Liquidity risk - Free Essay Example

Sample details Pages: 14 Words: 4090 Downloads: 1 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? What is liquidity risk and how managers deal with it? COMMERCIAL AND INVESTMENT BANKING 1. Introduction Technological progress and internationalization has led to rapid innovations in financial markets and regulations. This changing environment in which banks find themselves presents great opportunities but also a wide range of risks while operating. Don’t waste time! Our writers will create an original "Liquidity risk" essay for you Create order Such risks are interest rate risk, market risk, credit risk, off-balance-sheet risk, technology and operational risk, foreign exchange risk, country or sovereign risk, liquidity risk and insolvency risk. In this paper we attempt to provide a development of liquidity risk and the way managers deal with it. For financial institutions it is an everyday activity to provide cash to their customers. Moreover, the recent economic crisis proved that banks are particularly vulnerable to liquidity problems so it is of a fundamental importance for managers to supervise, forecast and plan banks position as they are considered to be â€Å"too big to fail†. (Saunders, 1949) 2. Why is liquidity necessary? According to the Bank of International Settlements (BIS), liquidity is the ability of the bank to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. This means that a financial firm has immediately access to spendable funds when they are required or can raise funds by selling assets or borrowing. Liquid funds are needed from a financial institution in order to meet customers demands or in the case of banks growth. More specifically banking activities include redemption of deposits, covering of loans, pay off of previous borrowing withdrawals of money from accounts and credit request that institutions wish to keep. It is indispensable to maintain a balance between short-term assets, which are represented by loans, and short term liabilities which are represented by deposits. What is more, the time dimension is a major factor so banks should administrate time carefully as some liquidity needs are immediate. Liquidity shortfall may l ead to closing of an individual bank and consequently this can encumber the whole economy. (Rose and Hudgins, 2008) 3. Sources of liquidity But how we generate liquidity? While every financial transaction is directly related to liquidity, banks have raised several options to correspond to these demands. The most liquid asset is cash and it is used to cover withdrawals. Conversely, banks tend to keep cash levels low as cash reserves pay no interest. Thus, another important source is considered to be the sale of assets and mostly the liquidation of investment securities. The liquidation of assets pay interest revenues but in some cases may be costly for the bank or not effective, while when the asset is very liquid returns are low. In addition, customers deposits and customers loans repayment can be potential sources. (Saunders, 1949) Heffernan (1956), advocates that banks by keeping a gap between their short term deposits and long term loans can produce money (maturity mismatching). This practice, in which banks retain a fraction of their deposits in reserve and lend out the remaining, is noun as fractional reserv e lending. Borrowing funds from other banks or from the Central Bank can be another alternative element in the supply of liquidity but also the last solution for illiquidity. Obviously the appropriate level of liquidity can be achieved through managing assets and liabilities. In many cases governments insure deposits so the desirable level of liquidity is stable and banks are protected. 4. Liquidity problems Financial firms often face significant liquidity problems. This major exposure to liquidity pressures arises from several sources which can disturb the balance between liabilities and asset s of the balance sheet. On the liability side, liquidity problems can be caused when depositors withdraw large sums of money. The reasons that can trigger this removal is usual the lack of confidence in the bank or in the banking system and poor management policies. When the run starts, the value of liquidated bank assets decrease, so everyone wants to remove their deposits. The fact that customers rush to the bank to take out their money as quickly as possible to avoid losing it is known as bank run. And as a bank run escalates and more people take out their deposits, the possibility of default increases, and this encourages additional withdrawals. This can impose bankruptcy and the follow-on series of bankruptcies can induce an economic recession. This susceptibility of banks can create sys temic risk, which means problem to the entire banking system. On the side of assets of the balance sheet, liquidity troubles can be triggered by unpredicted loan default. These are mainly related with the prolong of credit lines something that is offered from banks to customers and in cases of a shortfall burdens banks position. In both aspects a financial institution, usually the central bank, intervene with remedial measures, by operating as the lender of the last resort or as a lifeboat rescue. By the term â€Å"lender of last resort† we refer to the loaning from the central bank that aims to protect depositors and evade possible extensive panic to the economy caused by the collapse of a bank. To boot, the lifeboat rescue function is when the central bank demands from another healthy bank to provide loan to the problematical one. What is more, another method that is followed by some central banks is the â€Å"too big to fail† method. The Too Big to Fail is a p hrase states that, a bank is a large and integral part of the economy that government will provide support to avert its collapse. The assistance is for large banks whereas weak ones are left to fall down and this gives all banks a motivation to enlarge their assets even though it means obtaining risky lenders. However, despite the fact that this intervention is beneficial, the money borrowed from the Central Bank or from the interbank market have a penal rate which is costly. (Heffernan, 1956) 5. What is liquidity risk? â€Å"The risk that arises from the difficulty of selling an asset. An investment may sometimes need to be sold quickly. Unfortunately, an insufficient secondary market may prevent the liquidation or limit the funds that can be generated from the asset. Some assets are highly liquid and have low liquidity risk (such as stock of a publicly traded company), while other assets are highly illiquid and have high liquidity risk (such as house)† (investorwords.com) As it is derived from the definition, liquidity risk can be distinguished in two types, asset liquidity and funding liquidity. When an asset cannot be sold by reason of market illiquidity it is considered as asset liquidity. This is the cause for making explicit liquidity reserves, widening bid or offer spread and lengthening holding period for Value at Risk (VaR) calculations. The VaR model is used to compute a banks market risk. VaR is able to estimate risk while it happens and is an important consideration when ban ks make trading or hedging decisions. On the other hand, funding liquidity is the risk that liabilities cannot be met when they fall due or can only be met at an uneconomic price. Typically, funding liquidity risk depends on the availability of the liquidity sources and the ability to satisfy the budget constraint over the respective period of time. The reasons that consider engendering liquidity risk are two: a liability-side reason and an asset-side reason. The first cause, liability-side, is brought about when a liability holder, like depositors, demand cash immediately and they withdraw their deposits. This matter can be dealed with borrowing additional funds or with selling assets. The second cause is asset-side liquidity risk and is the ability to satisfy loan commitments. As it happens with liability withdrawals, banks can meet such liquidity needs by running down its cash assets, selling off other liquidity assets or borrowing additional funds. (Wikipedia, 2009) 6. Measurement of liquidity risk While the problem of liquidity risk is becoming more pertinent to the modern banking sector, a sound process for measuring and monitoring liquidity should be applied. In order to establish a measuring frame some parameters should be taken into account. Firstly, as it is previous mentioned, various types of risks may come up with strong interaction between them. Thus, a bank should recognize all this types and the events that can create them. Secondly, it is crucial to evaluate cash inflows and outflows and liquidity value of assets to know if it has the ability to face a shortfall. A third factor that should be considered is that a bank should control its liquidity risk position for all future flows of assets and liabilities, all sources of liquidity, all currencies in which bank it is active and correspond activities. The measurement tools that a bank can use are liquidity ratios, which compute the ability of current assets to meet short term obligations. The two indicators tha t are used more repeatedly are the following: 1. Current ratio=Current assets current liabilities This ratio contrasts current assets with current liabilities so as to indicate short term solvency and debt services. 2. Quick ratio=cash and accounts receivablescurrent liabilities The acid test or quick ratio depicts the companys capability to pay back immediate commitments with cash or cash equivalents. The outcomes of these indexes rely on the financial circumstances, on each individual banks experience and on the quality of assets that are used for liquidity ratios. (bis, 2009) (Glantz, 2003) 7. Strategies for liquidity risk management It is crystal clear, from all mentioned above, that liquidity risk is one of the most important types of risk that a bank or any other company can get together. The recent turmoil in the financial system was the most appropriate and representative fact to prove that managing liquidity risk is critical for the safety and soundness of financial institutions. Liquidity risk management systems should reflect an institutions complexity, risk profile and scope of operations. (federalreserve.gov, 2009) That is why managers have developed strategies in order to deal with liquidity problems like: a) Providing liquidity from assets (assets liquidity management) b) Relying on borrowed liquidity to meet cash demands (liability management) c) Balanced (asset and liability) liquidity management (Rose and Hudgins, 2008) a) Asset Liquidity Management (or Asset Conversion) Strategies One of the oldest strategies that managers use to deal with liquidity needs is asset conversion. Banks and other depository institutions apply this strategy by storing liquidity in assets, mainly in cash and marketable securities. When is necessary these assets are converted into cash in order to cover the arising demands. But first of all we have to make clear that an asset is consider to be liquid when it has a ready market (can be converted into cash immediately), it has a stable price (the asset can be sold quickly without significant decreases in price) and it is reversible (the seller can recover his initial investment with little risk or loss) The most popular liquid assets are treasury bills, federal funds loans, certificates of deposit, municipal bonds, federal agency securities, bankers acceptances and Eurocurrency loans. Asset conversion strategy is less risky than borrowings and that is why it is usually used by small financial institutions. The opportunity cost is r egarded to be a disadvantage of this method as selling assets means loss of future profits that they might have brought if were not sold. Moreover, something that managers must take into account is the fact that assets with the least profit potential are sold first to minimize the opportunity cost. Last but not least, liquid assets have the lowest returns and this is the reason that they do not consist a profitable investment. (Rose and Hudgins, 2008) b) Borrowed Liquidity (Liability) Management Strategies This strategy is also known as purchased liquidity and involves borrowing from money market to offset liquidity need. It is used by a wide array of financial institutions as it has a series or advantages. The bank can borrow funds only when it is necessary without losing high returns. Furthermore, this method gives the right to the firm to keep its asset portfolio unchanged if it is profitable. Finally, the borrowing institution has the control of the interest rate. When a large amount of funds is needed the offered rate is high but when fewer funds are required the offer rate is lower. The volatility of interest rates makes purchased liquidity the most risky approach. (Rose and Hudgins, 2008) c) Balanced Liquidity Management Strategies This strategy combines the use of asset conversion and borrowed liquidity approaches. In balanced management expected demands for cash are covered by stored liquidity in assets while unexpected cash needs are met from near-term borrowings. There is evidence that is the best liquidity management strategy. (Rose and Hudgins, 2008) 8. Estimating liquidity needs Banks attempt to predict their liquidity needs using manifold approaches. Though these approaches may not give accurate results, they give to banks the opportunity to be able to face their needs. Liquidity estimate enables banks to have liquidity reserves including both a planned and a protective component. The planned component consists of the reserves that were predicted lately while the protective component consists of extra reserves, over those dictated by the most recent forecast. Liquidity needs estimation techniques include the sources and uses of funds approach, the structure of funds approach, the liquidity indicator approach and the market signals or discipline approach. (Rose and Hudgins, 2008) * The sources and uses of funds approach Before we analyze this method we have to make clear that in the case of a bank liquidity rises as deposits increase and loans decrease or liquidity declines when deposits decrease and loans increase. Whenever sources and uses do not m atch we have liquidity gap. When sources of liquidity exceed uses, the bank will have a positive liquidity gap (surplus). In that case the financial institution must invest this surplus of funds in assets in order to meet future cash needs. When uses exceed sources the bank has a negative liquidity gap (deficit) and it must raise means from accessible sources. There are three steps involved in the sources and uses of funds approach. 1) Forecast of loans and deposits for a specific planning period 2) Calculate the estimated change in loans and deposits for the same period 3) Estimate the net liquidity funds surplus or deficit. This can be achieved by comparing the estimate change in loans to the estimated change in deposits. (Rose and Hudgins, 2008) Managers in banks have developed some forecasting models such as the following in order to estimate the changes in loans and deposits. Estimated change in total loans for the coming period is a function of: projected growth in the econ omy,projected quarterly corporate earnings,current rate of growth in the nations money supplyprojected primeloan rate minusthe commercialpaper rate, and estimated rate of inflation Estimated change in total deposits for the coming period is a function of: projected growth in personal income in the economy,estimatedincrease inretail sales,current rate of growth in the nations money supply,projected yield on money market deposits, and estimated rate of inflation Consequently, we have estimated liquiditydeficit or surplusfor the coming period=estimated changein deposits-estimated changein loans (Rose and Hudgins, 2008) * The structure of funds approach This approach involves three steps. The first divides deposits and other funds sources into different categories depending on the probability of withdrawals. As an illustration we might divide a banks deposit and non-deposit liabilities into three categories: a) â€Å"hot money† liabilities (volatile liabilities) high interest sensitive deposits and borrowed funds that expected to be withdrawn in recent period, b) vulnerable funds- customer deposits of significant part, perhaps 25% to 30% is likely to be withdrawn in recent period, c) stable funds (core deposits/liabilities)- funds that are not likely to be withdrawn. Second step is the allocation of liquidity funds for each category of funds according to some operating rules. For example lets assume that the manager sets up a 95% liquid reserve (less any required legal reserves). For vulnerable funds he holds an unchanging proportion of their entire amount say 30%- in liquid reserves. For invariable funds the bankers place a smaller percentage- perhaps 15%- of their sum in liquid reserves. Taking into account the assumptions above the liquidity reserve behind deposit and non-deposit liabilities would be: Liability liquidity reserve= 0.95*(hot money deposits and nondeposits funds- legal reserves held) +0.30*(vulnerable deposit and non deposit funds legal reserves held) +0.15*(stable deposit and non deposit funds legal reserves held) (Rose and Hudgins, 2008) As regards to loans the bank is supposed to make good loans. By this term we mean that the customer covers the lenders loan quality principles. In that kind of customers the banker tries to sell other services as well in order to increase the lenders trust on the lending association. These extra services will also bring extra income for the bank. Management must also try to calculate approximately the maximum possible number for total loans and hold in liquid reserves the whole amount (100%) of the difference between the real amount of loans outstanding and the maximum prospective for total loans. Combining both loan and deposit liquidity requirements, the third step is to estimate the total liquidity requirement for the bank. Total liquidity requirement= deposits and nondeposits liability and loan liability liquidity= 0.95*(hot money funds - legal reserves held behind hot money deposits) +0.30*(vulnerable deposit and nondeposit funds required legal reserves) +0.15*(stable deposit and non deposit funds required legal reserves) +1.00*(potential loans outstanding- actual loans outstanding) Of course all these requirements that mentioned above are biased estimates that depend on managements experience and philosophy. (Rose and Hudgins, 2008) * Liquidity indicator approach This approach estimates liquidity needs relying on the use of experience and industry averages. It uses different liquidity indicator ratios such as: I. Cash position indicator: cash and deposits due from depository institutions à · total assets( where large quantity of cash shows strong pose for the bank) II. Liquid security indicator: government securities à · Total assets, which compares the securities that a firm owns with the whole mass of its asset portfolio (large proportion of government securities means good liquid po sition). III. Capacity ratio: Net loans and leases à · Total assets which is a negative liquidity indicator due to the fact that loans and leases are often characterized for illiquidity IV. Hot money ratio: money market (short-term) assets à · volatile liabilities= (cash and due from deposits held at other depository institutions+ holdings of short-term securities + federal funds loans + reserve repurchase agreements)/(large CDs + Eurocurrency deposits + federal funds borrowed + repurchase agreements). This indicator proves whether the bank has balanced the volatile liabilities with the money market assets that could be converted rapidly into cash. (Rose and Hudgins, 2008) * Market signal (discipline) approach This is a qualitative approach to measure liquidity requirements of banks. It is a method that centers on the obedience of the financial market position which subject banks to chain of markets tests. a)Public confidence . It is very important for individuals and institutions as well to consider that the bank is able to meet its obligations. b)Stock price behavior. There is a case where the institutions stock price may fall because investors realize that the bank face or it is about to face liquidity crisis. c)Risk premiums on CDs and other borrowings. The market is likely to impose a risk premium by higher borrowing costs if it perceives that the institution is on the road to a liquidity crisis. d)Loss sales of assets. As we mention before at the liquidity strategies, the bank may sell assets when cash needs are direct. But this sometimes leads to significant losses. The question is whether this is a exceptional invent or a common one. e)Meeting commitments to credit customers. Sometimes management rejects credit applications because of liquidity demands when otherwise these applications would be acceptable. f) Borrowings from the central bank. When the institution has borrowed funds from the Central Bank more than once and in large amount then it is something that concerns the Bank significantly. If any of these cases are presented to the bank then management needs to take a better look at its liquidity policies and make some changes if it is necessary. (Rose and Hudgins, 2008) 9. Examples of Risk Management Since liquidity risk management is a crucial issue for banks, it is usually stated on their financial reports. Going over the annual reports of two well-known banks -Alpha Bank and Millennium Bank we take a closer look at how they handle risk. Alpha Bank Alpha Bank uses a strict framework for risk management. The goal is to advance this framework with the intention of avoiding any negative impacts on the institutions financial results. Managers are active and try to keep up with the international economic environment. The improvement and supervision of the framework is under the auspices of the Board of Directors. There is also a Risk Management Committee which ensures and monitors the policies that are used. The major part of the Groups Assets is financed by customer deposits and bonds issued by Alpha Bank. These funds may be divided in two categories: a) Customer deposits used to cover cash needs b) Customer deposits and bonds used for investment purposes. The Bank monitors its liquidity risk on a ordinary basis by computing two liquidity Ratios: * The Liquid Asset Ratio * The Short -term Asset-Liability Mismatch Ratio The trend of these indicators in conjunction with theoretical changes in the volumes of assets and liab ilities is commonly evaluated. Each year the budget is used to specify the financing necessities of the Bank and Group so that liquidity ratios stay in the desired limits the whole year. (Alpha Bank Business Review, 2008) Millennium Bank The attitude of this Bank on Liquidity Management is to make certain that there is an adequate quantity of funds to cover the liabilities when they due, in normal and abnormal circumstances without serious effects on the profits and the reputation of the institution. The Treasury section of the Bank exchanges information with other departments in order to define the requirements and the anticipated cash flow. Liquidity indexes are subject to crisis condition simulations with a number of dissimilar scenarios. The institution estimates on a daily and quarterly basis the following ratios: * Liquid Assets Capital Ratio * Assets-Liabilities Gap Ratio The Management of the liquidity risk is approved by the Liquidity Management Committee. Conclusion The aim of this effort was to analyze the magnitude of liquidity risk and the way it is handled by the managers. The susceptibility to this is a characteristic of the modern banking sector and consequently it is compulsory to oversee it taking always into consideration the dimension of time. The bright side of the issue is that there are ways to estimate it and leave at the discretion of each bank what method to follow according to its philosophy. In the case of maladminister, the consequences can be detrimental not only for each institution but for the entire economy and this is the reason that make their protection imperative. References: * Casu, B. and Girardone, C. and Molyneux, P. (2006) Introduction to Banking, England: Prentice Hall. * Glantz, M. with contributions by Moodys and KMV and Mum, J. (c2003) Managing bank risk: an introduction to broad-base credit engineering, Amsterdam: Academic Press. * Greuning, H. and Bratanovic, S.B. (2003) Analyzing and Managing Banking Risk: A Framework for Assessing Corporate Governance and Financial Risk, Washington: The World Bank * Heffernan, S. A. (1956) Modern Banking, England : Wiley. * Rose, P. S. and Hudgins, S. C. (c2008) Bank Management Financial Services, NY: Mc Graw- Hill. * Saunders, An. and Cornett, M.M. (1949) Financial institutions management: a risk management approach, NY: Mc Graw- Hill International Edition. Websites: * Alpha Bank Business Review (2008) Available: https://www. Alpha.gr/files/investorrelations/APOLOGISMOS_2008_EN.pdf * MILLENNIUM BANK S.A. , Consolidated Financial Statements based on the International Financial Reporting Standards adopted by the European Union the year ended on December 31, 2008 Available: https://www.millenniumbank.gr/NR/rdonlyres/48D2F078-BA8E-4C2E-B9A3-DDF29BDF3B65/0/Notes_Consolidated_Group2008EN.pdf * https://en.wikipedia.org/wiki/Lender_of_last_resort * https://www.investopedia.com/terms/l/lenderoflastresort.asp * https://www.yourdictionary.com/finance/lender-of-last-resort * https://www.investopedia.com/terms/t/too-big-to-fail.asp * https://en.wikipedia.org/wiki/Too_Big_to_Fail * https://en.wikipedia.org/wiki/Bank_run * https://www.econlib.org/library/Enc/BankRuns.html * https://www.businessdictionary.com/definition/maturity-matching.html * https://en.wikipedia.org/wiki/Bank_run * https://www.ecb.int/pub/pdf/scpwps/ecbwp100 8.pdf * https://www.investorwords.com/2841/liquidity_risk.html * https://en.wikipedia.org/wiki/marketliquidity * https://en.wikipedia.org/wiki/liquidityrisk * https://www.bis.org/pub/bcbs138.pdf. * https://fic.wharton .upenn.edu/fic/papers/07/po735html * https://www.federalreserve.gov/newsevents/press/bcreg/20090630a.htm * https://en.wikipedia.org/wiki/Fractional-reserve_banking

The Movie Proof - 1078 Words

Proof Proof is a film by John Madden. This movie is based on a play written by David Aubum which was a Pulitzer Prize winning play. This was originally produced by the Manhattan Theatre Club on May 23, 2000. It was made into a movie in 2005. Proof was acted out as in today’s times, not a replica that would have taken place decades ago. The main cast members were Gwyneth Paltrow as Catherine, Anthony Hopkins as Catherine’s father and Jake Gyllenhaal as Hal. This film is about a professor that was a mathematician. Anthony Hopkins played this specific role. The beginning started out as if he had been sick and shortly into the movie he passed away. Flashbacks that were not distinctly identified by some sort of change in scenery or†¦show more content†¦The ending leaves you in suspense as to if the notebook containing the proof was 100% correct and if it was, did it get published. I was left with a kind of mixed impression of the film. Although it was a great movie, it w as also one that I would watch one time unlike the ones we all can watch over and over ex: Wizard of Oz. There were several times I didn’t realize it went back into the past. There was no change of scenery, costumes not lighting to give you that hint. The costumes were that of normal, everyday, up to date clothing. This production went along throughout the whole thing with the characters keeping their personalities the same as from at the first and kept up with the dialogue point very well. Many aspects were visible to show the movies performance. All of the actors represented their own separate conflicts that didn’t affect the others. Catherine was stuck in grief and sadness until the end. She had the role as one facing depression. Clair was a person of confidence and pride. She presented an image of making one think she could do anything and everyone would let things go her way. Hal was a man of honor and appreciation. He knew how intelligent her father was and showe d in a nonvisible was that he was honored to have been one of his students. Proof seemed to me as an example of a classical drama. A death was presented at the beginning only didn’t show the battle he fought. CatherineShow MoreRelatedMovie : Rabbit Proof Fence900 Words   |  4 Pages Elyse 1 New Jersey City University Prof: Lisette Cultural Class Movie: Rabbit Proof Fence Through research, you can learn that postcolonial discourse is an â€Å"academic discipline that analyzes the cultural legacies of colonialism and of imperialism.† It is made up of theories found amongst â€Å"history anthropology, philosophy, linguistics, film, political science, architecture, human geographyRead MoreMovie Analysis : Rabbit Proof Fence1502 Words   |  7 Pagesto see me after he failed to recapture two runaway girls. This job failure has him concerned about his daughters and his own futures, and as a result he is experiencing depression. 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Analyses on TED Talks Free Essays

Yet in terms of effectiveness and persuasiveness, Bale’s is better than Whodunit in addressing the problem behind the Issue. Bales performs superior than Wooden as he Introduces the problem clearly and directly, which is more effective for audience to understand the topic. In the introduction part, both of them share their personal experiences to form a hook to draw audience’s attention. We will write a custom essay sample on Analyses on TED Talks or any similar topic only for you Order Now Bales uses his personal experience for introduction. In his first sentence he says, â€Å"The Interest in contemporary forms of slavery started with leaflet that I picked up In London. Instead of directly stating the thesis of his speech, Bales draws the audience’s attention by telling when his â€Å"interest in contemporary forms of slavery started. † Meanwhile, Wooden starts off with â€Å"The global challenge that I want to talk to you about today rarely makes the front pages. † She continues by showing her family group photo in front of Attainment and connects it with an example that happened in China. As an audience, I immediately know â€Å"slavery’ will be the main topic throughout the speech of Bales and the question he raised – the possibility of having millions of slaves. His move induces my personal feeling towards the Issue. When I am well informed of what I am going to analyze, I will be more attentive to listen to the speaker, so do other audience. On the other hand, Whodunit’s introduction of saying the photo was taken two weeks ago in fact is amusing, but its correlation with her topic is not as strong as Bale’s did. When Wooden Is showing her photograph, It takes time for the audience to find out the main topic of this performance, which is vague when audiences are watching live elk. Furthermore, when we are comparing the two headings, â€Å"How to combat modern slavery† and â€Å"Our Century’s greatest injustice†, it simply shows the difference in terms of clearness and directness on the two topics. Therefore, I am persuaded by Bale’s style as he has a better Introduction. Besides the Introduction, regarding whose skills on explaining claims and showing examples are more enhanced and convincing, Bale’s do as he has structuralizes and clear organizations. The body paragraphs are the utmost important parts for an article, a speech, or a critique. It is cause through the development of body paragraphs, we can decide whether an argument is persuasive or not. Although the content of the two issues are different from one another, we may compare the speeches by their claims, examples and evidences. Truly, both of the orators enrich their ideas with impressive examples, but am more Inclined to those presented by Bales. Bales claims that â€Å"slavery is an economic crime and people are doing it to gain profits. Bales tries to prove that by saying, â€Å"slavery would be recognized throughout all of human history. Hence, Bales 1 OFF re enslaved in 2010 and the average price for one of them nowadays is Just about $90 dollars in average around the world. Steps by steps, he explains the situation of slavery and provides suggestion for solving the problem. Thus, audiences are convinced by his speech and acknowledge the seriousness of the problem. For Whodunit’s speech, she is trying to raise people’s awareness about the unfair situation on female, hence showing that the status of women should be upraised as it will benefit the whole global society by presenting how four girls â€Å"moved out of a vicious cycle and into a virtuous cycle. In order words, there are four examples are explaining women are capable of acting the important roles in the society. Wooden does a great Job in explaining her thesis with the support of the examples, however I am not sure if she is objective enough. She does not mention the cases for male and the reasons behind why male are most likely showing upper status than female. In fact, taking about hegemonic masculinity may explain the condition in which men are dominant and privileged (Connell). If she can include such information, audience may have more opportunities to Judge the problem. After comparing, I prefer how Bale does his speech, which is more detailed and persuasive. After raising people’s awareness, both Bale and Wooden succeed in asking audience to call to action. All the hard works of the two speakers are to raise people’s awareness towards the social issues. It is flog on dead horse if there’s no further follow up – call to action. Bales narrates the story of a woman in Nepal which shows that we, people who got intellectual power, are the only hope to mitigate with slavery. Thus, he leaves audience the question, â€Å"Are we truly free? Meanwhile, Wooden reflects it is more blessed for us if we can help others as well by quoting researches, which shows there are few things can elevate our level of happiness and one of them is to contribute a cause larger than ourselves. She demonstrates that it is a great opportunity for audience not to hesitate but to Join the movement. She also leaves a question for the audience to nibble at: â€Å"How do we discharge that responsibility? † Both of the two orators starts their speech by taking the personal experience as the hook, then adding examples and claims to strengthen their ideas. At last, asking audience to show sympathy for the needy people. I believe from this act, audiences can be more motivated as knowing how the people are treated unfairly. In these two 220 minutes’ talk shows, the audience is deeply engaged with these two global issues. Bales and Whodunit’s sophisticated presentation skills raise our interest to further investigate the problems and the solutions. Dignity and rights of all members of human are the groundwork of freedom, Justice and peace in the world (Structure of the Universal Declaration of Human Rights 2). We are the lucky ones in his planet neither because of the ability to buy the latest tablet, nor enjoying a decent meal. We are lucky as we have the chance to study, have the chance to live in a safety place, and have the chance to not to be dead due to slavery or born in places with discrimination. Bale ends his speech, â€Å"Are we truly free if we are not thinking about these issues and help the needed ones? † We should constantly remind ourselves that we, as a responsible individual of this global community, should always take the initiatives to bail those who are underprivileged out from their predicaments. How to cite Analyses on TED Talks, Papers

Gap Analysis of Green Hotel Marketing †Free Samples to Students

Question: Discuss about the Gap Analysis of Green Hotel Marketing. Answer: Introduction Hyatt Hotel Corporation is an American multinational hotel chain serving worldwide. It is significantly providing with world class amenities to all its clients. Being a well-known property around the world, Hyatt attracts business travelers around the world. People from different cities and countries are opting Hyatt for a safe and effective stay. With the expanding business needs and technology up-gradation, Hyatt has developed itself as one of the most favored choice for the business travelers. With an increasing competition, there is an increasing need for developing an efficient product engaging large sized business corporations to opt Hyatt as their first choice. There has been drastic change in the business environment due to developing interest of people to go oversea for pursuing their business related dreams. This business plan is based on introduction of the business plan that is focused on A Mobile-Optimized Website. This mobile based will help in providing business travelers with an idea about the property. The hotel website will provide business travelers with an easy access to property information on the go. This will likely to rank higher in mobile searches than non-mobile sites. The business traveler can make sure about the features Hyatts property provide and amenities clearly, on a single click. The website will be dedicated to the Business Travelers page that highlights all relevant amenities, services and packages made for the business travelers. This will not only helpful to potential corporate customers, but is an efficient way to enhance SEO. With changing technological approaches in the business, it has become important to implement an effective marketing plan attracting business travelers across the world. This marketing plan will help in implementing the plan in an effective way. Business travelers are a next growing section in tour and travel. This has created needs for the business travelers to access the surroundings through a mobile optimized website. It will provide with a direct access to the places nearby and an effective customer services in order to manage the complete stay. Big corporate body can tie an alliance in order to carry out annual meeting and conferences. A Centralized app will help in smooth access in order to manage tour. Hyatt is a world renowned multinational hotel chain incorporating new business ideas in order to attract customers across the world. With a varying size of the property from 200 to over 2000 rooms, Hyatt is able to meet every kind of business requirements. The Hyatt property is known across the world as an appropriate destination for people around the world (Hyatt Hotel Corp.2017). With a changing business scenario, Business travelers are looking for better opportunities in order to carry out smooth functioning. The overall purpose is to add-on an effective service so as to manage the operations (Our Company.2017). The Hyatt property stands at ninth place in the world. With changing business situation, it has become significant to introduce an effective business plan in order to gain interest of business travelers. Hyatt has a network more than 600 properties scattered across the globe. The hotel chain is effectively providing with the personalized services to all its clients in order to meet the daily expenses in an effective way. Organizational auditing and external factor Analysis With such a great demand in business travel industry, The Hyatt Regency is one of the oldest brands located worldwide. These properties of Hyatt are well-known to meet the generic requirements. With the increasing pressure from the foreign travelers, it has become important to establish a central optimized mobile network. This will help in arranging the requirements in a useful way. In a competitive business environment, this has become important to provide customers with the best facility. There are other hotel chains that provides with a centrally optimized website dealing with customers query. In the given proposal it is clear that there is no proper system providing with assistance to the business travelers. The web based facility will help in meeting travelers requirements. The specific app features will focus on the facilities like spa and other leisure for business travelers. Hyatt, under this situation, can take advantage by launching a centralized app for the business travel ers. This facility is designed as a restricted service for the business traveler (Our story.2017). It is due to their capacity that the website will be able to provide well-organized services to most of the international business travelers while exploring the facilities. The company has gained a sustainable market by enabling itself at local and International platform (Brotherton, 2012). This facility will help in arranging the business requirements. This facility will appropriately focus on the entire requirements of the business travelers. The service considers all the requirements; even the pettiest service can be organized through the app. A well framed and differentiated approach that will bring the brand at a competitive place A well prepared plan connecting people through technology A positive environment A very well highly appreciated policies incorporating individual interest Extremely professional workforce Competent team with a focused brand values A logical and well organized system that help in dealing with the issues related to technology Overall, values and norms well characterized helping business travelers Gap in communication due to long term strategy An recognized characteristic of work and situation. It is important to increase the interdepartmental communication Employees down to business approach are important in case of dealing with the customers query. There is a requirement to arrange facility for the business travelers. High internet speed is necessary There is a high Returning growth rate Restricted competition To create better opportunities in order to create better opportunities. Multiple growing opportunities by creation of an effective business environment for the international tourist. This may cause hardcore competition for the company in coming years. recurrent similar services and a High degree of competition in the market. Recession has affected the business in the recent time. This might create problems in the coming years. PESTLE Analysis The political situation of the country where Hyatt is established directly affects the execution of the business service. With the increasing technological environment, it has become evident for the economies around the world to implement an effective plan in order to increase overall GDP. Individually, the brand is paying long term effectiveness in the modern environment. This is important enough to create effective policies and procedures in order to deal with the problems. Political environment therefore plays an important role in securing an effective position in the market. This however helps in gaining sustainable objectives in order to manage the organization. Local economy is an important factor in introducing a change in the organization. With the growing economic need, it is important to place current market position in the society and constantly developing associations in order to understand the needs of people and working consequently in order to gain competency. The overall purpose is to gain systematic growth with an effective work frame (The Hyatt Difference. 2011). Social issues are important while dealing with the issues in order to manage the changes. With the ongoing changes in the society, the hotel industry requires an effective technology in order to provide an easy flow of work. The brand is providing with unparallel services in order to gain market competencies. This will help in driving the company in a positive way. The web based centralized mechanism will improve the overall efficiency of the system. This will help in managing individual needs in order to arrange long term effectiveness in a perfect alignment with the organizational goals. It is important enough for the business organization in dealing with the issues in order to manage sustainable results. In the given situation, technological implementation is important in order to gain competencies. Hyatt through the current service will help in overcoming the ill-impact that is caused through the implementation of services for business travelers. This will help in ensuring a well-organized operation at its property. The best feature of Hyatt is that it provide unique amount of services in every part of the world. By synchronizing the activities through a centralized system will help in organizing facilities for the international business travelers. This has helped them in gaining ample amount of recognition across world (Kamath, 2017). All the legal compliance regarding the facilities will be managed through a centralized system. This will however help in managing the facilities in order to gain effectiveness against the complications in term of dealing with the complex situation. The primary focus of Hyatt is to manage the environmental factors in an effective way. The purpose is to coordinate the environmental factors with the technology solutions. One can easily book the hotel room for the business travelling purpose sitting at different places around the world. Hyatt has given much more priority to the environmental factors in dealing with the issues related to the business travelers. The barriers in the execution of the plan are related with the short and long term issues that can be seen while executing the plan. There are various threats and opportunities attached with Hyatt while focusing over the current plan. The organizational strength depends largely upon the necessity. This ought to create threat for the organization on a long run. The organizational strength and development is important to develop effectiveness. There can be issues in terms of service execution. It is tough for managing the A High-quality employee is important to deliver services in order to gain competency . This can be over-come by attaining distinguished results. Hyatt in this way can strengthen the brand strength resulting in victorious advancement. There can be an excess pressure on the website creating a hassle. In beginning there is a requirement to keep a well-trained workforce in order to deal with the issues. Hyatt is known for providing five star services to its clients across globe. In providing centralized mechanism The information regarding the service and its description is given to the business traveler personally on the website. By improving the centralized system, it would be easy to manage the activities in the best possible way (Pride, 2008). The most important and effective part in case of competition is by implementing an effective brand strategy. These strategies have helped in generating an effective business for the organization. Hyatt's Central Reservation System plays an important role in ensuring effective reservations across world. All these strategies are important enough to gain effectiveness in the market in order to deal with the long term consequences. Hyatt Reservation center in order to get the reservation done (Kotler, Keller, Manceau and Hmonnet-Goujot,2015). The marketing plan is regarding implementation of a High quality Mobile-Optimized Website. This mobile based system will help in providing business travelers with an idea about the property. This has become important for the hotel industry to develop effective centralized mechanism that will allow in gaining effectiveness in order to gain sustainable results (Armstrong, Adam, Denize and Kotler, 2014). There marketing strategy is based on attaining objective. It is necessary to communicate the exclusive set of services they are continuously providing to their customers. There focus is to direct the focus of guests by giving them a high quality and value for the money (O'Neill and Mattila, 2010). All these strategies are important enough to make effective advancements toward the business proposal. It is important from the point of view of developing better relationship with the employees. There is an effective connection in between the continuous growth and development in the field that will help in achieving long term result. Better relationship with the customers will help in dealing with the issues in the organization. It is important for an organization in order to deal with the issues that are taking place since a long time (Fournier and Lee, 2009). Techniques for new product development for the business traveler There are different techniques that can be used in order to introduce the product into the market. New product introduction and management is of great importance in order to gain long term competencies. The product is important from the point of view of gaining long term customer consideration and gaining effectiveness. In order to gain long term insight it is important to follow the following points in order to gain competency: Best Business facilities: There is a necessity to express an interest for the large sized corporate house. This will help in encouraging sustainable organizational results. The best services include all those services that are included in 5 star amenities. The world class facilities have helped them to sustain competition under tough situation. Custom-made Services: Hyatt is a famous name around world for providing customized services to the business traveler from different countries. They understand that it is important to serve the travelers by helping them to regulate services in an effective manner. Deluxe facilities: It is possible to introduce the services for the customers by introducing services on a click. Hyatt has various five star properties across the world to provide deluxe services. It is necessary for an organization to manage effective services by providing deluxe facilities to the customers (Reid and Bojanic, 2009). The centralized app based services is free of cost. Business traveler can upload it from Google store and Apple Store. Business Travelers across the globe can use the facility in an effective way. It is due to their pricing policy that the brand has gained a huge name in the market. It is important enough for gaining sustainable objectives on a long run in order to deal with the issues (Nykiel, 2007). Hyatt is focusing on the business travelers around the globe in making distinct advancement. For the reason they are working on dealing with the appropriate strategies in order to gain effectiveness. The purpose is to gain effective role in order to manage the quality for the purpose of organizational goals. The quality model is developed to understand the value for the loyal guest. There pricing policies are focused on the customers for which they are providing with guest cards in order to retain loyal customers . These cards are valid across the globe and provide a high discounted rate to the customers (Punitha and Rasdi, 2013). The Hyatt Regency is very well coordinating with the sub-brands in order to coordinate with the work. For the reason, it has to procure the most effective solution in order to deal with the situation. This is important enough to gain sustainable objectives while managing the distribution pattern that are seen in the organization. Hyatt has an effective distribution policy that focuses upon gaining effective growth. For business travelers it is important to design the mechanism in order to gain an effective distribution pattern (Lim, 2010). Communication mix For attaining an effective result, it is important to communicate the strategies in a better way. This is a well- coordinated marketing strategies. In a distinguished atmosphere this has become necessary for a company to provide personalized services to the customers. The companys marketing team allocates individual hotel manager to manage the property. It has become necessary for a business organization to serve each individual needs. The subject and revenue objectives have helped in attaining a distinguished market place. The purpose is to strengthen the objectives by focusing on corporate houses in coordinating business meeting at Hyatt (Line and Runyan, 2012). Brand direct marketing at Hyatt is handled by their PR agency. They formulate a list in order to sell product to the direct customer. In a distinguished environment it has become necessary to select a proper targeted list of companies. It is necessary to send them information about the range of Hotel they are providing with. The PR agent hired by Hyatt is responsible to manage public relationship with the corporate bodies (Reid and Bojanic, 2009). This is related with business processes in order to bring mutually people and technology to serve the mission. The company has created a team of regional directors in order to maximize the revenue. There duty is to generate the revenue by incorporating distinguished marketing objectives. The revenue can only be earned if policies are implemented in an effective manner (Barrows and Powers, 2008). There is a possibility that Hyatt may face issue in execution of the plan in case of employee development and management. Employees may feel agitated at an initial stage. It is suggested to negotiate the terms and conditions related to the upcoming project. There is a possibility that they might replace existing employees. Hyatt might face difficulty which is based on false claim by the business travelers. Such ethical issues need to be handled at priority by the company. Under such a circumstance it is necessary for them to restructure the ethical issues in an effective manner in order to attain sustainable results. A consolidated budget for deployment of the business plan is required to be implemented. An equivalent amount needs to be kept aside after considering the overall sales and cost. There is a need to meet the ethical issues taking place in the organization. However the budget needs to be prepared in accordance with all variable and fixed factors that need to be considered at priority. It is the last function that includes overall evaluation and implementation of the budget that is allocated for the business in order to meet the task. Hyatt is consistently preparing a separate budget in order to remove irregularities. There is a necessity to implement the centralized mechanism in order to regulate the services in the most effective way. Recommendations Hyatt has a worldwide portfolio with more than 600 properties across globe. It is difficult for the company to focus on all the individual needs. Every local market has distinctive needs. In such a scenario it is important for them to formulate effective policies for business travelers by understanding the difficulties they are facing, by keeping their requirements in mind, it is possible to gain competency in the low-edge market. Secondly they need to develop a comprehensive loyalty program for their regular business travelers. This will help to achieve a sustainable market place. Thirdly Hyatt needs to focus on retaining efficient employees who are performing excellently. Lastly it is recommended to develop high standards for the room division for the international business travelers by keeping a centralized portal. The app based service will allow them to access the hotel services in a smooth manner. Conclusion The report put forward the marketing plan for Hyatt for their business travelers. In changing business scenario, it has become evident to organize effective services in order to gain market competencies. They serve as the best place to meet the requirements of the guest across the world by meeting all their personal needs. The brand is known for providing effective services to the customers worldwide through their hotel chains. There marketing strategy has helped them to communicate with the customers in an effective manner. The primitive and quantitative strategies help in identifying desired results. The quality model is developed to value standard the international business travelers. Majority of opportunities are occurring at the global market that is helping them to retain market growth. Hyatt is a global brand with an international image it need to focus on the market requirements as per the local market needs. References Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia. Barrows, C.W. and Powers, T., 2008. Introduction to Management in the Hospitality Industry, Study Guide. John Wiley Sons. Belz, F.M. and Peattie, K., 2009. Sustainability marketing: A global perspective. Chichester: Wiley. Brotherton, B. ed., 2012. International Hospitality Industry. Routledge. Competitive strengths.2017. 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Resources and capabilities as drivers of hotel environmental marketing strategy: Implications for competitive advantage and performance. Tourism Management, 35, pp.94-110. Lim, W., 2010. The Effects of social media networks in the hospitality industry. Line, N.D. and Runyan, R.C., 2012. Hospitality marketing research: Recent trends and future directions. International Journal of Hospitality Management, 31(2), pp.477-488. Lovelock, C., 2011. Services Marketing, 7/e. Pearson Education India. Nykiel, R.A., 2007. Handbook of marketing research methodologies for hospitality and tourism. Routledge. O'Neill, J.W. and Mattila, A.S., 2010. Hotel brand strategy. Cornell hospitality quarterly, 51(1), pp.27-34. Our Company.2017. Online Available at: https://investors.hyatt.com/investor-relations/our-company/default.aspx Accessed on: 20 February 2017 Our story.2017. Online Available at: https://about.hyatt.com/en/hyatthistory.html Accessed on: 20 February 2017 Piccoli Ph D, G., 2012. Emerging marketing channels in hospitality: A global study of internet-enabled flash sales and private sales. Pride, W., 2008. Marketing. Cengage Learning. Punitha, S. and Rasdi, R.M., 2013. Corporate social responsibility: Adoption of green marketing by hotel industry. Asian Social Science, 9(17), p.79. Reid, R.D. and Bojanic, D.C., 2009. Hospitality marketing management. John Wiley and Sons. Reid, R.D. and Bojanic, D.C., 2009. Hospitality marketing management. John Wiley and Sons. SW Chan, E., 2013. Gap analysis of green hotel marketing. International Journal of Contemporary Hospitality Management, 25(7), pp.1017-1048. The Hyatt Difference. 2011. Online Available at: https://www.hyattdevelopment.com/competitive_strengths/sales_marketing.html Accessed on: 20 February 2017