behind this deliberate juxtaposition of both the aristocratic everyday and setting it in the mythical world was twofold. First, Antoine Watteau, the chief designer of the genre, wished for his paintings to be recognised by the government appointed Academic Des Beaux Arts, who still ranked scenes of the everyday in a lower class than those depicting biblical, historical or mythological scenes with an educational theme. Secondly, the economics behind painting and commissions were changing. In Watteaus economic world, instead of commissions coming almost exclusively from either the crown or the church, as it did previously, private patrons were also commissioning works, and provided most of the revenue for artists. But they also, whether by accident or deliberately, provoke a whole series of other responses, notable insofar as they are representative of nothing, and exist purely as decorative pieces of art. Indeed the reaction at the time was to place Watteau in a category of his own, as the ambiguity of his representations tended to eschew easy categorization. David R. Marshall suggests that: Watteaus paintings were difficult for contemporaries to classify; today they can be understood in terms of spectators response to the semantic vacuum that they present.[1] So, the genre of FÃ ªtes Galantes tends to subvert traditional ways of reading, introducing ambiguity on the level, insofar that the image takes precedence over what exactly is represented. In a sense the FÃ ªtes Galantes was designed to be ambiguous. Thus, the Fete Galante, especially Watteaus work, becomes extremely difficult to read in a straightforward manner; arguably, his work could be laced with irony, his landscapes invoke an almost impressionist free dom, and his concern with the image over the message signalled that his work reveals meanings that perhaps were intentional, or else purely coincidental and decorative. FÃ ªtes Galantes (1717), is a perfect representation of the style that came to be named after the painting. In the scene, a collection of characters are assembled around a statue of an angel. The background of the image invokes impressionist works, insofar as the trees and the composition of the image seems more in tune with the way light works, rather than the simple telling of a biblical or historical tale, as was the nature of previous work. Indeed, the ambiguity of this work is exactly what makes it compelling. Julie Anne Plax suggests that: Watteau consistently applied coherent strategies of representation aimed at subverting high art.[2] Indeed, this particular piece certainly suggests a deliberate eschewing of the concepts of high art for instance, the statue is a plain, generic statue, depicting an angel. Instead of elevating the divine in the picture, Watteau reduces it to the level of the mundane, as a rather dour looking statue in the corner of the composition. Instead o f this divine element, our eye is drawn to the centre of the piece, where some aristocrats talk and lounge in the sun. The resultant effect is a displacement of our expectations, as the scene of the everyday takes precedence over the historical and mythical connotations of the surroundings. Conversation was an important facet to life for Watteau, and indeed, the congregation of people that appear in FÃ ªtes Galantes certainly encapsulates this theme that remains prevalent in his work. Watteau sought to capture the rhythms of conversation, and indeed, the ambiguity of the piece, and the way it juxtaposes the divine, the everyday, the mythical and the traditional gives the impression that the piece is stuck in a dialogue with itself over what it is supposed to be representing. The conversational theme is prevalent in all of the FÃ ªtes galantes, and it is precisely this, juxtaposition of the high-brow conceptual and representational framework, pasted over the ordinary activities of a few aristocrats that makes the work, in a subtle way, revolutionary. Michalski suggests that: Almost all FÃ ªtes galantes should be interpreted from the viewpoint of the conversational theme. Watteau [] accepted the high status of conversation within society, and he paid homage to it thoug h his artful construction of discursive situations and though the discreet but self-revealing conduct of his figures[3]. Indeed, this glorification of conversation instead of the high historical concepts of modern art could be seen in a number of ways first, as a cynical drive to make money from two differing audiences; first, to satisfy the needs of the Academie and maintain an audience, and second, to actually satirize the concept of high art by smuggling the mundaneness of the everyday into a grand, historical painting. Thus, the work can be seen as an ingenious way of making profit from two increasingly disparate groups of people, or else it could be read as a more subversive work of art seeking to destroy the sanctity of representative art from within. This ambiguity and decorousness of the art is precisely what makes the work both fascinating and prescient to an audience that would later treat a work of art as a means to represent the artists unique vision, rather than a self less depiction of biblical or narrative events. Therefore, the work could be read as anticipating the impressionists and modernist art. Indeed, this is one particular reading of the piece. The decorative aspects of FÃ ªtes Galantes certainly can be read as a prototype for the modernist art obsessed by surface representation and secularism that was to come. Overall, the genre of the FÃ ªtes Galantes was important insofar as, despite its position as a distinctly commercial genre, artists such as Watteau, arguably satirized the academy by introducing the authority of the artist into these works. Juxtaposing the everyday with the mythical setting of Arcadia, Watteau appealed to both the French Royal establishment, and also the private aristocratic patrons that wished to see themselves in paint, conversing and doing everyday things in the countryside. Thus, the piece itself exists as a decorative piece, unencumbered by the traditional trappings of biblical narrative and / or morally stimulating works from mythology or history. And, by pushing to the forefront the purely decorative, in many ways secularising high art, Watteau brought to the forefront notions about the relationship between the artist and his art, as well as being a forerunner for movements such as Impressionism and Modernism, that would revolutionize the relationship between artist and art, and also mutate the representational powers of painting from an objective depiction, to an obsession with the various forms and the subtleties of seeing objects differently. Overall, Fete Galante is open to a whole series of different meanings and readings, but perhaps it is precisely this sense of ambiguity, this mismatch of certain tenets of classical, traditional high art, and the emergent vocabulary of low art that causes the image itself to be considered over the specificities of what or who it represents. Bibliography Cowart, G., Watteaus Pilgrimage to Cythera and the Subversive Utopia of the Opera-Ballet, from The Art Bulletin, Sept 2001 Marshall, D. R., Watteau and Eighteenth Century Art Michalski, S., Watteaus Painted Conversations from The Art Bulletin, Dec 1994 Plax, J. A., Watteau and the Cultural Politics of Eighteenth Century France, University of Arizona Press, Arizona, 2000 Footnotes [1]David R. Marshall, Watteau and Eighteenth Century Art [2]Julie Anne Plax, Watteau and the Cultural Politics of Eighteenth Century France, University of Arizona Press, Arizona: 2000, p. 24 [3]Sergiusz Michalski, Watteaus Painted Conversations, from The Art Bulletin, Dec 1994, p. 2

From Hacking to Cyber Terrorism Essay -- Computers Software Hackers Es

From Hacking to Cyber Terrorism Introduction Information technology (IT) is evolving everyday and our day-to-day life is becoming more and more dependent on it. In this twenty first century, we cannot imagine ourselves without emails, online banking systems and health care systems and without World Wide Web. In other words, evolution of IT has given a modern, technologically advanced and convenient life to the society. But, over the time we are also observing explosive growth in the darker side of the IT - regarding hacking and cyber crimes. Activities like unauthorized computer intrusion, denial of service (DOS), stealing computer passwords and secure data; causing damage to computer systems and databases and causing damage to individuals/society are not very rare these days. As we go further on this paper, we will see different aspects of hacking, from harmless (simply looking around thru web) to dangerously harmful (cyber-terrorism). Irrespective of harmless or harmful, we need to understand is it ethical and how does it impact the global world. This paper is intended to discuss the ethical issues and moral values involved with this darker side of information technology. This paper also includes discussion on the good side of hacking and how hacking can lead to serious cyber crimes and causes harm to world community. What is a computer hacker? The definition of the computer hacker can be described as follows, 1. In programming, a computing enthusiast. The term is normally applied to people who take a delight in experimenting with system hardware (the electronics), software (computer programs) and communication systems (telephone lines, computer networks etc). 1 2. In data (information... ...Security† - Dorothy Denning and Frank Drake, From Chapter 2, Computers, Ethics and Social values by Johnson and Nissenbaum. 5. â€Å"Computer Security and computer crimes† From Chapter 7, Case Studies in Information and computer ethics by Richard Spinello 6. Hacker Crackdown - By Bruce Sterling http://www.lysator.liu.se/etexts/hacker/ 7. Computer Hacking and Ethics by Brian Harvey http://www.cs.berkeley.edu/~bh/hackers.html 8. Hacking: Ethical Issues of the Internet Revolution http://blacksun.box.sk/tutorials.php/id/155 9. Cyber-terrorism http://www-cs.etsu-tn.edu/gotterbarn/stdntppr/ 10. â€Å"Frameworks of ethical analysis â€Å" From Chapter 2, Case Studies in information and computer ethics by Richard Spinello 11. Soren Kierkegaard http://plato.stanford.edu/entries/kierkegaard 12. Are hackers terrorists? http://zdnet.com.com/2102-11-528326.html

Analysis of the Absorption of Green Light Versus Red Light Absorption i

Analysis of the Absorption of Green Light Versus Red Light Absorption in Spinach Leaves The goal of the experiment was to determine if green light had less ability to absorb than red light in spinach leaves. This was done by separating the photosynthetic pigments (chlorophyll a, chlorophyll b, carotene and xanthophylls) from one another using paper chromatography. The separated pigments were then analyzed for their absorption spectrum using a spectrographometer. When the data was graphed it clearly showed the higher rate of red light absorption over green light. These results along with previous research indicate the importance of red light in photosynthesis and the minor role green light plays. The majority of life on Earth depends on photosynthesis for food and oxygen. Photosynthesis is the conversion of carbon dioxide and water into carbohydrates and oxygen using the sun’s light energy (Campbell, 1996). This process consists of two parts the light reactions and the Calvin cycle (Campbell, 1996). During the light reactions is when the sun’s energy is converted into ATP and NADPH, which is chemical energy (Campbell, 1996). This process occurs in the chloroplasts of plants cell. Within the chloroplasts are multiple photosynthetic pigments that absorb light from the sun (Campbell, 1996). Photosynthetic pigments work by absorbing different wavelengths of light and reflecting others. These pigments are divided into two categories primary (chlorophyll) and accessory (carotenoids) pigments. Chlorophyll is then divided into three forms a, b, and c (Campbell, 1996). Chlorophyll a is the primary pigment used during photosynthesis (Campbell, 1996). This pigment is the only one that can directly participate in light reactions (Campbell, 1996). Chlorophyll a absorbs the wavelengths of 600 to 700nm (red and orange) along with 400 to 500nm (blue and violet) and reflects green wavelengths (Lewis, 2004). Chlorophyll b has only a slight difference in its structure that causes it to have a different absorption spectra (Campbell, 2004). The carotenoid involved with spinach leaf photosynthesis absorbs the wavelengths of 460 to 550nm (Lewis, 2004). The pigments are carotene and its oxidized derivative xanthophylls (Nishio, 2000). A wavelength is determined by measuring from the cr est of one wave to the crest of the next wave. All the wavelengths possible are... ...2 520 0.06 0.049 0.01 0.005 0.09 540 0.06 0.06 0.01 0 0.088 560 0.08 0.065 0.01 0 0.09 580 0.125 0.076 0 0 0.111 600 0.15 0.091 0 0.005 0.122 620 0.21 0.09 0 0.005 0.148 640 0.24 0.3 0 0.005 0.195 660 0.99 0.18 0.01 0.01 0.495 680 0.18 0.03 0 0.01 0.09 700 0.03 0.01 0 0 0.028 720 0.01 0.01 0 0 0.02 Figure 2: The absorabancy spectrum shows how absorbent the photosynthetic pigments are at different wavelengths of light. Note: Green light is between 500 to 570 nm and red light is between 630 to 720 nm. References Campbell, N.A., â€Å"Biology,† New York: The Benjamin/Cummings Publishing Company, Inc., 1996, 182-200. Karohl, D., â€Å"Principals of Biology I Laboratory,† Lorain, Lorain County Community College, 2003, 65-71. Lewis, R., â€Å"Life,† Boston: McGraw-Hill , 2004, 97-114. Nishio, J.N., â€Å"Why are higher plants green? Evolution of the higher plant photosynthetic pigment complement,† Plant, Cell and Environment, 2000, 23, 539-5

Florence Nightingale Essay

Florence Nightingale’s environmental theory is a holistic approach to health care. The basis of this theory is the inter-relationship of a healthful environment with nursing. Nightingale noticed that external influences and conditions can suppress, or contribute to disease or death. The goal of the nurse should be to help patients retain their own vitality by meeting their basic needs through control of the environment. (Selanders & Crane, 2012) There are three types of environment in Nightingale’s theory. The first is the physical environment. It consist of the physical elements where the patient is being treated such as the bed, the linens, the floors and walls, and plumbing. Nightingale manipulated the physical environment by using cleanliness, heat and proper plumbing. She insisted upon patients having access to fresh air and natural sunlight. The second is the psychological environment, which can be affected by the negative physical environment. A dirty and un-kept environment is a psychological damaging environment. One way that Nightingale manipulated this type was with the use of fresh flowers. The psychological environment requires various activities to keep the mind active and distracted from the pain and suffering of illness. It also involves therapeutic communication with the patient and family. The social environment consist of the patients hospital room and home, as well as the community that affects the patient’s specific environment. For example, a patient’s social support may consist of friends, family, church members or neighbors. (â€Å"Nursing Theory,† 2012) There are five major components of a healthful environment. They are, proper ventilation, adequate light, sufficient warmth, control of noise and control of odors. These were all important in the Nightingale theory. Fresh ventilated air can decrease the amount of germs. We know that light is important to our patients and the absence of natural light can lead to delirium. Warmth is important as it helps the body remain free from the stress caused by cold. Decreasing the noise around our patients helps them relax and get the rest that their bodies require to heal. Controlling odors can also help our patients relax but is also important to the patient’s psychological well- being. (â€Å"Nursing Theory,† 2012) The nursing paradigm of Nightingale’s theory assumes that nursing is different from medicine and that the goal of nursing  is to place the patient in the best possible condition for nature to act upon them. Nursing encompasses the all the activities that promote health and can be performed by anyone. Nursing provides fresh air, light, warmth, cleanliness, quiet and a proper diet. Nursing facilitates a patient’s reparative process by ensuring the best possible environment and influences the environment to promote health. (â€Å"Nursing Theory,† 2012) Today we practice many of the aspects of Nightingales theory. Some units have quiet time to allow patients to rest. We have a butterfly garden that patients can visit that not only serves as a resource for fresh air, but also provides sunlight and a wonderful distraction from their illness. References Creasia, J. L., & Friberg, E. (2011). Conceptual Foundations, the bridge to professional nursing practice (5th ed.). St. Louise, MO: Mosby. Environmental Theory. (2012). Retrieved from www.nursingtheory.org Selanders, L. C., & Crane, P. C. (2012, January). The Voice of Florence Nightingale on Advocacy. The Online Journal of Issues in Nursing, 17. Retrieved from www.nursingworld.com

Projects: Life Insurance

PROJECT FINAL REPORT ON Agency business model of insurance companies â€Å"competitive strategies† BY SUBODH GUPTA (07BS4336) SBI Life Insurance Company Limited Summer Internship Project (Batch of 2009) PROJECT TITLE Agency business model of insurance companies â€Å"competitive strategies† A report submitted in partial fulfillment of the requirements of MBA program COMPANY GUIDE FACULTY GUIDE Mr. Suresh Kumar V. Prof. T. N. Ramakumar DSM, Calicut branch ICFAI Business School KOCHI SUBMITTED BY SUBODH GUPTA (07BS4336) Certificate This is to certify that the project report entitled â€Å"Agency business model of insurance companies competitive strategies† at SBI Life Insurance Company Limited is a bonafide record of work done by Subodh Gupta, and submitted in partial fulfillment of the requirements of MBA program of ICFAI Business School, Kochi. Prof. T. N. Ramakumar Faculty Guide IBS kochi TO WHOMSOEVER IT MAY CONCERN This is to certify that Mr. Subodh Gupta, doing MBA at ICFAI Business School, Kochi has done a project entitled â€Å"Agency business model of insurance companies competitive strategies† at SBI Life Insurance company Limited, Calicut Branch from February 22, 2008 to May 24, 2008. From SBI Life Insurance Company LTD. Mr. Suresh Kumar V. Divisional Sales Manager Calicut Branch Declaration I hereby declare that this report on â€Å"Agency business model of insurance companies competitive strategies† has been written and prepared by me during the academic year 2008-2009. This project was done under the able guidance and supervision of Prof. T. N. Ramakumar, Faculty, ICFAI Business School and Mr. Suresh Kumar V. , DSM, SBI Life Insurance Company Ltd. , Calicut in partial fulfillment of the requirement for the Master Of Business Administration Degree course of the ICFAI Business School. I also declare that this project is the result of my own effort and has not been submitted to any other institution for the award of any Degree or Diploma. Place: Kochi Subodh Gupta 07bs4336 Acknowledgements If words are considered to be signs of gratitude then let these words convey the very same My sincere gratitude to SBI Life for providing me with an opportunity to work with SBI Life and giving necessary directions on doing this project to the best of my abilities. I am highly indebted to Mr. Suresh Kumar V. , Divisional Sales Manager and company project guide, who has provided me with the necessary information and also for the support extended out to me in the completion of this report and his valuable suggestion and comments on bringing out this report in the best way possible. I also thank Prof. T. N. Ramakumar, ICFAI, Kochi, who has sincerely supported me with the valuable insights into the completion of this project. I am grateful to all faculty members of ICFAI, Kochi and my friends who have helped me in the successful completion of this project. I extend my hearfelt thanks to Mr. Sukumaran, territory manger, Mr. Sunil K. Menon, unit manager, and Mr. Vinod P. , unit manager, to help me during this project. |Contents | |Sr. No. |Subjects Covered |Pages | |1. |Project Proposed |9 – 11 | |1. 1 |Objective of the project | | |1. 2 |Methodology | | |1. |Sampling | | |1. 4 |Limitations | | |2. |Introduction |12 – 16 | |2. 1 |Definition of insurance | | |2. 2 |Functions of insurance | |2. 3 |Definitions of life insurance | | |2. 4 |Role of life insurance | | |2. 5 |Importance of life insurance | | |3. |Agency business model |17 – 19 | |3. |Insurance agencies | | |3. 2 |Functions of agency manager | | |3. 3 |Operational work of insurance agency | | |4. |Indian insurance industry |20 – 27 | |4. |History | | |4. 2 |IRDA | | |4. 3 |Changing perception of customers | | |4. 4 |Changing face of Indian life insurance industry | | |4. |Possibilities | | |5. |Global insurance industry |28 – 29 | |6. |Functioning of insurance industry |30 – 36 | |6. 1 |Insurer’s business model | | |6. 2 |Investment management | | |6. |Key ratios and terms | | |6. 4 |Requirements of an insurance risk | | |6. 5 |Various types of insurance products | | |7. |Insurance and economy |37 – 39 | |8. |SBI Life insurance company |40 – 42 | |9. Distribution of insurance product |43 – 46 | |10. |Effective marketing strategies for insurance companies |47 – 52 | |11. |Competitors of SBI Life |53 – 62 | |12. |Comparison of ULIP products |63 – 69 | |13. |Questioner |70 – 71 | |14. Conclusions and findings |72 – 91 | |15. |Recommendations |92 | 1. Project proposed Agency business model of different insurance companies- competitive strategies. Different agencies of different insurance companies are having some strategies to survive in the market. Their strategies may be in the form of: †¢ How they target their customers. †¢ How they make their advisors active. †¢ How they make their operational and sales department effective. How they promote their employees. †¢ How they handle the conflict in age ncy. Objective of the project: – Main objective of the project is to find out the strategies of different insurance agencies and evaluate them. Project is about to penetrate the competitors of SBI life. Conclusion of this project can give an idea of strategies of different companies which may be helpful to the company. Now days all the insurance companies in India are trying to establish themselves in the competitive market. They are introducing innovative marketing strategies to survive in the market. Many other private companies are looking to enter in the Indian insurance market . so it is very essential to a company to innovate their marketing strategies in terms of †¢ Recruiting their advisors †¢ To make their advisors active †¢ Well educated and capable employee in the agency †¢ Marketing of their products †¢ Deployment of their products †¢ Targeting the right and potential customers †¢ Differentiating from other companies †¢ Future plan of the company This study consists of to find out the marketing strategies of different insurance companies which are the competitors of SBI Life insurance. This research requires the interview of branch managers of different insurance companies and find out their branches are working in terms of above mentioned factors. Methodology Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by meeting with the branch and agency manager of different insurance agencies and branches in Calicut. Data collection has been done through by giving structured questioner. Research has been done after 27 branch managers or agency manager. This study will be based on judgment sampling and this research is skewed to organization level. This is an exploratory type of research. And this research needs further study also Research is a kind of pilot study. Sampling Sample size has been taken by judgment sampling. Judgment sampling is a process in which the selection of a unit, from the population is based on the pre judgment. This research requires the survey of different insurance agencies in Calicut city. So research concentrates on the branch or agency manager of different insurance companies. So the selection of unit for this research has been judged by the researcher. Sample size for this research is 27. Limitations: †¢ Time limitation †¢ Research has been done only in Calicut. †¢ Companies did not disclose their secrets data and strategies. †¢ Possibility of Error in data collection. †¢ Possibility of Error in analysis of data due to small sample size. 2. Introduction The story of insurance is probably as old as the story of mankind. Tendency of a human being to secure themselves against loss and disaster has been from the starting of world. They sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years as per records. Insurance business is divided into four classes: †¢ Life Insurance †¢ Fire †¢ Marine †¢ Miscellaneous Insurance. Insurance provides: †¢ Protection to investor. †¢ Accumulation of savings. †¢ Channeling these savings into sectors needing huge long term investment. Functions of insurance: †¢ Provide protection: The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. †¢ Collective bearing of risk: Insurance is an instrument to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. †¢ Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also. †¢ Provide certainty: Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain. †¢ Small capital to cover larger risk: Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. †¢ Contributes towards the development of industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. †¢ Means of savings and investment: Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance. †¢ Source of earning foreign exchange: Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk free trade: Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover. Life insurance: Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a premium paid undertakes to pay a fixed sum of money on The death of the insured or on the expiry of a spec ified period of time Whichever is earlier. In case of life insurance, the payment for life insurance policy is certain. The Event insured against is sure to happen only the time of its happening is not known. So life insurance is known as ‘Life Assurance’. The subject matter of insurance is life of human being. Life insurance provides risk coverage to the life of a person. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy. Roles of life insurance: †¢ Life insurance as an investment: – Insurance products yield more than any other investment instruments and it also provides added incentives or bonus offered by insurance companies. †¢ Life insurance as risk cover: – Insurance is all about risk cover and protection of life. Insurance provides a unique sense of security that no other form of invest can provide. Life insurance as tax planning: – Insurance serves as an excellent tax saving mechanism too. Importance of life insurance:- †¢ Protection against untimely death: – Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death. The dependents or family m embers get a fixed sum of money in case of death of the assured. †¢ Saving for old age: – After retirement the earning capacity of a person reduces. Life insurance enables a person to enjoy peace of mind and a sense of security in his/her old age. Promotion of savings: – Life insurance encourages people to save money compulsorily. When life policy is taken, the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums, only surrender value can be returned to him. In case of surrender of policy, the policyholder gets the surrendered value only after the expiry of duration of the policy. †¢ Initiates investments: – Life Insurance Corporation encourages and mobilizes the public savings and canalizes the same in various investments for the economic development of the country. Life insurance is an important tool for the mobilization and investment of small savings. †¢ Credit worthiness: – Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of business. †¢ Social Security: – Life insurance is important for the society as a whole also. Life insurance enables a person to provide for education and marriage of children and for construction of house. It helps a person to make financial base for future. †¢ Tax Benefit: – Under the Income Tax Act, premium paid is allowed as a deduction from the total income under section 80C. 3. Agency business model In India insurance is sold through mainly four channels. †¢ Through branch †¢ Through agency †¢ Through financial institution †¢ Through banks Independent agency system means of selling and servicing property and casualty insurance through agents who represent different companies. The agents own the records of the policies they sell. Insurance is now governed by a blend of statutes, administrative agency regulations, and court decisions. State statutes often control premium rates, prevent unfair practices by insurers, and guard against the financial insolvency of insurers to protect insureds. In most states, an administrative agency created by the state legislature devises rules to cover procedural details that are missing from the statutory framework. To do business in a state, an insurer must obtain a license through a registration process. This process is usually managed by the state administrative agency. The same state agency may also be charged with the enforcement of insurance regulations and statutes. Administrative agency regulations are many and varied. Insurance companies must submit to the governing agency yearly financial reports regarding their economic stability. This requirement allows the agency to anticipate potential insolvency and to protect the interests of insureds. Agency regulations may specify the types of insurance policies that are acceptable in the state, although many states make these declarations in statutes. The administrative agency is also responsible for reviewing the competence and ethics of insurance company employees. Insurance agencies: Insurance agency can be defined as a group of insurance agents or advisor. These agents or advisors create a distribution channel to sell the different insurance products. These advisors are the strongest distribution channel for an insurance agency. An advisor or agent works as a third party or intermediate between insurance company and customers. All the advisors in an agency work as a team. Main work of insurance advisor or agent is to promote and sell different insurance products of company. Functions of agency manager: a person who governs a group of insurance advisors is known as agency manager. Success of an agency manager depends on the success of their advisors. work of agency manager is to control the advisors in an efficient way. Agency manager is like a creature of two wings. He has to recruit advisors as well as to give sales to the insurance company. †¢ To recruit advisors. †¢ Make them aware of different insurance products. †¢ To give them training session. †¢ To motivate them for efficient work. †¢ To get maximum and efficient work from their advisors. Operation work of insurance agency (SBI Life): Every industry has an operational department which supports the market division. Front office partners (independent agents) Develop insurance products Distribute product CUSTOMERS Plan and manage company BUSINESS PARTNERS Fulfill and service product Claims Back office provider Regulatory institutions In the reference to the SBI Life insurance, development of insurance products, distribution, planning services products and claims are taken care by the head office. Back office providers are those persons who take care of the operational part of the organization and front office providers are the people who brings sell to the organization. Back office has its own hierarchy which is connected to head office, and every policy has to be processed to head office. Unit for the operations is known as processing centre, and processing centre within the city is known as mini processing centre. Proposal forms come through front office and the verification of the proposal is done by manually which is known as scrutiny. After scrutiny the operational staff enters it in SBI Life website, which is done online. the entry of a proposal is done in a sequential order starting with scrutiny, inwards, proposal wise inwards, cashier entry, cashier entry approval, data entry and finally outwards. After finishing all these operations policy issues from the head office of the state. 4. Indian insurance industry History: Life insurance came to India from England in 1818 when oriental life insurance company started in Calcutta by Europeans. After this many insurance companies had been started in India. But these companies were looking after only the needs of European community established in India. Indian people were not being insured by these companies. First Indian life insurance company came as Bombay mutual life insurance assurance. Second company was Bharat insurance company came in 1896. After this the united India in madras, national Indian and national insurance in Calcutta and the co-operative assurance in Lahore were established in 1906. To regulate Indian insurance business first insurance act came in 1912 as life insurance company act and provident fund act. These acts consist of premium rates tables and periodical valuations of companies. In the first two decade of 20th century many life insurance companies were started. So the insurance act came in 1938 to governing life and non life insurance companies and to provide strict state control. In 1956 the life insurance business in India was nationalized. In 1956 life insurance corporation of India (LIC) was created to spreading life insurance much more widely particularly in rural areas. In that year LIC had 5 zonal offices, 33 divisional offices and 212 branch offices. In 1957 the business of LIC of sum assured of 200crores, 1000crores in 1970, and 7000crores in 1986. Indian regulatory development authority: In 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. Role of IRDA: †¢ Protecting the interests of policyholders. †¢ Establishing guidelines for the operations of insurers, and brokers. †¢ Specifying the code of conduct, qualifications, and training for insurance intermediaries and agents. †¢ Promoting efficiency in the conduct of insurance business. †¢ Regulating the investment of funds by insurance companies. †¢ Specifying the percentage of business to be written by insurers in rural sectors. †¢ Handling disputes between insurers and insurance intermediaries. Changing perception of Indian customers: Indian Insurance consumers are like Indian Voters, they are soft but when time is right and ripe, they demand and seek necessary changes. De-tariff of many Insurance Products are the reflection of changing aspirations and growing demand of Indian consumers. For historical years, Indian consumers were at receiving end. Insurance Product was underwritten and was practically forced onto consumers on a â€Å"Take-it-As-it-basis†. All that got changed with passage of IRDA act in 1999. New insurance companies have come into existence leading to open competition and hence better products for customers. Indian customers have become very sensitive to Coverage / Premium as well as the Products (read Risk Solution), that is given to them. There are not ready to accept any product, no matter even if that is coming from the market leader, should that product is not serving the purpose. A case in point is ULIP Product / Group Life and Credit Life in Life Insurance segment and Travel / Family Floater Health and Liability Insurance in the Non-life segment are new age Avatar. The new products are constantly being demanded by Indian consumers, which is putting huge pressures on Insurance companies (Read Risk Under-writers) and Brokers to respond. Customers are looking at Insurance for covering Pure Risk now which I have covered in my next section. Another good reason why we are seeing quick changes in the buying behavior of Insurance from mere Investment to risk mitigation is the cost of Replacement of Goods (ROG) or Cost of Services (COS). Now Indian customers are aware of insurance industry and insurance products provided by companies. They have become more sensitive. They would not accept any type of insurance product unless it fulfills their requirements and needs. In historic day’s customers looking at insurance products as a life cover which can provide security against any unacceptable events, but now customers look at insurance products as an investment as well as life cover. So today’s customers wants good return from the insurance companies. The Indian customer’s forms the pivot of each company’s strategy. Investment of Indian household savings (as a % in different sector) |BANK DEPOSITS |39% | |CORP. BANKS |2% | |SHARES AND DEBENTURES |1% | |MUTUAL FUNDS |2% | |NBFC’S |3% | |GOVT. BONDS |13% | |INSURANCE |13% | |PF/ RETIRE FUNDS |21% | |CURRENCY |6% | Source: – www. vivaindia. com Changing face of Indian insurance industry: After the Insurance Regulatory and Development Authority Act have been passed there has been establishment of many private insurance companies in India. Previously there was a monopoly business for Life Insurance Corporation of India (L. I. C. ) who was the only life-insurance company for the people till 2000. L. I. C. still holds 71. 4% of the market share in 2006. But after the introduction of private life insurance companies there is a great competition in Indian market now. Everyone is trying to capture the fresh market here and penetrate it with aggressive marketing strategies. Today life-insurance is not only limited up to just life risk cover and maturity period bonuses but changed to greater return from the investments. With the introduction of the unit linked insurance policies these companies are investing the money in different investment instruments like shares, bonds, debentures, government and other securities. People are demanding for higher returns with the life risk cover and private companies are giving 30-40% average growth per annum. These life-insurance companies have every kind of policies suiting every need right from financial needs of, marriage, giving birth and rearing up a child, his education, meeting daily financial needs of life, pension solutions after retirement. These companies have every aspects and needs of our life covered along with the death-benefit. In India only 25% of the population has life insurance. So Indian life-insurance market is the target market of all the companies who either want to extend or diversify their business. To tap the Indian market there has been tie-ups between the major Indian companies with other International insurance companies to start up their business. The government of India has set up rules that no foreign insurance company can set up their business individually here and they have to tie up with an Indian company and this foreign insurance company can have an investment of only 24% of the total start-up investment. Indian insurance industry can be featured by: †¢ Low market penetration. †¢ Ever growing middle class component in population. †¢ Growth of customer’s interest with an increasing demand for better insurance products. Application of information technology for business. †¢ Rebate from government in the form of tax incentives to be insured. Today, the Indian life insurance industry has a dozen private players, each of which are making strides in raising awareness levels, introducing innovative products and increasing the penetration of life i nsurance in the vastly underinsured country. Several of private insurers have introduced attractive products to meet the needs of their target customers and in line with their business objectives. The success of their effort is that they have captured over 28% of premium income in five years. The biggest beneficiary of the competition among life insurers has been the customer. A wide range of products, customer focused service and professional advice has become the mainstay of the industry, and the Indian customer’s forms the pivot of each company’s strategy. Penetration of life insurance is beginning to cut across socio-economic classes and attract people who have never purchased insurance before. Life insurance is also now being regarded as a versatile financial planning tool. Apart from the traditional term and saving insurance policies, industry has seen the entry and growth of unit linked products. This provides market linked returns and is among the most flexible policies available today for investment. Now products are priced, flexible, and realistic and sustain so people in better position to understand the risk and benefits of the product and they are accepting these innovative products. So it is clear that the face of life insurance in India is changing, but with the changes come a host of challenges and it is only the credible players with a long term vision and a robust business strategy that will survive. Whatever the developments, the future and the opportunities in this industry will surely be exciting. There are 12 private players in Indian life insurance market. 6 bank owned insurers: – HDFC standard life, ICICI prudential, ING Vysya, MetLife, OM Kotak, SBI life. 6 independent insurers: – Aviva, ANP sanmar, Birla sun life, Bajaj Allianz, Max New York life, Tata AIG. Major international insurers are- Prudential and Standard life from UK, Sun life of Canada, AIG, MetLife and New York life of the US. Increasing growth since liberalization: |YEAR |LIC (in bn rs. ) PRIVATE PLAYER | |FY03 |110 |10 | |FY04 |120 |20 | |FY05 |130 |40 | |FY06 |140 |60 | |FY07 |240 |160 | Source: – Insurance Industry (ICFAI publication book) Possibilities for insurance companies in India: Further deregulation of the market. †¢ Greater concern for the customers. †¢ Newer products and services. †¢ Competition and quality consciousness. †¢ Cost effective operations. †¢ Restructuring of the public sector. †¢ Consolidation of domestic insurance markets. †¢ Technology driven shift in product design. †¢ Actual operations and distribution. †¢ Convergence of financial services. 5. Global insurance industry Globally, insurers increasingly are pressured by the demands of their clients. The development of global insurance industry over the past few years was influenced by booming stock markets which enabled considerable capital gains to be made in non life business. Increase in insurers equity capital increased underwriting capacity, while demand did not develop at the same pace, resulting in decrease in insurance policies prices. The stock market boom of the past few years led to demand for unit linked insurance products. The global insurance industry is growing at rapid pace. Most of the markets are undergoing globalization. Lot of mergers and acquisition are taking place in the insurance world. The rapidity in the industry, technological improvement has resulted in pressures on a few economic parameters. The world insurance industry is at peak of its globalization process. Global insurance market is increasing by an average of six percent per year since 1990. Insurance companies have collected $2443. billion premium world wide according to the global development of premium volume in 144 countries in 2005. $1521. 3 has been generated as life insurance premium and $922. 7 as non life insurance premium. The US accounted for 35% of global life an d non life premium, Japan had global share of 21%, and UK was having 10% of global share. Influence on Indian insurance industry: In this era of globalization, insurance companies face a dynamic global environment. Dramatic changes are taking place owing to the internationalization of activities, appearance of new risk, new types of covers to match with new risk situations, and unconventional and innovative ideas on customer services. Low growth rates in developed markets, changing customers needs, and the uncertain economic conditions in the developing world are exerting pressure on insurer’s resources and testing their ability to survive. Now the existing insurers are facing difficulties from non-traditional competitors those are entering the retail market with new approaches and through new channels. India has a rapidly growing middle class and this section can afford to buy insurance products. This shows the attraction that the Indian market holds for foreign insurers who have been putting pressure on developing countries as well as on India to open up its market. Life insurance penetration as a % of GDP United kingdom |8. 9% | |Japan |8. 3% | |Korea |7. 3% | |United states |4. 1% | |Malaysia |3. 6% | |India |3. % | |China |1. 8% | |Brazil |1. 3% | Source: – www. indianinsuranceresearch. com 6. Functioning of insurance industry: Insurer’s business model: Profit = earned premium + investment income – incurred loss – underwriting expenses Insurers make money in two ways: (1) through underwriting, the processes by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insured. The most difficult aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. An insurer's underwriting performance is measured in its combined ratio. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss. Insurance companies also earn investment profits on â€Å"float†. Float† or available reserve is the amount of money, at hand at any given moment that an insurer has collected in insurance premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. . Naturally, the â€Å"float† method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the â€Å"underwriting† or insurance cycle. Finally, claims and loss handling is the materialized utility of insurance. In managing the claims-handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. Investment management: Investment operations are often considered incidental to the business of insurance, and have traditionally viewed as secondary to underwriting. In the past risk management was the most important part of business, whereas today the focus has shifted to fund management. Investment income is a large component of insurance revenues, skilful and careful management of funds. Insurance is a business of large numbers and generates huge amount of funds over time. These funds arise out of policyholder funds in the case of life insurance, and technical and free reserves in the non-life segments. Time lag between the procurement of premium and the payment of claim provides an interval during which the funds can be deployed to generate income. Insurance companies are among the largest institutional investors in the world. Assets managed by insurance companies are estimated to account for over 40% of the world’s top ten asset managers. Returns on investments influence the premium rates and bonuses and hence investment income will continue to be an important component of insurance company profits. In life insurance, benefits from insurance profits accrue directly to policy holders when it is passed on to him in the form of a bonus. In non life insurance the benefits are indirect and mostly by the creation of an investment portfolio. Investment income has to compensate for underwriting results which are increasingly under pressure. In the case of insurance, the difference between revenue and the expenses is known as operating surplus. Revenue =premium. Expenses =sum of claims + commission payable on procurement of business + operating expenses. Operating surplus =revenue-expenses. Net investment income includes income from trading in and holding stock market securities including government securities, special deposits with the central government, loans to several public utilities and service providers in state government. Insurance premium collected is converted in a pool of fund then divided in to four expenses. †¢ To pay the expenses of the management. †¢ To pay agency commission. †¢ To pay for the claims. †¢ Surplus money will be invested in govt. securities. Requirements of an insurance risk Insurance normally insure only pure risks . However, not all pure risk is insurable . certain requirements usually must be fulfilled before a pure risk can be privately insured . From the view point of the insurer, there are ideally six requirement of an insurable risk †¢ There must be a large number of exposure units †¢ The loss must be accidental and unintentional. †¢ The loss must be determinable and measurable. †¢ The loss should not be catastrophic. The chance of loss must be calculable. †¢ The premium must be economically feasible Comparison of Insurance with other Similar Factors 1) Insurance and gambling compared Insurance is often erroneously confused with gambling . There are two important differences between them . First ,gambling creates a new speculative risk ,while insurance is a technique for handling an already existing pure risk . thus ,if you bet Rs 300 on a horse ,a new speculative technique is created ,but if you pay Rs 300 to an insurer for fire insurance ,the risk of fire is already present and is transferred to the insurer by a contract. No new risk is created by the transaction. The second difference between insurance and gambling is that gambling is socially unproductive, because the winner’s gain comes at the expense of the loser . In contract; insurance is always socially productive, because neither the insurer nor the insured is placed in a position where the gain of the winner comes at the expense of the loser. The insurer and the insured have a common interest in the prevention of a loss. Both parties win if the loss does occur . Moreover, consistent gambling transaction generally never restore the losers to their former financial position . In contract ,insurance contracts restore the insured’s financially in whole or in part if a loss occurs ) Insurance and hedging compared The concept of hedging is to transferring the risk to the speculator through purchase of future contracts . An insurance contract, however, is not the same thing as hedging . Although both technique are similar in that risk is transferred by a contract, and no new ri sk is created, there are some important difference between them. First, an insurance transaction involves the transfer of insurable risks, because the requirement of an insurable risk generally can be met . However, hedging is a technique for handling risks that are typically uninsurable ,such as protection against a decline in the price agriculture products and raw materials. A second difference between insurance and hedging is that insurance and hedging is that insurance can reduce the objective risk of an insurer by application of the law of large numbers. As the number of exposure units increases, the insurer’s prediction of future losses improves, because the relative variation of actual loss from expected loss will decline . thus, many insurance transactions reduce objective risk. In contract, hedging typically involves only risk transfer , not risk reduction . The risk of adverse price fluctuation is transferred because of superior knowledge of market conditions . The risk is transferred, not reduced, and prediction of loss generally is not based on the law of large numbers. Various types of life insurance policies:- Endowment policies: This type of policy covers risk for a specified period, and at the end of the maturity sum assured is paid back to policyholder with the bonuses during the term of the policy. †¢ Money back policies: This type of policy is for periodic payments of partial survival benefits during the term of the policy as long as the policy holder is alive. †¢ Group insurance: This type of insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, co-operatives etc it also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost. †¢ Term life insurance policies: This type of insurance covers risk only during the selected term period. If the policy holder survives the term, risk cover comes to an end. These types of policies are for those people who are unable to pay larger premium required for endowment and whole life policies. No surrender, loan or paid up values are in such policies. †¢ Whole life insurance policies: This type of policy runs as long as the policyholder is alive and is covered for the entire life of the policyholder. In this policy the insured amount and the bonus is payable only to nominee on the death of policy holder. †¢ Joint life insurance policies: These policies are similar to endowment policies in maturity benefits and risk cover, but joint life policies cover two lives simultaneously such as married couples. Sum assured is payable on the first death and again on the death of survival during the term of the policy. †¢ Pension plan: a pension plan or annuity is an investment over a certain number of years but does not provide any life insurance cover. It offers a guaranteed income either for a life or certain period. †¢ Unit linked insurance plan: ULIP is a kind of insurance plan which provides life cover as well as return on premium paid over a certain period of time. The investment is denoted as units and represented by the value called as net asset value (NAV). 7. Insurance and economy †¢ Indian economy is growing in reference to global market. Business of insurance with its unique features has a special place in Indian economy. It is a highly specialized technical business and customer is the most concern people in this business, therefore this business is able to spur the growth of infrastructure and act as a catalyst in the overall development of Indian economy. †¢ The high volumes in the insurance business help spread risk wider, allowing a lowering of the rates of the premium to be charged and in turn, raising profits. When there is a bigger base, the probabilities become more predictable, and with system wide risks balanced out, profits improve. This explains the current scenario of mergers, acquisitions, and globalization of insurance. †¢ Insurance is a type of savings. Insurance is not only important for tax benefits, but also for savings and for providing security. It can be serving as an essential service which a welfare state must make available to its people. Insurance play a crucial role in the commercial lives of nations and act as the lubricants of economic activities. Insurance firms help to spread the potentially financial consequences of risk among the large number of entities, to mobilize and distribute savings for productive use, facilitate investment, support and encourage external trade, and protect economic entities against external risk. Insurance and economic growth mutually influences each other. As the economy grows, the living standards of people increase. As a consequence, the demand for life insurance increases. As the assets of people and of business enterprises increase in the growth process, the demand for general insurance also increases. In fact, as the economy widens the demand for new types of insurance products emerges. Insurance is no longer confined to product markets; they also cover service industries. It is equally true that growth itself is facilitated by insurance. A well-developed insurance sector promotes economic growth by encouraging risk-taking. Risk is inherent in all economic activities. Without some kind of cover against risk, some of these activities will not be carried out at all. Also insurance and more particularly life insurance is a mobilizer of long term savings and life insurance companies are thus able to support infrastructure projects which require long term funds. There is thus a mutually beneficial interaction between insurance and economic growth. The low income levels of the vast majority of population have been one of the factors inhibiting a faster growth of insurance in India. To some extent this is also compounded by certain attitudes to life. The economy has moved on to a higher growth path. The average rate of growth of the economy in the last three years was 8. 1 per cent. This strong growth will bring about significant changes in the insurance industry. At this point, it is important to note that not all activities can be insured. If that were possible, it would completely negate entrepreneurship. Professor Frank Knight in his celebrated book â€Å"Risk Uncertainty and Profit† emphasized that profit is a consequence of uncertainty. He made a distinction between quantifiable risk and non-quantifiable risk. According to him, it is non-quantifiable risk that leads to profit. He wrote â€Å"It is a world of change in which we live, and a world of uncertainty. We live only by knowing something about the future; while the problems of life or of conduct at least, arise from the fact that we know so little. This is as true of business as of other spheres of activity†. The real management challenges are uninsurable risks. In the case of insurable risks, risk is avoided at a cost. 8. SBI Life insurance SBI Life insurance is a joint venture between the State Bank of India and Cardiff SA of France. SBI Life insurance is registered with an authorized capital of Rs 500 crore and a paid up capital of Rs 350 crores. SBI owns 74% of the total capital and Cardiff the remaining 26%. State Bank of India enjoys the largest banking franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,000 branches across the country, the largest in the world. Cardiff is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone’s leading Bank. BNP is one of the oldest foreign banks with a presence in India dating back to 1860. It has 9 branches in the metros and other major towns in the country. Cardiff is a vibrant insurance company specializing in personal lines such as long-term savings, protection products and creditor insurance. Cardiff has also been a pioneer in the art of selling insurance products through commercial banks in France and 29 more countries . In 2004, SBI Life insurance became the first company amongst private insurance players to cover 30 lakh lives. The company expects to carve a niche in the Indian insurance market through extensive product innovation and aims to provide the highest standards of customer service through a technological interface. To facilitate this, call centre’s have been already installed and help lines will be installed and customers will have access to their accounts through the Internet or through SBI branches. SBI Life insurance is uniquely placed as a pioneer to usher banc assurance into India. The company hopes to extensively utilize the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans, personal loans and credit cards. SBI’s access to over 100 million accounts provides a vibrant base to build insurance selling across every region and economic strata in the country. Under section 88 of insurance act 1961 an individual is entitled to a rebate of 20 per cent on the annual premium payable on his/her life and life of his/her children or adult children. The rebate is deductible from tax payable by the individual or a Hindu Undivided Family. This rebate is can be availed up to a maximum of Rs 12,000 on payment of yearly premium of Rs 60,000. By paying Rs 60,000 a year, you can buy anything upwards of Rs 10 lakh in sum assured. (Depending upon the age of the insured and term of the policy) This means that you get an Rs 12,000 tax benefit. The rebate is deductible from the tax payable by an individual or a Hindu Undivided Family. SBI Life Insurance is currently growing at an impressive rate of 200%. As per the latest IrDA report SBI Life ranks No. 3 amongst the private insurers. The company's market share has increased to 10% amongst the private players and is 2. 25% in the total industry. This year, the company is aiming at a growth of 150%. The new business premium of the company from beginning of the year to September 2006 is Rs 660 crores. The total business premium of the company from the beginning of the year till September 2006 is Rs 765 crores. The company aims to collect first year premium of over Rs 2,000 crores. SBI Life follow a multi distribution channel approach and expect all channels to contribute to the overall growth. Today, the agency channel contributes over 50% and banc assurance channel contributes to 40% of the business. Other channels like Credit Life and Group Corporate are also performing very well. Products of SBI Life insurance: – (Source: – www. sbilife. co. n) |Unit Linked products |(1) Group Employee Benefit Products | |Horizon 11 |Retirement Solutions | |Unit Pus 11 |Cap Assure Gratuity | |Unit plus child Plan |Cap Assure Superannuation | |Unit Plan Elite |Cap Assure Leave Encashment | |Pension Products |Group Immediate Annuity | |Horizon 11 Pension |SBI Life Golden Gratuity | |Unit Plus 11 Pension |Protection Plan | |Lifelong Pension |Sampoorn Suraksha | |Pure Protection Products |SBI Life Group Term Life Scheme In Lieu of EDLI | |Swadhan |Specialized Term Insurance | |Shield |SBI Life Keyman Insurance | |keyman |(2) Group Loan Protection Products | |Protection cum savings products |Dhanaraksha Plus | |Sudarshan |Dhanaraksha Plus SP | |Scholar11 |Dhanaraksha Plus LPPT | |Setubandhan |Dhanaraksha Plus RP | |Money back scheme products |(3) Group Savings Protection Plan | |Money Back |Nidhi Raksha RP | |Sanjeevan Supreme |(4) Group Micro Insurance | | |Grameen Shakti and Super Suraksha | 9. Distribution of insurance products Insurance has to be sold the world over. The Touch point with the ultimate customer is the distributor or the producer and the role played by them in insurance markets is critical. It is the distributor who makes the difference in terms of the qualit y of advice for choice of product, servicing of policy post sale and settlement of claims. In the Indian arket, with their distinct cultural and social ethics, these conditions will play a major role in shaping the distribution channels and their effectiveness. In today's scenario, insurance companies must move from selling insurance to marketing an essential financial product. The distributors have to become trusted financial advisors for the clients and trusted business associates for the insurance Companies. Challenges for insurance companies and intermediaries in India- †¢ Building faith about company in the mind of clients. †¢ Building personal credibility with the clients. Different distribution channels in India:- A multi-channel strategy is better suited for the Indian market. Indian insurance market is a combination of multiple markets. Each of the markets requires a different approach. Apart from geographical spread the socio-cultural and economic segmentation of the market is very wide, exhibiting different traits and needs. Different multi-distribution channels in India are as follows †¢ Agents: Agents are the primary channel for distribution of insurance. The public and private sector insurance companies have their branches in almost all parts of the country and have attracted local people to become their agents. Today's insurance agent has to know which product will appeal to the customer, and also know his competitor's products to be an effective salesman who can sell his company, the product, and himself to the customer. To the average customer, every new company is the same. Perceptions about the public sector companies are also cemented in his mind. So an insurance agent can play an important role to create a good image of company. †¢ Banks: Banks in India are all pervasive, especially the public sector banks. Many insurance companies are selling their products through banks. Companies which are bank owned, they are selling their products through their parent bank. The public sector banks, with their vast branch networks, are helpful to insurance companies. This channel of selling insurance is known as Banc assurance. |INSURANCE COMPANY |ASSOCIATE BANKS | |ICICI prudential |ICICI bank, bank of India, Citibank, Allahabad bank, Federal | | |bank, south Indian bank, Punjab and Maharashtra cooperative bank | |SBI life |State bank of India | |Birla sun life |Deutsche bank, Citibank, bank of Rajasthan, Andhra bank | |ING Vysya bank |Vysya bank | |Aviva life insurance |ABN amro bank, canara bank | |HDFC standard life |Union bank, Indian bank | |Met life |Karnataka bank, j&k bank | Source: – Hindu Business Line, January 08, 2007 †¢ Brokers: Now a day’s different financial institution are selling insurance. These financial institutions are known as brokers. They are taking some underwriting charges from the insurance companies to sell their insurance products. †¢ Corporate agents: Corporate agency is a cross selling type of channel. Insurance companies’ tie-up with business houses in other industries to sell insurance either to their employees or their customers. Insurance industry, during the past 2 years has witnessed a number of such strategic tie-ups and alliances. Corporate agents have become a major force to reckon with in distributing insurance products. Such as- Bajaj Allianz tied up with Maruti Udyog and Ford for auto insurance and Tata AIG life has tied up with Tata tea, khaitan’s Williamson major and bridge foundation for selling rural policies. †¢ Internet: In this technological world internet is also a channel of selling insurance. This can be as direct marketing. 10. Effective marketing strategies Now the Indian consumer is knowledgeable and sensitive. Consumers are increasingly more aware and are actively managing their financial affairs. People are increasingly looking not just at products, but at integrated financial solutions that can offer stability of returns along with total protection. In view of this, the insurance managers need to understand more about the details that go into the introduction of insurance products to make it attractive in this competitive market. So now days an insurance manager requires leadership, commitment, creativity, and flexibility. â€Å"Every family in every village in the country should feel safe and secure†. This vision alone will help to bring the new ideas to the insurance manager. Financial, marketing and human resource polices of the corporations influence the unit mangers to make decisions. Performance of insurance company depends on the effectiveness of such policies. Insurance corporations formulate and revise these policies from time to time to ensure that the performance of the managers is best for the organization. In the competitive market, insurance companies are being forced to adopt a strictly professional approach in marketing. The insurance companies face the challenge of changing the uninspiring public image of the industry. Some of the important marketing elements are- †¢ Marketing mix. †¢ The importance of relationship. †¢ Positioning. †¢ Value addition. †¢ Segmentation. †¢ Branding. †¢ Insuring service quality. †¢ Effective pricing. †¢ Customer satisfaction research. The growth of insurance sector is governed largely by factors external to it. The following factors influence the market and demand of product- †¢ Government policies. Growth in population. †¢ Changing age profile. †¢ Income wise distribution of the population. †¢ Level of insurance awareness. †¢ The p ricing of the policies. †¢ The economic climate of the country. †¢ The aversion to risk. †¢ Social and political features of the country. †¢ Growth scenario in the world. Different companies adopt different approaches in their marketing strategies. One approach is focus upon product quality which can give confidence in the mind of customers that they are offered by best featured products. And other approach is focusing on customer’s needs, which involve a heavy investment in developing relationships with policyholders. Under this approach customer can expect a range of products and service offered to him. Third approach is market segmentation under which the population can be divided into several homogeneous products and groups, the effort should be tie clients to the company by customized combination of coverage, easy payment plans, risk management advice, and convenient and quick claim handling. An insurance product can be classified in three phases: Core product: In insurance industry the core product is the policy that provides protection t