Case Study Essay Examples

Whites pioneered ready to eat cereal isle followed by he other companies in the US cereal market. However, the challenge for cereal marketers is not only to leverage the traditional bond with breakfast cereal but also to offer innovative products that suit the diverse tastes and eating habits of today’s cereal consumers, if they want to consistently attract consumers and survive competition. The company has a clear brand Identity “The Breakfast Bowl” but It failed to retain the interest of its customers by concentrating less on product innovation and its taste and paying more attention to their laurels.

Whites needs to mom up with product extensions and line extensions else the brand would be unsustainable. Product Extensions: Whites Hot Cereal: Survey research show more than 60% of American consumer eats hot cereal. General Millers Inc. Owns the Wattles as well as many other brands has not tapped the hot cereal market yet and hence It’s a good opportunity for the company as well as Whites. Whites Cereal/Protein Bars: Time is valuable and customers appreciate the products that provide value and save time.

Sit down breakfast culture is now replaced by on the go cereal bars an increasing number of nonusers treat breakfast as an on the run or to go. Protein Bars definitely would draw attention of the health conscious target market. Whites Snack Mix: All-day snacking replaces sit-down meals for on-the-go American. Research says Americans eat soul breakfast cereal morning noon, and night. More than 40% of cereal consumers eat it as an evening or late-night meal or snack.

Hence coming out with a Whites snack mix variant would provide the consumers with healthy snacking options during the day as well as for late night snacking and boost sales and profitability. Line Extensions: There Is a growing trend toward health-conscious eating habits. Of course, Wattles Is a healthier option than sugar-rich cereals Like Kellogg better-selling Fruit Loops. But within the healthy category, Whites has been out marketed by newcomers like Khakis as well as by reinvigorated old brands like Kellogg Special K.

Whites is having identity crises I. E. Whites is too healthy for junk food lovers yet not healthy enough for the health food crowd. Since the brand associates itself with champions, hence It has a promise to meet the expectations of the consumers in terms of received nutritional value. Presently, Wattles cereal provides health benefits 3,6 and 9 and B vitamins which have an important role to play in improving performance, muscle recovery and strength which leads to customer disappointment against perceived value of product.

Whites can add flavors and ingredients to its products and have line extensions to its hot and cold cereals and protein bars and snack mix with different health benefits. Whites with Greek yogurt chunks and cranberries (high protein & antioxidant) Whites with peanut butter chunks and none roasted peanuts (high protein & energy) Whites with flax seeds and raisins (omega 3 & energy benefits) : Whites cereal has positioned itself as a brand affiliated with athletic performance and its slogan, ” The Breakfast of Champions”, has remained since the brand’s introduction in 1924.

In the early asses,Whites took a new marketing approach. The company moved away from sports and into the children’s market, associating Whites with the Lone Ranger and the Mackey Mouse Club. More youngsters began eating Whites, but not enough to offset the decline in adult consumption, as adults didn’t wanted to be associated with sugary colorful cereals with cartoon characters on the boxes. Whites positioning strategy has always talked about champions in the field of sports and athletics mostly targeting men.

It could be music, cooking, loosing weight, Improvisation is an ongoing process and engaging your target market in this game will basically have no end and hence provide longevity and win loyalty. Engage customers on social media platforms. Use Twitter, Backbone as space where people can interact and write about challenge they have taken up and their progress. Make it interactive and personal for your customers to get more and more people talking ND gain popularity and insights on the campaign.

Devise ad campaigns that communicate the health and fitness benefits of Have series of short 30 seconds campaign for each of product like hungry at night-Grab a healthy snack-Whites snack. In a Hurry? Grab a healthy breakfast to go- Whites go bars. Did you Fuel before workout? Grab Whites fuel bar. Got your protein in for the day? Grab Whites protein bar. Run this campaign on television, radio, and billboards. Tie up with map my fitness app or other fitness app on mobile, which people use to track their daily activity and workouts. Add an option did you have Whites today in the app.

This would be able to track their performance on days they had Whites as against the days they didn’t and keep them motivated as they start seeing results. Tie up with companies who provide music lessons, cooking, gyms, dance classes, swimming, sports, sailing etc. And provide the customers a chance to sign up for any of these at discounted prices as a part of take up a new challenge. Use sponsorship to build visibility, gain promotional platforms, featuring health-and-wellness positioning. Coupons can encourage consumers to purchase items they would not even their budget and preferences.

Now they are offered via multiple sources including daily papers, direct mail, mobile applications, and online websites and directly at retail locations. The strategy stated above will not abandon the core value of the brand and Whites will still remain the ” Breakfast of Champions “. The company will still be able to leverage the traditional bond from its loyal customers and at the same time will also be able to tap into new opportunities, by offering innovative products to suit the diverse tastes and needs of today’s cereal eating consumers in the US.

Read more

Ne?tled Case Study

Table of contents

Nestled Case study Nestled in the high country of New Zealand’s South Island is a getaway adventure playground aimed unashamedly at the world’s very wealthy. Celebrity sportspeople, Rock stars, World Leaders and Corporate Chief Executives and other world globe-trotters are the prime targets of this new tourism business developed by Lilybank Lodge. The lodge offers these exclusive niche segments the opportunity of a secluded holiday in a little known paradise. Guests, commonly under public scrutiny in their everyday lives, can escape such pressures at an idyllic retreat designed exclusively and specifically with their needs in mind.

A chance meeting between a New Zealand Department of Conservation investigator and the son of the former Indonesian president marked the beginning of this speciality tourist operation. Recognising that ‘filthy rich’ people and public figures or celebrities are constantly surrounded by security and seldom have the luxury of going anywhere ‘incognito’, the New Zealander Kerry Mortimer suggested he and a friend purchase a high country station and lodge that was for sale.

Mortimer believed that the facilities and their secluded and peaceful environment would make haven for this elite group. Kerry Mortimer, who was by now the company’s Managing Director, developed a carefully tailored package of goods and services for the property. Architecturally designed accommodations, including a fully equipped Gymnasium and Spa Treatment & Beauty Salon, together with luxurious guest rooms were constructed and deigned by the country’s leading designers’.

Although New Zealand had an international reputation for being sparsely populated and green, Mortimer knew that rich travellers frequently complained that local accommodations were below overseas standards. Since the price of these rooms was not felt to be a major barrier to this type of targeted customer, the rooms were designed as twice as big as normal hotel rooms and to a very sumptuous specification, all with breathtaking panoramic views. Ten full-time dedicated staff were taken together with four special tour guides in keeping with the anticipated class and wealth of the potential clientele(Pickton, 2005).

The 2800 acres of the retreat also backed onto the South Island’s Mount Cook National Park which also offered big game reserve hunting as well as many other outdoor pursuits. Lilybank lodge therefore developed other product-line extensions. Horse trekking and riding, golfing on a nearby rural course, world class photographic lessons and sessions, helicopter rides nature walks and other activities formed part of this exclusive package. Whilst still in the early stages of operation, this retreat has already attracted a steady stream of visitors.

To date the manager has relied solely on positive word of mouth, publicity and some initial PR activity. Given the social and business circles in which the target market resides he decides to employ a marketing consultant to design and implement a more planned marketing communications strategy. The report should also consider the implication already voiced by one critical observer that this project is again evidence of yet another example of local land passing into the hands of foreigners!!

The MD and manager are convinced that the major markets and attention should be on International markets but is there a case for marketing some of the attraction to a more local and national market? Introduction Marketing communications can be defined as communications by means of promotion within a target audience or market. To communicate with consumers in order to persuade them to buy the company’s products is by no means the only objective. To view it as being only sales-orientated is to underestimate the complexity of modern marketing communications. It is necessary to target customers in an integrated fashion to inform, persuade and remind prospective and existing consumers and customers of the firm, its products and services and how these are differentiated to appeal to and satisfy targeted needs, wants and desires of target markets. ” (Kotler, 2002) Marketing communications does not entail the continuous application of tried and tested techniques, rather it is constantly moving and dynamic, not just in terms of messages, but also medias, monies expended and changing consumer mindsets.

An example of this, product placement, which involves the deliberate featuring of a product or brand in a film or television programme, was in its infancy even five years ago. Today, however, it represents a useful – if still marginal – element of the communications programme for many consumer goods organisations. Promotion is the communication arm of the marketing mix. Our hotel use various promotional approaches to communicate with target markets (the guests) and the following text will look at the general dimensions of promotion, defining promotion in the context of marketing.

Next, to understand how promotion works, the text analyses the meaning and process of communication, as well as the product (our services) adoption process. The remaining of the text discusses the major types of promotional methods and the factors that influence promotion across cultures. The Promotional Mix The promotion mix, one of the four major components of the marketing mix, involves a careful blending of several elements to accomplish the organisation’s specific promotion objectives. The four traditional elements are advertising, personal selling, sales promotion and public relations.

Advertising The first element I will discuss is advertising, which can be defined as “any paid form of non-personal promotion transmitted through a mass-medium. ” (Brassington & Petit, 2000, P. 593) “The purpose of an advertising plan is to provide the means by which appropriate messages are devised and delivered to target audiences who then act in appropriate ways. ” (Fill, 2002, P. 486) Any paid form of no personal communication through the mass media about a product or service by an identified sponsor is advertising.

The mass media used include magazines, direct mail, radio, television, billboards, and newspapers. This is used when the sponsor wants to communicate with a number of people who cannot be reached economically and effectively through personal means. Personal Selling Personal, face-to-face contact between a staff’s representative and those people with whom the staff wants to communicate is personal selling. Non-profit organisations, political candidates, companies, and individuals use personal selling to communicate with the publics. Public Relations

A further element of the promotional mix is public relations, which is defined by the Institute of Public Relations (1986) as “the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation and its public. ” Communication to correct erroneous impressions, maintain the goodwill of the hotel’s many publics, and explain the hotel’s goals and purposes is called public relations (PR). Unlike the other promotional mix elements, public relations are concerned primarily with people outside the target market, although it may include them.

Publicity is news carried in the mass media about a hotel – its products, policies, services, personnel, or actions – at no charge to the organisation for media time and space. Unlike the other tools in the promotional mix, public relations does not require the purchase of airtime and space in media vehicles, such as T. V or magazines. And compared to the other promotional tools, public relations have higher credibility because the decision whether or not a hotel’s public relations messages are delivered is not down to the hotel, but those charged with managing the media resource.

Another big advantage PR has over other tools is that it has such low absolute costs(Kitchen, 2000). Within the communications programme of a hotel, public relations have two major roles to play. “These are the development and maintenance of corporate goodwill and the continuity necessary for good product support. ” The first task of PR is to provide a series of cues by which the stakeholders can recognise, understand and position the hotel in such a way that it builds a strong reputation.

Sales Promotion Sales promotion communicates with targeted receivers in a way that is not feasible by using other elements of the promotion mix. It involves any activity that offers an incentive to induce a desired response by staffs, intermediaries, and/or final customers/guests. Sales promotion activities add value to the service because the incentives ordinarily do not accompany the service. According to the Institute of Sales Promotion, sales promotion is “… range of tactical techniques designed within a strategic marketing frameworks to add value to a product or service in order to achieve specific sales and marketing objectives. ” This added value could be in the form of an inducement, (for example, price-offs, coupons, premiums, seasonal-offs) and is intended to encourage guests to act now rather than later. PR and Publicity Public Relations is perceived the most important in terms of marketing Lilybank Lodge. Journalist, media representatives and travel writers have a key role to play in establishing a positive profile.

Also, popular sporting events, festivals, or visits by high profile celebrities or prominent politicians are excellent opportunities for eliminating the chronic negative image. Process by mass media such as TV, newspapers and films, and accounts given by friends, relatives or associates are powerful in the consumer’s decision. Lilybank Lodge’s image as a tourist destination greatly depends on the PR activities of its marketers and the extent to which they can influence or manipulate tourist’s perceptions of the region(Kitchen, 2003).

Tourism representatives had agreed not to underestimate the negative perceptions the prospective tourist had in his/her mind and was created by mass media, newspapers and films covering the ‘trouble’. What was needed was a strategic promotion of it’s tourism attractions on the part of tour operators and promotional bodies seeking to influence potential tourists. However many had their doubts. In McGuckin and Demick (2000) many doubts were rissen: One respondent suggested: “Positive advertising could never fully overcome negative editorial or media coverage(Ilchul, 2004)”.

Another that: “It is difficult for us to control the negative publicity particularly that created by the media”. Lilybank Lodge ‘s objective regarding Publicity for 2003 is to create awareness of New Zealand and portray the desired images of the island. E-Marketing and the Internet The objective is the offer the consumer information about New Zealand through Internet sites, mail and email to past enquiries in order to convert interest to booking and developing banner advertising to direct consumers to micro-sites, which have special offers and a call to action.

Trade Support Activity

The objective is to educate and support the market trade so they can promoted New Zealand effectively. Promotions The objective is to offer information and create the intention among consumers to come and visit New Zealand. External Analysis: Threats Economic The industry faces major challenges in regaining its competitiveness in the light of reducing customer satisfaction ratings, in particular as regards delivering good value for money. There are a number of key factors influencing this problem:

Social, cultural, demographic and environmental With growing concerns for environmental issues, New Zealand needs to become more aware of the problems with litter and pollution. These are the issues with lowest satisfaction levels of visitors as outlined by Failte New Zealand Visitor Attitude Surveys. The increase in competition from Eastern European countries has posed a threat by taking part of the market segment New Zealand once catered for. People are changing the way that they holiday. People are taking shorter holidays, but more often.

For example, Vienna, once expensive, has reinvented itself as a reasonable conference and city break destination. In 2002, against the expectations of the industry, the number of domestic trips recorded – at 5. 8 million – represented a decrease on 2001 performance and a 10% decrease on 2000. While business trips are at a steady rate, home holidays and visiting friends and relatives is down, as the graph below illustrates. (Cornelissen, 2006) Political, Legal and Government A major decrease in NZ investment in Irish tourism poses a major threat to the industry.

NZ grants, tax incentives and infrastructure supports are not as readily available as in the mid to late 1990s. Technological With the advancements in modern communication the need to travel has become less important. Telephone conferencing and the Internet are now alternatives to one on one business meetings. More affordable and efficient means of transport now allows for shorter stays, thus decreasing potential revenue for hotels. Internal Analysis: Strengths Experience With over 20 years in the business the Hotel has an established name and reputation.

Recent and Proposed Investment The recent refurbishment and proposed expansion of 20 new bedrooms indicates that the hotel has capital to invest in its growth. Staff and customer loyalty A longstanding relationship with both employees and the cities business population creates a sense of security within the hotel Good relations with competition The hotel proposed to investigate running a training scheme in conjunction with other hotels in the area. This indicates that they have a good relationship with their competitors.

Customer Focused

The hotel has identified the need to become more customer focused and flexible in their approach to the needs of their clients. Location Having a central location within the city is a major advantage. It provides easy access for customers and suppliers. There is a larger market for the restaurant and bar facilities. Other amenities are close by. E. g. : Pharmacy, Newsagents etc. Expansion The hotel is planning to expand which shows that they are forward thinking and are not complacent when it comes to competition. Identified Weaknesses (Utilizing resources)

They have identified the fact that their employees could be better utilized with some organization and planning Diverse Workforce The ages of the employees are wide ranging which enriches the company’s culture and combines the experience and know how of the older generation with the enthusiasm and new ideas of the younger one. Internal Analysis: Weaknesses Lack of Skilled Workforce The Hotel has had problems with attracting receptionists and chefs with the required level of skill. High Staff turnover There is a constant problem in certain areas for retaining staff.

Technology

The hotel does not seem to have any computer systems in place which is to its detriment. Older staff resistant to change The fact that there are a number of older staff who have worked in the hotel for a great many years may be a problem with regards to implementing new systems.

Training and Development

There is currently no training for staff and a lack of foresight for future career paths within the organization. Reactionary The hotel clearly reacts to its problems as opposed to planning for unforeseen circumstances.

Although they are planning for the future, they do not take into account the problems they may face. Bad planning and Utilization Employees clearly need to be better organized within the hotel. A problem like shift change times overlapping busy checkout times is something that just should not be happening in a hotel that’s in operation for more than 20 years. Lack of facilities The hotel has only the basic facilities any hotel of its size would have. A huge competitive advantage is being missed out on due to the lack of innovative extras within the hotel.

Transport

The lack of transport at awkward hours has a significant impact on staff retention in the hotel. Situation Analysis and Preliminary Assessment This section includes a SWOT analysis of the Lilybank Lodge case study and preliminary assessments based on currently available data regarding market conditions, market segmentation, and market size.

S. W. O. T.

Analysis of the Lilybank Lodge case study This section reviews the strengths, weaknesses, external opportunities, and external threats (SWOT) for Lilybank Lodge in its current situation. Internal Strengths There is no ordinary rooms in the hotel •Quality evaluations are very good compared to competitors

  • Located a within blocks of the financial district and Inner Harbor tourist sites External Opportunities
  • Increase sales figures
  • Increase net profit Internal Weaknesses
  • Not too many amenities
  • Received little promotion both locally and nationally
  • No kitchenettes External threat
  • Other hotels or units that offer similar service with the competitive price or even at the lower leve
  • Down falling economy Preliminary Assessment of Market Conditions

This section records preliminary observations on the market advantages and disadvantages of an all-suite hotel.

Advantages:

  • Rooms are 500 to 800 square feet compared to traditional hotel rooms which are 300 to 400 square fee
  • Privacy
  • Business people can conduct small meetings in there hotel rooms
  • Convenient because it’s located near the business district and near tourist attractions Disadvantages:
  • More staff needed
  • More expensive for upkeep
  • Some people don’t want such a big room
  • No big function rooms for weddings etc… Market Segmentation

All-suite hotels entered the hospitality market with the business traveler in mind, providing home-away-from-home comforts for long business trips and separate living and sleeping rooms to better accommodate in-room business meetings. It wasn’t long, however, before the benefits to traveling families became equally apparent. Private sleeping areas for parents or for children’s naptime and kitchen facilities to save money on meals as well as to accommodate children’s eating patterns are among the benefits of all-suite travel for families with children.

The market for Lilybank Lodge can be reasonably segmented into two categories: business travelers and leisure travelers. (Holm, 2006)

Business Travelers – need hotel rooms year round, but usually emphasize weekdays (M-T). They are likely to evaluate the hotel on the following criteria: price (although not very price sensitive, they can’t afford to be too free and easy with their expenses), level of personal service provided, degree of physical luxury (rooms, restaurants, lobby, decor, extra amenities) location relative to next days usiness meetings, ambiance / atmosphere of hotel and quality of upkeep (clean and fresh).

Leisure Travelers – tend to visit on weekends. They may be slightly more price sensitive than business travelers and be looking for packaged deals (special weekend rates including some meals), they will also want a location close to shops, restaurants, entertainment and attractions. If they were touring by car then on-site parking would be an issue. Preliminary Market Size Analysis In this section, a preliminary market size estimate for business travelers and leisure travelers is produced.

Business travelers

  • What is happening to business travel
  • Stagnation  high fares and technology alternatives
  • Still need for face-to-face meetings
  • Globalization is a positive factor
  • What do business travelers want
  • Location, service, reputation, appropriate product, price
  • Significance of women as growth business travel market Leisure travelers
  • 68% of trips, 43% of hotel stays
  • Leisure trips have been growing at twice the pace of business trips Recommendations based on assessment

Lilybank Lodge has already made a good start towards a successful marketing strategy for their Baltimore Hotel. It’s going to be tough to get the hotel started due to the falling economy. The hotel needs to get a good staff. Staff is very important because they leave a lasting impression on the customers. Lilybank Lodge needs to really concentrate on customer satisfaction. If they can get customer satisfaction then they have got through half the battle. Lilybank Lodge should also concentrate on online sales.

Everyone uses the Internet and that’s where he or she will find most of there traveling accommodations. Lilybank Lodge should also go to different businesses and explain to them all the amenities that they offer. They should also reevaluate their amenities because it seems by the survey that they are low in that factor. I believe the Lilybank Lodge. Suites will do just fine. Business people are traveling all the time and they definitely like idea of all suite hotels. It’s roomier, very convenient for business meeting and they have privacy which in ordinary hotels they lack that greatly.

Lilybank Lodge’s tourism industry needs to select the correct image for the region and communicate it to the appropriate target markets. Public relations and media management(Picktan, 2005) Conclusion In this paper communication was discussed as a vital strategic element of Lilybank Lodge’s especially a new opened hotel and importance was given to integrating the various promotional tools to achieve an effective focus. The main influence for communications and other management functions must be directed by long term aims and objectives developed as part of a comprehensive strategy.

References

  • Picktan, D. and Braderick, A. (2005), Integrated Marketing Cammunicatians, Pearsan Educatian Limited, Harlaw. Katler, P. (2002), Marketing Management, 11th ed. , Prentice-Hall/Pearsan Educatian, Englewaad Cliff, NJ. Belch, G. E. and Belch, M. A. (2003), Advertising and Pramatian, 6th ed. , McGraw Hill. Fill, C. (2006) Marketing Cammunicatians, 4th ed. , Financial Times/ Prentice Hall. Kitchen, P. J. and Schultz, D. E. (2000), “A repse ta ‘Thearetical cancept ar management fashian”, “Jaurnal af Advertising Research”, Val. 40 Na. 5, pp. 17-21.
  • Kitchen, P. J. and Schultz, D. E. , et al. (2003), “Will agencies ever “get” IMC? ”, “Eurapean Jaurnal af Marketing” Val. 38 Na 11/12. Ilchul, K. , Dangsub, H. and Schultz, D. E. , (2004), “Diffusian af IMC”, “Jaurnal af Advertising Research”. Carnelissen, P. J. , Thoger, C. , Vijn, C. , (2006) “Understanding the develapment and diffusian af integrated marketing cammunicatians”, “NRG warking paper”. Halm, A. , (2006) “Integrated marketing cammunicatian: fram tactics ta strategy”, “Carparate Cammunicatians: An Internatianal Jaurnal”, Val. 11 Na. 1, pp. 23-33.

Read more

EMI Group plc Case Study

EMI Group plc is the third strongest competitor in North America. The company, like its competitors, is seeking ways of maintaining its competitive position amidst the challenges facing the industry. The paper considers the strategic response of EMI Group plc following the price cuts in retail price by Universal Music Group, the leading competitor in the market. EMI Group plc The purpose of this paper is to consider the dilemma faced by EMI Group plc in responding to the price cut implemented by UMG, the strategic options available to EMI, and the recommended conditions for selection.

In 2003, the U. S. recorded music industry realized that the decline in sales it experienced in the previous years was likely to continue in the future. The major culprits for the decline in sales were the external factor of file sharing in the Internet, CD burning or piracy, competition from other entertainment formats, and economic downturns (Harmon, 2003). This threatened the competitive position of the top five recording companies operating in the United States.

The need to maintain its leading position was a reason for Universal Music Group (UMG) to lower the retail price of its CDs as a means of turning around the expected continuing slump in sales. The strategic move of UMG required a response from the other recording companies. The industry-reinvigorating scheme of UMG involves a two-stage process. First, UMG commences price cuts on its CDs to a standard retail price of $12. 98. This involves a jumpstart agreement with retailers to purchase CDs at the wholesale price of $9. 09 for regular CDs or $10.

10 for superstar CDs to give them a reasonable profit margin but in exchange for allotment of around one-third of store space to the company’s CDs. This also involves the cancellation of cooperative advertising in favor of direct market advertising. Second, other recording companies such as EMI should follow the price cuts. (Conniff, 2003) Lower prices of CDs from all the recording companies should comprise compelling incentives for customers to purchase CDs. The basic idea of the reinvigoration plan is to influence consumers to purchase CDs because of the lower price.

Even with lower prices, the expected increase in sales should translate into profit for the major recording companies. Consideration of all factors affecting the reinvigorating plan shows that the decrease in price by UMG would increase its sales during the period when other companies have yet to decrease their price. However, this is only in the short-term. This plan assumes that price is the sole determining consideration of the recorded music market in their decision to purchase CDs.

If this were so, then the price cuts would solve the problem. However, this is not so. Taste in music and quality are equally important determinants of consumption decisions (Simon, Bilstein & Luby, 2006). UMG records the music of many popular artists in different genres but so do the other four leading recording companies. The popularity of artists influence the purchase of records and UMG can only provide a limited number of options. The recorded music of an artist is not like other products susceptible to substitution with another artist.

There is no substitute for the Beatles so the recording company with exclusive rights to sell Beatles music gets the Beatles fans as its market. Despite the price decrease, the significant increase in the sales of UMG would only be for the CDs of artists with a wide following. Quality of the CDs is another consideration to create the impression that customers are receiving value worth their money. The problem with file sharing and CD burning is that these almost top the quality of original CDs, which do not provide much support for differentiation.

The impact on UMG of the reinvigoration plan may not be as huge as it expected. The initial impact on EMI of the announcement for low prices is a drop in its stock prices (Brandle, 2003). This led to the serious consideration on whether the company should follow the price cuts. If the impact of the price cuts on sales and market pull is significant, then EMI should follow suit. However, this is not the case. The reinvigoration plan will slightly increase the sales of UMG in the short-term. After this, the wait-and-see move of other recording companies leaves UMG with an uncertain financial prospect.

EMI should consider other competitive options to wither out the strategic move of UMG and provide a platform for a long-term strategy. Differentiation by creating and adding value are likely to improve sales more than price cuts (Simon, Bilstein & Luby, 2006). Active involvement in collaborative strategies with companies engaged in online music distribution (BusinessWire, 2007) such as Apple also comprises a strategic option. In conclusion, the plan of UMG to reinvigorate the record business was a desperate move to increase its market share as a solution to its impending financial problems.

This would not reinvigorate the recorded music industry because it is based on inaccurate or insufficient assumptions on the problem and the factors affecting market behavior.

References

Brandle, L. (2003). EMI stock drops on UMG price-cut news. AllBusiness. Retrieved February 5, 2009, from http://www. allbusiness. com/retail-trade/miscellaneous-retail-retail-stores-not/4381346-1. html BusinessWire. (2007). Warner Music Group and imeem announce strategic digital partnership. Retrieved February 5, 2009, from http://www. businesswire. com/portal/site/google/? ndmViewId=news_view&newsId=20070712005366&newsLang=en

Conniff, T. (2003). UMG cutting prices on its top-line CDs. AllBusiness. Retrieved February 5, 2009, from http://www. allbusiness. com/services/motion-pictures/4886492-1. html Harmon, A. (2003, September 4). Universal to cut prices of its CD’s. The New York Times. Retrieved February 5, 2009, from http://query. nytimes. com/gst/fullpage. html? res=940CE6DC1038F937A3575AC0A9659C8B63 Simon, H. , Bilstein, F. , ; Luby, F. (2006). Low prices = more customers? Not always. Harvard Business School. Retrieved February 5, 2009, from http://hbswk. hbs. edu/archive/5314. html

Read more

Enron Case Study

Table of contents

Executive Summary

As per requested this group assignment prepared from Group 2 (NASA) contributed by Norazman Saharum , Shaufi Akil , Abd Manaf Jalil and Zubir Zainal Abidin . This group assignment part of final course entitle for 25 marks . This assignment to fulfill our MSU MBA Syllabus for subject Accounting For Corporate and Evaluation (DAC 5013) instructed by Dr Mazlinah Mat Zain . Our group have chosen The Arthur Andersen Troubles. The most famous scandal case Arthur Anderson scandal was involved in was the fraudulent auditing of Enron.

In this case Arthur Anderson shredded vital documents sourcing the audit of Enron which occurred in the year 2002. Enron has clearly done some damage to the U. S. economy, but it will not hold up recovery from the current recession. The fundamental health of the U. S. economy is strong and now getting stronger. Some individual new economy companies will have depressed stock prices for some time, but they, too, will recover as they demonstrate that they are prepared to prevent Enron-like behaviour. We do believe Enron will be the morality play of the new economy.

It will teach executives and the American public the most important ethics lessons of this decade. We will discuss more information on this issues based on the question given on Arthur Andersen and among them are the conflict of interest between the two roles played by Arthur Andersen, as auditor but also as consultant to Enron; the lack of attention shown by members of the Enron board of directors to the off-books financial entities with which Enron did business; and the lack of truthfulness by management about the health of the company and its business operations.

Lastly, we would like to thanks to Dr Mazlinah on her dedicated and helpful to achieve our mission and mission to be a successful entrepreneur for the future. Arthur Andersen case study reminds us the most important ethics lessons of this decade.

Introduction

Arthur Andersen LLP, based in Chicago, was once one the “Big Five” accounting firms among Price Water House Coopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG , providing auditing, tax, and consulting services to large corporations.

In 2002, the firm voluntarily surrendered its licenses to practice as Certified Public Accounting in the United States after being found guilty of criminal charges relating to the firm’s handling of the auditing of Enron, the energy corporation, resulting in the loss of 85,000 jobs. In this case Arthur Andersen shredded the vital documents sourcing the audit of Enron which occurred in the year 2002 . Although the verdict was subsequently overturned by the Supreme Court of the United States, it has not returned as a viable business.

However, how did this company get the reputation that it has while following such a moral slogan? As the clients demanded for more profit margins , Arthur Andersen scandal had to compromise his morality leading to the allegation that he had fraudulently altered the statement of such companies and corporation for example Sunbeam Products, Waste Management Inc. , Asia Pulp and Paper, The Baptist Foundation of Arizona , and WorldCom . Due to the downfall of Arthur Andersen, it lost nearly all of its business and clients.

It lost not millions but billions of dollars due to this intense investigation. Although it is still in business and operating under Omega Management and has not as of yet declared bankruptcy, the firm will never reach its past legacy. Arthur Anderson’s motto of “Think straight, talk straight” has forever been tainted in the eyes of Americans corporations. This devastation of fraudulent activity has forever left a deep and painful scar on America’s businesses.

The Arthur Andersen’s Troubles:

Question 1: What did Arthur Andersen (AA) contribute to the Enron disaster?

The most famous scandal case Arthur Andersen was involved in was the fraudulent auditing of Enron. In this case Arthur Andersen shredded vital documents sourcing the audit of Enron which occurred in the year 2002. According to Watkin, a financial executive who worked with Andrew Fastow told Enron CEO Kenneth Lay she feared that Enron would “implode in a wave of accounting audit scandal “ (1: USA Today, Wed, Jan 16, 2002) AA apparent mistakes may have been made for several reasons to the Enron disaster including:

  • Incompetence , as displayed and admitted in the rhythms case . Judgement errors; . as to the significants of each of the audit findings, or of the aggregate impact in any fiscal year.
  • Lack of information caused by Enron staff not providing critical information, or failure on the part of AA personal to search it out .
  • Time pressures :related to revenue generations and budget pressures that prevented adequate audit work and the full considerations of complex SPE and prepay financial arrangements .
  • Desire not to confront Enron management or advise the Enron board in order not to upset management, and particularly fastow, Skilling and Lay Lack of Independence. The Board of Directors failed to ensure the independence of the company auditor , allowing AA to provide internal audit and consulting services while serving the Enron outside auditors .
  • A failure of AA’s internal policies whereby the concerns of a quality control or practice standards partner can and was overruled by the audit partner in charge of the Enron account.

AA was the only one of the Big 5 accounting forms to have this flaw and it left the entire firm vulnerable to the decisions of the person with the most to lose by saying no to a client. A misunderstanding of the fiduciary role required by auditors . for example AA allowing Enron to engage in high risk accounting , inappropriate conflict of interest transactions, extensive undisclosed off-the-books activities and excessive executive compensation . Given this “tone at the top’. It is reasonable to assume that AA partners were going to be motivated by revenue generations. But if too many risks are taken in the pursuit of revenue the probability of a series of audit problems leading to increasingly unfavorable consequences becomes greater .

That is exactly what happened to Enron disaster. Unfortunately, the leaders of AA failed to recognize the cumulative degree to which the public, the politicians, and the SEC (The Securities and Exchange Commission) were angered by the progression of AA audit failures .

Question 2: What Arthur Andersen (AA) decision were faulty?

Arthur Andersen (AA) decision were faulty . This is the ‘ Enron Debacle” section presented previously covers in detail many of the questionable accounting transactions, legal structures, and related disclosures that AA reviewed as auditors of and consultants to Enron.

AA faulty may have been made for several reason , including:

  • AA apparently approved as auditors and consultants (and collected fees for the consulting advice) the structure of many special purpose entities (SPEs) that were used to generate false profits, hide losses, and keep financing off Enron’s consolidated financial statements , failed to meet the required outsiders 3 percent equity at risk, and decision control criteria for non consolidation .
  • AA failed to recognize the generally accepted accounting principle (GAAP) that prohibits the recording of shares issued as an increase in shareholders’ equity unless they are issued for cash .
  • AA did not advise Enron’s audit committee that Andrew Fastow, Enron’s CFO and his helpers were involved in significant conflict of interest situations without adequate alternative means of managing these conflicts.
  • AA did not advise the Enron audit committee that Enron’s policies and internal control were not adequate to protect the shareholders’ interests even though AA had assumed Enron’s internal audit functions . Many transactions between Enron and the SPEs were not in the interest of Enron shareholders since: a) Enron profits and cash flow were manipulated and grossly inflated, misleading investors and falsely boosting management bonus arrangements. b) Extraordinarily overgenerous deals, fees, and liquidation arrangements were made by Fastow, or under his influence, with SPEs owned to Fastow , his family, and Kopper, who was also as employee of Enron .
  • AA aparently did not adequately consider, the advice of its quality control partner, Carl Bass. He asked AA for an accounting change that would have resulted in a $30 – $50 million charge to Enron’s earnings.
  • AA apparently did not find significant audit evidence, or did not act upon evidence found, related to the:
  1. Mistaken valuation of shares or share rights transferred to SPEs
  2. Side deals between Enron and banks removing the bank’s risk from transactions such as the :
  • Chewco SPE Rhythms hedge.
  • Numerous prepay deals for energy futures, even though AA made a presentations to Enron on the GAAP and AA requirements that preclude such arrangements.

Questions 3: What was the prime motivation behind the decision of Arthur Andersen’s audit partners on the Enron, WorldCom, Waste Management the public interest or…?

Cite examples that reveal this motivation . The AA was motivated by greed instead of serving the public interest. The amount of money they got from the consulting fee has compromised their auditing works.

In 1997, client Waste Management Inc. had the largest earnings restatement to date, wiping out $1. 7 billion in profits that it pulled in through the 1990s. The lead auditor on Waste Management was Robert Allgyer, who was known inside the firm as “the Rainmaker” for his success in cross-selling extra services to auditing clients. He was clearly successful at selling to Waste Management, which paid $17. 8 million in fees unrelated to the audit between 1991 and 1997, against audit fees of $7. 5 million.

But he was also signing off on drastically inaccurate books. Among other things, the fast-growing trash hauler wasn’t properly writing off the value of assets such as garbage trucks as they aged, a ruse that pumped up reported profits. The SEC’s acting commissioner, Laura Unger, concluded that the agency had the “smoking gun” it was looking for to prove that the lure of consulting fees compromised auditor independence. The SEC filed suit in March 2002, accusing six former Waste Management executives of fraud. It alleges that Mr.

Allgyer’s judgment was skewed by consulting fees, in particular a $3. 7 million “strategic overview” of Waste Management operations. The project lasted for 11 months, but the client didn’t adopt the recommendations.

Question 7: Under what circumstances should audit firm shred or destroy working paper ?

According to section 802 of the Sarbanes-Oxley Act of 2002, accountants who audit or review an issuer’s financial statements are required to retain certain records relevant to that audit or review. These records include workpapers and other documents that form the basis of the audit or review, and memoranda, correspondence, communications, other documents, and records (including electronic records), which are created, sent or received in connection with the audit or review, and contain conclusions, opinions, analyses, or financial data related to the audit or review.

To coordinate with forthcoming auditing standards concerning the retention of audit documentation, the rule requires that these records be retained for seven years after the auditor concludes the audit or review of the financial statements. Refer to the above question, for example if we as a professional audit firm can’t simply shred or destroy working paper. How long to keep a document, when and how to store the document, and how to dispose of the document, will depend on the type of document . As any internal auditor knows, there are numerous types of documents that may be accumulated as part f an audit or review. The final rule here requires the retention of all records relevant to the audit, including working papers and other documents that form the basis of the audited financial statements, as well as certain supporting documents. The guideline for document retention is that they must meet two criteria:

  1. Documents are created, sent, or received in connection with the audit or review,
  2. the documents contain conclusions, opinions, analyses, or financial data related to the audit or review.

Both Enron and Arthur Andersen are now gone, but this audit work-paper clean-up exercise, no doubt, was a major motivating factor for the Sarbanes-Oxley Act , Section 802 rules outlining penalties for the destruction of documents. The rules require external auditors who audit or review an enterprise’s financial statements to retain certain records relevant to that work, including work papers and other documents that form the basis of the audit or review.

These retention requirements include memoranda, correspondence, communications, other documents, and records, as well as related electronic records that are created, sent, or received in connection with the audit work and contain conclusions, opinions, analyses, or financial data related to the work. These records are to be retained for seven years after the auditor concludes the financial statements review. This rule was nothing new for many internal auditors as many audit functions have followed similar document retention rules based on U.

S. tax document retention guidelines. The rules also states that if you know your company is under investigation, or even suspect that it might be, all document destruction and alteration must stop immediately. And, you must create a company records showing that you’ve ordered a halt to all automatic e-data destruction practices. Question 8: Answer the “Lingering Question” on page 94 . Enron has clearly done some damage to the U. S. economy, but it will not hold up recovery from the current recession.

The fundamental health of the U. S. economy is strong and now getting stronger. I do believe Enron will be the morality play of the new economy. It will teach executives and the American public the most important ethics lessons of this decade.

Among these lessons are:

  1. You make money in the new economy in the same ways you make money in the old economy – by providing goods or services that have real value.
  2. Financial cleverness is no substitute for a good corporate strategy.
  3. The arrogance of corporate executives who claim they are the best and the brightest, “the most innovative,” and who present themselves as superstars should be a “red flag” for investors, directors and the public.
  4. Executives who are paid too much can think they are above the rules and can be tempted to cut ethical corners to retain their wealth and perquisites.
  5. Government regulations and rules need to be updated for the new economy, not relaxed and eliminated.

Due to the downfall of Arthur Anderson, it lost nearly all of its business ,employees, and clients. It lost not millions but billions of dollars due to this intense investigation. Although it is still in business and operating under Omega Management and has not as of yet declared bankruptcy, the firm will never reach its past legacy. We believe accounting regulations should be altered to prohibit ownership of both auditing and consulting services by the same accounting firm.

Accounting firms are already moving to sever their consulting businesses. The SEC should probably adopt additional disclosure requirements. Various regulators should tighten requirements for directors to be alert and provide protections for whistleblowers who bring improper behaviour to public attention. But, in the final analysis, the solution to an Enron-type scandal lies in the attentiveness of directors and in the truthfulness and integrity of executives. Clever individuals will always find ways to conceal information or to engage in fraud.

Read more

The Business Value of Information Systems. Case Study: Amazon.Com

THE BUSINESS VALUE OF INFORMATION SYSTEMS CASE STUDY: AMAZON Isabel Maria Arroyo Moreno Business Information Technology Module BSc Business Management with HR Greenwich School of Management, University of Plymouth (London) Submission date: 8th December 2011 Word count: 2. 776 Table of Contents Executive Summary4 The Business Value of Information Systems5 Introduction5 Business Value of Information5 Business Information Management through Information Systems6 The Value of Information Systems6 Customer Relationship Management (CRM) Systems6

Enterprise Resource Planning (ERP) Systems7 Supply Chain Management (SCM) Systems8 Information Systems and the Changing Business Environment8 Amazon. com Information Systems10 Introduction10 Amazon. com’s Information Systems Value10 Amazon’s Customer Relations Management (CRM) system11 CRM System Business Value11 Amazon’s Enterprise Resource Management (ERP) System Value13 Amazon. com’s Supply Chain Management (SCM) system13 Amazon. com’s SCM system Value13 Amazon IS and the external changing environment ………………………………………………………………. 5 Conclusion…………………………………………………………………………………………………………………………… 16 ? Executive Summary Business information management requires the use of information systems, which make possible the conversion of data into useful information to be used by decision makers in organisations (Chaffey, 2004) The acquisition and further deployment of such systems requires organisations to make expensive investments prior to know whether they are going to produce the desired business improvements.

Therefore, delivering value for money from information systems investments has become a very serious issue for many organisations. There are several examples in both the private and public sector of expensive failures, but there are fewer published cases of success (Ward, 2006) The purpose of the present paper is to explain how added business value emerges from the use of information systems. The paper begins with a review of the related literature and then, it takes a practical approach through a case study analysis which intends to set out the value of information systems to a successful organisation such as Amazon.

Therefore, the case study will illustrate how different information systems have enabled Amazon to achieve a solid competitive advantage by improving its marketing techniques and the efficiency of its distribution channels in a time in which the fast development of technologies have come to redefine the commerce model within the retail industry. Indeed, the use of Internet has changed the way in which people acquire goods and services, and nowadays there is a strong shift towards online shopping that is forcing retailers to go onto the Net if they want to remain competitive.

In this regards, Amazon has been a pioneer in using information systems to anticipate changes in the retail industry environment, and in addition, it provides the perfect example of how a company can obtain value for money from information system investments. ? The Business Value of Information Systems Introduction Business information management is essential to organisations in order to support strategic decisions. Information adds value to organisations as it allows improving products and services, reducing business costs and developing new innovations.

Information systems are used in order to manage business information in such a way that allows organisations to increase profitability, to improve productivity and to gain other intangible benefits with the objective of achieving sustainable competitive advantage and company success. In addition, the use of information systems allow organisations to adapt to external changes in the business environment, otherwise they could not remain competitive. Business Value of Information

Information management is essential to businesses in order to support operational processes, organisational performance, and strategic decisions affecting their position in the market place. According to Marchand (2000) information can create value for organisations by: •Adding value to products and services through a better understanding of customer characteristics and needs, as customer activities are monitored to develop competitive strategies. Reducing costs and making business processes and operations more efficient, as information enables organisations to use fewer resources and to improve communication. •Supporting organisational strategic decisions and helping with risk management assessment •Enabling innovations and new product and service developments (Chaffey, 2004; Oestreich, 2010) Business Information Management through Information Systems

Business information management involves the use of information systems (IS) which, according to the UK Academy for IS, are “the means by which organisations and people, using information technologies resources, gather, process, store, use and disseminate information”. (www. ukais. org; Chaffey, 2004) Therefore, IS are computer based systems that collect, process and stores data, making possible its conversion into useful management information –data mining process- to be used by decision makers within organisations. (Davis & Olson, 1985; Lucas, 1990; McLeod, 1995 cited by Ramesh, 1997).

The Value of Information Systems During the 1990s, there was a great argument about the real value delivered by expensive organisational investments on IT and IS, as studies found out that there was weak correlation between IS investments and increased business performance (Solow, 1987; Brynjolfsoon, 1993; Strassman, 1997 cited by Dans, 2003; Chaffey, 2004) However, studies by Delone and McLean (1992, 2003) and by Jacks (2009) demonstrated the importance of IS to the creation of business value and competitive advantage. Jacks, 2011) According to Jacks (2011) IS make organisations successful by either: •Increasing profitability: sales growth, profits, ROI, reduced costs, market share increase. •Increasing productivity: business process outcomes, operational efficiency, service performance •Intangible benefits: customer satisfaction and loyalty, industry performance, quality improvement. Customer Relationship Management (CRM) Systems

CRM systems are intended to build and sustain long-term business relationships with customers of an organisation. Organisations may increase their profitability if they can retain customers and sell additional products to them. Research by Reicheld and Schefter (2000) showed that by retaining 5% more customers, online companies can increase their profits by 25% to 95%. (Chaffey, 2004) Consequently, CRM systems focus on the activities aimed to market products and services to customers in a more efficient way.

By understanding customer characteristics and needs, organisations can elaborate tailored marketing campaigns to acquire, retain, extend and select potential customers, which ultimately will translate into increased sales and organisational profitability (Steinberg, 2006; Chaffey, 2004; Lee-Kelly, 2003) Table 4: Marketing activities of CRM CRM marketing activitiesObjectiveInformation based marketing techniques Customer acquisitionGain new customersTailored marketing communication Customer retentionEncourage repeated purchasesPersonalized/tailored ommunications Customer extensionUp-sell (more expensive products) Cross-sell (additional products) Personalised/tailored communication Customer selectionIdentify the most responsive groups of customersDatabase analysis and modelling Enterprise Resource Planning (ERP) Systems ERP systems integrate all departments and functions across an organisation, thus eliminating IS’ isolation in departments such as finance, HR, marketing and the warehouse, and replacing them with a single system where all important information is connected together (Wailgum, 2008; Steinberg, 2006).

ERP systems add value to organisations by: •Integrating customer order information: ERP systems integrate order information, product shipment and invoices in one single system, enabling organisations to improve order tracking, and to coordinate inventory and shipment among different locations simultaneously. Therefore, the order process speeds faster through the organisational departments, and customers get their orders faster and with fewer mistakes. •Reducing inventories: ERP systems streamline the order fulfilment process and help with the delivery process, thus improving the flow of the organisation’s supply chain. Wailgum, 2008; Steinberg, 2006) Supply Chain Management (SCM) Systems SCM systems coordinate all supply activities of a company such as supply and distribution network, logistic activities and inventory management; and these add value to an organisation by (Gabe, 2010; Chaffey, 2004): •Increasing process efficiency: SCM systems help to reduce the cycle time of business processes and the resources needed to execute them, thus reducing costs per order. •Reducing supply chain’s complexity: SCM systems enable organisations to order directly from suppliers, thus reducing the costs of distribution. Improving data integration within the supply chain: SCM systems enable information sharing on product demand between the organisation and its suppliers, which improves inventory management efficiency through the use of VMI (vendor-managed inventory). The benefits include reduced cost of paper processing and lower inventory holdings. •Reducing costs: SCM systems enables organisation to outsource certain assets, to lower costs through price competition and to offer better service quality. (Steinberg, 2006; Chaffey, 2004) Information Systems and the Changing Business Environment

The environmental influences on any organisation change rapidly, and therefore it is important to continuously monitor the current environment and to anticipate future trends through “environmental scanning or sensing” activities, in order to respond to changes accordingly. Organisations that either do not monitor environmental factors or do not respond to changes adequately may lose competitiveness or even incur in failure. As example, IS managers need to constantly assess the relevance of new technologies and to monitor technology trends and innovations in order to remain competitive. (Chaffey, 2004). ? Amazon Information Systems

Introduction Amazon is the biggest online retailer in world, although many consider that it is more a leading software developer or “information systems’ company with a little pick, pack and ship service” (Hof, 2003). This world-class retailer, which began doing business as an online bookseller in the mid 90s, has changed with the time and currently it offers its customers a wide variety of products such as electronics, clothes, beauty products, and so on. In addition, Amazon operates as a service provider allowing other retailers to sell on its site and it also commercializes cloud storage services and its own tablet post-PC device –Kindle-. Businessweek, 2003; Hof, 2003; Jenkinson, 2005) Therefore, Amazon has become the Net’s premier shopping destination in 2011, and data, information technology and information systems constitute its most valuable assets. (Manjoo, 2011). Amazon’s Information Systems Value Between 2001 and 2003, Amazon invested $300,000 into building new distribution centres and acquiring information systems software. However, experts hardly criticised the company asserting that it would never recover the investment, (Gabe, 2010) and even financial analysts such as Lehman and Brothers expressed concerns over its cash flow situation. Foley, 2000) Although it took Amazon long time to become profitable, additional revenues rose once the company got enough customers and sales to pay off the initial IS investments, and their bet for information systems technology enabled the company to overcome competitors such as Barnes and Nobles in the 90s and more recently Wal-Mart Stores Inc (Hof, 2003; Gabe, 2010). Amazon uses information systems to improve profitability faster and its current financial situation, strategic position, market share, and intangible benefits give evidence of that the company’s IT and IS strategies worked as expected.

According to Hottovy’s report (2011) Amazon doubled in size from 2008 to 2011 with $34 billion in net sales and its current revenue growth is close to 40%. The company has a valuation of $325 per share and generates return on invested capital exceeding the 50% – note that Amazon invests mainly in IT and IS technologies –. Moreover, it has an active customer base of 137 million users that accounts for an annual growth rate of 20%.

All in all, Amazon has one of the most capital efficient-models in e-commerce and its low cost operations, network effect and focus in customer service provide the company sustainable competitive advantage (Hottovy, 2011). Amazon uses ERP, SCM and CRM information systems. Oracle (ERP) built a multi-terabyte database for the company, while SCM software was acquired to control costs and to improve shipping and logistics efficiency. In addition, Amazon’s CRM system intends to work up e-marketing efforts through the analysis of customer’s preferences and the provision of products for specific segments (Foley, 2000).

Amazon’s Customer Relations Management (CRM) system Amazon’s CRM system uses the following applications to gather customer information: •A database of customers with personal, profile and transactional data which include their purchase history and activities •An order processing system that includes the record of credit card information and is linked to a delivery system •A web-page system that takes customer information such as customer feedback, personal interests, wish list and product review records, and customises formats. •Automated communication ystems: e-mail and message systems and order information systems that ensure personalised and relevant communication with customers (Hof, 2003; Jenkinson, 2005; Hottovy, 2011) CRM System Business Value Amazon’s CRM system creates business value through integrating customer sales, services and communications effectively (Jenkinson, 2005; Manjoon, 2011) In order to detect patterns of consumer behaviour, customer information is analysed by data mining experts using statistical CRM and artificial intelligence (SAS) software; while collaborative filtering technology automatically analyzes past customer purchases.

The analysis provides processed information that serves to elaborate profiles of customer individual interests, which enables Amazon to send them tailored product recommendations in order to increase product sales (Foley, 2000; Hof, 2003; Jenkinson, 2005). In addition, CRM data mining activities also compare individual profiles to other customer profiles and bring them together into similar groups. As result, the company has taken traditional campaign techniques and move into faster campaigns to target different customer segments more effectively.

Thus, Amazon has the ability either to launch broad campaigns to millions of customers, or more focused campaigns to a few thousands and tailored recommendations to individuals, due to a better understanding of customer characteristics and needs (Foley, 2000; Hof, 2003). Summarizing, Amazon’s CRM system combine advertising, service and selling to acquire customers in order to encourage repeated purchases through cross selling and up selling tailored marketing techniques. Jenkinson, 2005) As a result, Amazon has achieved high levels of customer commitment and loyalty. Research by Millward Brown (BrandZ study) showed that 54% of US buyers are loyal to the company, as compared with a 10% of the industry average; while a 67% of its orders are from repeated customers. Moreover, Amazon customers are more likely to buy at a higher rate than loyal customers across the category, as 40% of Amazon customers are frequent users compared to an 8% of the average category (Jenkinson, 2005). ?

Amazon’s Enterprise Resource Management (ERP) System Value Oracle is the ERP system used by Amazon and it consists of a multi-terabyte database that integrates all the information related to customer orders such as purchase history, product shipment and invoices, thus enabling to streamline the order fulfilment process (Wailgum, 2008) Oracle automates the steps of this process by taking customer orders and process them into invoices, so when a customer comes online to buy a product the order system communicates directly with the warehouse system to find the adequate distribution centre, while customers receive communications about their purchase status and delivery times (Bacheldor, 2004) The company recognises that without this system it would be very difficult to coordinate and control the flow of merchandise in their business operations (Bell, 2011). Such integration of information creates business value by allowing Amazon to speed faster the order fulfilment process, as well as to improve visibility of order tracking and to reduce distribution mistakes. In fact, the company has reduced its customer service contacts per order by 50% since 1999 due to fewer distribution mistakes (Businessweek, 2003). Amazon’s Supply Chain Management (SCM) system Back in 2000, Amazon. om made expensive IS investments into building its high quality automated warehouses, and nowadays their supply chain is one of the most efficient and sophisticated in the world (Jenkinson, 2004; Businessweek, 2003, Gabe, 2010). A CRM system controls all supply chain activities of Amazon, such as transportation management, shipping activities and inventory planning, with the aim of reducing operational costs and optimizing logistic operations (Gabe, 2010) Amazon’s SCM system Value In 2000, Amazon’s operational costs accounted for about a 15% of sales revenue because the process of picking and packing different products was not very efficient. Employees had to enter data into the system manually and chutes holding pending orders were backed up when products did not arrive on time. (Businessweek, 2003)

Nowadays, the implementation of a SCM system has enabled Amazon to reduce the cycle time and the resources needed to complete its operational processes, thus making them more efficient. The SCM system examines Amazon’s customer demand to identify items that are often purchased together in order to place them at the front of the supply lines, thus enabling to speed faster the process flow (Businessweek, 2003) The SCM system also allows to find where the items are physically located, so after receiving an order the system will send a picker where the product is shelved. In the case of multi-orders, the system generates optimised pick lists, finding the shortest possible route for picking the product. (Gilmour, 2003).

As a result, Amazon’s operation costs fell down from 15% of total sales revenue in 2000 to a 5% in 2003, and lower costs have enabled the company to offer more product discounts and free shipping in orders over $25 (Businessweek, 2003). Moreover, Amazon’s CRM system enables information sharing on product demand between the company and its suppliers, which improves inventory management efficiency. Amazon’s CRM system is linked to its suppliers’ IS in order to share information in real time about orders and shipment. Thus, Amazon can hold lower levels of inventory stock in warehouses as it receives goods from its suppliers only when needed and accordingly to customer demand levels. Hof, 2003; Foley, 2000) Thanks to the CRM system, Amazon reduces costs by carrying only a 15 day’s worth of inventory while traditional retailers must stock up to 160 days’ worth of inventory in their warehouses (Hof, 2003). In addition, information systems’ integration between suppliers and Amazon enables customers to buy goods directly from suppliers. The company forwards orders to its suppliers which get the product to customers directly; therefore the complexity of the supply chain and costs of distribution get reduced. (Knowledge Wharton, 2009). Amazon’s IS and the changing external environment. Information systems have provided Amazon with competitive advantage since it as been able to adapt its business model better than its competitors to the changes that the retail industry has experienced during the past decade such as the shift towards online shopping due to a more widespread use of Internet (Manjoo, 2011) Thus, Amazon forced traditional retailers to go onto the Net in the 90s (Hof, 2003), while nowadays, it has the best record with new products -as they are constantly monitoring environmental changes- and their web services, cloud computing services and Kindle device are true innovations that have changed the rest of the industry (Manjoo, 2011) ? Conclusion This paper demonstrates the importance of information management and information systems to the creation of organisational business value and competitive advantage.

According to Jacks, information systems contribute to organisational success by increasing profitability and productivity, and providing other intangible benefits such as customer loyalty. Subsequently, Amazon’s case study illustrates the perfect example of how an organisation obtains value for money of their information systems investments. The effective use of information systems has allowed the company to improve the efficiency of its distribution channels, to provide cost effective convenient products to its customers and to achieve the highest levels of customer retention and loyalty within the e-retail industry, which ultimately has helped Amazon to increase profitability and to achieve a solid financial position.

In addition, information systems have provided the company with notorious competitive advantage over their competitors since it has been able to better adapt its business model to the changes that the retail industry has experienced during the past decade, such as the shift towards online shopping due to a more widespread use of Internet. ? REFERENCE LIST •Books and journals 1. Bausch, P. (2003) Amazon Hacks: 100 Industrial-Strength Tips and Tools (1st Edition) O’Relly. USA 2. Chaffey, D. et al (2004) Business Information Management: Improving Performance using Information Systems (1st Edition) Prentice Hall Pearson Education. England 3. Hottovy, R. (2011) “Amazon. com AMZN Hare Stock Focus” Morningstar StockInvestor Vol. 11 Iss: 2 pp. -9 [Online] Available at: http://web. ebscohost. com/bsi/pdfviewer/pdfviewer? sid=d0f8a490-3601-4df8-b033-0d48d0b16c5a%40sessionmgr113&vid=11&hid=8 [Accessed on 18/11/2011] 4. Jacks, T. et al (2011) “A Framework for the Impact of IS on Organizational Performance”. Business Process Manager Journal Vol. 17 No. 5, pp. 846-870 [Online] Emerald Group Publishing. Available at: www. emeraldinsight. com/1463-7154. htm [Accessed 18/11/2011] 5. Lee-Kelley, L. et al (2003) “How e-CRM can enhance customer loyalty” Marketing Intelligence and Planning Jounal Vol. 21 Iss: 4, pp. 239-248 [Online] Available at: http://colinwatsonleeds. co. uk/RMarticles/LEEKeeley. df [Accessed on 18/11/2011] 6. Melville N. et al (2004) “Information Technology and Organisational Performance: An Integrative Model of IT Business Value”. MIS Quarterly & The Society for Information Management Vol. 28 Iss: n. 2, January, pp. 283-322 [Online] Available at: http://www. misq. org/review-information-technology-and-organizational-performance-an-integrative-model-of-it-business-value. html[Accessed 18/11/2011] 7. Oestreich, T. (2010) “The Value of Information” Journal of Management Excelence Issue 9, June 2010. Oracle [Online] Available from: http://www. oracle. com/us/solutions/thoughtleadership/journal-mgmt-excellence-june-2010-116920. df [Accessed on 12/11/2011] •Publications 8. Bacheldor, B. (2004)” From Scratch: Amazon Keeps Supply Chain Close to Home” Informationweek [Online] Available from: http://www. executivemanagementskills. com/pdf/amazon. pdf [Accessed on 11/11/2011] 9. Businessweek (2003) “Reprogramming Amazon” Bloomberg Businessweek December 23th [Online] Available at: http://www. businessweek. com/magazine/content/03_51/b3863115_mz063. htm [Accessed on 18/11/2011] 10. Dans, E. (2003) IT Does Matter. European Business Forum [Online] Available at: http://profesores. ie. edu/enrique_dans/download/IT%20Does%20Matter%20-%20EBF. pdf [ Accessed on 18/11/2011] 11. Foley, J. 2000) “Amazon’s IT Agenda” Informationweek. com News, November 6th [Online] Available at: http://www. informationweek. com/811/amazon. htm [Accessed on 18/11/2011] 12. Gabe, M. (2010) “Lessons in Distribution” Mortgage Banking [Online] Available at: http://www. allbusiness. com/banking-finance/banking-lending-credit-services-mortgage/14266140-1. html [Accessed on 18/11/2011] 13. Gilmour, K. (2003) “Amazon Warehouse” Internet Magazine, Sept. 2003 [Online] Available from: http://www. kimgilmour. com/articles/archive/amazon_warehouse. html [Accessed on 14/11/2011] 14. Hof, R. (2003) “Amazon. com: The Wild World of e-commerce” Business Week Archives [Online] Available at: http://www. usinessweek. com/1998/50/b3608001. htm [Accessed on 18/11/2011] 15. Jenkinson, A. (2005) “Amazon: Bounding Customers with Integrated Service” Centre for Integrated Marketing, University of Luton [Online] Available at: http://www. centreforintegratedmarketing. com/gfx/documents/amazon_bonding_customers_with_integrated_service. pdf [Accessed on 18/11/2011] 16. Knowledge Wharton (2009) “Fit for the Holidays: Amazon is Shaping Up and Shipping Out”. Knowledge@Wharton [Online] Available from: http://knowledge. wharton. upenn. edu/articlepdf/2382. pdf? CFID=172480957&CFTOKEN=80041908&jsessionid=a8305ac77adc802c10107e653f5a2f715b56 [Accessed on 14/11/2011] 7. Manjoo, F. (2011) “The Great Tech War of 2012” Fastcompany October 19th [Online] Available at: http://www. fastcompany. com/magazine/160/tech-wars-2012-amazon-apple-google-facebook [Accessed on 18/11/2011] 18. Ray, R. (2010) “True CRM: It is Beyond Technology” Smallbiztechnology, June 29th [Online] Available at: http://smallbiztechnology. com/archive/2010/06/true-crm-its-beyond-technology. html/ [ Accessed 18/11/2011] 19. Ramesh, A. et al (1997) “Establishing a management information system” FAO Corporate document Repository. [Online] Available at: http://www. fao. org/docrep/W5830E/w5830e0k. htm [Accessed on 10/11/2011] 20. Steinberg, M. 2006) “Enterprise Applications: A Conceptual Look at ERP, CRM and SCM” Hill Associates Inc. [Online] Available at: http://www. hill. com/resources/whitepapers/enterprise_apps. pdf [Accessed on 18/11/2011] 21. Ward, J. (2006) “Delivering Value from Information Systems and Technology Investments: Learning from success”. [Online] Available at: http://www. som. cranfield. ac. uk/som/dinamic-content/research/documents/deliveringvaluereport. pdf [Accessed on 12/11/2011] 22. Wailgum, T. et al (2008) “ERP Definition and Solutions” Cio. com [Online] Available from: http://www. cio. com/article/40323/ERP_Definition_and_Solutions [Accessed on 16/11/2011]

Read more

Case study – new trend in international banking

Case study – new trend in international banking

The Zedmo (Asia) Pacific Bank was incorporated in Taiwan on the 7th December 1970. The lead promoter of the bank, Mr. Philip Zem decided to recruit one of his relatives, Mr. Sim Lin, who by profession is one of the most respected bankers of his generation. Mr. Lin graduated from one of the local Universities with a BSc (Hons) in Mathematics & Physics. After a short work experience with the Best Union Bank (BUB), he went to USA to complete a Masters’ Degree in Banking & Finance. Mr. Lin is a very ambitious young man, and constantly told his colleagues that he will not get married at a young age, because some wife can be very dominant. He does not want to be bossed by the wife. He wants to maintain a high-profile and lavish life style until he reaches the age of 34. On his return in Taiwan, he was approached by a number of local and foreign banks to work for them as their Deputy General Manager of Operations.

After quite a while without a job because he wanted to be choosy, the President and CEO, Mr. Philip Zem approached him with a very lucrative salary package for him to work for Zedmo (Asia) Pacific Bank. He was told that as part of the deal, he should work in this position for a period of 5 years, then he will be promoted to the Vice-President of Finance, and in the next 5 years again, he will be promoted as the CEO under the leadership of Mr. Zem.

The bank started its operations with a capital injection of US$10 million, and as at 31st December 2005, the capital base has reached US$350 million. According to one financial analyst for the banking sector, the bank should grow at a more rapid pace. The progress is not as expected by the market because Mr. Zem is a very old-fashioned and conservative banker, who worked for one of the local banks until 1968. Whenever, there is such a comment coming from the capital market, Mr. Zem seems to take exception and get unnecessarily upset. He would normally quote “Slowly but surely” of what one is doing rather than taking a faster lane, and in the end, gets caught up with various problems.

This is a business philosophy that he used to tell Mr. Lin that he has learnt a lot out of the University of Life. Mr. Zem never had the opportunity to go the University after his secondary school. His family could not afford the University fees, and he had no option but to join Best Union Bank as a messenger and worked his way through the ladder. After his normal working hours, Mr. Zem used to teach himself accounts and maths so that he can progress further in life.

Zedmo (Asia) Pacific Bank employed 150 employees including the management staff.  Every month, they would have their management meeting and Mr. Zem would suggest to other members of the Board of Directors that the bank is doing very well with their manual accounting system. Every night at least 25 employees including Mr. Lin would stay behind to complete the day’s work manually. The bank had to pay huge overtime to the employees and provide them with transport. Mr. Zem would boast his success that luckily he has one of his relatives to supervise the “after-office-hours” job. One evening, there was a power failure at the bank’s premises, and the job could not be completed as planned.

The next morning, Mr. Zem came to know about this problem. He called in Mr. Lin, who is practically in-charge of the bank’s operations to get a definitive explanation. Meanwhile, customers of the bank were coming to the bank to withdraw monies right-left-and centre. Mr. Lin recognized that the problem was going to aggravate that he told Mr. Zem to change his old-fashioned business practice. He shouted to Mr. Zem saying that” I have told you on a number of occasions that this bank will fail unless, we modernize its operations”. Our competitors are conducting all their transactions electronically. Why can’t we do the same? We need to invest more in Information Technology rather than paying more overtime. The bank is going to collapse unless we change this administrative practice. The staff is getting really tired of this manual system, which gives a reasonable accuracy of the transactions.

Meanwhile, news started to spread in the City that Zedmo (Asia) Pacific Bank is facing some serious administrative problems with its accounts. The External Auditors were called in to help minimize the damage that the accounts should be reconciled to the last dollar. Mr. Chen, who was the Auditing partner of Lem Chu Associates, came in a rush and told Mr. Zem that he had noticed that this system cannot carry out to function in this modern setting. He stated that he was getting really worried, when last year’s audit was not completed on time as a result of missing information from the customers’ accounts.

Unknown to the Board of Directors, the Regulatory Agency had issued a warning to Mr. Zem concerning the bank’s liquidity and capital adequacy requirement. Mr. Zem never disclosed this piece of information to the rest of the directors, and nor to the management team. While assisting the management to put the accounts up to date, the Auditors found out that there is a sum of US$5 million missing from one of the customers’ account. This matter was brought to the attention of Mr. Zem, who claimed that the bank should keep quiet and the money will be refunded to the client without much publicity.

Mr. Lin was so upset that he decided to take one day off duty. He told Mr. Zem that he has lost control over the operations of the bank. It is high time that he consult other members of the Board of Directors that he should retire. Mr. Zem was very adamant that he told Mr. Lin to leave his office because he wants to be the boss of the bank. One of the corporate customers phoned the bank to find out what has happened, he was told by the front-office staff that it is “none of his business” and Mr. Zem is still in control.

The competitors of Zedmo (Asia) Pacific Bank came to know about the news and one of them decided to “launch” a hostile bid to takeover the operations of Zedmo (Asia) Pacific Bank. Mr. Zem decided to make a news announcement on the Taiwanese media that the bank is still solvent and those new financial services products will be made available as soon as they have sorted out the accounts.

Mr. Clifford Smith a foreigner working for the Regulatory Agency came to the bank to meet with the Board of Directors so that a decision can be made to save the embarrassment and the bank from collapse. Mr. Smith was a very vocal person and told Mr. Zem that Information Technology in banking is now one of the key drivers. Mr. Zem replied that you are talking in terms of “machines”, when we survive without computers for a long time. Mr. Smith further argued that the bank has not been able to meet its capital adequacy ration under the Basel I Accord for quite sometimes. The authorities are now very concerned that the New Basel II, will shortly become the norm for all banks to comply with. Mr. Zem replied that “the bank operated long enough without having to under the Basel Accord”. He also stated that I do not need this gentleman (meaning Basel II) to come on my banking premises. I will get the security guards to throw him out of the banking hall.

The Finance Director of Zedmo (Asia) Pacific Bank pointed out during the meeting that Mr. Zem was obsessed in turning the bank into a “one-stop financial services boutique” and when asked what he is going to offer, he said, we will keep the same level of services and charge the customers more for the bank’s services. Mr. Zem was quite embarrassed to hear the Finance Director’s argument and told him to resign immediately because he is in control whatever happened to the bank.

Mr. Lin has sent an email to Mr. Zem to tender his resignation because he is of the opinion that the bank will not be able to recover from the operational risk. An inter-bank borrowing from Sin-Son Bank for the amount of US$65 million is coming close to maturity. The Chairman of the Sin-Son Bank, Miss. Cheong is a very serious banker and has given  Zedmo (Asia) Pacific Bank a delay of one day, failing, which if the amount is not paid in full, there will be a court case.

Question Time

What is the main problem with Zedmo (Asia) Pacific Bank?
Do you think that Mr. Zem’s behaviour is acceptable in today’s banking era?
What are the risks that Zedmo (Asia) Pacific Bank under the Chairmanship of Mr. Zem?
What are the auditors’ roles in this scenario?
Is there any thing that the competitors can do to save Zedmo (Asia) Pacific Bank from collapse?
Is Mr. Lin’s action warranted?
What about the position of the Regulatory Agency – is acceptable the way they have dealt with the situation?
What do you think the Board of Directors should do?
Is there any recourse, which the Board of Directors can take against the external Auditors?
Do you share the view that Mr. Zem can save the bank’s operations through the establishment of a “one-stop financial services boutique?”
Where the Board of Directors collectively responsible for this problem?
Are you of the opinion that the bank must switch from a manual accounting system to a computer-based accounting system?

Answers

Q 1.

The problem of Zedmo (Asia) Pacific Bank has been due to lack of innovation, and preparedness to follow new trend and development in a modern banking environment.

Mr. Zen’s belief is that what had worked for the last 36 years of the bank’s existence will continue even in the 21st Century.

There has been a very poor professional judgment by Mr. Zem.

Q. 2

Mr. Zem’s behaviour is certainly unacceptable because he has been behaving like an autocratic leader not to allow the bank to change and adapt to new commercial environment.

Mr. Zem is a resistant to change to new banking practices – which is dangerous for the bank.

Q. 3

Under the Chairmanship of Mr. Zem the bank face a multitude of risks like:

(a)    operational risk (e.g. collapse of the accounting system)

(b)   technological risk

(c)    financial risk

(d)   reputation risk

Q. 4

The External Auditors does not have much to contribute with the exception that they have done their duties professionally and to highlight any administrative deficiencies. It is up to the Board of Directors (responsible for Corporate Governance) should take necessary actions to remedy any problem.

If the Auditors had known the problem and had kept quiet without alerting the Board of Directors, they can be considered as an accomplice to such problem. They will be considered negligence and liable for the professional negligence.

Q .5

The competitors can join forces together to analyze the magnitude of the problem of Zedmo (Asia) Pacific Bank and take necessary administrative actions to either purchase the bank in whole or in part or restructure the whole operations.

This strategy can be done with the help of the Regulatory Agency so as to avoid a systemic risk in the banking system.

Q. 6

In real life, Mr. Lin has no choice, but to resign in order to save his reputation, otherwise, his reputation is also tarnished with the Zedmo (Asia) Pacific Bank.

The financial market will have no confidence in his professional reputation. He may not get another job within the banking sector.

Q. 7

Regrettably, the Regulatory Agency did not perform its function in accordance with the local and international standards to follow and monitor the progress of each and every bank operating in Taiwan.

They have been acting very passively in their role to protect and ensure a safe and sound banking system at all time prevails.

They are equally guilty with Mr. Zem to create a moral and financial hazard in the banking system. The Supervisor responsible to deal with Zedmo (Asia) Pacific Bank should resign from his job with immediate effect.

Q. 8

The Board of Directors should appoint an independent consultant to sort out the problem and then resign from their position respectively.

Otherwise, the bank will have great difficulty to continue to operate with the same directors.

Confidence is already lost.

Q. 9

The Board of Directors does not have any right of recourse to the External Auditors because this is an internal matter between Mr. Zem and the bank.

Q.10

Mr. Zem is a confused man and does not have any idea what he wants to do. Without additional services being provided by the bank, he has already mis-managed the operations. To enlarge the products/services portfolio would mean more problem for the bank to handle under his leadership.

Q 11.

The stewardship of the bank rests the entire responsibility of the Board of Directors jointly. They should be made to answer to all the stakeholders as to why they bank had reached such a position.

Q. 12

In this day and age, all banks have a computerized accounting system. It is considered as one of the key drivers in a bank’s resources.  Any bank that uses manual accounting system runs the risk of a system collapse and it is nor appropriate to do so.

Customers are now more sophisticated and demand up to date information about their accounts and services that will help them be more business like.

Mr. Zem has allowed the bank’s operations to outgrown its operating systems – hence such a disaster.

Read more

Case study of Bangladesh and Boscastle Floods

1. The flood occurred on Monday, 16 August 2004 in the villages of Boscastle in Cornwall, England, United Kingdom. The village suffered extensive damage after flash floods caused by an exceptional amount of rain that fell over eight hours that afternoon. At midday on the 16th August 2004, heavy thundery showers had developed across the South West; these were the remnants of Hurricane Alex (2004) which had crossed the Atlantic. The flood in Boscastle was filmed and extensively reported. The floods were the worst in local memory. A study commissioned by the Environment Agency from a hydraulics consulting firm concluded that it was among the most extreme ever experienced in Britain.

1. The flood occurred during late July, August and September of 2004 and was widespread across Bangladesh. Although flooding is common, the 204 was exceptional bad with increased loss of live and livelihood. Bangladesh suffered extensive damage and approximately 38% of the country was submerged in flood water at some point

Boscastle and Bangladesh Floods 2004

Causes

Boscastle

Bangladesh

1. 75mm of rain fell in just 2 hours in the village

2. The village lies in a steep valley which speeded up overland flow of rainwater

3. The village lies at the confluence of two rivers

4. The natural channel had been walled so the river couldn’t adjust to the sudden increase in water

5. There had never been a major flood in this village so there were no flood prevention methods in place.

6. The torrential rain led to a 2 m (7 ft) rise in river levels in one hour. A 3 m (10 ft) wave, believed to have been triggered by water pooling behind debris caught under a bridge and then being suddenly released as the bridge collapsed, surged down the main road. Water speed was over 4 m/s (10 mph), more than enough to cause structural damage. It is estimated that 20,000,000 cubic metres of water flowed through Boscastle that day alone

7. Changes in farming practice caused a reduction of trees and hedges higher up the valley causing water to flow through more quickly than would have been the case in the past. The saturated surface also contributed.

8. Boscastle lies in a valley and the highland encouraged precipitation in the form of orographic rainfall.

1. Bangladesh is a low-lying country with most of its land lying on the delta land of three major rivers, the Ganges, the Brahmaputra and Meghna.

2. Climate change resulted in melting glaciers in the Himalayas which contribute to water input.

3. Deforestation in the Himalayas for agriculture led to increased soil erosion. This had a negative effect on the rates of interception and evapotranspiration resulting in more water reaching the river.

4. There was as unusual heavy seasonal monsoon rain upstream from May-September which fed into the rivers. This was a large contributing factor.

5. There were also tropical revolving storms (cyclones) that brung exceptional winds, intense precipitation and storm surges. Causing high discharge in the rivers.

6. River implement is difficult to implement as Bangladesh in one of the poorest countries with the GDP at around $300.

7. Increased pressure of rural-urban migration meant that more people lived on the flood plains.

8. The increased sediment in the river is also a contributing factor.

Immediate Impacts

Boscastle

Bangladesh

1. A burst sewage mains and damaged buildings made much of Boscastle inaccessible for health & safety reasons for at least a few days. 75 cars, 5 caravans, 6 buildings and several boats were washed into the sea. Large loss of possessions

2. Approximately 100 homes and businesses were destroyed; trees were uprooted and debris were scattered over a large area.

3. A fleet of 7 helicopters rescued about 150 people clinging to trees and the roofs of buildings and cars.

4. No one died.

5. Roads were blocked off by the floodwater, making emergency access difficult except from the air. Even when rescue helicopters arrived, the valley was only big enough for two to operate at any one time, prolonging the operation & putting lives at risk from the still rising flood waters.

6. Property was destroyed by debris such as entire trees & vehicles speeding down the valley at high speed, pulled out towards the sea by the raging torrent. Buildings were smashed, especially in the main street where the river channel flows.

7. People were trapped in buildings by the floodwater & forced to seek refuge on the roofs of the buildings and await rescue. The danger of hypothermia, shock or even being swept away was great.

8. People were left homeless for the night, so emergency accommodation had to be set up. Nearby hotels & guest houses were packed with tourists who had arrived in Boscastle in the morning & had lost their cars, so were unable to return to their accommodation elsewhere.

1. During July and August 2004, approximately 38% of the total land area of the country was flooded, including 800,000 hectares of agricultural land and the capital city, Dhaka.

2. As well as 1.5 million acres of crop damage there was the death of 21,000 livestock. This is a huge loss of income for the families.

3. Nationwide, 36million people (out of a total population of 125 million) were made homeless.

4. By Mid September the death toll had risen to 800. Many of these people died as a result of disease caused by lack of clean water.

5. Raw sewage contaminated much of the flooded areas especially in Dhaka.

6. The flood also caused serious damage to the country’s infrastructure, including roads, bridges and embankments, railway lines and irrigation systems

7. Almost a million dwellings were destroyed, more than 3 million damaged and millions of inhabitants temporarily or permanently displaced.

8. Boats were afloat on the main runway at Sylhet Airport and all domestic and internal flights were suspended. Rail and road links into Dhaka and the affected areas were severely damaged. This created a difficulty distributing supplies.

9. The value of the damage was assessed as being in the region of $2.2 billion

10. Although the flood affected both the poor and wealthy households, the poor were generally less able to withstand its impacts. Landless labourers and small farmers were the most severely affected in rural areas. In the urban areas it was typical the slum dwellers, squatting on poorly drained land, who suffered the most.

11. 5000 shelters opened to accommodate the homeless.

12. 25,000 schools were damaged. The undamaged ones were used as emergency shelter and doctors set up clinics in the back of trucks.

13. Loss of export earnings from factories.

Long Term Impacts

Boscastle

Bangladesh

1. Floodwater damaged a great deal of properties. Possessions were lost, river water and burst sewage mains spoiled the ground floor of many houses & thousands of pounds worth of damage was done.

2. Repairs had to be made after the damage. This was very time consuming & costly. Some buildings were beyond repair & their owners have had to consider rebuilding from scratch.

3. The damage not only affected the residents, but also insurance companies. It is likely that home insurance will be much costlier in Boscastle from now on.

1. Boscastle’s main industry is tourism. The town was effectively closed to tourists after the flood, causing a massive loss of revenue. Tourist attractions such as the witchcraft museum were lost and tourists next season will be wary of visiting the town in case the floods are repeated. Boscastle may never recover its tourist industry fully & many small businesses could go out of business as a result. 90% of Boscastle economy is tourism, the floods caused major loss of tourism. 21 accommodation providers had to close down. 2 of which didn’t reopen.

2. Environmental damage to local wildlife habitats

3. Costal pollution caused as debris and fuel from cars flowed out to sea.

4. People suffered from long term stress and anxiety as a result of been traumatised by the incident.

1. The floods caused 4 environmental impacts: river-bank erosion, especially on embankment areas close to the main channels; soil erosion; water logging particularly in the urban areas; and water contamination, such as raw sewage in Dhaka, and the associated health risks that come with this.

2. As Bangladesh is such a poor country, the short term impacts almost mirror the long term ones as there’s little money to alter them.

3. The 36 million that were homeless up to 70% of them will remain that way for up to 5 years.

4. Factories continued to have a loss of earnings as there was a loss of export.

5. Roads, houses, other infrastructure, railway lines and embankments remained damaged.

6. Charities and other NGO have continued to provide aid and help distribute supplies

7. People undoubtedly will have suffered from long term stress and anxiety as a result of been traumatised by the incident.

8. Many small businesses and many peoples income (through farming or rearing animals) will have been lost and will never recover.

9. The absence of money in the country will inevitably mean certain amenities won’t get repaired.

Immediate responses

Boscastle

Bangladesh

1. Buildings that were damaged were secured by building inspectors. This took 7 days, after which homeowners could retrieve there possessions.

2. People were relocated.

3. Power and water supplies were repaired

4. Local GP surgery acted as an emergency centre

5. Prince Charles made a large donation to rebuild parts of Boscastle.

6. Cars and debris was removed as well as the demolition of damaged buildings.

7. Environment agency removed debris upstream and burned vegetation away from the river.

8. Roads and sewage works were restored.

9. Nearby hotels welcomed anyone affected by the floods to stay. Especially tourists.

10. Tourists were given food and amenities and transport free of charge and helped to recover any of their possession before been helped to return home

11. The entire region was inspected & the probability of a recurrence calculated. The Environment Agency has recommended that construction in the area in the future should not include facilities for those most vulnerable to flash-flooding, such as the elderly & young children. Effectively, this means that the local Council will reject any planning applications for residential homes or schools in the valley.

1. Government organised a large scale search and rescue mission, with help from NGO’s and volunteers.

2. Sewage in the capital city was drained.

3. The government, working with non-governmental organisations (NGO’s) provided emergency relief in the form of rice, clothing, water, medicines and blankets.

4. An international appeal was launched with over $50 million donated.

5. The UN activated a disaster management team to coordinate the activities of the various UN agencies. They supplied critical emergency supplies and conducted a “damage and needs assessment” in the affected areas.

6. Bilateral aid from individual countries was directed to the UN team.

7. The charity WaterAid affected many areas that WaterAid works in, and so WaterAid and its partners actively engaged and assisted in water and sanitation issues, by rehabilitating existing work and through hygiene education. WaterAid’s initial response included supplying oral saline and water purification tablets, providing transportation for emergency patients, disinfecting water points affected by flood water and raising awareness of hygiene risks through posters.

8. Many other charities such as the Red Cross provided volunteers who distributed food and essential relief items like kitchen sets, lighting, clothing, shelter materials and water purification tablets. They also provided healthcare and supported search and rescue operations.

Long Term Responses

Boscastle

Bangladesh

1. 2004: Buildings searched, buried cars removed from harbour, trees removed, roads cleared, B3263 bridge temporary concrete parapets installed. Completed an Overflow culvert work and hard sticks were inserted into the ground so barrier against the flood water would be created. The museum and shops were demolished. All power and water supplies were restored. The Boscastle power system was also renewed

2. 2005: Most shops and restaurants re-open with new customers. The flood defences were increased and improved strongly with an £800,000 flood defense scheme been completed by April 2005. The rest of Boscastle got rebuilt.

3. 2006: Two underground pumping stations for the sewage treatment scheme began and work to widen and lower the river channel to increase capacity began. The car park level was raised, and extended, reducing the risk of cars being washed away if it flooded again.

4. 2007: A ‘gateway building” was built and work started on rebuilding an old culvert at the top of the village, to allow more water to flow through in periods of heavy rain. Work started on installing the pipes for the new sewage treatments works, in the harbour area (between the Lower and Upper bridges). Traffic lights were reinstalled and the new lower bridge was installed.

5. 2008: Work on rebuilding the culvert next to the petrol station completed as well as a culvert in Dunn Street. The harbour was resurfaced and the Old Lower Bridge was demolished, and the new Lower Bridge was brought into use.

1. Self help schemes were put in place, such as growing pumpking on ground thought to be infertile, “Superducks”, Site and service and core housing.

2. WaterAid repaired tubewells, constructed mobile latrines and gave house to house counselling to families.

3. Charities continued donating money and continued their work with distributing supplies, improving living conditions and treating disease

4. Australia donated food supplies, consequently been the largest food aid donor to Bangladesh with the total worth contribution to over $27.6 million

5. With aid and government funding infrastructure was rebuilt along with some roads. All traces of sewage were removed from the capital city.

6. Flood shelters and early-warning systems have been successfully put in place.

7. Small scaled community projects have been put in place resulting in lives been saved

8. Following the floods, additional financial aid was granted for a period of 5 years. This was mainly in the form of a loan from the World Bank, to pay for, in the first instance, repairs to infrastructure, water resource management, health care and education.

9. Disaster-preparedness is a key priority for the future. This includes flood management and improved water resources. It is also planned that, in future, flood-resistant designs should be used in all social and economical infrastructure projects.

Read more
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat
Close

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp