Pestel Analysis Political Factor Management Essay

Pestel Analysis Political Factor Management Essay China automobile industry, the top vehicle superpower in the world has become the backbone in the national economy due to the fast growing of the industry in 2009. Protections and privileges have been set up by Chinese government to the foreign automakers which directly allow those foreign companies have easy access in Chinese automobile industry. Therefore, China is successfully attracted many multinational companies to enter the country such as Ford, and Volkswagen. Economy Factor The open policy have brings the country rapid and continuous economic growth and today, China has playing an important role in the global economic environment. Based on China currently growing economy position, huge market size, and the dominating position in the global economic environment which showed there are high profits potential have attracted big international vehicle manufacturers. Social Factor Firstly, any international firm needs to understand the Chinese concept of guanxi which is completely different meaning from Western concept of relationship. However, it is important for Western organisations to build their own guanxi networks in China in order to smoothen their operations. Finding local partners when begin a business in China is a sensible way. Thus, many of the multinational automobile manufacturers are choose joint venture as their entry mode where it can ease the process in both administrative and political processes, yet, cultural differences may become the obstacles for them to handle. Technology Factor The technologies in automobile industry are keeps upgrading, for example, automobile makers are now designing a car with environmental consciousness in order to protect the environment and they comes up with hybrid cars. Moreover, several automobile companies are using computers system in their car diagnosing problems. Environment Factor The consequences of the growth sales in automobiles are such as air pollution, sound pollution, and of course the global warming due to the overconsumption of oil which is causing the release of CO3 that harm the earth. Nevertheless, the responsibility is not only in the shoulder of China but also the burden of the whole world. Legal Factor China laws and regulations are usually often known as unclear, ambiguous and difficult to understand. However, the government is trying to liberalize the legal and regulatory environment for foreign investors. Michael Porters 5 Forces Threats of Product Substitutions The factor presenting the strongest threat of substitutes in the industry is the second hand car. This may be seen in the face of used automobiles which are sold by dealerships along with new cars. Especially, when it is in the economic recession which directly impact the increase of buying second hand cars and reduce sales in new cars. Public transportation like bus, train, monorail and others are another alternative mode of transport as the substitutes to cars. Threats of New Entrants Due to the economic booming and the rise of demand in purchasing cars in China, thus, it will attract more new entrants in the Chinese automobile industry. A large investment is needed by every new entrant in order to set up necessary facilities in producing large amount of production. The fixed costs are high, and then it will be a major entry barrier for new entrants. Besides, new entrants need to face some authorization processes before launch their new business. However, the lack of transparency in China legal system may bring substantial difficulties for them and it will create barriers too. Intensity of Rivalry As we know that, to involve in automobile industry the fixed costs are high. So, assuming a company wants to leave the industry, their loss of revenues and assets will be high too. Hence, to avoid disinvestment, companies will increase their research and development and invest in marketing in order to attract customers which will increase the intensity of rivalry amongst companies. Besides, international automobile companies not only need to competing each other, but also amongst the local automobile companies. Although it is true that customers might buy foreign cars by the mindset of quality, but, local customers will more prefer local automobiles where their design may fit their needs compare to foreign cars. Bargaining Power of Buyers Dealerships is the key buyers for those car manufacturers, yet, the end-user customers also importance to be counted. The exclusive contractual agreements make the switching costs for the dealerships are extremely high. But, dealerships are vital to those car manufacturers too in the sense of reaching the end consumers. Bargaining Power of Suppliers The bargaining power of suppliers is seem to be high. This is because by the small size of reliable suppliers whose are producing high quality raw materials and readymade components and parts which are no substitutes for all needed raw materials. Michael Porters Diamond Analysis Factor Conditions China is a large population country with its increasing purchasing power has made it as the ideal place for investments. In order to attract international automobile companies, the State council of China has developed a new development outline, called the Outline in March 2009 where it is about industrial upgrading, technological enhancement and promotion of new engines. It is no doubt that China has enough facilities including land capacity and natural resources that able to support every interested company. Demand Conditions Today, there are change in the level of Chinese needs and want which is come along with the increase of purchasing power and disposable income amongst the demographics. Moreover, the improvement in the Chinese lifestyle and economic life of state power risen the private consumption of them. The demand in China was especially heavy for cars that were perceived to be of higher quality than most of those produced by Chinese government and in China only about 20% of people owned car. Related and Supporting Industries China has realized that the reliance on low-end and labor-intensive manufacturing which use mainly imported technology is being no longer sustainable. Therefore, the development of the automobile industry shall involve restructuring of the production and technological advancement. The presented Outline by the Chinese government entails that passenger cars produced with domestically independent brands shall account for over 40% of the total car market, comprising about 10% (around one million) of the whole export production and sales in 2011. A powerful information system aimed at enhancing the Joint Ventures capabilities by better managing the entire value chain of the enterprise, including research, design, sourcing, production, marketing, sales, and service. Firm Strategy, Structure, and Rivalry In terms of market expansion it is a moderate factor influencing rivalry among competitors due to the established powerful brands in the industry, nevertheless some companies engage in more than one segment by utilizing different brands, e.g. BMW and Mini. Rivalry among competitors is also little reduced through a degree of differentiation in few diverse segments within the automobile industry like luxury cars and budget cars. The models offered by Changan-Ford in the Chinese market sold well because they appealed to a sophisticated segment of buyers, who saw Western-designed cars as differentiated because of their overall superior quality, innovative technology and aesthetic appeal. Hofstedes Dimension Social Orientation China scored 20 in the index which is showed that Chinese is a highly collectivist group where they act based on the group majority decision and not themselves. In contrast, United States is a highly individualistic community where this can be proved by they achieved a 91 score. In order to solve the problem between collectivist and individualistic culture, Changan-Ford can held workshops or seminars which are able to educate their employees about the important of teamwork (ie. Team building). Power Orientation By the high score of 80, China is a definitely power respect culture where they will obey to their superiors command and instructions. However, United States scoring a low score in this dimension which is only 40. And this is showed that Americans are practicing power tolerance where they will just follow their leader if they think that their leader is right, whereas the superior will listen to the employees opinion. Therefore, empowerment atmosphere is in the Americans culture. Changan-Ford may benchmark the Toyota lean productions strategy whereby Toyota is believed in bottom-up report and this beside can formalized the process but also can decentralized the organisation. Uncertainty Orientation In this dimension, China has score 30 which is showed that Chinese do not avoid risk and contented with ambiguity. Slightly scores higher score than China, US scores 46 which presented that Americans are risk takers and willing to accept new ideas, innovative products and willing to try new practices. Goal Orientation By the scores of 66, China is proven to be masculine society. Thus, many Chinese will rather sacrifice their family than careers due to they are more eager to be successful in their jobs. Not far different from China, US score 62 on this dimension showed that Americans are masculine society too. Time Orientation Chinese is known as the country that needed longest time to make decision making where persistence and perseverance are normal. This can be proved by they achieved extremely high score in this dimension which is 118 score. Contrast, US scores 29 in this dimension and showed that they are short-term oriented culture. Therefore, Americans make fast decision making than Chinese. The suggestion for Changan-Ford to solve this problem is they may set dateline to all decision-makings that all managers need to make.

Progressive Era: The Era of Immigration, Race, and Women’s Rights Essay

Introduction: The Progressive era was a period of reform in American history that spanned roughly from the 1890s to the 1920s. Prohibitions, segregation, women's suffrage and immigration arose during this time, like many of the social reforms that shape the way we live and work today. The progressive era in the United States one of the most important times in history with brought permanent changes to the American ways of living. All of these and other factor were vital for the creation of a new American society. Be Gender roles: At the beginning of the 20th century the United States starts to leave behind the old ideas of the 19th century concerning the separate, and indeed distinct natures of men and women, which were more, standardized at the pick of the industrialization which defined merchandize labor as the â€Å"job of men,† and the domestic duties as the natural domain of woman. At this time, the relationships with men and women and of both in society stated to generate a big change thanks to the rapid change that industrialization was creating in society, which provokes a rebirth a new believe an practice of the traditional render roles. In the early 20’s women felt that they were lacking participation in their own communities, which alienated them from providing any type of influence in their own society. For this lack in participation women felt that they needed to take action. Voting was one of the first symbolic movements that women saw as a passage to gain all of the rights that they were denied. During this part the gran majority of men did not think that it was a good idea to support women for various reasons. One of the first reasons was that women were larger number of citizen at the time. Also men thought that t... ...emigration. Garvey wanted African Americans to unify and create a central government centered in homeland Africa where they were supposed to build â€Å"a great industrial and commercial commonwealth.† He wanted â€Å"every negro to make the dream of possibility.† His idea was to buy steamships to take people and goods to Africa where they were going to create a new history were I didn’t start with the slaves. Garvey is still significant till this day big figures like Martin Luther King and Malcon X were influence by his ideal. Conclusion: To conclude, the progressive Era was a time where these three main themes generated in a society that was hungry for progression. It is very important to remember that all of these changes in the late 19th century and the early 20th century were not secluded from each other; instead these developments were all interlined with each other.

Professional Wrestling :: essays research papers

Current Issues  Ã‚  Ã‚  Ã‚  Ã‚   Professional Wrestling   Ã‚  Ã‚  Ã‚  Ã‚  When some people hear the word wrestling they think of â€Å"2 points takedown† or headgear and singlets. But most people think of the WWF, WCW, NWO, and the WolfPac. They think of names such as Hollywood Hogan, Sting, Stone Cold, Diamond Dallas Page, and Golberg. If you have been alive in today’s TV culture, you have undoubtedly heard these names.   Ã‚  Ã‚  Ã‚  Ã‚  Although professional wrestling has been enjoying newfound success lately, it is not a new sport by any means. Professional Wrestling has been around since the 1800’s but it was mainly confined to barns and other small areas with people betting on the winner. These were often bloody and dangerous fights. Dangerous for the wrestlers as well as the audience as sometimes the fight would spill out into the crowd.   Ã‚  Ã‚  Ã‚  Ã‚  Professional Wrestling became more of a spectator sport in the early to mid 1900’s, but it resembled very little of what we think of Professional Wrestling today. Today, as opposed to old-time wrestling, it is just a spectator event with people cheering for a â€Å"hero† against a â€Å"vilian†. Most all matches are set up in a way that there is always one crowd favorite, and one that the crowd hates.   Ã‚  Ã‚  Ã‚  Ã‚  Today Professional Wrestling is no longer a sport but a entertainment industry. The fights are rigged, the wrestling is fake, and the only thing real about wrestling is the money. Millions of dollars are generated by professional wrestling. TV contracts, t-shirts, posters, Video games, movies. These all generate enough money and interest to make professional wrestling the most watched entertainment event today. One of the reasons that wrestling has become such a powerful force in entertainment is that it has all the action of a Jackie Chan movie, all the drama of ER and all of the â€Å"eye-candy† of Baywatch.   Ã‚  Ã‚  Ã‚  Ã‚  I am going to tell you some of todays biggest stars and give you a little background on them.   Ã‚  Ã‚  Ã‚  Ã‚  One of the most entertaining people in professional wrestling is current world champion Goldberg. Goldberg grew up as a doctors son in Oklahoma with his two brothers. Goldberg was even an imposing future at a young age as he was a bouncer in a bar at age 17. He went on to play college football at SEC power Georgia. As a Georgia Bulldog, Goldberg earned all-confernce honors as a nose-guard and was drafted by the Atlanta Falcons and eventually ended his career as a LA Ram. Goldberg was not done bashing skulls after he hurt his knee though. He shaved his head and got a tattoo and followed many former football players into Pro wrestling.

A Role for Equity Theory in the Turnover Process Essay

The purpose o f the present study was to examine the role o f equity theory in the context of the contemporary turnover process. A model was developed and tested with 192 hospital employees using structural equation modeling (SEM), which placed satisfaction and intention to quit as mediators of employee turnover. The results strongly support the present model, but also suggest a role for other mediators, some of which are suggested for future research. Equity theory (Adams, 1963, 1965) continues to be a major model stimulating considerable research regarding work motivation in recent years (Bretz & Thomas, 1992; Carr, McLoughlin, Hodgson, & Maclachlan, 1996; Glass & Wood, 1996; Greenberg, 1990; Harder, 1991, 1992; Huseman, Hatfield, & Miles, 1985, 1987; Johnson & Johnson, 1991; Joshi, 1990; King & Miles, 1994; King, Miles, & Day, 1993; Miles, Hatfield, & Huseman, 1994; Perry, 1993; Sheehan, 1993; Sweeney, 1990; Van Dierendonck, Schaufeli, & Sixma, 1994). Briefly summarized, equity theory suggests that an employee compares the ratio of his or her outcomes to inputs to the ratio of outcomes to inputs of some referent other. Employees who perceive themselves in an inequitable situation will be dissatisfied and will try to reduce the inequity. Although Adams (1963,1965) proposed a number of ways that employees might reduce inequity, research concerned with organizations has tended to focus on employee reactions to pay inequity, such as low performance and dissatisfaction (Greenberg, 1990). Leaving the situation (i.e., voluntary turnover) was also postulated as a tension reaction mode by Adams ( 1 963, 1965), but only a few studies have examined the impact of inequity perceptions on turnover in the context of contemporary ideas regarding a turnover process (e.g., Horn & Griffeth, 1995; Mobley, 1977). The purpose of the present study is to test the relationship between equity perceptions and turnover within the context of such a contemporary turnover process model.  Ã¢â‚¬ËœThe authors greatly appreciate the comments of Peter Hom, Debra Cohen, Peggy Lewis, and two anonymous reviewers on earlier versions of this paper. 1018 GRIFFETH AND GAERTNER Early research into the equity-turnover relationship, using aggregate rates of turnover, found mixed results. For example, Telly, French, and Scott (1971) found aggregated perceptions of equity within subunits of an organization to be significantly related to that subunit’s turnover rate for the previous 11 months on five of the seven dimensions (e.g., supervision, social aspects). Dittrich and Carrel1 ( 1 979) developed and tested a five-dimension measure of equity perceptions that they called the Organizational Fairness Questionnaire (OFQ). They found that the five factors (pay rules, pay administration, work pace, pay level, and rule administration) underlying the OFQ were not predictive of turnover rates by department. However, pay rules (a factor that combines comparisons of one’s own pay to that of coworkers with the fairness of the rules for granting pay increases and promotions) and work pace (fairness of the supervisor in maintaining a fair pace of work activity) were predictive of absence. While not directly predictive of turnover, employee perceptions of the fairness of pay rules and equality of pay among coworkers and of supervisor control of the work pace were strongly predictive of job satisfaction ( R 2 = S8). Equity and Individual Turnover At the individual level, tests of a direct relationship between equity perceptions and turnover have also had mixed results. For example, Oldham, Kulik, Ambrose, Stepina, and Brand ( 1 986) found that equity perceptions in combination with job complexity descriptions were marginally predictive of  turnover. Vecchio, Griffeth, and Hom’s (1986) initial findings were that perceptions of supervisor control over work-pace equity were significantly related to turnover. However, when leader-member exchange quality was added, this variable fully mediated the equity-turnover relationship. Finally, Randall and Mueller (1995) found no significant direct relationships between turnover and distributive or procedural justice perceptions. They suggested two plausible explanations for this lack of significant findings. First, the effect of equity on turnover is not direct, but rather is mediated by several other variables such as job satisfaction, organizational commitment, and intention to stay. Second, a lack of alternative employment opportunities among the nurses in their sample induced them to stay despite possible inequities. This latter explanation seems less probable since turnover and shortage rates among nurses remained high into the mid-1990s (Hom & Griffeth, 1995). Another set of studies has examined the relationship of equity perceptions to intention to stay. The results in these studies have also been mixed. Scholl, Cooper, and McKenna ( 1 987) found that comparisons using others outside the company in similar jobs and comparisons of one’s own pay in the past were significant predictors of turnover intentions. However, Ronen (1 986) found that neither equity referent (others inside the organization or others outside the organization) nor job level (skilled workers vs. managers) was significantly  related to turnover intentions. Finally, Berg (1991) found that global perceptions of equity were significant predictors of intention to stay among television employees. Strictly speaking, however, Berg did not actually measure equity. Instead, he asked employees to assess their perceptions of fairness without reference to some comparison other. Again, it seems plausible, especially based on Adams’ (1 963, 1965) theory, that job  dissatisfaction would be the immediate result of inequity perceptions, mediating the effects on turnover intentions and actual turnover. In conclusion, these studies show relatively weak or inconsistent support regarding the relationship between inequity perceptions and turnover. There are several reasons for this inconsistency. First, all of these studies examined the direct influence of equity on turnover, generally ignoring the mediating role of felt tension of job dissatisfaction (Adams, 1963, 1965). Some studies attempted to link equity perceptions to intention to stay (or quit), a weak test of the equityturnover relationship. According to Steel and Ovalle (I 984), intention to quit is a relatively poor surrogate for actual turnover, typically accounting for less than 25% of turnover variance. Moreover, the earlier studies were unable to take advantage of recent advances in the study of turnover identifying the process of employee turnover (Horn & Griffeth, 1991, 1995; Hom, Griffeth, & Sellaro, 1984; Mobley, 1977). Contemporary turnover theorists posit a series of cognitive and affective linkages translatingjob dissatisfaction into turnover cognitions and behavior. Perhaps the major weakness of each of these studies was the omission of satisfaction as a mediating variable. More recent models that propose linkages between equity and turnover explicitly incorporate perception of equity as an exogenous variable that has an impact on turnover via job satisfaction and quit intentions (Hulin, Roznowski, & Hachiya, 1985; Price & Mueller, 198 1). Two studies have placed the equity-tumover relationship within the context of such a process model. Summers and Hendrix (1991) included perceptions of pay equity for comparisons with a generalized other (someone of similar knowledge, skills, and abilities), self (past), others inside the company, and others outside the company. Respondents were then asked to select the three most important referents. Only the equity perceptions with regard to the single most important referent were used as a measure of pay equity. Of respondents, 6% chose others outside of the company as their most important referent. A generalized other was the most frequently selected, followed closely by self (past). The model test revealed a significant mediated relationship between pay equity and turnover. The significant and hypothesized intervening variables were pay satisfaction, overall job satisfaction, and intention to  leave. Iverson and Roy (1994) performed a relatively comprehensive test of the Price and Mueller (1981, 1986) turnover model, which specifically includes elements of equity perceptions of various benefits and pay in relationship to coworkers. Although the correlation coefficient for the relationship between equity and job satisfaction was positive and significant, the hypothesized and  revised model yielded a negative (also significant) relationship between the two variables. Such a reversal may be indicative of multicollinearity (Neter, Wasserman, & Kutner, 1990) and suggests that a more parsimonious model might be practical. A second weakness of this test of the equity-turnover relationship is the use of behavioral commitment, or intention to stay, rather than actual turnover as the ultimate dependent variable (Steel & Ovalle, 1984). However, both the hypothesized and the revised model confirm affect Cjob satisfaction) as a mediator of the relationship between equity and intention to stay. For both of the process model tests, the conceptualization of equity was narrowly limited to distributional outcomes, such as pay and benefits (Iverson & Roy, 1994; Summers & Hendrix, 1991) or to comparison others inside the organization (Iverson & Roy, 1994). Prior research has found multiple comparison others to be important and, although pay seems to dominate perceptions of equity (Berg, 1991; Scholl et al., 1987; Summers & Hendrix, 1991), other facets are also important (Oldham et al., 1986; Telly et al., 1971; Vecchio et al., 1986; Wilhelm, Herd, & Steiner, 1993). It is the primary purpose of the present investigation to reexamine the role of equity perceptions within the context of contemporary turnover theory and empirical research at the individual level of analysis. Toward this end, a model of this process is developed and tested based on equity theory. Both the predictive and nomological validity of this model are examined using structural equation modeling (SEM). This model and the hypothesized relationships among the model constructs are shown in Figure 1. Model Development The present model posits a turnover process initiated by perceptions of  inequity in relationship to three key determinants of job satisfaction: pay satisfaction, satisfaction with one’s supervisor, and satisfaction with the work itself. We postulate perceptions of inequity as determinants of these facets of job satisfaction, and, in doing so, we expand on two components of Adams’ (1 963, 1965) equity theory. First, Adams’ conceptualization of equity as concerned with the ratio of inputs to outcomes only (distributive justice) reflects the contemporaneous understanding of justice. More recently, justice has been characterized as a process, and researchers have delineated two meaningful elements in addition to distributive justice as important to explaining perceptions of justice (Bies & Moag, 1986; Greenberg, 1990). These two elements are procedural justice, which refers to the rules and procedures used to arrive at the distribution of outcomes, and interactional justice, which refers to the way those who carry out the process relate to the recipient party (Bies & Moag, 1986; Greenberg, 1990). While these elements tend to be highly correlated, each uniquely adds to our understanding of the justice perceptions and reactions to those perceptions (Folger & Konovsky, 1989; McFarlin & Sweeney, 1992).

Critical Analysis of The Business Strategies

Offensive and defensive strategies are by products or results of the corporate strategies. A corporate strategy is a comprehensive set of activities developed by top management to aid an organization achieve its corporate objectives. Involving all parts of an organization, these strategies consider both internal and external environments. As the name suggests these strategies are aimed at placing the organization in a ‘attack mode' of sorts. Organizations employing such strategies generally believe in acting before their opponent. Such strategies are usually achieved through internal growth, though some like mergers and acquisition, etc are external. Concentration on a single product or service The firm chooses to specialize in a single product, product line, or service. It plans to do one thing with great effectiveness and efficiency. This specialization allows an organization to do whatever it does extremely well, perhaps even better than other organizations. Used mostly by small organizations, it reduces the amount of resources required and as such is a low risk strategy. However, it ties up all of the firm's resources on a single product, service, or product line. The firm's success and growth is dependent entirely on that particular product with nothing to fall back on were that product to fail. Also, coupled with the facts that this strategy limits an organization's growth and opportunities, it can be considered a high-risk strategy as well. E.g. a company deciding to specialize only in the production and distribution of a particular brand of chocolate will find their chances for growth and profits tied inexorably with the market acceptance of that chocolate. Failure of the product will spell doom for the company. Despite these pitfalls, the concentration strategy has nevertheless borne fruit for organizations like Holiday Inns. Considered one of the largest hotel chains in the world with 1800inns, Holiday Inns have achieved unparalleled success by focusing on the hospitality industry. Put plainly concentric diversification is said to be when a firm originally concentrating on one specific product, service, or product line decides to add related products or services to its already existing retinue. These new products or services are added internally (i.e. it can be a management decision) or may be acquired through acquisitions. A good example is Cadbury. Though initially focusing on biscuits, the company today has an impressive line-up that includes not only biscuits, but also chocolates and ice cream as well. One of the major reasons why companies choose to follow such a strategy is the potential for faster growth, and the lure of establishing a diverse if related product line. This ensures that if one product were to fail, there would still be something to fall back on. Vertical integration occurs when one firm acquires another that is involved either in an earlier stage of the production process (backward integration) or a later stage of the production process (forward integration). The firm that is acquired usually follows the same line of business as that of the parent company. While backward integration will give the firm more control over the quality and quantity of its raw materials, forward integration will ensure that the firm's products will enjoy a good demand. This occurs when a firm decides to branch out and add products or services that are unrelated to its existing products and services. Conglomerate diversification can occur through acquisitions or it may be based on management decisions. The purpose in employing such a strategy is to increase sales and earnings, spread risks, or in the case of acquisitions simply to make an attractive investment. An example is the heavy vehicles and industrial equipment manufacturer Caterpillar, who have branched out into the production of boots and accessories. A merger involves combining the operations of two companies to form a new and unified organization. Acquisitions on the other hand is the taking over of another firm but allowing the acquired firm to function as a independent division or subsidiary of the acquiring firm. The main aim of this strategy is to achieve growth both in sales and earnings, which it does more quickly than any internal strategies. An accurate example would be the recent merger of carmakers Chrysler and Mercedes Benz. An example of acquisition would be BMW's takeover of Rolls Royce. Joint venture is when two or more firms combine resources to accomplish a task that an individual firm could not have done alone, or to do a job more efficiently. Considered as a means to implement a strategy rather than a strategy, joint ventures offer a way for organizations to undertake projects and spread any risks as well as operate more efficiently. General Motor's collaboration with Toyota is an example of a joint venture. Usually adopted by companies, who follow a wait and watch attitude, these strategies nevertheless help an organization achieve a good foothold in the market. Reducing the scope of operations or activities to improve effectiveness and efficiency is retrenchment. Organizations adopting such a strategy generally believe that making the organization more effective and efficient will give it a better chance to return to a higher level of profitability. In some cases a firm may simply cut costs, reduce personnel, etc, but will decide to maintain all its current line of business, whereas, in extreme cases a firm may decide to get rid of certain product lines or services. Divestment is when a firm spins off or sells segments of its operations. The main reasons for such a situation to arise are: a firm may have acquired another firm that either interferes or does not contribute to its current organization mission, a segment may not be functioning satisfactorily enough to justify the resources invested in it, or the segment might be earning a profit but the management decides its resources are better utilized elsewhere. Stopping the decline in a firm's performance and bringing a return to successful performance involves turnaround. It combines a defensive strategy (retrenchment or divestment) with a growth strategy. The turnaround of Chrysler Corporation in early 1980's from a failing enterprise to a successful one is a good example. Usually a last resort strategy, it involves selling or disposing of the organization assets. The entire organization or only part of it may be sold. It occurs when turnaround was a failure or may not have been viable. Undertaken mainly to provide the stockholders a return on their investment, it is one of the most unpleasant strategies. The various offensive and defensive strategies are not separate, and are used in complement with one another. Most firms employ a variation or a mixture of the various strategies. The only important factor is deciding which strategy will better suit the conditions presently being faced by the firm.

Kayem Foods, Inc

Executive Summary Problem/Issues Matt Monkiewicz, director of marketing for Kayem Foods, Inc. , is challenged with a decision pertaining to a small but fast growing product, Al Fresco chicken sausage. The product has become a brand leader in its market niche, and means on how to promote the product is in question. A â€Å"buzz† marketing campaign was recently used, and while the company did increase in sales, there is no way to directly calculate the effect the campaign had on the product. Mr. Monkiewicz would like to continue to use the â€Å"buzz† marketing approach, but supermarket executives and food distributers are unwilling to increase buying and support for the brand. They do not believe that this small marketing campaign is solid enough to increase buyer recognition and increase sales. Customers have remarked that the product is hard to find in stores, and some cannot find it entirely and have to visit other locations. Analysis The sausage market, while growing, has several competitors who dominate the market. Al Fresco chicken sausage has become the number one brand in its market niche, but buyer power is high due to the low price and similarity of the product. Kayem Foods Inc has primarily sold through supermarkets and other retail food stores in the Northeast. In the last two years, it had made a concerted effort to obtain distribution in the Midwest and the Southeast. Kayem has two different communication needs. First, they need to convince retailers that their product has a stable top of the market demand, and that current pricing creates a large profit potential. This objective can be achieved by devoting money to print advertisements in food magazines, and by allocating money to trade advertisements which depict the success the company has currently seen with the Al Fresco product Monkiewicz used Al Fresco’s high recent sales increases to secure an $185,000 advertising budget for FY 2006. His perceived marketing options include spending $75-72,000 on another Buzz campaign, which supermarket executives do not believe is an adequate marketing campaign for the product. Another possibility is running trade advertisements to entice more retailers to sell Fresco’s chicken sausage (minimum cost of $80,000). The company has evaluated the possibility running no less than 2 or 3 print ads in specialty food magazines; this would be a cheap way to get circulation to the target market. A final alternative would distribute consumer price-off coupons at a minimum cost of $90,000. On top of the advertising venues chosen, an informative website that provided, product history, flavors, recipes, and product locations would be beneficial Recommendations Kayem Foods, Inc. should use the budgeted $185,000 promotional dollars to run a series of â€Å"trade advertisements† that would cost $80,000. They should also run two ads in both Food and Wine and Cooking Light food specialty magazines which would cost $39,765 and $57,840 and would be seen by 5. 4 million people. They should also launch an informational website that would help build product awareness. Use of these three advertising avenues helps resolve the problems the Al Fresco brand currently faces; a new, largely unknown brand to consumers, supermarket managers have been reluctant to offer the brand considerable, if any shelf space due to doubts of stable demand. Problems/Issues Matt Monkiewicz, director of marketing for Kayem Foods, Inc. , is challenged with a decision pertaining to a small but fast growing product, Al Fresco chicken sausage. This product, though small, has become the number-one brand in its niche market. The company had recently implemented a â€Å"buzz† marketing campaign for the product. This is a unique technique for using a word-of-mouth advertising venue. Monkiewicz did not initially have a substantial marketing budget adequate enough to make a substantial impact using traditional media. â€Å"Buzz† marketing, gave him means to promote the rand on a small budget but still have an impact on his target market. According to ACNielsen, Al Fresco had become the number one-selling branded chicken sausage in the United States by late July 2004. However, it was not clear whether this was due to the buzz campaign or to other marketing activities implemented by the firm. Prior to the campaign, the brand had developed substantial m omentum with a minimum of advertising support. Also, during the campaign period the sales force had made a special effort and offered special discounts and allowances to obtain new distribution. The sales increase by the brand was very impressive, but it was not clear how much more growth Kayem could expect from this rather unusual marketing tactic. Monkiewicz explained that it would be a challenge to sustain the growth and increase market share with such a limited marketing budget. Even with substantial growth of the product, the company has continued problems with supermarket executives and food distributers still unwilling to increase buying and support for the brand. They do not believe that this small marketing campaign is solid enough to increase buyer recognition and increase sales. This placed a major dilemma for Kayem Foods, and Al Fresco. They would like to continue to use the â€Å"buzz† marketing approach, but there is no way to justify and link the increase in sales with the campaign. The big issue now is getting supermarket executives and distributers to be confident with the product to increase shelf space and brand recognition. This is very important because seventy-two percent of the BzzAgents reported that they had had difficulty finding the product in the supermarket. This meant that they had to either ask the store manager for the product or go to a different store. Twenty-three percent were never able to find the product. Monkiewicz has two weeks to decide how to implement an upcoming market strategy for the product. He would like to implement another â€Å"buzz† marketing campaign in 2005, but since this strategy is not wielded well by supermarket executives, he has to look at other venues. Some alternatives he could look to with the advertising budget include; limited magazine advertising, consumer coupons, or more point-of-purchase material. Monkiewicz has also considered an advertising campaign in supermarket trade magazines aimed at retail food buyers and merchandising executives. Situation Analysis 5 Forces Upon reviewing the five forces model for Al Fresco, it is noted that competition is pretty high in the industry. Total category sales for the chicken sausage segment were about $75 million per year. The market is growing at about 12 percent a year. This is a growing market, with a few large brands, and rivalry is high. Al Fresco possesses a small 5. 3 percent of the market in the New England area. Because the chicken sausage category is small, it is difficult to obtain many specifics about competition. Buyer power is moderate to high, due to the fact of low switching cost and ease of access to the product. Buyers can be brand loyal, which is a benefit to some companies in the industry. Tying in with the high buyer power is a high power of substitutes. Consumers on average spend $16. 95 annually per year in the target market, when compared to the food industry is not very much. The sausage market can be seasonal, with price promotions and coupon discounts during these periods can be very high. This can lead to shelf space being a big factor, because if a consumer cannot find their desired product, they can easily purchase a similar product for a similar price. Barrier to entry is low in the market due to the fact of establishing a high quality product at a reasonable price with good shelf space and advertising. Supplier power is also low due to the fact that the low priced products in the industry are located in all major grocery stores. S. W. O. T. Strengths In 1999 Kayem introduced the Al Fresco brand. The firm believed if they could have a well-recognized â€Å"demand brand,† it could potentially obtain higher prices and better margins and open doors in new markets. By late July 2004, Al Fresco had become the number one-selling branded chicken sausage in the United States. The product was offered with high quality, healthy attributes, freshness, and distinctive flavors. Al Fresco chicken sausage has 75 percent less fat than traditional pork sausage and is available in seven flavors. Sales have increased significantly for Al Fresco chicken sausage. In September of 2003 they posted sales of $197,000 and in October of 2004 that number rose to $575,000. Weaknesses Though Al Fresco has been prosperous in recent years, Kayem’s profit margins have been eroding. Gross margin for the company had been declining for several years due to supermarkets gaining â€Å"power† through consolidation and demands for greater discounts and promotional allowances from suppliers. With this, Al Fresco has been asked for more price- oriented promotions. This could be a possible benefit for the company, but would cost about $90,000 to be effective. The target market for Al Fresco chicken sausage is the 25- to 54-year-old woman who was health conscious. This is a good niche market, but it makes Al Fresco cater to this niche instead of advertising to an entire population. Opportunities Kayem Foods Inc has primarily sold through supermarkets and other retail food stores in the Northeast. In the last two years, it had made a concerted effort to obtain distribution in the Midwest and the Southeast. This market expansion could lead to vast growth for the company if it takes hold of market share in these regions. The chicken sausage segment is small, with category sales about $75 million per year, but the market is growing at about 12 percent a year. With the new prospective advertising campaign, Al Fresco has potential to capture additional market share. Since sales of Al Fresco had been increasing significantly, the advertising budget was increased to $185,000 for fiscal year 2006 (March 1, 2005-February 28, 2006). This allows Monkiewicz with new possibilities for advertising and reaching a broader customer base. The company should use this to increase demand from supermarket executives, to provide better shelf space for the product. Monkiewicz would like to continue to use the â€Å"buzz† marketing campaign. Rob Walker wrote an article in the New York Times, explaining how effective this campaign was. Appendix) One agent related. †I told everyone that they were low in fat and so much better than pork sausages. †Ã‚  The article relates how effective â€Å"word of mouth† advertising can be. Threats Al Fresco has faced a few problems along the way. During their â€Å"buzz† marketing campaign, seventy-two percent of the agents reported that they had had difficulty finding the product, while twenty-three percent were never able to find the product. This is unacceptable in the marketplace and Al Fresco must convince the supermarkets to carry the product, and give it adequate shelf space. Though Monkiewicz liked the â€Å"buzz† campaign, it was hard to track and justify just how effective an advertising campaign it was. This is threatening, because supermarket executives are timid to demand the product if this is the only kind of advertising the company partakes in. Sausage Market Consumers of sausage products spanned all national regions and income levels. Accordingly, the sausage products where used for both main entree’s and complements to other center-plate dishes for all three main meals of a day. Retail sales of all sausages tallied $2. billion in 2003. This total includes Al Fresco’s product segment, specialty sausage, which had a 20%, or $4. 8 million in sales, and was currently the fastest growing segment. Increased sales were linked with a shift in consumer preference for differentiated products that added a variety to their menus, or were lower in fat content. Concurrently, Al Fresco’s chicken sausage was part of a market segment of low-fat/lean sausages which made up 19% of all sausage sales. Communication strategy Kayem has two different communication needs. First, they need to convince etailers that their product has a stable top of the market demand, and that current pricing creates a large profit potential. This objective can be achieved by devoting money to print advertisements in food magazines, and by allocating money to trade advertisements which depict the success the company has currently seen with the Al Fresco product. Ads in food magazines will also help achieve the second communication goal, stimulating primary demand in consumers, by introducing them to not only a new product segment, but the most popular product in that market. Supermarket executives have recommended that Kayem advertise in specialty food magazines. Through this type of method consumers should be encouraged to deepen brand loyalty. Due to the niche market of chicken sausage, consumers may not need a sales promotion as often as in larger, saturated market segments. Running advertisements in specialty magazines allows a company to easily target desired geographic and demographic segments. Magazine ads are thought to have both high credibility and prestige. Plus, this method of marketing has a longer life span than many other mediums (TV, radio, telephone). In essence, though Kayem would be out the entire expense of running advertisements in the current fiscal year, sales spurred by these investments may be realized in months or even years to come. Out of the possible types of advertising goals, the persuasive approach is most in line with both Kayem’s marketing goals and the potential customers reading cuisine magazines. The company can create liking, preference, and conviction for readers to buy their sausage by highlighting its flavor, freshness, and more importantly healthy composition in comparison to other sausage alternatives. They currently have very low brand awareness which could be alleviated with vast advertising campaigns. This method also works best when consumers are processing the advertisement in a detailed, analytical mode. This description fully fits the reader of a food magazine who is seeking new recipes and/or foods. Point-of-purchase (P-O-P) communication is not the most effective use of Kayem’s promotional money at this time. The company’s current dilemma involves convincing more retailers to buy/stock their item on shelves. This problem should be tackled before the same retailers are asked about in-store promotions. Analysis of Alternatives Monkiewicz used Al Fresco’s high recent sales increases to secure an $185,000 advertising budget for FY 2006. His perceived marketing options include spending $75-72,000 on another Buzz campaign, running trade advertisements to entice more retailers to sell Fresco’s chicken sausage (minimum cost of $80,000), running no less than 2 or 3 print ads in specialty food magazines, and distributing consumer price-off coupons at a minimum cost of $90,000. Monkiewicz must decide if BzzAgent’s previous campaign generated enough sales to warrant spending an additional $75,000 on a second campaign in FY 2006. Due to other promotional activities that occurred simultaneously with the first campaign he is unable to determine how many incremental sales the program created. Kayem’s own sales representatives claimed that they were unable to get additional placements or expanded shelf space due to the buzz campaign alone. The cost per â€Å"buzz† (conversation/ activity involving Al Fresco) was calculated to be almost $4. 24. The new campaign would have a unit breakeven of 62,500 packages. While this advertising approach does disseminate relevant literature there remains no clear way to track generated sales. Growing negative market sentiments of BzzAgent’s techniques may also hurt the image of the company if consumers become aware that they use this form of advertising. Another drawback is the fact that Kayem must rely on unpaid employees of another firm to handle their promotions. A second option costing at least $80,000, involves Kayem running a series of â€Å"trade advertisements† directed at convincing retailers that their chicken sausage is in high demand and can be sold with high profit margins. This alternative has a unit breakeven of 66,667 units. Although past efforts have lacked the intended success, Kayem must address the limited availability of their product. Producing the leading brand of a product in a market segment which has quickly expanded gives them better financial support when approaching retailers than before. The option of distributing consumer price-off coupons was mentioned by both Al Fresco’s sales force and certain supermarket managers. The supermarket managers would still receive full retail selling price, but the Kayem would be cutting their profit margin on each package bought with a coupon. The unit breakeven of this promotion would be 75,000 packages. The product is competitively priced with other chicken sausage products according to a survey of the Boston-area supermarkets. Another draw-back to offering price reductions is in conflicts with Kayem’s desire to keep margins high to off-set their lower profit lines. A final promotional route Kayem could choose involves running advertisements in specialty food magazines. This approach covers a large geographic area, connects to the targeted demographic profile, and has a longer life than most of media avenues. Various costs for ads covering a full, half, or quarter of a page for three different magazines is accompanied by number of circulations in the appendix. Kayem’s managers believe that no fewer than 2 or 3 ads would be needed to have any positive effect on sales. There are many new opportunities opening in the advertising venue for Al Fresco due to the increased budget. Two big issues the company faces are product awareness, and knowledge of where the product is available for purchase. With the Internet becoming more and more common place, a simple website would be a possible alternative for Al Fresco. The site would offer history of the product, types of product, recipes to go with the sausage, and locations were the sausage may be purchased. Any advertising that is done; the name of the website could be placed on the advertisement. It is assumed that a start up fee cost for a simple informative website would be $4,000 and yearly upkeep would be an additional $3,000. Recommendations/Implementation Kayem Foods, Inc. should use the budgeted 185,000 promotional dollars to run a series of â€Å"trade advertisements†, 2 ads in both Food and Wine and Cooking Light food specialty magazines, and launch an informative website. Use of these three advertising avenues helps resolve the problems the Al Fresco brand currently faces; a new, largely unknown brand to consumers, supermarket managers have been reluctant to offer the brand considerable, if any shelf space due to doubts of stable demand. Due to budget constraints, the placement of two 1/4 four-color advertisements in both food specialty magazines is the cheapest way to increase broad brand awareness in the target market. An estimated 5. 2 million ads will be circulated at an estimated cost of $18. 7 per 1,000 viewers. This is by far a cheaper avenue to reach potential customers than another â€Å"buzz† campaign (appendix). The ads should highlight the freshness and natural, healthy composition of Al Fresco’s chicken sausage, and should include the statements, â€Å"#1 Selling, Healthy, All-Natural Choice† and â€Å"Ask for It at Your Local Supermarket†. Thes e advertisements will not only increase selective demand, an approach that attempts to highlight a specific brand’s competitive advantage in the face of many substitutions, but will also spur a deepening in brand loyalty. By using a persuasive advertising approach these placements will lead to higher preference, liking, and conviction of Al Fresco’s chicken sausage flavors by consumers because they will be processing the ads in a detailed, analytical mode. Placing these ads in food magazines gives Kayem the opportunity to place their product in the minds of consumers actively searching for new products/ recipes, thus initiating new sales from experimenting, health conscience, or even allergenic consumers. Secondly, supermarket executives have said such an advertisement campaign is needed to create the stable demand required to prompt initial purchases and shelving of Al Fresco’s chicken sausage. Increasing the pressure on retailers to adopt and sell Al Fresco’s products can be supplemented by running a series of â€Å"trade advertisements†. These ads will highlight the specialty and low-fat sausage market segment’s growing sales numbers, and Al Fresco’s personal commitment to faithfully market their products. High profit margins and placement at the top of the segment market are also key points that must be received by retailing executives. As mentioned by Monkiewicz, $80,000 will be needed to successfully implement this advertising campaign. The remaining budget dollars will be used to launch and maintain an informational website specifically aimed at providing product awareness to customers. In today’s day and age, the internet is becoming more resourceful. With Al Fresco’s increased advertising over the next year, they can add they website URL to the ads for free publicity to the website. The website would be simple, offering product history, flavors and recipes, and locations were the product is available. APPENDIX |BREAKEVENS | | | | | | | | | | | |$1. 0 contribution margin per pound, typical package (unit) size= . 75 pounds, SO, $1. 20 contribution margin/package | | | | | | | |OPTIONS | | | | | |1. Bzz campaign @ cost $75-72,000 | | | | |75,000/1. 2 = 62,500 Breakeven in units | | | | | | | | | | |2. Series of â€Å"Trade Advertisements† @ cost $80,000 | | | |80,000/1. 2 = 66,667 Breakeven in units | | | | | | | | | | |3. Consumer Price-off Coupons @ cost 90,000 | | | |90,000/1. 2 = 75,000 Breakeven in units | | | | | | | | | | |4. Ads in specialty magazines | | | | |MEDIA COST AND CIRCULATION FOR MAGAZINES | | | | | | | | | | |Circulation |Cost of Full Page |1/2 Page |1/4 Page | |Better Homes and Gardens |7,600,000 | $ 359,000 | $ 215,400. 0 | $ 107,700 | |Food and Wine |900,000 | $ 66,275 | $ 39,765. 0 | $ 19,883 | |Cooking Light |1,700,000 | $ 96,400 | $ 57,840. | $ 28,920 | | | | | | | | | | | | | |$185,000 Proposed Budget | | | | |Circulation |Price | | | | |1. 8 million |$39,765 |(2) 1/4 Page ads in Food & Wine | |3. million |$57,840 |(2) 1/4 Page ads in Cooking Light | |5. 2 million |$97,605 |Total | | | |   |$80,000 |Cost of Trade Advertising | | | |$177,605 | | | | | |$7,000 |Launch and Maintenance of Website | |$184,605 |Total Advertising Budget | | | | | | | | |*Cost of magazine ads $97,605 with an estimated 5. 2 million circulation = $18. 77 per estimated 1,000 viewers | |*While Cooking Light has a lower cost-per-thousand | |the difference is not significant enough to offset the potential | |increased reach of running advertisements in Food and Wine simultaneously. | Buzz Mkt | | | | | | |2000 agents | | |Conversation Locations | | | |3 coupons for free package | | |Place |Percent | | |10 $1 off coupons when purchasing 2 packages | | |Home |41% | 5,807| | | | |Social Location |16% | 2,266| |goal each agent talks to 10 people = 20,000 people | |Work |15% | 2,125| | | | |Grocery Store |10% | 1,416| |758 agents filed reports | | |Other |18% | 2,550| |1,647 BzzReports completed, 8,470 buzz hits | | | | | | |1 report = 8. 6 conversations or activities about Al Fresco | | | | | |8. 6 x 1647 = 14,164 buzz hits (revised) | | |14,164 | | | | | | | | | | |Reedeming coupons 6000 free package coupons | | | | | |at 4. 9 = $26,940 | | | | | | | | | | | | | |20000 $1 off coupons = $20,000 | | | | | | | | | | | | | |Total cost of full redemption = $36,940 | | | | | | |$47,000 + 46,940 = $93,940 Potential Total Cost of Bzz campaign | | | | |Estimate | | | | | | |Total cost $ 60,000/ 14,164 = 4. 361 | | | | | | |An estimated $4. 24 spent for each conversation/activity | | | | | |stemming from Bzz regarding Al Fresco | | | | | | |CHICKEN SAUSAGE MARKET | | | | | | |FY 2006 |FY 2007 | |$75,000,000 |$84,000,000 |$94,080,000 | Sources

Uk Taxation System

1. 1 Introduction of the UK tax system There is a very long time before British tax becomes what it is now, which can be traced back to Ancient times when UK was a part of the Roman Empire. The uniform land tax in 1692 is the basis to the current British tax system; at that time, the land tax is a kind of direct tax and is the main source of government revenue. Before the end of 18th century in British, William Pitt announced income tax to cover the expenses on weapons in the preparation for the Napoleonic Wars. Initially, the tax rate was around 1/120 of the income above ? 60 and the rate increased to 1/10 of income above ? 200.In the 20th century, income tax is the main resource for UK government; in the mean time, indirect taxes also became more important through the century. In 1965, the corporation tax and the capital gains tax were introduced, and in 1984 the capital transfer tax was replaced by inheritance tax. Currently, the taxation system in the UK can be mainly categorized as personal tax, including income tax, inheritance tax and council tax, sales taxes and duties, including value added tax, excise duties, stamp duty and motoring taxation, business and personal taxes, including national insurance contributions and capital gains tax and business taxes.As a constitutional monarchy, the power of legislation is highly concentrated. All tax laws are from proposals from the Treasury Department and after approved by parliament and the royal, these proposals can come into effect and become laws. In the UK, nearly 90% of tax income is collected by central government. The HM Revenue & Customs takes charges of tax administration related affairs, including value added tax, sales revenue and tariff. 1. 2 Discussion of the UK taxation bases In computing the tax, we have to consider two parts: tax base and tax rate.Tax base is the economic basis of a certain tax and it is the base amount to compute the tax liabilities. Tax base is different from tax object, for e xample, the total income is the object of income tax, while only the taxable income can be regarded tax base. On the whole, tax base has two categories: economical tax base and non-economical tax base. Economical tax base means the objects of tax that are related to economical actions, such as revenue, capital and sales; non-economical tax base has nothing to do with people’s economical actions, such as the poll tax that is taxed on every individual person without their actions.In the UK, there are three kinds of tax bases: income base, capital base and consumption base. The income base is mainly used in individual income tax and corporate income tax. In most countries, revenue from income tax is the main source of government, so income tax base certainly has many advantages. Firstly, income tax base is much larger than other tax bases, because people with income above taxable allowance are the subjects to income tax. Furthermore, for most people, tax based on income is easy to calculate and manage for governmental officers. On the other hand, income tax base also has several disadvantages.Firstly, income tax base is only available for cash income; for income as goods, income tax base would not work. Obviously, it is unfair to not tax on goods income. Secondly, income has many sources; some are easy to track, such as wages and bonus, while some are not easy to detect, such as illegal sales commissions. At last, different people have different ability to pay the tax and income is not a good indictor to measure their tax abilities. So it is very hard to make a rule or rate to keep fair among every taxpayer. Capital can be used to make income and can reflect individuals’ paying ability, so it seems to be a good base for tax.However, the amount of capital would not generate the same amount of income, so it is not very accurate to use capital as a tax base. Furthermore, there are many kinds of capitals, which are hard to calculate and manage, and taxp ayers’ economic conditions are not the same, for example a house with mortgages and without mortgage should not be regarded same, so capital tax base also has some drawbacks. At last, consumption is also a measurement of ability to pay tax; more consumption means more ability to pay tax and less consumption means less ability to pay tax.According to Nicholas Kaldor’s theory, revenue should be the base of tax, not income. But here comes a confusing question: what if a person saves most of his/her income in the bank, rather than for consumption? Moreover, revenue tax base would affect the money supply on the capital market, because most people would tend to shorten their consumption and save money in banks. In a nut shell, all of these three tax bases have advantages and disadvantages, and there is no perfect tax base that can very fairly measure all taxpayers’ ability. So when considering the tax system, we should keep a balance between these three tax bases. . 3 Evaluation of a good taxation system What are the qualities of a good taxation system? Of course, nobody likes paying tax; however, tax is the main source for government revenue, which is used for providing public services. So we can also say taxpayers pay for the services they received, such as high ways and public schools. A good tax system should be both simple and equitable and simple. Equity has two directions: one is horizontal and the other is vertical. Horizontal equity means taxpayers with similar income should the same level of tax; vertical equity means taxpayers with higher income should pay a high level tax.Even though companies have to pay corporate tax, all taxes are ultimately paid by individual taxpayers. So it is extremely important to keep tax system to be equitable. Besides, simple is also an important quality to a good tax system. The rules and laws should be easy to understand; the tax liability should be easy to calculate and the tax system should be easy to administer. If the cost to administer the tax is more than tax revenue received, this kind of tax system is inefficient to both taxpayers and government.Complicated tax laws are costly to both taxpayers and the government; such laws are hard to administer and inefficient to collect. In addition, a good tax system should also be certainty, which means that the tax policy should keep being stable year to year, because this can make taxpayers to know the difficulty to evade tax payable and make a reasonable tax plan on the long run. On the whole, equity and efficient principles are two main principles to measure a tax system. A pie cannot be made both bigger and divided fairly. The same situation happens here.We cannot expect a tax system to be both equity and efficient, for example, when cut down the marginal income tax rate for those high income taxpayers, their productivity would increase accordingly, while the tax equity would decrease. However, there is always a comparably good po int between them, which we often call tradeoff. 1. 4 Evaluation of the UK taxation system In the UK tax system, income tax, national insurance, value added tax and corporation tax are the four main source of governmental revenue; the percentages are respectively 29%, 19%, 15% and 9%. On the whole, the UK tax system is quite stable.According to Huijun Yang (2012), from mid 90s 20th century, the ratio of total tax on GDP is between 36% and 39%, so it would be easy for taxpayers to make a tax plan. In addition, the UK tax system is quite equity for its income tax rate ranges from 10% to 50% and low income taxpayers can deduct allowances too. In 2012, the income tax personal allowance increases from 7,475 to 9,000 and the highest income tax rate decreases from 50% to 45%. This new rule will benefit 23,000,000 basic income tax rate taxpayers. The UK tax system also operates efficiently and the cost to administer tax is comparatively low.So overall, the UK tax system is well designed and works both efficiently and equity. However, there are still some drawbacks of the UK tax system. Firstly, the highest tax rate will be 45% in 2013, so the income gap between the rich and the poor will get bigger and bigger. Secondly, the tax takes less than 40% of the GDP, while, on average, government expenditure is 45% of the GDP, which means that the government need to increase their deficit to keep going on. Too much deficit will increase the governments’ financial pressure, because the borrowing must be paid by future years’ tax revenue.If the deficit always keeps on a high level, the governments’ authority among public would be weaken, and government function cannot be operated well. Thirdly, individual tax is prepared and paid by individuals; these tax preparation costs, including service fee of accountants and time cost, are also hidden costs for taxpayers. At last, the British government provides comprehensive social welfare to all citizens; among them, most taxpayers pay for the services, but some lower income taxpayers or unemployed people enjoy the services free of charge.So it is those high income taxpayers pay money for the low income taxpayers, and this would decrease those high income taxpayers’ work efficiency because some of their work are not rewarded. According to Holdford and Lovelace-Elmore (2001, p. 8), Vroom asserts, â€Å"Intensity of work effort depends on the perception that an individual’s effort will result in a desired outcome†. 1. 5 suggestions for the UK taxation system The following suggestions may be work to solve those drawbacks: * Creating more jobs for the poor and unemployed people * Increasing the highest rate of income tax Optimize the tax structure * Simplifying complex tax law clause * Decreasing the corporate tax rate for starting companies 2. 1 proposals for the UK taxation system In the UK, the main taxes are: income tax, inheritance tax, council tax, value added tax, motori ng taxation, corporate tax and capital gain tax. Even though all taxes have different tax bases, the ultimate taxpayers are every individual. As we know, a pie cannot both be big and evenly sliced. So for the UK government, it should find out a good point that can make the tax system be both efficient and equity.According to the 2012 Budget statement by the Chancellor of the Exchequer, the Rt Hon George Osborne MP (2012), the main target for the UK government is to keep the economy in a stable increase trend. As mentioned in Osborne’s report, the UK’s economy is in a depressed time and the government has to both cut down expenditures and expand tax revenue. Therefore, we proposed three proposals on the tax system to improve the development of economy. Firstly, divide more the income tax rate levels between the higher rate and additional rate.According to the current UK income tax system, taxpayers with band between ? 34,371 and ? 150,000 are applicable to the higher ra te that is 40%, and taxpayers with band over ? 150,000 are applicable to 50% additional income tax rate. Apparently, the range from ? 34,371 and ? 150,000 are too wide that some mid-class families have to pay too much income tax for the high marginal tax rate. Taxpayers with income of ? 34,371 and ? 150,000 are totally different in tax payment ability, so it is not fair to let all of them pay tax on the same rate. From my point of view, taxpayers with band between ? 4,371 and ? 70,000 are applicable to tax rate of 25% because most mid-class taxpayers’ incomes are in this range and by doing so, there financial pressure will be reduced a lot; taxpayers with income ranges from ? 70,000 to ? 100,000 are subjects to 35% income tax rate and taxpayers with band from ? 100,000 to ? 150,000 pay income tax on 45% income tax rate. This proposal will greatly reduce the most mid-class taxpayers’ financial pressure and as the marginal tax rate increases for high income taxpayers, th e total tax revenue for government will not decrease.Secondly, impose property tax on people who own luxury houses or own more than three houses. In many countries, the property tax is imposed on individual house owners because real perporty is a remark of wealth. The property tax can help to reduce the gap between the rich and the poor. Moreover, as the tax is imposed on multiple house holders, the economic bubble in real estate investment or speculation will be greatly eliminated. Currently, the property tax is imposed on gains from capital, such as house rental not on capital itself. Even though taxpayers pay tax on their capital gain, the income gap still increases.At last, decrease the rate of stamp duty for bond or stock transactions. Currently, the stamp duty rate is 0. 5%. As mentioned in the UK’s budget statement, the main target in 2012 is to keep the economy to be stable not do slow down. The decrease of stamp duty is really a good method to stimulate the economy d evelopment. On the one hand, the decrease of stamp duty is a good remark for the stock market, which would encourage more stock transactions. On the other hand, even though the rate of stamp duty decreases, as more transactions there will be, the total revenue from stamp duty will still increase.As we know, UK is the center of worldwide stock market center. Stock market is the main capital source for public companies, so the boom of capital market will greatly promote the development of entity economy. In conclusion, the UK’s tax system is well organized and designed except for some drawbacks. I believe my proposals can effectively improve both equity and efficiency of the UK tax system and stimulate the economy development. Reference list Budget statement by the Chancellor of the Exchequer, the Rt Hon George Osborne MP, 2010. HM TREASURY. online] Available at: < http://www. hm-treasury. gov. uk/junebudget_speech. htm> Finance Act 1965 (c. 25), from UK Statute Law Databaseâ⠂¬ . UK Statutory Publications Office,  Ministry of Justice. Retrieved 2007-05-09. â€Å"HM Revenue and Customs receipts†. hmrc. gov. uk. Retrieved 2011-11-11. Kay, Richard. â€Å"Palace fear over Queen's tax bill†. Daily Mail  (London). Peter Victor (30 July 1995). â€Å"A brief history of VAT†. The Independent(London). Retrieved 13 January 2011. Principles of a good tax system,2010, tutor2u, [online] Available at: