Berkshire Hathaway Phenomenon In the Context of Modern Finance Theory Essay Example for Free

Berkshire Hathaway Phenomenon In the Context of Modern Finance Theory Essay Berkshire Hathaway Phenomenon In the Context of Modern Finance Theory Septtember 2013 Berkshire Hathaway Phenomenon In the Context of Modern Finance Theory Introduction Over the 46 years ending December 2012, Warren Buffett (Berkshire Hathaway) has achieved a compound, after-tax, rate of return in excess of 20% p.a. Such consistent, long term, out performance might be viewed as incompatible with modern finance theory. This essay discusses the Berkshire Hathaway phenomenon in the context of modern finance theory. Part 1 Modern Portfolio Theory Berkshire Hathaway’s investing strategies mainly differ with modern portfolio theory on two aspects. The first one is the attitude towards the undesirable thing in investment. And the second one is the perspective of diversification. As Harry Markowitz pointed out in Portfolio Selection, one of the assumptions is (Markowitz, 1952)â€Å"the investor does (or should) consider expected return as a desirable thing and variance of return an undesirable thing†. However, in Warren Buffet’s point of view, (Roberg G, 2005) the only undesirable thing should be the possibility of harm. He emphasizes on conducting fundamental analysis to work out a company’s future profits, so as to determine the intrinsic value instead of monitoring the stock prices. This is because in the long term, the investment outcome is mainly harmed by misjudging the business value, including misjudging of inflation rate and  interest rate etc. As such, risk is defined differently between Mr Buffett and Modern Portfolio Theory; one is defined by possibility of misjudging the  intrinsic value of business, the other being simplified to variance of expected returns. If we consider risk as a probability statement, then maybe Mr B uffett’s definition is closer to the original meaning. Also, the assumption of maximising one-period expected utility is not what Buffet focuses on in his investment strategies. (Roberg G, 2005)In this case, Justin Industries, which was acquired by Berkshire Hathaway in 2000, can serve as a good example. During the five years prior to the acquisition, stock price of Justin Industries dropped by 37 percent, which should result in a huge variance of expected return. But Mr Buffett saw it as a perfect opportunity to purchase a well-managed traditional business with over 100 years of history. He offered a 23 percent premium over stock price at the time, and the stock price shot up by 22% on the day of announcement. It is also stated by Markowitz that, (Markowitz, 1952)â€Å"a rule of behaviour which does not imply the superiority of diversification must be rejected both as a hypothesis and as a maxim†. On the contrary, Mr Buffett has his famous quote, (Roberg G, 2005)â€Å"diversification serves as a protection against ignorance. If you want to make sure that nothing bad happens to you relative to the market, you should own everything. There is nothing wrong with that. Its a perfectly sound approach for somebody who doesnt know how to analyse business†. One can always argue that Berkshire Hathaway does not operate in only one industry, and they tend to invest in more industries in recent years. But as the business grows in volume, it is reasonable to be involved in new industries when there are few sound investment opportunities in the industries they already operate in, let alone that the technology industry was rarely in the list of holdings of Berkshire Hathaway, not even when Apple’s stock was soaring. The reason being, (Roberg G, 2005)â€Å"investment success is not about how much you know but how realistically you define what you dont know†. Chart 1 (Martin Puthenpurackal, 2007) Distribution of Berkshire Hathaway Investments by Industry The chart above shows distribution of Berkshire Hathaway’s investments by industry and firm size during the time frame 1976-2006. Judging by the size and number of investments, it can be concluded that a large amount of wealth was placed in manufacturing industry during the 30 years in study, although for diversification purpose, more weight could have been placed in the industry of agriculture, forestry and fishing, construction or retail trade. Having compared the differences, it is still worth noting that Markowitz did not rule out fundamental analysis in portfolio selection process, as is said in his foregoing paper,(Markowitz, 1952)â€Å"the process of selecting a portfolio may be divided into two stages. The first stage starts with observation and experience and ends with beliefs about the future performances of available securities. The second stage starts with relevant beliefs about future performances and ends with the choice of portfolio. This paper is concerned with the second stage†. Part 2 Efficient Market Hypothesis The strong form of efficient market hypothesis states that all information, no matter public or private, instantaneously affects current stock price. Semi-strong form is only concerned with public information, while the weak form suggests that current stock price reflects information in the previous prices. In short, they simply imply that in the long run, no one should be able to beat the market in terms of investment return. As is said in Fama’s paper in 1970, (Eugene F, 1970)â€Å"the evidence in support of the efficient markets model is extensive, and (somewhat uniquely in economics) contradictory evidence is sparse†. However, Warren Buffet has always criticised efficient market hypothesis as much as he could. The major  reason is that, as a fundamental analysis advocate, (Roberg G, 2005)he thinks analysing all available information make an analyst at advantage. He once said, (Banchuenvijit, 2006)†investing in a market where people believe in efficiency is like playing bridge with someone who has been told it does not do any good to look at the cards.† Also in his speech at Columbia University in 1984, he mentioned, â€Å"ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham Dodd will continue to prosper.† (Roberg G, 2005)To illustrate, we can take Berkshire Hathaway’s acquisition of Burlington Northern Santa Fe Corp. in 2009 for example. At the time, shares of Burlington Northern had dropped 13 percent in 12 months. Also, the market was soft during GFC, so the possibility of competitive bids was low according to Tony Russo, a partner at Gardner Russo Gardner, which holds Berkshire shares. If efficient market hypothesis does stand, the market would rebound quickly when GFC took place, and such opportunity of relatively low-priced acquisition would not exist. Even if it exists, other investor should anticipate quick upward adjustment of price and participate in bidding when they find out about this opportunity. However, this does not prove that fundamental analysis is superior, because intrinsic value is not yet clear defined, and how does Mr Buffet calculate the intrinsic value is still a mystery. Part 3 Capital Asset Pricing Model When examining assumptions of Capital Asset Pricing Model, it is obvious that Mr Buffett is at odds with almost every one of them. Firstly, the model assumes that all investors are Markowitz efficient, but as mentioned earlier, Mr Buffett does not treat variance of expected return as an absolute drawback, so the second rule that Markowitz Efficiency must follow does not stand. Secondly, the model is backed by the assumption that investors have  homogeneous expectations and equal access to opportunities, which suggests that everyone is supposed to have the same view of future profit stream. However, as a recent paper pointed out, (Frazzini, et al., 2013)Mr Buffett’s return is largely due to his selection of stocks. If everyone has the same view with Mr Buffett and the same access to the investment opportunities, then if not everyone, a large number of people should be as rich as Mr Buffett, when the reality is the opposite. So Mr Buffett would not agree with this assumption either. The third assumption is that capital markets are in equilibrium, which is practically what only efficient markets can achieve, which, as discussed above, is not in line with Mr Buffett’s view point. The final one, which is that Capital Asset Pricing Model only works within one period time horizon, is apparently against Mr Buffett’s long-term holding strategy. Apart from model assumptions, one of the strongest contradictions between Mr Buffett’s view point and Capital Asset Pricing Model is that the model is for short-term predicting purpose, which would clearly be categorised into (Roberg G, 2005)â€Å"speculation† instead of â€Å"investment† by Mr Buffett. In addition, â€Å"market portfolio† is not of practical use, compared with Mr Buffett’s way of only analysing businesses he is familiar with, because the market portfolio we use cannot truly represent the entire market. Part 4 Multi-factor Pricing Models Unlike Capital Asset Pricing Model, which has only one factor, in Multi-factor Pricing Models, such as Arbitrage Pricing Theory and Fama-French three-factor model, the rate of return is linked to several factors. As diversification is still suggested by the model, the same divergence on diversification exists with Mr Buffet’s strategies and Multi-factor Pricing Models. Moreover, differences also lie in the fact that multi-factor models usually take in some macroeconomic factors, which investors should not consider according to Mr Buffett, (Roberg G, 2005)the rationale being that if a single stock price cannot be predicted, the overall economic condition would be more difficult to predict. Despite the differences, some micro factors included in the multi-factor model, such as P/E ratio and book-to-market ratio, can also be used to conduct fundamental analysis to determine the intrinsic value and possibility of growth of a business. As such, the ideas of which factors to take into account can coincide within the two different approaches. Chart 2(Martin Puthenpurackal, 2007) Factor Regressions of Berkshire Hathaway and Mimicking Portfolios In a paper by Gerald S. Martin and John Puthenpurackal, they conduct a regression analysis using Fama-French three-factor and Carhart four-factor models on monthly returns of Berkshire Hathaway and mimicking portfolios. (Martin Puthenpurackal, 2007)The adjusted excess returns turn out to be significant with p-values 0.024; the excess market return and high-minus-low book-to-market factors are again significant with p-values 0.01. However, small-minus-big and prior 2-12 month return momentum factors are not significantly explanatory factors. As such, preliminary conclusion can be reached that book-to-value highminus-low can be a common factor in both multi-factor models and Mr Buffett’s fundamental analysis. In addition, the factors of firm size and momentum are not likely to be considered by Mr Buffett. Also, both Berkshire’s and mimicking portfolio’s returns outperform the multi-factor models in study. (Bowen Rajgopal, 2009)But as is pointed out in another thesis, the superior performance is attributed to the earlier years and they observe no significant alpha during the recent decade. Part 5 Black-Scholes Option Pricing Model According to Berkshire Hathaway’s letter to shareholders in 2008,(Buffett, 2008)their put contracts reported a mark-to-market loss of $5.1 billion, and this led to Mr Buffett’s â€Å"criticism† towards the Black-Scholes formula as is claimed by the media. However, the loss was in fact caused by inclusion of volatility in the formula when volatility becomes irrelevant as the duration before maturity lengthens. As Mr Buffett said in the letter,(Buffett, 2008)if the formula is applied to extended time periods, it can produce absurd results. In fairness, Black and Scholes almost certainly understood this point well. But their devoted followers may be ignoring whatever caveats the two men attached when they first unveiled the formula. As such, Mr Buffett’s comment on Black-Scholes formula is more of self-criticism than the other way around. This is reflected in his earlier comment on performance in the letter,(Buffett, 2008)†I believe each contract we own was mispriced at inception, sometimes dramatically so. I both initiated these positions and monitor them, a set of responsibilities consistent with my belief that the CEO of any large financial organization must be the Chief Risk Officer as well. If we lose money on our derivatives, it will be my fault.† We can understand why Mr Buffett gave this â€Å"fair† comment about the formulae when referring to the Black-Scholes paper,(Black Scholes, 1973)†if the expiration date of the option is very far in the future, then the price of the bond that pays the exercise price on the maturity date will be very low, and the value of the option will be approximately equal to the price of the stock. â€Å" Mr Buffett also commented that (Buffett, 2008)†The Black-Scholes formula has approached the status of holy writ in finance, and we use it when valuing our equity put options for financial statements purposes. Key inputs to the calculation include a contract’s maturity and strike price, as well as the analyst’s expectations for volatility, interest rates and dividends† and that â€Å"even so, we will continue to use  Black-Scholes when we are estimating our financial-statement liability for long-term equity puts. The formula represents conventional wisdom and any substitute that I might offer would engender extreme scepticism†. Despite Mr Buffett’s confession, a scholar studied the letter and reached a different conclusion why the loss was made:(Cornell, 2009)He first ruled out risk-free rate, inflation rate and drift and focused on volatility, which is consistent with where Mr Buffett thought he made a mistake. The lognormal diffusion assumption, which implies that volatility increases linearly with respect to the horizon over which it is measured, was discussed at length with controversial evidence. As such, its misuse is not a strong explanation regarding the absurd results. He then found out in the letter that Mr Buffett believed that inflationary policies of governments and central banks will limit future declines in nominal stock prices compared with those predicted by a historically estimated lognormal distribution. If Mr Buffet is right, then the Black-Scholes model will indeed significantly overvalue long-dated put options, to which a possible solution is making the left-hand tail truncated to reduce the value of long-dated put options. Summary Throughout this essay, we have discussed the common views and divergences between Mr Buffett’s investment strategies and Modern Finance Theories. Now we summarize the main points as follows: Common views Divergences Black-Scholes Option Pricing Model Modern Portfolio Theory Efficient Market Hypothesis Capital Asset Pricing Model Multi-factor Models Chart 3 Common Views and Divergences between Modern Finance Theory and Mr Buffett’s Strategies Modern Finance Theories Modern Portfolio Theory Divergences with Warren Buffet 1. Risk Defined as Volatility 2. Short Investment Horizon 3. Diversification Efficient Market Hypothesis Capital Asset Pricing Model Reliability of Fundamental Analysis 1. Markowitz Efficient Investors 2. Homogeneous Expectation and Equal Access to Opportunities 3. Markets in Equilibrium 4. Short Investment Horizon 5. Predicting Function Leads to Speculation 6. Impractical â€Å"Market Portfolio† 7. Diversification Multi-factor Models 1. Macro Factors 2. Diversification Chart 4 Detailed Divergences between Modern Finance Theory and Mr Buffett’s Strategies Bibliography Banchuenvijit, W., 2006. Investment Philosophy of Warren E. Buffet, Bankok: The University of Thai Chamber ofCommerce. Black, F. Scholes, M., 1973. The Pricing of Options and Corporate Liabilities. The Journal of Political Economy, 81(3), pp. 637-654. Bowen, R. M. Rajgopal, S., 2009. Do Powerful Investors Influence Accounting, Governance and Investing Decisions?, Washington D.C.: University of Washington. Buffett, W. E., 2008. Letter to Shareholders, Omaha: Berkshire Hathaway, Inc.. Cornell, B., 2009. Warren Buffet, Black-Scholes and the Valuation of Long-dated Options, Pasadena: California Institute of Technology. Davis, J., 1991. Lessons from Omaha: an Analysis of the Investment Methods and Business Philosophy of Warren Buffett, Cambridge: Cambridge University. Eugene F, F., 1970. Efficient Capital Markets: A Review of THeory and Empirical Work. The Journal of Finance, 25(2), pp. 383-417. Eugene F, F. Kenneth R, F., 1992. The Cross-Section of Expected Stock Return. The Journal of Finance, XLVII(2). Markowitz, H., 1952. Portfolio Selection. The Journal of Finance, VII(1), pp. 77-91. Martin, G. S. Puthenpurackal, J., 2007. Imitation is the Sincerest Form of Flattery: Warren Buffett and Berkshire Hathaway, Reno: University of Nevada. Roberg G, H., 2005. The Warren Buffet Way. 2 ed. Hoboken: John Wiley Sons, Inc.. William F, S., 1964. Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk. The Journal of Finance, 19(3), pp. 425-442.

The Customer Satisfaction In The Airlines Industry Tourism Essay

The Customer Satisfaction In The Airlines Industry Tourism Essay The main aim of this chapter is to review the theories and previous research papers which are mainly concentrated on the evaluation of customer satisfaction in the airlines industry. Shaw, S. (2004) has defined the consumers are those people who actually travel. They make existence clear by reporting for flights and their requirements. They are therefore usually given a great deal of attention by marketers in the airlines business. However, the consumers may not be the decision-makers about the things that matter. In the marketing theories, such decision makers are defined as Customers. Furthermore, there are three customer decisions which must be analyzed: This decision is mainly aimed to the business travelers. For many firms today, the cost of travel is a major item of cooperate expense. Especially, in the recessionary period, most of the firms will attempt to reduce expenditure in order to minimize the effect of recession. In such situation, the business trips will be replaced by other methods such as the phone, video-conferencing or email. There are different choices for passengers to select for their air ticket class in the cabin with different kinds of services and price such as First Class (mostly selected for the long-haul flights), Business Class, Economy Class or Coach Class. Additionally, the business travelers will have a little or no say in the decision as to which class will be purchased. Because most of the firms have their travel policy whereby very senior executives are allowed to take First Class, those in the middle rank in Business Class, and the junior employees have to be satisfied with Economy Class. Interestingly, during recessionary periods, most of the firms have to be downgraded their travel policy in order to save money so that the First Class and Business Class travel being eliminated. The question of the choice of the airline is obviously a crucial one. In the leisure air travel, many airlines focus on selling the blocks of seats to tour operators and travel agencies so that the individual travelers will have very little say in the airlines that they fly with. Otherwise, in the business air travel, during the time 1990s, more and more companies centralized travel purchasing in order to gain access to cooperate discounts from airlines. Such policies narrowed the choice which the individual travelers could exercise, even if they were not restricted to using a single airline. Finally, the choice of airlines still depends on the person who has to travel and the airline schedule as well. If the airline schedule is suitable, the passengers will choose to fly with the airline as their choice. The comprehensive definition of customer satisfaction is given by Oliver (1997); Customer satisfaction is the consumers fulfillment judgment that a product or service itself, provided (or is providing) a pleasurable level of consumption- related fulfillment, included level of under-or over fulfillment. Today, the airlines have to face with the significant competition within the industry so that level of customer satisfaction becomes more important. Besides that, the passenger satisfaction includes the various types of services which are related to the airlines industry such as the satisfaction of the online check-in service, ground handling service and the quality of food on board as well. Next, the customer satisfaction factor plays a major role in the airlines industry and it also impacts directly to the profit of an airline company. At the same time, according to Yi (1991), customer satisfaction may be defined into two basic ways: either as an outcome or as a process (table 1.1) Definition The buyers cognitive state of being adequately or in-adequately rewarded for the sacrifices he has under gone An emotional response to the experience provided by (or associated with) particular products or services purchased, retailed outlets, or even molar patterns of behavior, as well as the overall marketplace An outcome of purchase and use resulting from the buyers comparison of the rewards and the costs of the purchase in relation to the anticipated consequences An evaluation rendered that the experience was at least as good as it was supposed to be An evaluation that the chosen alternative consistent with prior beliefs with respect to that alternative The consumers respond to the evaluation of the perceived discrepancy between prior expectations and the actual performance of the products as perceived after its consumption Approach Satisfaction as an outcome Satisfaction as a process Figure 1.1: Definition of customer satisfaction (Yi, 1991) Source: Adopted from Grigoroudis Siskos (2010, p.4) Otherwise, losing customers would mean that the airline organizations would have to win new customers to keep the business going, by doing so, the cost of promotions and attracting new customers would cost the airline organizations more money, Hill, N. and Alexander, J. (2000). The report by Kazim, S, K. (2005), starts with the introduction to Emirate Airlines and its innovation in the in-flight products to achieve the high level of customer satisfaction. Next, Emirate Airlines has mainly focused to develop the onboard connectivity for ultra long haul flights (8-14 hours). This is important especially for in the cases of business travelers and cooperate travelers as these ultra long haul flights can be a very attractive proposition for them because of the accessibility and fast connection from one end of the world to another. The reports result is that Emirate Airlines has a successfully innovated to build up their market positioning and achieve the high level of customer satisfaction through the onboard connectivity. 3.2) Measuring the customer satisfaction in the airlines industry: This part is mainly focused on the measurement of customer satisfaction in the airlines industry which is based on the tangibles of service and the intangibles of product. Besides that, these important elements will be used in the questionnaires and will be analyzed as a part of this research papers objective to indentify customer satisfaction motivating factors in the aviation industry. 3.2.1) Why is customer satisfaction measured? Hill, N. Brierley, J. and MacDougall, R. (1999), explains the reasons why the customer satisfaction factor needs to be measured. A customer satisfaction measurement (CSM) programme will therefore enable us to understand how customers perceive your organization and whether your performance meets their expectations. Furthermore, the airline organizations are able to understand their passenger expectations so that they will have their own strategies and methods to achieve those passengers requirement. At the same time, if the airline companies manage the customer satisfaction measurement well, they will be able to set the goals for their service improvement and monitor progress against a passenger satisfaction index. Likewise, the airlines can increase their profits through improved the customer satisfaction, customer loyalty and retention. Business Success Customer Loyalty Customer Satisfaction Figure 1.2: Business performing modeling Source: Adopted from Hill, Brierley MacDougall (1999, p.7) There are many airline organizations and especially the in the USA have recognized the significance of CSM so that they have developed the business performance model (see figure 1.2), enabling them to forecast financial performance from shift in their CSM data. Some can even take the model back as far as employee satisfaction. Based on the figure 1.2 above, it shows us the relation between customer satisfaction and customer loyalty and then both factors are linked closely to the success of business. Next, the diagram above would mean that the airline organizations should achieve the high level of passenger satisfaction and therefore they will also be able to maintain effectively the passenger loyalty and it will lead to the success in business of those airline organizations. Additionally, these elements would contribute to add up to a customer satisfaction level and retention. By understanding the non-traditional customer satisfaction elements such as the below could allow the airline organizations to adopt and improve on their customer retention methods. 3.2.2) Elements of service require for satisfaction: This portion shall be based on the theory of Parasuraman, Zeithaml and Berrys (1988) which is presented the five elements of reliability, assurance, responsiveness and empathy which makes up service quality. The SERVQUAL model above (see figure 1.3) is essentially an instrument for measuring how customer perceived the quality of service they receive. Furthermore, the evaluation is based mainly on the five elements of services which are expected from the air passengers. The Reliability: The airlines services must be dependable and consistent in their performance, it includes accurate in their performance. Besides that, it also means the airline companys employees should perform the desired services correctly in the first time round. For example: providing the check-in service for passengers effectively. The Responsiveness: It means the airlines services should deliver the services such as the on-board services and services at the airport promptly to passenger (rather than ignores the passengers and leaves them waiting). Besides that, the airlines employees are always willing and ready to serve and help the passengers. E.g. the air hostess should be always ready to serve quickly when the passengers query has been made. The assurance: The air service staffs have to assure that they have the knowledge, skills, abilities and courtesy to perform their duties. E.g. knowledge of the air hostess about the destinations, reputation of the airline organizations and security. Staff empathy: This service element is related to the airlines staffs ability to provide passengers with individual attention. Next, the airlines employees need to treat individually and need to show their concern, caring to passengers as well. E.g. recognize the regular passengers name, learning passengers specific requirement. Tangibles: This element is considered as the physical evidence of service. For example: appearance of personnel, the equipment used to provide the service. 3.2.3) Elements of product require for satisfaction: In this portion, I would like to mention to the five elements of product which associate with customer satisfaction within the aviation industry. Moreover, I would include these elements into my questionnaires later to ask the respondents rank accordingly for their satisfaction level. Quality of services: The quality of airlines services such as check-in service, food and beverage on board and ground handling service impacts directly to the passengers decision making. Especially, some passengers will select the airline for its good services even though the air fare is higher than other airlines? Location: The location of airline offices and its authorized agencies should be convenient and easy to access for passengers. Airfares price: The airfares price is considered as the most important factors for a specific airline to compete with their competitors. Next, the airfare should offer with reasonable price. Layout, decoration and entertainment service: This portion is to mention to the interior design of the air craft and the uniform of air hostess which are considered as the cultural factors for an airline company. Next, some additional on-board entertainment services (videos, music and games) are also the competitive elements in the aviation industry. Loyalty program: This part is to emphasis the functions of VIP cards or other methods that are used by the airline organizations to bring back passengers through discount, vouchers, higher priority and free gift. For example: the Golden Lotus Program of Vietnam Airlines and SIAs Kris Flyers program. 3.3) Understanding the passenger requirements: This part is concentrated to understand the passenger requirements in the business travel market so that the airline organizations will be easier to achieve the higher level of customer satisfaction and also to improve the service quality efficiently. Shaw, S (2004), airlines do not just have to be indentify the passengers needs but they also have to prioritize. Below is are the options to the nature of passengers needs and the discussion shall be divided between the corporate and independent sub-segments of business travel demand, and between short and long hauls routes. 3.3.1) Short-haul and long-haul routes: 3.3.1.1) Frequency and Timings: In the airlines industry, the frequency and timings factors are very important to the air passengers, especially for the short-haul markets. Today all the business travelers are extremely busy and their plan is rescheduled often at the short notice. And therefore, an airline offering them a high frequency will have crucial advantages. Besides that, frequency will ensure that business travelers can fly out for the meeting shortly before it is due to begin and return to their offices or homes very soon after it has been completed. Moreover, the flights timings are also a vital consideration and there should be extensive opportunities on short-haul routes for business travelers to make day-return trips. And therefore most of the flights need to be concentrated in the early morning and evening periods. 3.3.1.2) Punctuality: The flights punctuality is a crucial importance to the business travelers and there is no airline dare to hope to obtain a big number of passengers if they perform a poor punctuality reputation. Likewise, the flight delays meaning inconvenience, missed appointment and perhaps the loss of customers. Especially, almost of the long-haul passengers are the connecting passengers and they are usually taking the transit or stop-over flights so that this factor becomes extremely significant for them. Once delay, it will annoy the point-to-point travelers and may destroy their entire flight itinerary. 3.3.1.3) Ticket flexibility: Seat accessibility is considered as a piece of aviation jargon which refers to the probability of passengers who are being able to grab a seat shortly before the flight is due to depart. Next, it is a crucial product need for business travelers. The short-haul passengers requirement about ticket flexibility is a little bit unfair for the airlines because many business travelers expect the right to no-show for the flight, and then to be re-booked on the next flights out later without any penalty being charged. Of course, because of this, airlines have to face with so many difficulties and issues. Nonetheless, these factors are lower importance on the long-haul routes and the last minute availability of seat is less important on the long-haul flights. Normally, the long-haul passengers will take note carefully for their flights three days before the departure date due to the its lower frequencies and high cost of penalty when missing the flight. 3.3.1.4) Frequent flyer benefits: Today, almost of the airlines operate their own frequent flyer programme or the passenger loyalty schemes to gain the re-support of their regular passengers. At the same time, the frequent flyers will have chance to accumulate the number of mileage points and then they can use those points to exchange to some kinds of benefit such as rewards, hotel or restaurant vouchers, free gifts or free air ticket for the next time travelling. Nevertheless, there is a difference of the attitudes to frequent flyer points between short and long-haul markets. On the long-haul route, substantial numbers of points are stake. In fact, for many programmes, the passengers are taking the long-haul flights with a particular airlines (at least in the First or Business Class), they could earn sufficiency mileage for a short-haul flight on that airlines network with free of charge. Because of this issue, so many long-haul passengers have selected the airlines whose frequent flyer points they are supporting; even they are not really satisfied with the flight timing or frequency. 3.3.1.5) Ground service: It is not surprising that the airport service should be a significant factor in select of airline decisions. Of course, all the business travelers will wish to spend as less time as possible in the airport. Besides that, they wish to check-in very late for the flight, by using the separately check-in counters as well. And so that, the airport service provided should be very effective and helpful to satisfy the demand of air passengers. However, the offer of very late check-in time for the long-haul passengers is less important. Besides that, most of the long-haul passengers prefer to check-in earlier than those in the short trips because of the greater penalty of missing flight and lower frequencies as well. 3.3.1.6) In-flight service: On the short-haul routes, the fact that the flight duration is short so that in-flight service often assumes a lower priority than frequency, punctuality and airport service in selection of airline decisions. However, it still can extremely important and directly influent to the passengers in-flight experiences. On the other hand, there are differences between the expectations for in-flight service on long and short haul flights. On the long-haul routes, the seating comfort on board, a separate cabin to allow for sleep and work, meal quality and in-flight entertainment are taken more concern from the passengers. 3.3.1.7) Direct flights for long-haul routes: Especially, a significant consideration alongside the frequency is often that there should be direct and non-stop flights available for the long-haul routes. In the competitive aviation industry, that is no longer the impossible expectations, as aircrafts manufactures have innovated with aircraft having longer and longer ranges so it has become possible to fly greater and greater number of the worlds air routes on a non-stop basic. Today, there is really no way for an airline operating a stopping service to compete for the high-yielding traffic with the competitors which are able to offer the direct, non-stop flights. 3.3.2) The differences between cooperate and independent travelers: This portion would differentiate the requirements of cooperate business travels and independent travelers. First of all, for the independent business travelers, the terms of frequency, timings, safety, punctuality, seat accessibility and ticket flexibility need to remain the same. Moreover, the independent travelers are more concern about the airfares cost than other factors such as standard of seating comfort and quality of in-flight meals. Next, the independent travelers will normally trade off the cheaper airfare because the tickets cost is coming out from their own pocket. Secondly, for the cooperate travelers, the attractive perk of the job and providing opportunities to enjoy free leisure flights are considered more important than the benefits of frequent flyer points. 3.4) Form the alliances to enhance customer satisfaction: In this part, it mainly concentrates on the airlines alliance which is the important factors to improve the customer satisfaction and develop the airlines business. Otherwise, the theories are based on the explanations of reliable authors and other academic articles on the same researchs topic. 3.4.1) Introduce to airlines alliances: Shaw, S (2004), the air carriers have usually preferred the comfort of co-operative rather than competitive relationships. In 1993, KLM and Northwest Airlines announced their desire to create a strategic partnership. Then, the United States government gave them immunity from the US Anti-Trust laws, which it did following the signing of an Open Skies agreement between the US and Netherlands governments. After that, the two national airways, Lufthansa and United Airlines proposed to join hand with KLM and Northwest Airlines to become the Star Alliance in 1995. Again, the Anti-Trust was available between US and Germany governments. In additional, Star Alliance grew rapidly in terms of the number of members it had, with it currently consisting of 27 member airlines in 2010. Alongside the available of Star Alliance, there were other formations of airlines alliance such as One World alliance and Skyteam alliance. Likewise, the formation of One World alliance by British Airways (BA), American Airlines (UA) and Cathay Pacific (CX) was announced in one year after the establishment of Star Alliance. Besides that, the evaluation of the modern alliance was completed in 1999 when Air France and Delta Airlines formed the Skyteam Alliance. Otherwise, Thompson, A. and Strickland, A, J. (2004) stated that airlines which enter alliances to gain competitive advantage. These are the following main motivations to make the airline companies enter alliances. To gain the technology knowledge and experience To enter a new markets To better exploit economies of scale Having said this, it is quite obvious that airlines which enter into co-operative alliance relationships are seeking cost reductions. Next, if the alliance members can negotiate together, this may help to increase their power to bargain with the suppliers of airport services. Next, According to Chareonsup, N. (2006), the strategic alliances become increasingly important in the very competitive aviation industry. This study mainly focuses on key success factors in managing strategic alliances for Thai Airways International as member of Star Alliance. Particularly in the global airlines industry, the strategic alliances enable the small firms to face with the difficulties, while also the large firms are still able to obtain their benefits, while remaining small. As the small airline carrier of the Star Alliance, Thai Airways is considered as an available opportunity to understand and investigate strategic alliances in clearer picture. Lastly, upon the result of this research, it can be concluded that Thai Airways has a high potential to adapt itself in a big alliances. 3.4.2) Definition of airlines alliances: According to Yoshino, M, Y. and Rangan, U, S. (1995), alliances are defined as the long-term beneficial relationship between two or more airline organizations. Besides that, these airline companies have agreed upon achievement to meet a critical business need while staying independent of each other. Next, it is a synergistic agreement between two or more airline organizations agree to cooperate in carrying out of business activity where each brings different strengths and abilities to the agreement. Moreover, Sawler, J, H. (2000), has tried to define of strategic alliances in a clearer picture. It is defined as the relationship between two or more airline firms that involves the sharing of resources: capital, technology, experience, distribution network, etc., in which is involved with cooperative activities which go beyond ordinary arms length transaction, but fall short of mergers. 3.4.3) The benefits of customer from airlines alliances: Kleymann, B. and Seristo, H. (2004), this part will get an idea of the Alliance Markers views and analyze how the airlines alliances bring more benefits to their customers. Besides that, this portion is based on the interviews with senior airline executive (Vice-president up to Deputy CEO Levels) involved in alliancing. Bob Ayling, Chief Executive of British Airways, said: his customers have shared with him they prefer airlines to work together to increase the standard of services across the world. Furthermore, alliances bring together leading airlines to maximize the benefits for customers, employees and shareholders. Don Carty, Chief Executive of American Airlines, said: the purposes that they started the alliance are to enhance the travel experience for the customers, improve the competitive position of their respective airlines and thus provide opportunities for their employees, as well as create value for their shareholders by building the worlds premier airline network. Kevin Benson, Chief Executive of Canadian Airlines, said: One world alliance will deliver unrivalled benefits across our partner airlines, ensuring that the customers are recognized across all airlines as if they were their own. David Turnbull, Chief Executive of Cathay Pacific Airways, said: This alliance is superb news for Cathay Pacifics customers and those of our partner alliances. Customers travelling on Oneworld will receive the highest levels of services and product available. James Strong, Chief Executive of Qantas Airways, said: Oneworld alliance will provide each of them with a great opportunity to provide worldwide high quality service to customers through airline partners acknowledged as world leaders in the airlines industry. In additional, Doganis, R. (2001), stated that the airlines alliances produce more benefits for the air-passengers such as arise from higher frequencies, offer more available destinations with on-line connections with airlines in the same alliance, improve the transfer times and levels of in-flight and ground service, as well as more attractive of loyalty schemes. As so far, alliance may lead to lower operating cost for the airlines through the realization of cost synergies, so that customers will likely have chance to grab the lower airfare easier if any cost saving are reflected in the lower fare. This portion is ended with the case study of Airlines industry partnership which also analyzed the customers benefits from airlines alliances clearly. Customer benefits from partnership include seamless travel with association between connections, sharing of airport lounges, and cross-use of frequent flyer programmes where customers will have chance to enjoy the lower average airfares from airlines within the alliances due to the power of partnership as well. Besides that, the latter open-skies model of partnership has facilitated the reduction in fares through cooperative pricing which gives a certain amount of benefit to each partner. At the same time, most of the partnership shares routes and operates the code-share routes (passengers could buy a ticket for one airline and end up on a plane of the other partners) so that customers may have chances to enjoy travel experiences with different airlines in the same alliance. (Donaldson, B. and Toole, T, O. 2007). 3.5) Competition leads to the development of service quality: 3.5.1) Definite the competition: Pride, W, M. Hughes, R, J. and Kapoor, J, R. (2008), business competition is essential a rivalry among businesses for sales to potential customers. Moreover, competition also ensure that the airlines will survive only if it is able to serve and satisfy customers well by providing products and services that meet needs. 3.5.2) Porters Five Forces framework: Porter, (1998), the five forces comprises threat of new entrance, bargaining power of suppliers and buyers, threat of substitute as well as competitive rivalry, as show in the figure 1.4. Furthermore, the framework helps to identify the sources of competition in the airlines industry as to facilitate the development of service quality for the airlines to serve passengers better. New Entrants Deregulation of airlines More airlines serving the region Emergence of budget carriers Bargaining Power of Supplier Aircraft Manufacturers Travel Agent Internet Fuel suppliers Buyers Power Wide choice of airlines (low switching costs for passengers) Customers have stronger bargaining power Rivalry in the Industry Increasing number of international flights Load factors utilization Price wars due to load factors Advertising campaigns Substitutes Teleconferencing and video conferencing Email Interstate transportation modes for domestic carriers rail, bus, car Figure 1.4: Porters Five Forces Framework Industrial Analysis Source: Adopted from Porter, M, E., Competitive strategy: Techniques for analyzing industries and competitors. 3.5.2.1) Threat of new entrants: In the airlines industry, the threat of new entrants is low due to the barriers to entry such as high capital, costs of training and differentiated products. On the other hand, opening sky policy contributes to stimulate the potential cross passenger service between the airlines and the new entrants. 3.5.2.2) Bargaining power of supplier: Buyers are more willing to switch suppliers due to low switching cost and diverse source of supply that is available (Grant, 2005). Today, airlines are willing to switch between two giant suppliers, Airbus and Boeing due to the expectation in modern aircrafts in term of high load factor, less fuel consumption, CO2 emission and quieter engines. 3.5.2.3) Bargaining power of buyers: Although customers are able to book the air-tickets online due to the high technology systems, travel agencies constitute a major portion of the customer base to the industry. Besides that, these travel agencies have the strong chances to influent customers who have no strong brand preferences as to what travel decision they should make. Next, travel agencies understand their advantage position in the industry therefore they use their high bargaining power with airlines to get the better deals in area such as extra commission. Moreover, due to the bargaining power, travel agencies have the authorization to offer some special kinds of fare which customers are unable to book by other ways. Like, for a group of travelers, customers will have chance to book the GV2 tickets (from 2 passengers and above take the same return flight and date) or GV10 tickets which is offered specially by Singapore Airlines (from 10 passengers and above take the exactly same return flight and date). And of course, the airfares cost should so much be cheaper compare with the basic single air ticket. Finally, travel agencies are using their bargaining power effectively to earn extra commission and help the travelers to get better deals with airlines as well. 3.5.2.4) Threat of substitute: The improvement of technology is also one of the threats to the airlines industry today. Likewise, the online business communication technologies are considered as an alternative to travel. Next, the high usages of international calls lead to the reduction in business travel as well. 3.5.2.5) Competitive rivalry: The rivalry among existing players in the market is the dominant force in the framework. The intensity of rivalry which is the most obvious of the five forces in t

Expert Systems: The Past, Present and Future of Knowledge-based Systems :: Exploratory Essays Research Papers

Expert Systems: The Past, Present and Future of Knowledge-based Systems Expert Systems were invented as a way to decrease the reliance by corporations on human "experts" -- people who apply reasoning and experience to make judgements in a specific field, such as medicine, insurance underwriting or the operation of a power-plant. Hence, an expert system should include a database of facts and a way of reasoning about them. In many, but not all, applications it is also helpful to have a way for the system to reason with probabilities or non-Boolean truth values. Expert systems are also sometimes referred to a "knowledge-based systems". In classical AI many different reasoning methods have been tried. A few of the common ones are "forward chaining", in which conclusions are drawn from a set of facts by using modus ponens, syllogism, and other simple tools of logic; "backward chaining", which uses trickier logic, such as modus tollens; and neural nets. Most expert systems simply use forward chaining and backward chaining, with some non-Boolean component such as Fuzzy Logic only where necessary. Expert systems tend to be more practical than AI in general. It is quite possible to build an expert system in a conventional programming-language, such as COBOL, C or Java. However, much of the machinery inside an expert system can be abstracted away from any specific domain, and the main criterion in the success of an expert system is its ease of use and maintenance, not it's ability to make decisions in a fraction of a second. Therefore, it is possible to build a "knowledge system shell" which can then be prepared for almost any domain simply by listing rules and data in a standard form. Few expert systems are written in LISP, because most LISP implementations lack robust user-friendly input-output routines. A good knowledge system shell includes I/O routines, a way to accurately and generally represent facts, and an easy, efficient, accurate way to give the system inference-rules. However, even the best expert system shell is limited by the problem domain to which it is applied. One researcher divided problem domains into four categories: "Class 1. ... if the effective domain decompositions are not known and the available domain knowledge is limited to the set of allowable actions and constraints. An example of such a problem is maze traversal, where the knowledge about the structure of the maze is not available a priori. "Class 2.

herody The Imperfect Hero of Homers Odyssey Essay -- Odyssey essays

The Imperfect Hero of The Odyssey   Ã‚  Ã‚  Ã‚   In literature, a bold character or hero is often the principle character. In the epic poem The Odyssey there are many immortals, but only one hero, Odysseus. The differences between the immortals and the hero are few. The god-like Odysseus is plagued with the human weaknesses of pettiness, self-doubt, and dependence on the pity of others. Odysseus reveals his pettiness when he amuses himself with humorous guile. Odysseus not only uses his cunning at the expense of his enemies, but he also uses his cunning and guile as a way of entertaining himself. After Odysseus tells the Cyclops his name is "Noman," Odysseus stabs Polyphemus in the eye and Polyphemus cries for help saying, "Friends, Noman is murdering me be craft" (87). Odysseus’ power over his enemy is once again confirmed by his wit more than by his physical force. Although Odysseus is a wise man, this wit is only useful in the short picture. After he and his men get away from Polyphemus, Polyphemus’ father, Poseidon, causes the mortal men trouble. To avoid such trouble, Odysseus could have choose not to amuse himself. Odysseus often loses sight of the greater vision, which is returning to his family. Odysseus risks his return by a moment of testosterone-driven pettiness. The moment comes when Odysseus challenges Irus by saying, "†¦do not challenge me too far with show of fists, or you may rouse my rage; and old as I am, I still might stain your beast and lips with blood" (174). When the beggar/Odysseus fights and wins against Irus it is a miracle that no one became suspicious of Odysseus. The suitors were shocked that an old beggar, as Odysseus appeared to be, would be that strong. If anyone put two and two together then Od... ...One thing that can be learned from Odysseus is: no matter how good one is, one is still a human; and part of being a human is to learn to overcome one’s flaws Works Cited and Consulted Griffin, Jasper, Homer: The Odyssey   Cambridge UP 1987 Heubeck, Alfred, J.B. Hainsworth, et al. A commentary on Homer's Odyssey. 3 Vols. Oxford PA4167 .H4813 1988 Jones, Peter V. Homer's Odyssey : a companion to the translation   of Richmond Lattimore.   Ã‚  Ã‚  Ã‚   Carbondale, IL : Southern Illinois University Press, c1988. PA4167 .J66 1988 Murnaghan, Sheila,   Disguise and Recognition in the Odyssey, Princeton UP 1987 Peradotto, John , Man in the Middle Voice: Name and Narration in the Odyssey, Princeton UP 1990 Stanford, William Bedell. Homer's Odyssey. 2 Vols. Macmillan   Ã‚  Ã‚  Ã‚   Thalmann, William G., The Odyssey : an epic of return. New York : Twayne Publishers. PA4167 .T45 1992

Animalistic Characters In Medieval Times :: essays research papers

The many temptations of life bring people to act differently through personality changes. The characters in Sir Gawain the Green Knight change their personalities through temptation. Through the Christmas time, Bertilak, king of the castle, decides to go hunting. While he is hunting, his wife is hunting or seducing Gawain. Men tempted with sex by women often act with certain animalistic instincts; in Sir Gawain and the Green Knight by the Pearl Poet, the seduction scene leads Gawain to act upon his animal instincts, which mimic the behaviors of the beasts of Bertilaks' hunt.The temptation in the first seduction scene and the first hunt scene of the deer relates in both shy and timid ways. When the lady approaches Gawain, he acts shy "laid his head low again in likeness of sleep" (25). Gawain, confused at the directness of the lady, pretends to be asleep. She throws her body at him, which startles Gawain to act ignorant. At the end of the first seduction scene, Gawain says, "I shall kiss at your command" (28). The deer, which at first is shy, but at the end of the hunt is killed, relates to Gawains' shy behavior, but at the end of the seduction scene is caught and kissed. Although the deer is the shyest of animals, the boar is caught with more use of power and strength. The next seduction and hunt scene revolves around the behavior of the boar. The boar is a quick and aggressive animal. It has a "bloodthirsty heart to quell" (31). Gawain, when approached by the lady in the second seduction scene, acts less ignorant to his position, but temptation draws him to be aggressive. "My aim is to please," (33) said Gawain. The lady tempts Gawain to such an extent that he tries to resist her by exchanging two kisses with her, instead of sleeping with her. The hunt of the boar caught at last with more strength then the deer, is parallel to the lady attempting to pursue Gawain. He is more tempted to her and finally is caught by power. The temptation of the third seduction scene and the hunt of the fox are the most forceful.Gawain is tempted to the extreme during the hunt of the fox. The fox has a sly and deceiving personality. "He thought through his wiles to have thrown off the hounds" (36). The fox tries to sneak away from the dogs, which happens to be the most outgoing personality characteristic.

The Coca-Cola Company Essay

The Coca-Cola Company (KO) is a beverage company that manufacturer and distribute coke, diet coke and other soft drinks worldwide. The company primarily offers nonalcoholic beverages, including sparkling beverages and still beverages. Its sparkling beverages include nonalcoholic ready-to-drink beverages with carbonation, such as carbonated energy drinks, and carbonated waters and flavored waters. The company’s still beverages comprise nonalcoholic beverages without carbonation, including noncarbonated waters, flavored and enhanced waters, noncarbonated energy drinks, juices and juice drinks, ready-to-drink teas and coffees, and sports drinks. It also provides flavoring ingredients, sweeteners, beverage ingredients, and fountain syrups, as well as powders for purified water products. In addition, the company licenses its technologies to suppliers and third parties. The company is currently employing 130,600 full time employees and is considered being the world leader in the bev erage industry. Financial Review of the company: A. Market value of equity & Book value of equity – Market value of the equity of the company is the current market capitalization rate and it measured through by multiplying current market value of the share into the total number of shares outstanding and he market capitalization of the company as on 2nd October, 2014 is $187.10 billion (source: finance.yahoo=KO=key statistics). While the book value of the equity is the current book value of the company share and it is determined as under: Book value of equity = Total value of the equity / shares outstanding Book value = $7.77 (source: finance.yahoo=KO=key statistics). It is important to note that the book value of the shares of the company has increased from $3.29 per share in 2004 to $7.77 per share uptill now (it was $7.54 per share in the year 2013) B. Market performance – Total Return C. Financial performance review – The financial performance review of the company is as under: Gross profit margin – The gross profit margin of the company was 65.2% as at year 2004 but it has decreased to 60.7% in the year 2013 indicating a decline of 5.5% over this review period. The decrease in the gross profit is due to the increase in the cost of goods sold ratio as  of revenue from 34.78% in the year 2004 to 39.32% in the year 2013. Operating profit margin – The same trend of the decrease in the profitability is noted in the operating profit margin of the company as it has decreased from 25.9% in the year 2004 to 21.8% in the year 2013. This decrease in profitability is an alarming sign for the company as despite the increase in the revenue, the company was not able to generate profitability in the same proportion as that of the increase in the revenue of the company. Payout ratio – The dividend payout has increased from 50% in the year 2004 to 58.8% in the year 2013 indicating higher proportion of income is being paid out to the shareholders of the company Asset turnover – The relative increase in the assets of the company has resulted in decrease of asset turnover as it has decreased from 0.75 times in the year 2004 to 0.53 times in the year 2013 indicating the poor management of assets with respect to revenue generation Return on assets – ROA has also decreased from 16.52% in the year 2004 to 9.74% in the year 2013 due to the decrease in the profitability and increase in the asset base of the company Return on equity (ROE) – ROE of the company has also decreased from 32.29% in the year 2004 to 26.03% in the year 2013 due to the decrease in the profitability of the company Interest coverage ratio – The company first interest coverage ratio was determined in the year 2008 and it was 17.98 times. It has increased to 25.79 times in the year 2013 indicating an improvement in the overall interest coverage of the company. Liquidity of the company – The liquidity of the company as being measured through current and quick ratios is indicating a positive trend as current ratio was 1.10 in the year 2004 and it has increased to 1.13 in the year 2013. On the other hand, quick ratio has increased from 0.81 in the year 2004 to 0.90 in the year 2013. Efficiency of the company – Days Sales Outstanding of the company has increased from 35.42 days in the year 2004 to 37.52 days in the year 2013. Also, the Days Inventory has also increased from 63.84 days in the year 2004 to 64.8 days in the year 2013. Payables Period has decreased tremendously as it has decreased from 199.3 days in the year 2004 to 38.66 days in the year 2013. Cash Conversion Cycle of the company has improved as it has increased from -100.04 days in the year 2004 to 63.66 days in the year 2013. D. References: finance.yahoo. (2nd October). Key Statistics. Retrieved October 2, 2014, from http://finance.yahoo.com/q/ks?s=KO+Key+Statistics Morning Star. (2nd October). Coca-Cola Co KO (Key Ratios & company performance). Retrieved October 2, 2014, from http://financials.morningstar.com/ratios/r.html?t=KO ®ion=usa&culture=en-US

Sm C102 Quiz #2

Correct Question: Which of the following models uses a schematic model of the sequence of steps in a problem and the conditions and consequences of each step? Your Answer: Decision trees Correct Question: The way to build in greater flexibility in your workers is to do which of the following? Your Answer: Provide a broader range of training Incorrect Question: If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity cushion?Your Answer: 75 percentCorrect Question: The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as:Your Answer: Economies of scopeCorrect Question: Capacity planning involving acquisition or disposal of fixed assets such as buildings, equipment or facilities is considered as which one of the following planning horizons?Your Answer: Long-rangeCorrect Question: Capacity planning involving hiring, layoffs, some new tooling, minor equipment purchases, and subcontracting is considered as which one of the following planning horizons?Your Answer: Intermediate rangeCorrect Question: If the actual output of a piece of equipment during an hour is 500 units and it's best operating level is at a rate of 400 units per hour, w hich of the following is the capacity utilization rate?Your Answer: 1. 25Correct Question: A process flowchart uses which of the following symbols to represent tasks or operations in a flow diagram?Your Answer: RectangleCorrect Question: A process flowchart uses symbols to represent which of the following?Your Answer: Flows of material or customersCorrect Question: According to Little's law, which of the following can be used to estimate inventory?Your Answer: Throughput rate times flow timeCorrect Question: A process flowchart uses which of the following symbols to represent a decision point in a flow diagram?Your Answer: DiamondCorrect Question: A process flowchart uses which of the following symbols to represent storage areas or queues in a flow diagram?Your Answer: Inverted triangleCorrect Question: To reduce process throughput time you might try which of the following actions?Your Answer: Change the sequence of activitiesCorrect Question: An advantage of a make-to-stock process is which of the following?Your Answer: Rapid delivery of a standard productCorrect Question: Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made?Your Answer: Assembly lineCorrect Question: Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10 and the selling price for the finished product is $25.Which of the following is the number of units that has to be produced and sold to break-even?Your Answer: 1,000 unitsCorrect Question: Which of the following is not considered a major process flow structure?Your Answer: FabricationCorrect Question: A difference between project and continuous flow categories of process flow structures is which two of the following?Your Answer: The size of the productCorrect Question: Which of the following is not a basic type of process structure?Your Answer: Product-process matrixCorrect Question: You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?Your Answer: The company's total margin will be less than its investment