Sunday, March 15, 2020
McDonaldÃ¢â¬â¢s Ã¢â¬Å"SeniorsÃ¢â¬ Restaurant Case Analysis In the study of the briefing of the McDonaldÃ¢â¬â¢s Restaurant, there are positives to the problem and negatives towards the problem. A McDonaldÃ¢â¬â¢s in a city crowded with seniors are overwhelmed with senior customers during the early hours of the day. The senior come in as a meeting area where they eat and commune at the restaurant. The number of seniors that come in, crowds the dining area in which customers come in and eat. They come in on the fourth Monday of every month to get extra special, over the age of 55 discounts. This is a meal that cost 1.99 and free coffee refills. The staff knows the seniors very well and go to see them if they are hospitalized. The relationship is considered a good one between the staff and the seniors. In addition, a idea of adding bingo to add to the excitement of the mornings for the seniors from nine to eleven a.m. Using the party room would accommodate up to 150 senior patrons. Isolate the Salient Problem A primary problem to this case study is the senior crowd. The restaurant already takes on the task of having enough room to seat the entire dining style crowd, if it engages in bingo than the crowd will become even more outrageous. Not only will the restaurant have the meeting crowd they will have a bingo crowd as well. Meaning, that more senior crowd will come in ready and only ready to engage in bingo. A secondary problem would be the title of the restaurant would be at risk. The fast food label may become a social restaurant, common to a bar status. It may take on the name of the Ã¢â¬Å"old peopleÃ¢â¬â¢s restaurantÃ¢â¬ . This will detour many of the younger customers and the customers who are coming to get the fast food service. The restaurant will face over crowding due to the new additions (bingo). Accumulate and Organize relevant facts Seniors are mainly the people who enjoy doing activities such as bingo. Bingo co... Free Essays on McDonaldÃ¢â¬â¢s Ã¢â¬Å"SeniorsÃ¢â¬ Restaurant Free Essays on McDonaldÃ¢â¬â¢s Ã¢â¬Å"SeniorsÃ¢â¬ Restaurant McDonaldÃ¢â¬â¢s Ã¢â¬Å"SeniorsÃ¢â¬ Restaurant Case Analysis In the study of the briefing of the McDonaldÃ¢â¬â¢s Restaurant, there are positives to the problem and negatives towards the problem. A McDonaldÃ¢â¬â¢s in a city crowded with seniors are overwhelmed with senior customers during the early hours of the day. The senior come in as a meeting area where they eat and commune at the restaurant. The number of seniors that come in, crowds the dining area in which customers come in and eat. They come in on the fourth Monday of every month to get extra special, over the age of 55 discounts. This is a meal that cost 1.99 and free coffee refills. The staff knows the seniors very well and go to see them if they are hospitalized. The relationship is considered a good one between the staff and the seniors. In addition, a idea of adding bingo to add to the excitement of the mornings for the seniors from nine to eleven a.m. Using the party room would accommodate up to 150 senior patrons. Isolate the Salient Problem A primary problem to this case study is the senior crowd. The restaurant already takes on the task of having enough room to seat the entire dining style crowd, if it engages in bingo than the crowd will become even more outrageous. Not only will the restaurant have the meeting crowd they will have a bingo crowd as well. Meaning, that more senior crowd will come in ready and only ready to engage in bingo. A secondary problem would be the title of the restaurant would be at risk. The fast food label may become a social restaurant, common to a bar status. It may take on the name of the Ã¢â¬Å"old peopleÃ¢â¬â¢s restaurantÃ¢â¬ . This will detour many of the younger customers and the customers who are coming to get the fast food service. The restaurant will face over crowding due to the new additions (bingo). Accumulate and Organize relevant facts Seniors are mainly the people who enjoy doing activities such as bingo. Bingo co...
Friday, February 28, 2020
Strategic Marketing Management - Essay Example .............................................................. 2.3 Market analysis........................................................................................... 2.4 Competitor analysis.................................................................................... 2.5 Consumer analysis....................................................................................... 2.6 Internal analysis........................................................................................... 2.7 Additional research considerations contributing to analysis................... 3.0 Objectives and strategy............................................................................................ 3.1 Marketing strategy....................................................................................... 3.2 Evaluation of target segments...................................................................... 4.0 Tactics.................................................................. ....................................................... 5.0 Implementation and control...................................................................................... References Appendices Strategic marketing plan: Walt Disney Parks and Resorts "There is no reason to believe that those now at the top will stay there except as they keep abreast in the race of innovation and competition." (Kaplan 1954, p.142). 1.0 Background Walt Disney Parks and Resorts is seeking new opportunities for revenue growth within the amusement park industry that is currently in the maturity stage in Europe and the United States. Companies that operate in very saturated, competitive markets must identify new innovation opportunities to extend the product and service life cycle and avoid consumer market stagnation by not diversifying the products and services offered in the business model. This report identifies a strategic marketing plan for Walt Disney Parks and Resorts encompassing 2014-2016 in orde r to enhance revenue production and build a more powerful competitive brand. In order to achieve this growth, the company should be focusing primarily on the North American market, the market with the most opportunity for long-term growth. 2.0 Situation analysis This section provides a macro and micro-level analysis of the market, review of the amusement park industry, consumer and competitor analyses, and a brief internal analysis of the competencies currently sustained by Walt Disney Parks and ResortsÃ¢â¬â¢ organisational model. 2.1 PESTEL analysis The political environment, both domestically and internationally, are relatively favourable for support of amusement park businesses. The United States is a free market economy, one in which there is minimal government regulation of business behaviour which allows firms to develop their own financial strategies and diversification practices to insulate the business from risk. It is a stable, democratic government system with virtually no risk for political upheaval or non-government militant activity. Hence, the United States provides support for business growth and unregulated access to key consumer markets and market information (Appleby 2010). The United States also maintains a very strong economy which is currently in a significant recovery stage stemming from the 2008-2010 global recession. In 2013, the U.S. sustained a gross domestic product of $16.6 trillion, making it the largest single economy in the world (Federal Reserve Bank of St. Louis 2013). The United Stat
Tuesday, February 11, 2020
HOW DOES EXERCISE MODIFY NORMAL PHYSIOLOGY - Essay Example The situation, which will be described in this work, is the following: the experienced athlete is going to run a 20km marathon today. The aim is to describe his physiological changes during all aspects of this event. First of all, it is necessary to note, that marathons are not related to the sub maximal loadings; they are related to the dynamic kinds of sports with rather steady and obviously smoother changes in various physiological indices of the sportsman under research. Thus, let us look at the changes, which are caused by the nervous system when the race has just begun. According to Sutoo & Akiyama (2003), exercise modifies the function of brain, as well as the nervous system functioning. However, the mechanism of these changes is still unknown for the scientists. According to the experiments, the influence of the physical exercises has been displayed through the increase of the level in serum calcium, transported to the brain, to stimulate the synthesis of dopamine. In its turn, the higher level of DA synthesis becomes the main reason of the physiological changes during physical exercises. Thus, the main effect caused by the nervous system changes during the dynamic exercises is the increase in blood pressure, the rationale for which lies in the calcium-exchange changes; but it is important to know, that profound understanding of the process of calcium production as a result of long stable exercises becomes the reason for general decrease in bloo d pressure, and this contradiction may be explained as follows. Calcium is known to reduce blood pressure through the calcium/CaM-dependent DA-synthesizing system, simultaneously increasing it through intracellular calcium-dependent mechanism. These facts explain why the first several minutes of race are the most difficult even for the experienced racers. The calcium infusion, caused by exercises, becomes the reason of hypercalcemia during the first kilometers of race, and causes higher blood pressure,
Friday, January 31, 2020
Performance of Information Systems through Organizational Culture Essay The objective of this paper is to determine the importance of the connection between the organizational culture and the information system which can be vital to achieve essential business goals. However the proper definition of information system (IS) is important, as different people create confusion in this respect, which according to Anderson (1992) it is the system which captures, records, and reorganize data then provides results which are useful for managerial purposes. On the other hand information technology IT is only the technological part of IS and the organizational culture is simply the way things are done in a firm. The interaction of these systems would result in huge advantages. Now it is that we have precisely viewed the explanation of IT, IS and organizational culture. We should now look at their interconnectedness. IT and organizational culture are incorporated in order to have statistical and meaningful information from the raw and unarranged data which is the information for decision making, however the feasibility of the implementation of such system is important in terms of technology and its cost. Once an idea or belief is accepted by a larger group it is said o be powerful and if it is accepted by a specific group then subcultures are said to exist and it is important to determine that which culture is dominant, and on the basis of this culture two opinions are created one which says that yes IT is important and the second which identifies IT as the fundamental basis of the IS, however it is also important that the new culture should be implemented or meant for a foreseeable future in the long-term and not in the short-term, as the short-term creates complexity quite earlier as compared to long-term approach, if there is some element of deviation of opinion. No matter what is the final decision is, the carrying out of the implementation process is important, currently in most firms there exists a Ã¢â¬ËÃ¢â¬â¢IT specialist cultureÃ¢â¬â¢Ã¢â¬â¢ which involves only the IT personnel in this process and obviously is not much effective. Therefore it is important that in the implementation of an IS, not only IT personnel should be involved but also the top management and the users of this IS should also be involved so that their requirements are catered in an efficient and effective way. Theoretical principles or basics Today the world is turned into a dynamic market place, where firms need to compete in terms of prices, efficiency and technology. For this purpose experts have realized the importance of information systems (IS) with information technology (IT) as its basis, combined together with the organizational culture. The perfect combination of these three important systems of a firm a firm is able to achieve a competitive status in the world market. Therefore it is important to have such elements in the firm in order to achieve businesses vital goals. For this purpose cultural change is to be incorporated, provided that it is the way things are done or the set of norms of the firm, therefore the bubble-like approach of incorporating cultural changes is said to be the most effective one. Under this idea of bubble-like cultural change, comes the idea of informatics and informational culture. The idea of IS is also important, however majority of people confuse it with IT however the correct expl anation are the one discussed earlier. The implementation of ISÃ¢â¬â¢s in most of the firms has resulted into various advantaged to the firms; briefly it enables the management to acquire meaningful information from the raw data and later to help decision making. But the successful implmetation and usage of the IS requires three important components which are: 1, the data or information, the people (implementers and users) and the material resources. Here the data can be any data form example businesses truncations or employeeÃ¢â¬â¢s records, and the material resources are the mechanical supportive equipment for example office furniture and computers etc and lastly the people are the user and the implementers of the IS. Now with people here comes the notion of organizational culture, the culture in accordance with the IS and IT plays an important role if these three things are in line or are in agreement then vital advantages can be observed which are discussed as follows: Ã · As it decreases the anxiety and confusion created by the IT/IS, it supports the adaptation of the environmental changes, therefore it contributes positively to the overall satisfaction level of the internal staff who have been involved in its implementation. Ã · Ã Enables the management to know if the implantation id accepted by the users. Ã · Ã Social relations are created when the implementers and users of different departments meet to implement the system. This adds to the motivation level of the employees. Ã · Tells the users that which information will be available at what location in what time. Ã · Ã Determines the effectiveness of the IT/IS associated to the means of communication, as both inside and outside, it is a vital way correspondence. Ã · Ã As it explains that what are the norms and practices of the entity, a feeling of strong unity is created. Interconnectedness of IT, IS and Organizational Culture An IS is created so that meaningful information can be derived out of the raw data, therefore it is that an IS is responsible for converting data into information and therefore quantity and quality of the information is important. However the relationship between data, culture and information system is important. Only an effective IS can be developed when there is perfect correlation between these three. And then only information which is meaningful can be obtained and used for managerial purposes. We have discussed that appropriate people in appropriated places is important, another point about the feasibility in terms of technology and finance. If there are no sufficient financial and technological assistance and resources then the application of the IS may not be successful, for example if due to lack of finance some important features of the IS are excluded from the plan then it wonÃ¢â¬â¢t produce accurate and meaningful results. Another way in which the relationship of IT and organizational can be reviewed can be provided with two questions that whether it is the IT which creates the lines of an organizational culture or whether it is the organizational culture that decides that whether IT solutions should be incorporated or not; answers to these can be this if there is strong feeling among the users of the IS and other supporting staff that the use of IT has resulted into the benefits of some particular group, department or a person then incorporation of computerized solution will form as the firms norms or in other words culture because majority thinks that yes IT is important. However it is also possible that opposite can happen, which can be further elaborated in a way that there have been opposite behaviors in respect of the discussion between the service and manufacturing sector. This is because in manufacturing businesses there is more of manual labor work and computerization and IT is incorporated to a lesser extent thus a culture in manufacturing would be less compatible to the IT, whilst in the service sector more of IT solutions are required and computerization is involved to a larger extent therefore there is strong evidence of the fact that information technology can set the valueÃ¢â¬â¢s and norms of the firm. Now there is a question that which approach is the best? This is difficult question to answer because the two have enormous effects on each other, but in light of modern business techniques IT/IS solutions have been more effective on the cultural practices, this is because an IS not only automates the flow of data but also provides manage ment with alternatives ways of doing things in respect of efficiency, accuracy, and timeliness. Specific Relationship of Information System and the Organizational Culture It is possible that there exists a conflict between the norms or cultural practices of two groups in an entity. Therefore, it is in vital interest of the firms that these differences are rectified, because when there is one common way of doing things efficiency and timeliness are prone to occur along with economies of scale ( reaching a position when per unit cost is lowest). More specifically these divergences can be that a larger group supports one view and a smaller group supports the contrary this is known as the subculture. Distinction between these two opinions is necessary so that there might be an informatics or an in informational culture. Where informatics is that for example usage of IT is important, and the informational culture is with more detail where it says in order to make correct and accurate decisions IT should be incorporated as the basis of an IS. The first culture is easy to understand but the second one goes into more detail, it also includes in it the first culture and also the organizational behavior and the information data. It however necessary that in order to have a successful transformation of IT into an IS, conversion of informatics culture into the in informational culture is necessary. Informational and Informatics Culture; Features It is now that we have come to know that what are the two cultures now we must discuss that which one is to be transformed into the other through administrative intervention. When we talk about the informatics culture the case is that it only considers the costs of the IT department only in the short term, therefore it ignores the long-term research and development process which can result into the firms inters this is why it is a usual case that firms end up in spending more and earning less from IT centers as proper consideration are not taken when purchasing its equipment and employing staff. However on the contrary the informational culture approach considers the outputs of an IT center to a larger extent; it not only considers the quantitative aspects of the IT solution but also the long-term usefulness to the firms in respects of tactical and strategic planning, it not only sees the IT solution in terms of an IS as cost, but also highlights it advantages and long-term benefits in terms if research and development and therefore upon this approach distributes its cost over its useful life.
Thursday, January 23, 2020
Death and Sorrow in Frankenstein Mary Shelley's Frankenstein is filled with death and sorrow. They occur in almost every aspect of the book. The four "squares" of the book, Walter, Victor, the monster, and the cottagers, all suffer from them at one time or another. Some perceive Frankenstein as a horror story; however, in actuality it is a book of tragedy and despair. Every page reveals more misery than the page before. Thus, death and sorrow are inevitable in Mary Shelley's Frankenstein. Walter has an interesting turn of events towards the end of the book. He is forced to abandon his quest to the North Pole, he is faced with the monster and must hear the monster's plans for self-destruction, he has to watch idly as his new friend, Victor, passes from this world. He has such noble dreams and aspirations, but they are all brought to a halt because of his chance meeting with Frankenstein. Or, was his expedition doom from the start because of the nature of wanting to do what no other man had done? Was it his ambition that led him to untimely failure? The evidence from the text proves that possibly he was never meant to surpass his peers and obtain the glory that he pursued. Victor experiences very little joy at all after the creation of the monster. He suffers from numerous bouts of depression, he most tolerate the deaths of his brother, best friend, and wife, all of which were murdered at the hands of the monster. His friend Justine is executed because of the death of William, for which she is falsely accused and convicted. His father also dies after the murder of Elizabeth, Victor's ill-fated bride. With so much death surrounding his life, how is it possible that Victor could still be cognizant of his actions when he decides to pursue the monster and end its violent fury? He can't. Victor's mind is so clouded by the sorrow and pain of his past that he is blinded to the fact that he is attempting to destroy a creature with far greater physical strength and speed than any mortal. Much of his conflict appears to be created by the monster, when in fact the torment comes from Victor's own hands because he himself created and gave life to the monster. The monster lived in a world of eternal turmoil and strife.
Wednesday, January 15, 2020
Global Marketing Topical Research Paper Chu Nguyen Binh Ã¢â¬â DBA Hanoi NorthCentral University (NCU), USA National University of Hanoi (Vietnam) August 2009 Research title: Where would be the market for foreign banks in Vietnam after joining WTO? ABBREVIATION BTABilateral Trade Agreement CARCapital Adequacy Ratio FBBForeign Bank Branch FIBForeign Invested Bank JSCBJoint Stock Commercial Bank JVBJoint Venture Bank MOFMinistry of Finance NPLNon-Performing Loan SBVState Bank of Vietnam SOCBState Owned Commercial Bank SOEState Owned Enterprise SMESmall and Medium-sized Enterprise SSCState Securities Commission WBWorld Bank WTOWorld Trade Organization TABLE OF CONTENTS ABBREVIATION ABSTRACT 1. INTRODUCTION1 2. VIETNAM BANKING SECTOR Ã¢â¬â A SUMMARY1 3. CHARACTERISTICS OF THE VIETNAMESE BANKING INDUSTRY3 3. 1. Very Low Market Penetration3 3. 2. Rate of Growth in Both Loans and Deposits Far Exceeding GDP Growth3 3. 3. A Highly Concentrated but Highly Fragmented Banking Market4 3. 4. Heavy Handed Regulation with Restrictions on Foreign Banks5 3. 5. Lack of Transparency Concerning Quality of Lending6 3. 6. Heavily Undercapitalized7 3. 7. Narrow Revenue Base and Few Product Offerings7 3. 8. Unknown Quantity of Non-performing Loans8 4. BUSINESS ENVIRONMENT FOR THE BANKING SECTOR9 4. 1. The GovernmentÃ¢â¬â¢s Strategy9 4. 2. State Bank of Vietnam Ã¢â¬â Freeing the Tiger9 4. 3. Regulatory Environment Ã¢â¬â Meeting International Standards10 4. 4. Developing the Capital Markets11 5. PROSPECTS FOR BANKING SECTOR GOING FORWARD12 5. 1. Non-Performing Loan Ratios to Rise, But Risks of Bank Failures Looms12 5. 2. Further Development Inhibited by Low Capital and Technology12 6. CONCLUSION14 REFERENCES15 ABSTRACT VietnamÃ¢â¬â¢s banking system is dominated by five state-owned banks, with around 70% of system assets at end-2008. Around 38 private banks comprise roughly another 25%, with the balance substantially accounted for by a host of foreign banks. In recent years, the private banks, being more commercially oriented, have grown rapidly at the expense of the state-owned banksÃ¢â¬â¢ market share. The foreign banks have also grown, as opportunities improved for them after Vietnam entered a bilateral trade agreement with the US in 2001 and acceded to the World Trade Organization (WTO) in 2006. The Research Paper will examine the VietnamÃ¢â¬â¢s banking sector as a whole, including general characteristics of the Vietnamese banking market. It then analyzes the proportion in term of loan and deposit of state-owned, joint stock, joint venture and foreign banks. In the second part, the report lists opportunities for foreign banks to penetrate the Vietnam market under new legal requirement of the Vietnamese Government. They can establish 100% foreign bank entity, purchase stake in local banks or set up joint venture with Vietnamese partners. Finally, it will examine strengths and difficulties in terms of technology, expertise and experience, service quality, risk appetite, etc. f the foreign banks when operating in Vietnam market. 1. INTRODUCTION There are a lot of banks in Vietnam. Too many in fact. Currently there are five state-run commercial banks, 38 joint stock commercial banks, four joint-venture banks, 29 foreign bank branches, 45 foreign bank representative offices, five finance companies and nine finance leasing firms operating in Vietnam. Since 1992, Vietnam has moved to a diversified sys-tem in which state-owne d, joint-stock, joint-venture and foreign banks provide services to a broader customer base. However, the four main state-owned commercial banks Ã¢â¬â the Bank for Investment and Development of Vietnam (BIDV), the Bank for Foreign Trade of Vietnam (Vietcombank), the Industrial and Commercial Bank of Vietnam (Incombank) and the Bank for Agriculture and Rural Development (VBARD) account for around 70% of all lending activity. In a trade agreement with the United States signed five years ago, Vietnam fully committed to allow in foreign banks by 2010 at the latest, and to expose the banking sector to foreign competition. Under WTO entry rules the door may have to be opened even sooner than that. This has prompted foreign banking groups to closely scrutinize the Vietnamese banking sector as a business opportunity in itself. 2. VIETNAM BANKING SECTOR Ã¢â¬â A SUMMARY Vietnamese banking market is currently dominated by the five major State-Owned Commercial Banks (SOCBs), with 38 semi-private so-called joint stock commercial banks (JSCBs) gradually eating into their market share by better catering to the needs of small and medium-sized enterprises (SMEs) and retail clients. Years of lax monetary policy focused on supporting export-led GDP growth has flooded the banking system with money, pushing up redit growth to an annual average of 36. 4% over the past five years (2003-2007), hitting a peak of 54. 9% last year according to World Bank figures. High liquidity and a scramble for market share have resulted in a degree of aggressive lending, in particular to investments in the real estate and stock markets, which both experienced rapid downturns in 2007 and early 2008. State-Own ed Commercial Banks: The five SOCBs Ã¢â¬â Agribank, Bank for Investment and Development (BIDV), Vietcombank, Vietinbank and Vietnam Development Bank Ã¢â¬â hold roughly two thirds of banking assets according to IMF sources. The SOCBs are still encumbered by their previous role as instruments for implementing government policy. Indeed, the strong links between senior bank executives and the ruling Communist Party of Vietnam, and other state-owned enterprises (SOEs) have impeded much-needed corporate restructuring. Hence, SOEs still receive preferential treatment in loan allocation, resulting in the SOCBs running up high non-performing loan (NPL) ratios. The SOCBs are currently reporting NPL ratios of around 3%, but we are expecting this figure to rise to 5% before the end of 2008. However, we carry doubts about the reliability of official figures and suspect the real ratios could be significantly higher. Joint-Stock Commercial Banks: The 38 JSCBs presently control roughly 20-25% of banking assets in Vietnam, but are quickly eating into the market shares of the larger SOCBs by providing superior services to SMEs and retail savers. The JSCBs are generally better managed and more profitable than the SOCBs, but suffer from low capitalisation, which has made them vulnerable to Vietnam's domestic Ã¢â¬Ëcredit crunch', prompted by the SBV's rapid tightening of its monetary policy. Foreign Banks: HSBC and Standard Chartered and a number of other foreign banks are already present in the Vietnamese market through joint ventures with JSCBs. HSBC increased its stake in Techcombank to 20% in August and Standard Chartered raised its stake in Asia Commercial Bank (ACB) to 15% in May 2008, but foreign banks have been prevented from increasing their stakes by restrictions on foreign ownership of domestic banks. Vietnam currently limits the shareholding a foreign bank can take in a domestic counterpart to 20%, with the total foreign ownership limited to 30%. 3. CHARACTERISTICS OF THE VIETNAMESE BANKING INDUSTRY . 1. Very Low Market Penetration There are only about six million bank accounts in Vietnam, five million of them for individuals which amounts to a penetration rate of about 6%. In reality, the effective potential market size is about 20 million or trebles the current penetration level. That is the size of the AB socioeconomic class in Vietnam. Even so, if we comp are this to the internet and mobile penetration rate of 14% and 12% the number is rather low. The reason is simple: the distribution and infrastructure of banking services is very poor relative to the telecommunications industry, which has virtual national coverage. By contrast, banks are almost unheard of in secondary cities and rural areas. With a low urban population of about 29%, banks simply donÃ¢â¬â¢t have easy access to over 70% of the population. There are other reasons, of course. Until recently the government had encouraged a cash economy by paying state employees in cash; there is a traditional distrust of banks; the banks themselves have done a poor job of providing services to the retailing public; and small businesses too are poorly served by banks unwilling to give them large loans unless they have the collateral to back it up. Of course the banking industry is growing rapidly with both deposits and loans expanding at high, double-digit growth rates per annum. And some banks such as Vietcombank, ACB, Sacombank, and Techcombank are making a determined effort to court the retail market. 3. 2. Rate of Growth in Both Loans and Deposits Far Exceeding GDP Growth Credit growth in Vietnam has been expanding at a breakneck speed these last few years. Not surprisingly given heady GDP growth. Nonetheless, the sustained rate of increase over several years has raised eyebrows at international bodies such as the IMF and World Bank. They like their credit growth at room temperature, rather than piping hot. Well piping hot is what theyÃ¢â¬â¢ve got. In fact, the state-owned banks saw credit grow at an annual average rate of 24% over the past five years. Given the inability of some bankers to distinguish a good credit risk from a bad one (assuming they have a choice) this is not entirely a good thing. Hence the international sigh of disbelief that such stellar credit growth has been accompanied by a falling NPL ratio. According to some economists a 7% GDP growth rate can accommodate an annual credit growth rate of about 14-20%, roughly a factor of two without generating a lending bubble. However, credit growth rates above that level for any extended period of time are unhealthy for an economy. Admittedly credit growth rates have been falling for the last year down to about 15% as the central bank has tried to rein in credit departments. So far this year in fact lending has expanded at only about 16% nationwide. Going forward the speed of credit growth may well start expanding again as WTO becomes a reality. One bank has forecast that credit could grow at 35% per annum over the next five years given sufficient access to capital. While the better banks could probably cope with this, the temptation for others to take on too much risk is high. 3. 3. A Highly Concentrated but Highly Fragmented Banking Market Five state banks have carved up 70% of the loan market while forty-odd joint-stock banks and a host of foreign banks scrap for the remaining 30%. Compare this with the US where the ten biggest commercial banks control only 49% of the countryÃ¢â¬â¢s banking assets, up from 29% a decade ago. Thus, at the top tier, the market acts like an oligopoly, while beneath the surface there is a holy war going on as mite-sized private sector banks scrap for the rest. Since the market itself is growing so fast this may not seem so bad. The state banks are also slowly bleeding market share. Even so things look very lopsided. Enter the State Bank of Vietnam (SBV), concerned about the fragmented nature of the private sector banks. They will introduce new regulations to force another round of consolidation in the near future. One way of doing this is to set high hurdles for any new established bank before it can get a license. All banks will need to have chartered capital of VND 1 trillion ($62. 8 million) which is exceeded by the existing capital of only the very biggest JSCBÃ¢â¬â¢s such as ACB and Sacombank. All other existing banks fall far short and will need to scramble for new capital or merge in order to meet the new requirements. And that is just the first round. From next year the SBV has circulated a draft proposal to raise the minimum capital level to about US$300 million. And there you have the consolidation trigger. 50% of the JSCBÃ¢â¬â¢s face merger or takeover. They will also have to demonstrate experience in banking governance. Banks will need to commit to Basel 2 standards from 2010. One of the key issues is the regulation of key stakeholders, such as a bar on lending to stakeholders or their affiliates. This is to prevent corporations from using their own banks as private piggy-banks. Currently a corporate of family can own up to 40% of a joint-stock commercial bank. 3. 4. Heavy Handed Regulation with Restrictions on Foreign Banks The government still exerts strong control on the banking sector in two ways. Directly, through various regulations and restrictions which govern how they conduct business and strictly licensing the type of businesses they can enter; and indirectly through the interference of a myriad of agencies and ministries, both local and national, who want to have a say on how scarce credit resources are allocated. The state-owned banking system is trying to shift from directed policy lending to a commercial system. But the transition is proving slow and painful. Given the legacy of state control at both national and local level itÃ¢â¬â¢s hardly surprising that the state-owned banks routinely complain about interference in their lending decisions and overall management. It seems that banking is too important to be left to bankers. The culture of social and political lending is still dominant amongst local officials and bureaucrats, as is the idea of consensus building and consultation before decisions are taken. To be fair, the problem has been recognized and things are getting better. With the proposed re-organization of the SBV for example, fewer local branches should reduce the amount of day-to-day noise coming in to credit departments. Local authorities will have less leverage in leaning on banks without the local central bank office to back them up. And the recently announced decree allowing for 100% foreign-owned bank branches will finally set the stage for a level playing field for foreign banks. However, without eliminating limits on branch openings and mobilization of Dong deposits (currently limited to 350% of total capital for foreign banks) some painful shackles will remain. . 5. Lack of Transparency Concerning Quality of Lending Lending decisions in Vietnam are still based more on relationships than cash flow. The assessment of loan customers is usually driven by the relationship with the bank and the size of the collateral being offered. Cash flow driven assessment and qualitative analysis is reserved for large private sector customers only. Amongst t he large banks only ACB bank uses DCF analysis across their entire customer base. The problem is partly due to outside interference in the decision making process and partly due to a lack of professional guidance. The absence of IT infrastructure to support professional credit analysis is another major factor. Another issue is exposure. Most banks lend a lot of money to a fairly narrow base of customers. The top 30 state-owned corporations probably account for over half of the state banks lending books. The private sector joint-stock commercial banks (JSCBs) are no different. 3. 6. Heavily Undercapitalized One of the legacies of state ownership is a severe shortage of capital at the state banks, a quality shared by private sector commercial banks as well. Government restrictions on equity holdings combined with a bond market that hardly functions has made raising chartered capital very difficult for banks. Average capital adequacy ratios (CAR) in amongst Vietnamese banks stood at 4. 5% at the end of 2007. This compares with an average CAR of 13. 1% in Asia Pacific and 12. 3% in South-East Asia. Admittedly with large scale raising of capital this year this number is improving. With most of the state banks well below the minimum 8% capital adequacy ratio for Tier 2 capital, lack of access to the international capital markets has constrained their growth. And this valuation is anyway based on a vary generous reading of their NPLÃ¢â¬â¢s. The JSCBs are in only a slightly better state with a handful able to cross the 8% hurdle rate. The rest are pitiful. And given that the domestic capital markets are still in the fledgling stages, raising new capital has been the biggest headache for all banks. The stronger JSCBs have responded partly by selling shares to foreign strategic partners. Further down the line, where profitability is lower and capital particularly skimpy the options are more limited. The SBV is chary of allowing smaller anks to raise capital from foreign investors. Going forward all of the banks have substantial appetites for raising further capital, to shore up their Tier 2 capital base to bring them over the 8% CAR hurdle by 2010. 3. 7. Narrow Revenue Base and Few Product Offerings Most Vietnamese banks make money from loans. And thatÃ¢â¬â¢s basically it. Compare that to Western banks that make about a quarter of their income from fees Ã¢â¬â credit card fees, lending fees, arranging fees, etc. Ã¢â¬â and most have branched into wealth management. Well, not in Vietnam. To be fair this is tied into the lack of availability of credit history: banks donÃ¢â¬â¢t like lending to strangers they know nothing about. The state banks are generally geared to the large corporate and state-owned sector, providing syndicated loans for utilities, infrastructure projects, heavy industry and property developers. JSCBs are geared mainly towards lending to small and medium sized enterprises (SMEs) and the wealthier retail customers. However given their low penetration and limited branch network they only reach a fraction of their potential customer base. Car loans, mortgages and house improvement loans are retail staples. And small business loans using property as capital is the basic model for the SME market. In general, the Vietnamese banking model is best described as relationship-based rather than product-based as in international banks. 3. 8. Unknown Quantity of Non-performing Loans If you were to believe the State Bank of Vietnam (SBV) statistics the non-performing loans problem has been largely dealt with since 2000. Amongst the state-owned banks, non-performing loans (NPLs) have fallen steadily from 12. % in 2000 to 8. 5%, 8. 0% and 4. 47% in 2005, 2006 and 2007, respectively. Under a new stricter definition, the official number in 2008 has risen to about 7. 7%. Overall, about half of the NPLÃ¢â¬â¢s are on the watch list, which is the second of five lending categories in the new SBV scoring system. The other half fall into the three categories below watch list which are of greater concern. For private sector JSCBs, average NPLs were said to be around the 1% level at the end of 2007. Of course few believe the official numbers. International bodies carried out a similar exercise using Ernst & Young and found that NPLÃ¢â¬â¢s in the system using international accounting standard definitions came to about 15-20% of outstanding loans in the state-owned sector. This number is conservative due to limited data; a figure between 20-25% is probably a fairer estimate. In this respect the slow development of the banking industry is a blessing in disguise, things could be a whole lot worse. The worry is that the gap between the official version and the real picture is large and may indeed be growing. Most NPLs are generated by state-owned enterprises (SOEs) refusing to pay their obligations to state-owned banks. Pre-equalization is a favorite time to write off or simply clear out these loans. That way SOEs can start their new life in the private sector unencumbered by debts. So apart from asking the government to honor the SOEsÃ¢â¬â¢ commitment and trying to seize collateral there is precious little banks can do. There is not yet an effective secondary market for bad debt, although attempts to kick-start one are ongoing. There are very few NPLs sale and purchase transaction taking place. 4. BUSINESS ENVIRONMENT FOR THE BANKING SECTOR 4. 1. The GovernmentÃ¢â¬â¢s Strategy After a long period of hesitation and hints of action the government has come up with a fast-track roadmap to liberalize the financial sector by 2010. Under the roadmap, the state will retain a controlling stake in the banks but its holdings will be quickly reduced to 51%. Foreign ownership will account for a maximum of 30% of total shares, while each strategic foreign institutional investor currently allowed to hold 10-20% at most. The 20% limit may be eventually erased but the 30% cap will stay for the time being. Basel 1 will be in effect until 2010, when the stricter Basel 2 standards for corporate governance will be introduced. The government will have to introduce further legislation before then to force banksÃ¢â¬â¢ compliance, particularly at the ownership level. This may create some buying opportunities amongst the JSCBs as families are forced to reduce their stake. 4. 2. State Bank of Vietnam Ã¢â¬â Freeing the Tiger In theory the central bank enjoys a wide remit. In practice it canÃ¢â¬â¢t do much without a legion of agencies and ministries throwing in their pennyÃ¢â¬â¢s worth of advice. The central bank, the SBV, currently acts as the sole supervisory and regulatory body for the banking sector. It also owns the state-owned banks and sets interest rates. There is a clear need to separate the various roles of the SBV and give it increased autonomy in those areas such as monetary policy and regulation of the banking sector, which are clearly in its remit. The SBV also needs to be free of its role as custodian of the stateÃ¢â¬â¢s shareholdings in the banking sector. The SBV sees several key roles for itself in the future: compiling and executing monetary policy, ensuring stability of the credit institutional system, act as a regulator to the banking system. In order to achieve this it needs legislative backing to clearly define its relationship with the National Assembly, government and all government agencies. In simple terms stop the incessant interference from other parties so that the SBV can get on with the job. After all, if the central bank is not allowed to set interest rate policy and regulate the banking sector without being leaned on, what hope is their for individual banks to lend money without getting the same treatment. Another issue is the lack of cooperation with the MOF on key issues such as bad debt and bank equitisation. MOF has often written off state-owned companiesÃ¢â¬â¢ bad debt without consulting the banks. And the State Securities Commission (SSC), the stock market regulator often stalls on issuing licenses for banks to list. The two donÃ¢â¬â¢t play well together. 4. 3. Regulatory Environment Ã¢â¬â Meeting International Standards There are a myriad of regulations and decrees covering almost every aspect of the financial sector but we would like to look briefly at just three topics: progress removing restrictions from foreign banks, meeting international banking standards and the treatment of NPLs. With regard to meeting international banking standards, the government has appeared to follow WB recommendations to provide the necessary framework for an integrated financial system as required under WTO rules. And so in the last few years some of the necessary legislation has been pushed into place. On the NPLÃ¢â¬â¢s, the central bank issued Decision No. 93 to reclassify bad debts and risk reserves closer to international norms. So far, three state-owned banks (SOBs) claim to have successfully reduced their bad debt ratios to less than 5% in accordance with the new rules. Too successfully in fact, but more on this later. Overall the regulatory authorities are making an effort to converge with international stand ards in the financial sector, but with WTO membership and the 2010 deadline looming, time is not a friend. And foreign banks are still allowed to raise Dong deposits only to a ceiling of 350% of their chartered capital. In effect this locks them out of the domestic deposit market and is the most important impediment for their expansion plans. 4. 4. Developing the Capital Markets Banks need more tier 2 capital and bonds will provide the bulk of that. However with the bond market in its infancy there are still major constraints on the banksÃ¢â¬â¢ ability to raise sufficient capital quickly to reach the 8% capital adequacy ratio they crave. The infrastructure for developing the bond market is still not in place. HSBC is only now offering to provide a pilot rating scheme to enable potential investors to gauge the creditworthiness of various bond issuers. Fitch and MoodyÃ¢â¬â¢s have also dipped their toes in the market, rating Sacombank and BIDV respectively. However rating services are horribly expensive and there needs to be a domestic agency to offer these services at prices most banks can afford. Another key hurdle lies with interest rate guidelines in place at all maturities along the yield curve. This prevents risk weightings and effectively bars smaller or weaker banks from coming to the market to issue capital whilst compensating for the higher risk by offering higher coupons. 5. PROSPECTS FOR BANKING SECTOR GOING FORWARD . 1. Non-Performing Loan Ratios to Rise, But Risks of Bank Failures Looms It is likely that there will be an increase in non-performing loan (NPL) ratios from the present 4-5% as an increasing number of companies and households default on their loans on the back of higher interest rates and slowing economic activity. A complicating factor in assessing the risk posed by deteriorating loan portfolios is that Vietnamese banks are currently applying a new system of internal credit rating schemes and debt classification systems in accordance with international standards. Implementation has so far been diverse between banks, making intra-sector comparisons a complicated business. Consultancy Ernst & Young has estimated that the application of the new standards is likely to lead to an increase in disclosed NPL ratios of 2-3 times, i. e. to the IMF estimates of 15-20%. While the new standards will make the NPL figures more internationally comparable, the resulting increase in the ratios is likely to create uncertainty about the proportion which can be attributed to the new standards and how much is down to an actual deterioration of loan portfolios. However, it can be believed that the effects on the overall economy from possible bank failures can be contained by larger JSCBs taking over smaller banks pushed to the brink by loan defaults and low capitalisation. Nonetheless, there might be possibility that the government or central bank will need to intervene to force mergers between banks and possibly also recapitalize those in worst health. 5. 2. Further Development Inhibited by Low Capital and Technology Consolidation should be a positive for the banking sector by decreasing excessive competition and increasing capitalization levels. Nonetheless, capital shortages, low technology and a shortage of skilled staff, especially at higher levels, will continue to inhibit the development of the banking sector. This will leave domestic banks exposed to the might of international banking giants such as HSBC and Standard Chartered, which are initially committing US$183 million and US$61 million respectively to their Vietnamese subsidiaries, placing them well in league with the larger JSCBs. Increased competition from foreign players will thus constitute a potent threat to domestic banks, which will be forced to improve services if they want to maintain their market share. Further expansion will need regulatory approval from the State Bank of Vietnam. The IMF has, in its annual review of the Vietnamese economy, set improvement of financial supervision as a prime task for the government in its reform agenda. The government raising the foreign ownership ratio to 25% for individual banks and 35% in total in 2009-2010 in order to maintain foreign banks' interest in holding stakes in domestic players, thus assisting in technology transfer. With the current system in place, there is a risk of a severe divide between better-capitalised, more technically advanced and better-managed foreign banks and a still relatively undeveloped domestic sector suffering from both a shortage of capital and low efficiency. Vietnamese banks are still primarily focused on taking deposits and lending and thus completely inexperienced in asset management and other financial services tipped to be the main growth areas in the Vietnamese banking market going forward. Domestic players, in particular the larger SOCBs, may have an advantage through their established branch network and client base, but this factor can be rapidly eroded as HSBC and Standard Chartered extend their operations. The threat from foreign banks will be particularly potent for the SOCBs, where reform has been slow in spite of the government's intention to place them foremost in the queue in the so-called Ã¢â¬Ëequitisation' process of transferring SOEs to private hands. It is unlikely that the government will find takers for its offers of 10-20% stakes in SOCBs for strategic foreign players if it does not radically review its privatisation procedures. With the state-owned banks constrained by politicised decision-making and the private banks suffering from a severe lack of capital, HSBC, Standard Chartered and other regional players will gain the upper hand over time as their extensive experience, superior technology, and readier access to capital work in their favor. It is unlikely that foreign players will dominate the Vietnamese banking sector in 10-15 years time, with the larger JSCBs being majority-owned by foreigners and the role of the once-impressive SOCBs reduced to supporting inefficient state-owned companies and agricultural households. 6. CONCLUSION In Vietnam, there is only less than 10% of Vietnamese currently use banks for financial services, instead largely relying on extended families and neighbourhood associations for lending and saving. However, a rising number of younger Vietnamese are now using banks for financial services, opening up great expansion opportunities in retail banking. The Vietnamese banking sector is a veritably good destination for early entrants as poorly-capitalised and inefficient domestic banks are ill-prepared for the opening of the banking market to foreign entrants as pledged in Vietnam's accession to the WTO in January 2007. With bank penetration at less than 10% and the Vietnamese economy forecast to grow by an average 7. 8% annually over the next ten years, the growth opportunities are great for foreign players. Top of Form REFERENCES Johny K. Johansson (2006). GLOBAL MARKETING Foreign Entry, Local Marketing, & Global Management. McGraw-Hill, Fourth Edition, International Edition. ISBN 007-124454-9. Vinacapital. Vietnam Equity Research. August 15, 2006 Fitch Ratings, Vietnam Special Report Ã¢â¬â Vietnamese Banks: Focus on Asset Quality Ã¢â¬â Three Stress Scenarios. February 25, 2009 at: www. fitchratings. com Vietnamese Banks: A Home-Made Liquidity Squeeze? May 2008 Jaccar Equity Research, Vietnam. Banks and Financial Services. The Bubbles did not Burst but Turned Grey. May 18, 2009 at www. jaccar. net Fulbright Research Project, The Banking System of Vietnam: Past, Present and Future. Nam Tran Thi Nguyen, 2001. at: www. iie. org/fulbrightweb/BankingPaper_Final. pdf retrieved on 27 Feb 2009.
Monday, January 6, 2020
To understand standard enthalpy of formation ofÃ O2Ã Equal to Zero, you need to understand the definition of standard enthalpy of formation. This is the change of enthalpy when one mole of a substance in its standard state is formed from its elements under standard state conditions of 1 atmosphere pressure andÃ 298K temperature. Oxygen gas consists of its elements alreadyÃ in the standard state, so there isnt any change here. Oxygen (the element) at standard state is O2. The same is true other other gaseous elements, such as hydrogen and nitrogen, and solid elements, such as carbon in its graphite form. The standard enthalpy of formation is zero forÃ elements in their standard states.