Project on Gulistan Textile Mills

ACKNOWLEDGMENT All the appreciation and gratitude is for the Almighty Allah who is the most merciful and beneficial. He is the only one who bestowed us knowledge and wisdom and made us capable of doing the challenging tasks. We thank the Almighty for all those capabilities that He granted us to complete this project. Secondly we are very thankful to our teacher Prof. Aitzaz Khursid who worked day and night with us for this project. He helped us at each and every step and guided us in every difficult situation. We are thankful to the other teachers as well whose support and guidance was an asset for the completion of this project.We would like to thank our parents and family members as well because they provided us the financial and moral support in doing this project. And last of all whatever we have done, it is just because of the coordination and cooperation of all the group members. They worked hard researched through different sources. Table Of Contents: Industry Profile†¦Ã¢ € ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦.. 4 Company Profile†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦.. 6 Vision Statement†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 8 Mission Statement†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 9 PEST Analysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚ ¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. .. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦. 11 * Political Forces * Economical Forces * Social Forces * Technological Forces Porter’s Model†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 13 Opportunities & Threats. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 15 EFE Matrix†¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦17 Critical Success Factor†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã ¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦. 18 Competitive Profile Matrix†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 19 Strategic Internal Audit Of Departments†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦21 * Marketing * Finance * Accounting * MIS * HR Organization’s Strengths & Weaknesses†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 7 IFE MATRIX†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã ¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 38 SWOT Matrix†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 39 Long Term Non-Financial Objectives†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦40 Long Term Financial Objectives†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦41 Findings†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦41 * EFE * CPM * IFE SPACE Matrix†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 43 BCG Matrix†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 46 IE Matrix†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 48 Grand Strategy Matrix†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦.. 50 QSPM†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚ ¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦52 Conclusion†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 56 Learning†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦57INDUSTRY PROFILE The textile and apparel industry is often considered the backbone of the Islamic Republic of Pakistan’s economy. In that south Asian republic which shares borders with China to the north, India to the east, and Iran and Afghanistan to the west, as well as the Arabian Sea to the southwest cotton textiles and apparel historically were the f ocus of the industry, mainly because of the large amount of cotton grown in the country. In fact, Pakistan currently ranks fourth among world cotton producers and third among world cotton consumers having produced 9. million 480-pound bales and consumed 11. 8 million 480-pound bales in the 2010/2011 marketing season. Pakistani textile manufacturers recently have diversified their product offerings to include man-made yarns, fabrics and apparel as the result of shifts in global demand for cotton-blend apparel. Other recent economic factors, such as the end of textile quotas in 2005, have caused Pakistan’s textile industry to continue to adapt in an effort to remain globally competitive. The republic’s textile and apparel industry in 2011 consisted f ginning, spinning, man-made fiber, weaving, finishing, apparel, terry towel, tarpaulin and canvas, and knitwear machinery sectors. The textile and apparel industry as a whole employed approximately 40 percent of total indust rial workers and accounted for 46 percent of total manufacturing. There were 1,221 ginning units, featuring an installed capacity of 20 million bales of cotton. The spinning sector comprised 408 spinning units, with an installed capacity of 157,143 rotors; and 50 composite units, with an installed capacity of 10. 1 million spindles.The country’s 10 man-made fiber units had an installed capacity of 660,000 tons. The Pakistani government’s Board of Investment reported 124 large and 425 small weaving units, with a total production capacity of 4. 4 billion square meters of fabric. With regard to finished textile goods, the country’s 5,000 apparel units featured an installed capacity of 450,000 sewing machines, show organizers reported. The installed capacity for Pakistani knitwear manufacturers numbered 12,000 machines. Tarpaulin and canvas production capacity totaled 100 million square meters, while installed capacity of terry towels totaled 7,500 looms.While the P akistani manufacturing sector as a whole in 2011 accounted for approximately 25 percent of the country’s estimated gross domestic product (GDP) of US$395. 2 billion on a purchasing-power-parity basis, the textile industry’s diverse product offerings accounted for 11 percent of the country’s GDP, as reported in the aforementioned IGATEX Pakistan report. In addition, approximately 60 to 70 percent of total exports came from the production of cotton textiles and apparel, which are considered Pakistan’s largest industries.The Business Recorder, a Karachi-based financial newspaper, reported in June 2011 that the textile industry’s value addition accounted for more than 9 percent of the GDP, and that the industry had a market share of approximately 30 percent in world yarn trade and 8 percent in cotton cloth. With the recent decline in textile exports and a record-setting trade deficit that reached more than $2. 1 billion in the first two months of 2012, Pakistan’s textile industry currently is confronting new economic challenges.Including the spinning, weaving, value-added apparel and made-up and home textile sectors had begun to downsize its workforce. A hike in interest rates in July 2011 by the country’s central bank led to increases in export refinancing, long-term commercial and industrial credit, and, ultimately, rising production costs. Furthermore, exporters are facing steep price competition from manufacturers in China, India and Bangladesh. COMPANY PROFILE Gulistan Group of Companies began with the establishment of Gulistan Textile Mills in 1966.Gulistan Group of Companies since then the group has expanded substantially to become one of the largest textile groups in Pakistan with over 6000 employees Gulistan Group of Companies main focus of this carefully designed expansion has been to add stability to business obligations and win customer confidence in product quality, reliability and competence. This appr oach towards progress and growth is visible in Gulistan Group's enormous success in all of its undertakings to date. Gulistan Group of Companies an annual turnover of US$140 million. Gulistan Group of Companies all units are listed company.Gulistan Group of Companies head offices are in Lahore ; Karachi. Gulistan Group of Companies has: * 11 spinning mills producing 60,000 tons of yarn per annum. * 2 woven fabric mills producing 16. 5 million meters of fabric per annum. * 4 Power generation plants producing 21 megawatts of electricity. * Gulistan Group of Companies are manufacturing (Yarn, Fabrics, Apparel, Cotton Clothes, * Towels, Bed wear, knitwear, Raw Cotton, etc) Yarn Gulistan’s 9 spinning mills with 215,000 spindles and 4,200 rotors produce 70,000 tons per year of cotton ; blended yarns from 4/1 to 120/1 as well as up to 10-plied yarns.This is complemented by a yarn dyeing plant with a capacity of 3,000 tons per year of a wide variety of melange and dyed yarns. Gulista n Group has one of the largest and most versatile spinning setup in Pakistan. Fabrics The state of art weaving unit with its 255 air jet and projectile looms have a capacity of weaving 36 million linear meters of high quality greige fabric in widths ranging from 40 inches to 144 inches and thread counts as high as 600 in single, Apparel Gulistan has set up a 500 stitching machines woven apparel unit ensuring aesthetics, elegance and fineness.Gulistan is producing 8000 trousers per day through its latest state of the art mechanical setup, production planning systems and design mechanism. Home Textile Home Textile products are the latest addition to the group’s product range. A manual fabrication facility is being setup and exports have already begun of top quality yarn dyed sheet sets into the United States. Vision Statement * To become a complete and integrated textile conglomerate. * To become an institution that delivers extra value through superior product quality and prof essionally principled management. To stay abreast of technological advancements to meet the changing and challenging requirements of our customers. All of us at Gulistan are committed to delivering more to our customers all over the globe. We seek growth through state of the art technological innovations and continuous improvement in our operations. Analysis Basically Vision statement is the answer of the question that â€Å"what do we want to become? †And it is a really important component of the organization. If the organization wants to formulate any strategy clear vision is the key component required for that.Let’s analyze the vision statement of Gulistan point by point. * Conglomerate means â€Å"A group of diverse companies under common ownership and run as a single organization† so it’s clear that they want to take over the whole textile industry under their own company. This sends a clear message to the competitors that they want to compete. This statement motivates the employees because they made it clear what they want to become. * The organization promises to deliver quality product and good management so this is their competitive advantage because the quality and the management make the difference.This statement sends the clear message to the customers or the target market that quality and management is their core competence. * As we all know that this is the time of globalization. The customer demands and needs are more challenging than the previous times so technological advancements are necessary for the organization. It’s a good thing to include in vision statement because it shows the strength of the organization that they opened their door for technological advancements to fulfill their other vision components. The major portion of the revenue generated by Gulistan is from their exports so they also covered the global prospective by stating that they are committed to deliver more for their customers all over the globe. This also covers that they are targeting the customers not only from Pakistan but all over the globe. * As the core rule of vision that it should be broader so they stated in their vision that they will seek through state of the art technological innovation and continuous improvement in their operations.This shows the broader vision of the organization that they are not stereo type and they always open their arms for improvements. This is a really a good vision statement which covers all aspects like Industry, customers, core competence, competitiveness, product and employees. Mission Statement Commitment towards excellence, to our customers, to society is the foundation that we have built upon; from it we drive our strength. Gulistan has held the traditional values of honesty, integrity and commitment in high esteem. The structure of each of our business units is designed to integrate experience with technological advancement.With the effort and expertise put in by the 10,000-members of Gulistan family, our state of the art units are producing world-class yarns, fabrics, made-ups, apparel and household products for our local ; global customers. Our plans are geared towards expanding our global presence; providing quality products and developing relationships while at the same time serving the community we live in. Analysis Mission statement must have 9 basic components let’s see that how gulistan is fulfilling those 9 mission components and I also highlighted them above. Customers– Local and global customers. * Products– Yarns, fabrics, made-ups, apparel and household products. * Markets—International & Global Markets * Technology– To integrate experience with technological advancement. * Concern for survival, growth and profit—Expansion of global presence. * Philosophy– Traditional values of honesty, integrity and commitment in high esteem. * Self Concept– Providing quality products and deve loping relationships. * Concern for public image– Commitment towards excellence, to our customers, to society. Concern for employees– The effort and expertise put in by the 10,000-members of Gulistan family. This is a really a good & comprehensive mission statement which covers nine basic components of mission statement like customers, products, markets, technology, concern for survival & growth, philosophy, self concept, concern for public image & concern for employees. PEST ANALYSIS Political * Rules and regulations by the government for the collection of taxes have impact on the organization. * Rules and regulations imposed by the government on import and export effect the organization. Different types of export duties by government also effected organization to discourage from export their product. * Day to day changing in political situation in Pakistan had a bad impact on organization. * Organizations are discouraged to expand their business due to changes in pol itical situation. Economic * Economic condition of our country is very bad so it has a great impact on industrial sector. * Due to bad economic condition industries are suffering from low profit. * Due to inflation profit of industries is reducing because it impact on industries to increase in prices of products. Bad economic condition results in to reducing number of industries in a country and to unemployment. Social * Unemployment is increasing day by day due to electricity shut downs in our country. * Attitude of the people on work is not improving due to low salaries are given to them in response to their work. Technological * Volatile technologies are launched day by day which has a great impact on organizations to serve in market. * Fast internet browsing eliminates gap between importers and exporters. * Modern customized software reduces human effort and it tends to save time and money of owner. Advertising agencies make it easy to access their customers at home at any time on national and international level. * Innovation in technology increases efficiency of organizations to compete in the market and to increase productivity. Conclusion: Technology has a great impact on the industry. Due to technology, they face new challenges, which check their abilities and improve performance. Gulistan adapts latest ways of technology & is successfully doing their business. PORTER’S MODEL 1. Threats of new entrants The threat of new entrants in the retail industry keeping in view the brands that we have chosen is low.As the scope of the textile business, Gulistan is providing a vast category of products under one roof. The new entrants face several barriers which primarily includes the high costs involved in starting this business. Secondly the product offered by them is highly differentiated product which also discourages new entrants. With such established brands it becomes very difficult for the new entrants to make a position in the market or capture ma rket share. Thirdly the cost involved in having an exclusive distribution is very high which also serves as a barrier to entry. 2. Threats of substitutesWe are analyzing the threat of substitute can be classified into the following category of: * Local Market * International Market The threat of substitute is medium to low in local market. People might switch brands if they think due to any reason the brand is not providing satisfaction. But on the other hand people who are brand loyal would not think of any substitute. But in the international market the threat of substitutes is pretty high because other industries ; competition. 3. Rivalry among existing firm The rivalry among the textile industry is high, both in the local market and for the international market.In case of the local market the number of competitors is very large and all moves are competitive. Majority of them are even located in the same areas ; are challenging each other’s positions, taking sales from eac h other. The international market is also on the competitive moves. Launch of new product by any brand impacts the other brands like the recent launch of Gulistan impacted the sales of other exports ; international brands too. 4. Bargaining power of suppliers The bargaining power of suppliers is high in retail industry as the suppliers can supply to any firm they want.In international ; local market some industries have multiple suppliers and therefore have great impact on the sales of the business. The products at these stores are differentiated and therefore the switching costs involved are very high. Alongside the substitutes in case of suppliers is also not viable as brand equity is also very important. 5. Bargaining power of buyers The bargaining power of buyers is high in the international market but in case of local markets it is low. The reason for the high bargaining power in local market is * Plentiful alternate suppliers Product not differentiated * Access to substitutabl e products * Plentiful options for consumers. On the other hand in case of the international market the bargaining power of buyers is low because * Less alternatives * Differentiated product * Changing supplier costs high to the seller Conclusion: As we discussed above the textile industry is very vast in Pakistan the competition in local markets is high because there are many textile companies working here. People have plenty of choices to select between different brands. So companies are competing neck to neck for customer satisfaction.Quality is the most important to maintain competitive edge over other brands. Globally the competition is also tough because textiles are included in the major exports of Pakistan. Quality and variety both are important in international markets. Gulistan is producing variety of products with supreme quality so they should improve and sustain it to remain in competition. Opportunities ; Threats Opportunities Pest analysis * Fast internet browsing eli minates gap between importers and exporters. * Modern customized software reduces human effort and it tends to save time and money of owner. Advertising agencies make it easy to access their customers at home at any time on national and international level. * Innovation in technology increases efficiency of organizations to compete in the market and to increase productivity. Porter’s model * Threat of new entrants is low. * Threat of substitute is low in local market. * Low bargaining power in local market. Threats Pest analysis * Rules and regulations by the government for the collection of taxes have impact on the organization. * Rules and regulations imposed by the government on import and export effect the organization. Different types of export duties by government also effected organization to discourage from export their product. * Day to day changing in political situation in Pakistan had a bad impact on organization. * Organizations are discouraged to expand their bu siness due to changes in political situation. * Economic condition of our country is very bad so it has a great impact on industrial sector. * Due to bad economic condition industries are suffering from low profit. * Due to inflation profit of industries is reducing because it impact on industries to increase in prices of products. Bad economic condition results in to reducing number of industries in a country and to unemployment. * Unemployment is increasing day by day due to electricity shut downs in our country. * Attitude of the people on work is not improving due to low salaries are given to them in response to their work. * Volatile technologies are launched day by day which has a great impact on organizations to serve in market. Porter’s model * Threat of substitute is high in international market. * Rivalry among existing firms. * Bargaining power of suppliers is high. * High bargaining power of buyers in international market.EFE MATRIX KEY EXTERNAL FACTORS| Weight| R ating| Weighted Score| OPPORTUNITIES| WTO regime implementation. | 0. 12| 4| 0. 48| Cost reduction by using modern and technology| 0. 13| 3| 0. 39| Local market development| 0. 10| 1| 0. 10| Entering in Energy sector. (Subject to Government permission)| 0. 11| 2| 0. 22| THREATS| Export of raw cotton and yarn| 0. 12| 4| 0. 48| WTO regime implementation| 0. 10| 4| 0. 40| Exchange rate fluctuations| 0. 09| 2| 0. 18| Instable political and economical conditions| 0. 12| 4| 0. 48| Government policies| 0. 11| 1| 0. 11| TOTAL| 1. 00| | 2. 84| Interpretations:EFE score of 2. 84 indicating that the Gulistan is taking the external opportunities and avoiding external threats quite well, however there is room for improvement is well. This score suggest Gulistan to be aggressive but the degree of aggressiveness needs to be little moderate, it should not go for diversification, rather it should go for penetration in the existing market, further developing local or foreign market or it may design a new product. Critical Success Factors Critical Success Factors are: * Product design * Technological up-gradation * Research ; development * Market Segmentation Distribution ; promotion * Capacity utilization * Persistence in product quality * Efficient procurement of raw material * Effective management * Trained manpower * Cost competitiveness * Customer satisfaction ; loyalty Competitive Profile Matrix CRITICAL SUCCESS FACTORS| | Gulistan Textile MILLS LTD. | CRESCENT TEXTILE MILLS| CHENAB TEXTILE MILLS| | WEIGHT| Rating| Weighted Score| Rating| Weighted Score| Rating| Weighted Score| Product design| 0. 07| 4| 0. 28| 3| 0. 21| 3| 0. 21| Technological up-gradation | 0. 11| 3| 0. 33| 4| 0. 44| 3| 0. 33| Research ; development| 0. 0| 4| 0. 40| 3| 0. 30| 2| 0. 20| Market Segmentation| 0. 07| 2| 0. 14| 2| 0. 14| 4| 0. 28| Distribution ; promotion| 0. 07| 3| 0. 21| 3| 0. 21| 2| 0. 14| Capacity utilization | 0. 08| 3| 0. 24| 3| 0. 24| 2| 0. 16| Persistence in product quality| 0. 09| 4| 0. 36| 3| 0. 27| 4| 0. 36| Efficient procurement of raw material | 0. 09| 3| 0. 27| 3| 0. 27| 3| 0. 27| Effective management| 0. 08| 3| 0. 24| 4| 0. 32| 2| 0. 16| Trained manpower| 0. 07| 4| 0. 28| 3| 0. 21| 3| 0. 21| Cost competitiveness | 0. 10| 2| 0. 20| 2| 0. 20| 1| 0. 10| Customer satisfaction ; loyalty| 0. 7| 3| 0. 21| 3| 0. 21| 2| 0. 14| TOTAL| 1. 00| | 3. 16| | 2. 98| | 2. 56| INTERPRETATIONS: A Gulistan Mills limited is dominating in the industry as compared to local players. There are several competitors like Agzard 9, Kohinoor textile mills, etc, but above taken competitors are the major ones. CPM scores for Gulistan showing aggressiveness as compared to the crescent and Chenab textile mills. Gulistan is number one company within the local environment; it is basically leading the industry in the following aspects: * Product design. * Research ; development. Persistence in product quality. * Trained Manpower. Moreover, crescent textile mills is resides at the second number and leading industry in effective management style. Finally Chenab textile comes at number 3rd with leading position in persistence in quality and market segmentation. Strategic internal audit of the company of the following departments * Marketing * Finance * Accounting * MIS * HR MARKETING DEPARTEMENT Sales ; Marketing department at the Gulistan Textile Mills Ltd. is involved in following three types of sales. * Exports * Local Sales * Wastage SalesFor these three types of sales the Gulistan Textile Mills Ltd have following two Sale ; Marketing offices. * Lahore Office * Faisalabad Office Exports The Gulistan Textile Mills Ltd exports all his goods through the agents in the different countries across the world. The direct sales to the foreign customers are very low. Gulistan Textile Mills Ltd. Export Agents Customers Export Agents Following are the major export agents of the Gulistan Textile Mills Ltd. * KSEO SEOUL KOREA * ATEX INTERNATIONAL * TAIZEUS LAILA ISLAM * SENCO INTERNAT IONAL * ESTERN KOREA * R. D JAEWARDANE INDIA * MITSUI ; CO INDIA * FIBER SMITH INTERNATIONALExport Customers Following are the customers of the Gulistan Textile Mills Ltd across the world. * COTTONNIERE DU, SENIGAL * CHINA TEXMAT CHINA * HAESONG BANGLADESH * EL HARAMEEN CO. EGYPT * ZHEJIANG IMPORT CHINA * KANDYGS HANDLOO SRILANKA * CRYSTAL MARTIN UK * RESTEX COMPANY USA * OASIS NJRT GENE TURKY Internal Audit Check List * Target markets are effective. They are relying mainly on exports so market is divided into one small portion of local sales and other major portion of exports. * Currently their exports portion is doing great among all other competitors like nishat mills is behind in the exports section. Firm market share is stable locally but in exports they already acquired major international markets. * As they have sales and exports agents on 2. 5 % commission which are doing well for them * Customers are pretty much satisfied with the product quality because they never compromi sed on product quality. * Gulistan is maintaining good quality with reasonable price which is the key factor for their huge sales * They are less focused on their advertisement because they have sales agents. They have invested in print media for advertisement. * They have trained managers and with minimum 10 years of experience in their related fields.ACCOUNTS DEPARTEMENT The financial information of a business is communicated through this department. As we know that â€Å"Accounting is an art of interpreting, measuring and communicating the result of economic activities† this department is concerned with the preparation of financial statements preparing budgets for business and allocating budget to different units according to their requirement. For daily expenses or for purchasing of goods or machinery for business. Accounts department prepares financial statements on quarterly, half yearly and annually basis.On the basis of these statements management takes necessary deci sions for business. Stakeholders can also get information about the financial position of the organization. Accounts manager handle whole department different accountant and assistants work under account manager. Units send all documents on daily basis to head office and on basis of these accountants prepare financial statements for purchases, payments, expenses, receipts and others. Functions of Accounts * Maintain record of assets of business * Recording transactions in books of accounts * Preparing financial statement Preparing ledger, journal and vouchers * To pay salaries, wages and different types of expenses to mills * Prepares financial statements on quarterly. Semi annually and annually basis FINANCE DEPARTMENT Finance department is concerned with the financial activities of the organization. Finance manage is responsible for the acquisition of finance for running operations of business smoothly. Finance manager prepares cash flow statements to estimate the financial needs in the business and to check whether the expenses are incurring according to the requirement of business.Finance is life blood of a business so it is very important department which handles financial activities of an organization. Accounts manager provides bank statements to finance manager and finance manager review those statements and then take decision which unit need to be finance and they are responsible for planning finance from where to acquire and where to invest. All the departments in organization depend on finance without finance department organization is unable to run smoothly. Functions of Finance Department * Planning Funds * Procurement of funds * Finding sources of funds Forecasting of financial for future * Effective utilization of funds * Negotiating with creditors * Allocation of funds to different units * Provide funds as they require Allocation of budget to units Allocation of expenses to units Make decisions of payrolls Proper review of expenses of units RATI O ANALYSIS For the analysis of the financial statements of the GULISTAN GROUP OF COMPANIES we use the ratio analysis in order to get a clear vision about the financial position with simple interpretation. For this purpose we can analyze the financial statements through the followings ratios: 1.Liquidity Ratios 2. Activity Ratios 3. Debt Ratios 4. Profitability Ratios 5. Marketability Rations/Efficiency Liquidity Ratios The liquidity of a business firm is measured by its ability to satisfy its short-term obligations as they come due. Liquidity refers to the solvency of the firm’s overall financial position the ease with which it can pay its bills. Basic measures of liquidity are: * Current ratio * Quick ratio By putting the values taken from the annual report of â€Å"GULISTAN GROUP OF COMPANIES† in the formulas of above ratios the results are shown in the following table.Current Ratio = current asset / current liabilities Quick Ratio = current asset – inventory / current liabilities Ratios| 2011| 2010| 2009| Current Ratio| 5657592015 /5872231037= . 96| 4222471024 / 4221143753= 1. 00| 3,170,385,835 /3,125,424,959=1. 01| Quick Ratio| 5657592015-4098001926 /5872231037=. 27| 4222471024-2872063135 / 42211437531=. 32| 3,170,385,835-1891974316 /3,125,424,959=. 41| Current Ratio A current ratio of 2. 0 is occasionally cited as acceptable, but a value’s acceptability depends on the industry in which the firm operates. A current ratio of 1. would be considered acceptable for a utility but might be unacceptable for a manufacturing firm. The ratio in 2011 is below 1. 0 so it is not acceptable. Quick Ratio The quick ratio is similar to the current ratio except that it excludes inventory, which is generally the least liquid current asset. Quick ratio is an extended version of current ratio in which only very quick assets (which can be quickly liquidated) are considered. Quick ratio in 2011 is also low that shows excess of inventory in stock. Acti vity Ratios Activity ratios are used to measure the speed with which various accounts are converted into sales or cash.With regard to current accounts, measures of liquidity are generally inadequate Basic measures of activity are: * Inventory turnover * Total asset turnover * Average collection period * Average payment period. Inventory turnover = CGS / Inventory Avg. collection period = A/R / Avg. sale per day Avg. payment period = A/p / Avg. purchase per day Asset turnover = sale / total asset Ratios| 2011| 2010| 2009| Inventory Turnover| 4197948535/4098001926= 1. 02 Times| 4442886796/2872063135=1. 55 Times| 1983953867/1891974316=1. 05 Times| Avg. collection period| 1202179249/14370761. 5=83. 65 Days| 992689190/14190684. 10=69. 95 Days| 896133503/11757625=76. 22 Days| Avg. payment period| 507009956/11435996=44. 33 Days| 428978782/11833817= 36. 25 Days| 250638087/11932214=21 Days| Asset turnover| 5245328111/9277085948=. 57| 5179599697/7821978153=. 56| 4291532961/6639205671=. 65| In terpretation of the Results Inventory Turnover Inventory turnover commonly measure the activity, or liquidity, of a firm’s inventory. Inventory turnover of the company is 1. 02 times in the year 2011 and it has decreased from the last year figure of 1. 55 times. Though here is a decrease in inventory turnover in 2011 but it is best in 2010 as compared to 2011 and 2009. Total Assets Turnover Total assets turnover indicates the efficiency with which the firm uses all its assets to generate sales. Generally, the higher a firm’s total asset turnover, the more efficiently its assets have been used. This measure is probably of greatest interest to management, because it indicates whether the firm’s operations have been financially efficient. Asset turnover in 2009 is high that shows efficient use of assets but it decreased in 2010 and have minor increase in 2011 which is not enough.Thus it shows inefficiency of the management of the firm to use assets to generate reve nues. Average Collection Period Average collection period indicates that how many days are required to collect amount from the trade debts. The earlier the cash is received from the debtors; the better will be for the company. Average collection period of the company has decreased in 2010 as compared to 2009 but it has a great increase in 2011 This shows inefficiency in the collection of Accounts receivable Average Payment PeriodAverage payment period indicates that after how many days the payment to creditors is made. This time period should be maximum one. But Avg. Collection period for GTM shows gradually an increase in these years that shows efficiency of management to best utilize of resources. Debt Ratios The debt position of a firm indicates the amount of other people’s money being used in attempting to generate profits. In general, the financial analyst is most concerned with long-term benefits, because these commit the firm to paying interest over the long run as wel l as eventually repaying the principally borrowed.Because the creditors’ claims must be satisfied before, the distribution of earnings to share holders. Basic measures of debt are: * Debt ratio * Time interest earned ratio Debt Ratio = Total Liabilities / Total Assets Time Interest Earned Ratio = EBIT / Interest Ratios | 2011| 2010| 2009| Debt Ratio | =6031027175/9277085948=65%| 4366370736/7821978153=56%| 3220598874/6639205671=49%| Time Interest Earned Ratio| 860296219/832459296=1. 03| 660050601/535671023=1. 23| 459782158/401355131=1. 4| Interpretation of the Results Debt Ratio The debt ratio measures the proportion of total assets financed by the firm’s creditors. The higher this ratio, the greater the amount of other people’s money being used in an attempt to generate profits. GTM’s debt ratio has increased from year to year. This shows that the company has increased its dependence on the outsider’s sources of finances. This ratio is high than t he acceptable limit of 60%. This shows that there is a significant increase in the debts of the company. Interest Coverage RatioInterest coverage ration tells that how many times the firm is able to pay its financial charges out of its profit . A high ratio is desirable. This ratio for the company is 1. 03 times in the year 2011 and has decreased from 1. 23 times in the year 2010. This shows good sign for the company. But in 2010 it is increased so it is bad sign for company but it seems to be controlled by management in 2011. Profitability Ratios There are many measures of profitability. Each related the return of the firm to its sales, assets, equity, or share value.As a group, these measures allow the analyst to evaluate the firm’s earnings with respect to a given level of sales a certain level of assets, the owners’ investment, or share value. Without profit, a firm could not attract outside capital. Basic measures of profitability are: * Gross profit margin * Oper ating profit margin * Net profit margin * Return on total assets * Earnings per share GP Margin = GP / Sale OP Margin = OP / Sale NP Margin = NP / Sale EPS = earnings available for common stock / number of common stock outstanding ROA = earnings available for common stock / Total AssetsROE = earnings available for common stock / Common stock equity Ratios| 2011| 2010 | 2009| GP Margin| 1047379576/5245328111=20%| 736712900/5179599697=14%| 569887350/4291532961=13%| OP Margin| 885608679/5245328111=17%| 587536742/5179599697=11%| 431199214/4291532961=10%| NP Margin| 1582297/52453281118=3%| 52791520/5179599697=1%| 50720861/4291532961=1. 18%| EPS| 1582297/17258090=. 09| = 52791520/16054038=3. 06| 50720861/14594580=3. 48| ROA| 1582297/9277085948=. 017%| 52791520/7821978153=. 7%| 50720861/6639205671=. 76%| ROE| 1582297/172580900=. 92%| 52791520/16054038=3. 29%| 50720861/14594580=3. 48%| Interpretation of the Results Gross Profit Margin The gross profit margin measures the percentage of each sales dollar remaining after the firm has paid for its goods. The higher the gross profit margin, the better and the lower the relative cost of merchandise sold. Gross profit margin of the company has increased in the year 2011 as compared to last year; this increase is due to decreased cost of goods sold. Operating Profit MarginThe operating profit margin measures the percentage of each sales dollar remaining after all costs and expenses other than interest and taxes are deducted. It represents the pure profits earned on each sales dollar. A high operating profit margin is preferred. Operating profit margin of the company has increased to 2011 as compared to the year 2010 ; 2009 gradually. This has increased due to decreased selling and administrative expenses. Net Profit Margin The net profit margin measures the percentage of each sales dollar remaining after all costs and expenses, including interest and taxes, have been deducted.The higher the firm’s net profit margin wil l be better. The net profit margin is commonly cited measure of the firm’s success with respect to earnings. Net profit margin of the company has increased to in the year 2011 against 2009 ; in the year 2010. Return On Equity Return on shareholders’ investment (ROI) measures the overall effectiveness of management in generating profits with its available assets. The higher the firm’s return on investment, the better. For the year 2011 it is . 92%, which is very low than that of 2010 3. 29% and 3. 8 in 2009 which is better from all of these current year. So it is a negative sign for the company. Return On Total Assets Return on Total asset of the company has decreased in the year 2011 from in the year 2010 ; 2009 it shows inefficiency of the company management to generate profit on the total assets. There is no best utilization of assets. Earnings per Share The firm’s earnings per share (EPS) are generally of interest to present or prospective stockholders and management. The earnings per share represent the number of dollars earned on behalf of each outstanding share of common stock.They are closely watched by the investing public and considered am important indicator of corporate success. Earnings per share of the company is decreased to . 03 per share in the year 2011 against 3. 06 in 2010 and 3. 48 in 2009 per share. It is due to decreased in profit level. So company adopts different steps to increase profit. Marketability Ratios Equity investor is more interested in the dividends of the company. It is also concerned about the profitability positing of the firm. For the purpose of equity investor we calculated the following ratios: * PER = Market rice per share / EPS * Book Value of Share = total common equity / number of common stock outstanding * Market Value of Share = market price per share of common stock outstanding / Book Value Ratios | 2011| 2010 | 2009| PER| 75 / . 09=833| 75 / 3. 06 = 24. 50| 75/(1. 63)=-46| Book Value| 172580900/4771715=36. 17| 160540380/ 4771715 = 33. 64| 145945800/14594580=10| Market Ratio| 75 / 10= 7. 5| 75 / 10 = 7. 5| 75/10=7. 5| Interpretation of the Results Price Earnings RatioPrice earnings ratio for GTM is increased in 2011 and in 2010 there is decrease in price earnings ratio of GTM so shareholder perceives it less risky to invest in GTM. Book Value Per Share Book value per share is good one if it is below the market price of its shares. Book value per share of the company is 10 per share, which shows investor’s confidence on the firm’s ability to generate profits Market Ratio Market ratio for GTM is same from 2011 and in 2010, 2009 so there is consistency in price earnings ratio of GTM so it is due to no change in book value per share. MIS DEPARTMENTThe MIS department is really strong in Gulistan. Company is equipped with AS400 Software which interconnects all departments. It collects the data from each server in every department and brings it to one serv er. If the manager needs any information he or she can obtain that data by just one click. This software can also generate reports regarding different accounts which eventually help management to take decisions. Strong and quick management information system is key competitive edge of Gulistan. Internal Audit Checklist * All managers utilize this facility to make decisions according to their concerned departments. They have appointed a HOD for MIS. * Data is always updated on daily basis. * Every manager has password and login through which he or she can access the system. * Training is essential for every manager so that he or she can get familiar to the system. * Company always tried to make it user friendly ; they succeeded in that. * Managers considered MIS a key thing or a company asset because it’s very valuable for providing them competitive edge. HR DEPARTMENT Gulistan has huge number of employees. It is necessary to manage a strong HR department and gulistan is doing it.The company’s people are their assets and it’s important for them that how they are developed, trained, and motivated. Gulistan is committed to diversity in a working environment where there is mutual trust and respect . Where everyone feels responsible for the performance and reputation of their company. They recruit, employ and promote employees on the sole basis of the qualifications and abilities needed for the work to be performed. They are committed to safe and healthy working conditions for all employees. They didn’t use any form of forced, compulsory or child labor.They are committed to working with employees to develop and enhance each individual skills and capabilities. They respect the dignity of the individual and the right of employees to freedom of association. They maintained good communications with employees through company based information and consultation procedures. There HR department is currently working on these basic lines:- * Manage ment by objectives * Hiring and retaining highly professional and talented people, who are dedicated, empowered and committed to deliver remarkable growth. * Skills development through internal and external training programs. Equal opportunity employment i. e. No discrimination in hiring, promotions, rewards and appraisals on the basis of sex, religion, caste, race or national origin. Following are the organization's main strengths:- * Good Governance And Policies * Team Work * Communication between Units * Healthy Resources * Product Quality * Low Workers Strength * ISO 9001 and IKO-TEX 100 Certified * Biggest composite unit in Pakistan * Highest credit rating by PACRA * Self owned power plant * Largest dyeing facility in South East Asia Following are the organization's weaknesses:- Organization is unable to offer its middle managers a good salary * Transit time is more as compare to foreign competitor * High employee’s turnover * High cost of production * Relying on interna tional market more than local market * Benefits offered to the general managers are good but the benefits offered to middle managers are not at all satisfactory * A weakness of the Gulistan Textile Mills Limited is the no direct relationships with the customer because they have to pay the 2. 50% of the sales to agents as commission. INTERNAL FACTOR EVALUATION (IFE) MATRIX KEY INTERNAL FACTORS| | Weight| Rate| Weighted Score| STRENGTHS| | | | ISO 9001 and IKO-TEX 100 Certified| 0. 11| 3| . 33| Biggest composite unit in Pakistan| . 10| 4| . 44| Highest credit rating by PACRA| 0. 13| 4| . 52| Self owned power plant| . 15| 4| . 60| Largest dyeing facility in South East Asia| . 12| 4| . 48| Weaknesses| | | | Relying on international market more than local market| . 10| 2| . 20| High cost of production| . 12| 2| . 24| High employee’s turnover| . 06| 2| . 12| Transit time is more as compare to foreign competitor| . 11| 1. | . 11| Total| 1. 00| | 3. 00| INTERPRETATIONS: IFE score ofà ‚  3. 0  indicating that the Gulistan Textile Mills  is an internally strong organization, it  represent that it is excellent in its overall internal strategies when it come to explore strengths and weaknesses. Overall the main  strength  is financial. SWOT Matrix | STRENGTHS| WEAKNESSES| | 1. ISO 9001 certified ; IKO-TEX 100 Certified. 2. Biggest composite unit in Pakistan 3. Highest credit rating by PACRA 4. Self owned power plant 5. Largest dyeing facility in south east Asia| 1. Relying on international market only 2. High cost of production 3. High employees turnover 4.Transit time is more as compare to foreign competitor| OPPORTUNITIES| S-O STRATEGIES| W-O STRATEGIES| 1. WTO regime implementation 2. Cost reduction technology by using modern and advanced technology 3. Local market development 4. Diversification in energy sector (Subject to Government permission)| 1. provide electricity to residential areas ( S4, O4)2. capture local market by providing facility of outso urcing and introducing company products through its retail outlets (S2, S5, O3)| 1. Import modern technology (W1, W2, O2)2. Company can enter in new market through retail outlets (W1, W4, O3)| THREATS| S-T STRATEGIES| W-T STRATEGIES| . Export of raw cotton and yarn 2. WTO regime implementation 3. Exchange rate fluctuations 4. Instable political and economical conditions 5. Government policies| 1. Penetration in foreign market (S1, T2)2. Make future contracts to avoid currency fluctuations (S3, T3)| 1. Focus on local market (W1, W2, W4, T2, T3)2. Import modern technology, and do agreements with suppliers to secure your supply of raw material (W2, T1)| INTERPRETATIONS: Critical Region is WO. Gulistan can import new technology to reduce its cost of production.Company can thus be able to penetrate in the market and capture more shares by improving quality of goods and services, and provision of goods at lower prices. LONG TERM NON FINANCIAL OBJECTIVES * To provide quality product to cus tomers to satisfy their need. * To achieve goals set by group. * To win competition in the market and to reach on peak of textile sector. * To use innovative technology that reduces human dependency. * To provide such an environment where employees do their work with honesty and satisfactorily. * To expand business around the boundaries of Pakistan and at international level. To use innovative machinery for its units. * To provide such a mechanism where employees are rewarded and encouraged toward their objectives. LONG TERM FINANCIAL OBJECTIVES * To achieve the turnover of Rs 29 billion. * Introduction of value added products. * Attaining bigger international market share. * Upgrading all the technological equipments to increase production. * To find Suppliers of the company in local market to increase local market share. * For better production make relations with cotton development and research institutes, local cotton producers and cotton whole sellers. Plant layout is important factor in production cost the company objective is to improve plant layout for cost reduction. Findings Interpretations Of EFE: EFE score of 2. 84 indicating that the Gulistan is taking the external opportunities and avoiding external threats quite well, however there is room for improvement is well. This score suggest Gulistan to be aggressive but the degree of aggressiveness needs to be little moderate, it should not go for diversification, rather it should go for penetration in the existing market, further developing local or foreign market or it may design a new roduct. Interpretations Of CPM: A Gulistan Mills limited is dominating in the industry as compared to local players. There are several competitors like Agzard 9, Kohinoor textile mills, etc, but above taken competitors are the major ones. CPM scores for Gulistan showing aggressiveness as compared to the crescent and Chenab textile mills. Gulistan is number one company within the local environment; it is basically leadin g the industry in the following aspects: * Product design. * Research ; development. * Persistence in product quality. Trained Manpower. Moreover, crescent textile mills is resides at the second number and leading industry in effective management style. Finally Chenab textile comes at number 3rd with leading position in persistence in quality and market segmentation. Interpretations Of IFE: IFE score of  3. 00  indicating that the Gulistan Textile Mills  is an internally strong organization, it  represent that it is excellent in its overall internal strategies when it come to explore strengths and weaknesses. Overall the main  strength  is financial. SPACE MATRIXFinancial Strength|   Rating|   Environmental Stability|   Ã‚  Rating| Leverage| 4| Rate of inflation| -3| net income| 6| Technological changes| -3| E. P. S| 5| Competitive pressure| -3| R. O. E| 5| Risk involve in business| -2| |   |   |   | Average| 5| Average| -2. 75| | | Y-Axis strength| 2. 25| Co mpetitive Advantage|   Rating|   Industry Strength|   Ã‚  Ã‚  Rating| Market share| -1| Growth potential| 5| product quality| -2| Financial stability| 3| customer loyalty| -3| Resource utilization| 3| Technological know how| -2| Profit potential| 2| |   |   |   | Average| -2| Average| 3. 5| | | X-Axis strength| 1. 25| INTERPRETATIONS: * For the purpose of evaluating financial strength we have compared our concerned co. with industrial average. * Leverage used by Gulistan was significantly low as compared to industrial average that why we have ranked it at point 4. * Net income of Gulistan was highest in industry that’s why it is given 6 points. * It’s E. P. S ; return on equity was also high as compare to industry that’s why they were ranked 5. * Market share of Gulistan was highest about 12% that why it is given -1 marks. There product is of good quality ; there customers are loyal but customers can’t be very loyal in this industry thatâ€⠄¢s why they were ranked at -2 ; -3. * They have new ; advanced technology that’s why they are ranked -2. * Rate of inflation is increasing its C. G. S ; technological changes its depreciation as well as there is heavy competitive pressure from china ; Bangladesh that’s why they were rankes-3. * There is high risk now a days in this business but due to being as industrial giant in Pakistan they are not in such a risk that why it is given -2. There is high growth potential in industry because now recovery period have been started. * Industry is less financial stable as well as most of the companies are producing very below then their capacity that’s why they are ranked at 3. * Due to increase in cost the profit potential has been declined that why this is ranked at 2. Directional vector point is 🙠 1. 25, 2. 25) Conservative Aggressive Competitive Defensive FS IS CA ES Interpretations: * According to our calculations the score of our company is 1. 25 on x- axis And 2. 25 on Y-axis * Which is showing that our co. hould go for aggressive strategy * Furthermore it is telling us that our financial strength is the dominating factor in industry * Our concerned strategies can be * Backward ,forward ,horizontal ,integrations * Market penetration * Market development * Product development * Diversification(related or unrelated) * On the other hand, Gulistan also has the opportunity to enter and capture the local market. Company can do this through opening retail outlets in the local areas and provide better goods and services to its domestic customers. THE BOSTON CONSULTING GROUP MATRIXMarket Share High Low StarsHigh Industrial Growth | Question Mark| Cash CowLow | Dogs| Interpretations: Gulistan is a composite textile unit of Gulitan Textile Group. Total number of players in the industry is 60, and Gulitan is the market leader. It captures 12% market share as a whole. In 2009, the industrial overall growth rate is 11%, but that of Gulitan Te xtiles is 24% as compare to the sales of 2008. The industrial growth is high and Gulistan Textiles has high market growth as well.So, it lies in the first quadrant (Stars) of the BCG matrix. It implies that, company has the opportunity to go for Market penetration to capture more shares in the existing market by using new technology, and increasing promotional activities. It also has a tremendous option of local market development. Other feasible strategies may be the backward integration to secure the supplies in order to tackle with the threat of exporting of local raw material to foreign markets. Also Gulistan Textiles goes for forward integration to minimize its weakness of transit time of goods and services to its customers.THE INTERNAL-EXTERNAL (IE) MATRIX A- IFE TOTAL SCORE B- C- Strong Moderate Low D- E- IGrow and Build| IIGrow and Build| IIIHold and Maintain| IVGrow and Build| VHold and Maintain| VIHarvest| VIIHold and Maintain| VIIIHarvest| IXDivest| High F- G- H- I- J- K- Medium L- EFE TOTAL SCORE M- N- O- P- Q- Low R- S- T- U- V- W- Interpretations: * IFE Total Score (As per IFE Matrix) = 3. 00 * EFE Total Score (As per EFE Matrix) = 2. 84 It implies that Gulistan Textiles is in a much strong position. But, comparatively it is stronger internally as compare to its external position.As per IE Matrix, Gulistan Textiles lies in fourth cell, which implies that it should go for aggressive strategies that is grow and build strategies. The possible strategies for Gulistan Textiles may be the integrations, intensive, and diversifications. Gulistan Textiles has the opportunity to go for Market penetration to capture more share in the existing market by using new technology, and increasing promotional activities. It also has a tremendous option of local market development. Other feasible strategies may be the backward integration to secure the upplies in order to tackle with the threat of exporting of local raw material to foreign markets. Also Gulistan Text iles goes for forward integration to minimize its weakness of transit time of goods and services to its customers. THE GRAND STRATEGY MATRIX Rapid Market Growth Quadrant II| Quadrant I | Quadrant III| Quadrant IV| Strong Competitive Advantege Weak Competitive Advantage Slow Market Growth Interpretations: Total number of players in the industry is 60, and Gulistan Textiles is the market leader. It captures 12% market share as a whole.In 2009, the industrial overall growth rate is 11%, but that of Gulistan Textiles is 24% as compare to the sales of 2008. As the market growth is high, and Gulistan Textiles has strong comparative position in the market. So, it lies in the first quadrant of Grand strategy matrix, which implies that it should go for aggressive strategies. The possible strategies for Gulistan Textiles may be Market Development, Market Penetration, Backward and Forward Integrations. THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM) | Strategy 1LOCAL MARKET DEVELOPMENT| Stra tegy 2PENETRATING IN FOREIGNMARKET| KEY INTERNAL FACTORS| Weight| AS| TAS| AS| TAS| STRENGTHS  | ISO 9001and IKO-TEX 100 Certified. | 0. 10| 1| 0. 10| 3| 0. 30| Biggest Composite Unit in Pakistan. | 0. 11| 4| 0. 44| 2| 0. 22| Capacity utilization. | 0. 13| 3| 0. 39| 2| 0. 26| Self-Owned Power Plant. | 0. 14| 2| 0. 28| 3| 0. 42| Largest Dyeing Facility in South East Asia. | 0. 12| 2| 0. 24| 1| 0. 12| WEAKNESSES| Relying on international markets only. | 0. 10| 4| 0. 40| 2| 0. 20| High Cost of Production. | 0. 12| 3| 0. 36| 4| 0. 48| Market Segmentation. | 0. 07| 3| 0. 21| 1| 0. 07| Transit time is more as Compared to Foreign Competitors. 0. 11| 2| 0. 22| 1| 0. 11| SUBTOTAL| 1. 00| | 2. 64| | 2. 18| | Strategy 1LOCAL MARKET DEVELOPMENT| Strategy 2PENETRATING IN FOREIGN MARKET| KEY INTERNAL FACTORS| Weight| AS| TAS| AS| TAS| OPPORTUNITIES  | WTO regime Implementation. | 0. 12| 1| 0. 12| 4| 0. 48| Cost reduction through introducing modern technology. | 0. 13| 2| 0. 26| 4| 0. 52| Loca l market development. | 0. 11| 3| 0. 33| 1| 0. 11| Entering in Energy Sector. | 0. 11| -| -| -| -| THREATS| Export of raw cotton and yarn. | 0. 12| 3| 0. 36| 2| 0. 24| WTO regime Implementation. | 0. 1| 1| 0. 10| 3| 0. 30| Exchange rate fluctuations. | 0. 09| 2| 0. 8| 1| 0. 09| Instable Political and Economic Conditions. | 0. 11| 3| 0. 33| 2| 0. 22| Government Policies. | 0. 11| 2| 0. 22| 3| 0. 33| SUBTOTAL| 1. 0| | 1. 90| | 2. 29| GRAND TOTAL | | | 4. 54| | 4. 47| Interpretations: * I. S. O certification will only be helpful in market penetration so that’s why it is given high marks. * Biggest composite unit ; less capacity utilization will be helpful or will be used better by open chain store rather than market penetration so it is given higher marks. * Increasing sales in foreign will better use energy rather than chain store so it is given higher marks. Largest dying facility has its goodwill so we have ranked it higher in chain store. * Reliance on international market c an be decreased by opening chain store that’s why it is given higher marks. * Higher cost of production can be decreased by exporting more quantity but opening new store will increase an expense for that’s why penetration is given higher marks. * Open chain store will increase our segmentation ; it will decrease on reliance on exports so problem of transit time will impact us less that are why these are given higher marks. * WTO regime will be useful only in penetration so it is given higher marks. Local market development will be done only in that case when we will go for chain store so it is given higher marks. * If we will open chain store we will be able to charge higher prices due to our goodwill so yarn’s export problem will not affect us as it is effecting. * WTO regime implementation will be covered only in that case when we will go for market penetration. * Exchange rate fluctuation will impact us only in that case when we will go for foreign trade so o pening retail store will reduce its impact that’s why it is given higher score. Due to bankruptcy of foreign customers the political ; economical conditions will have less impact on us if we will go for chain store that’s why it is given higher marks. * Government policies regarding opening a new store can be difficult to meet so it is given lower marks. Conclusion Future of the company Gulistan Textile Mills Limited is a growing firm and all its employees have a potential and skills to grow for the betterment of the company. Work environment is good and employees are satisfied with Gulistan Textile Mills Limited. There are not hard and fast rule in the accomplishment of the work.Gulistan Textile Mills Limited facilitates its employees with the lot of facilities like medical and other facilities. The job turnover ratio is gradually increasing due to the Economic crisis in Pakistan but employees are sincere with their work. Office area is established and safety measures are applied. Company is facing very tough competition from competitors particularly china, India, Bangladesh. The competitive positive position of  competitors is better because of their lower cost of doing business on account of various incentives and subsidies available to them.Recently government provided some relief to textile manufactures of value added product only in shape of lower interest rates. For increasing textile manufactures, Gulistan group of companies has no alternative but to improve the sale of its product in followings way. * Gulistan group of companies should improve the quality of its products. * Gulistan group of company should emphasis on value-added products and improve the quality. * The machinery of company should be improved by technology which increases the production of goods. * Gulistan group of companies should meet the requirements of consumers in term of fashion and design.Learning It was a marvelous experience that we have availed with devotion and commitment. We have an interest in textile industry that's because Textile is the back bone of the economy of the country. But one thing we want to share it’s not easy that looks it has a great toughness and complications in its process but the overall it was nice and great. We learnt that how strategies are formed, implemented & evaluated in textile sector. By doing analysis we have an idea that how to make and evaluate the strategies that are implemented in field.

Internet safety securityn privacy Essay

Introduction Microsoft has established partnership with American Academy of Pediatrics (AAP) in order to ensure online safety of children. This program provides guidelines for family safety and to protect children from developing psychological disturbances on social issues. AAP has a vast number of pediatricians in U. S. and it has second place as largest physician organization in the world which is promoting health and welfare to all children. Microsoft company which is a giant in computer software predicts that future generation of children required to possess extensive knowledge about Internet whereas, it should be lead by limitations of dos and don’ts on Internet browsing, which if not guided results in adverse impact both for parents and children. In this effort, AAP records a total of 96 million of school-age children per year and apart from promoting health care, AAP would also provide Internet safety measures for children. â€Å"We are pleased to see that the AAP and its members are striving to make Internet safety education a part of routine clinical care for children,† (Adrienne Hall, Senior Director of Trustworthy Computing at Microsoft) Microsoft has several guidelines for each age group. Viz. , using family contracts, 10 things to teach kids, computer security tips for students, steps to improve family’web security, minimizing risk from online predators, a bank of tips and tools to help parents and a video to teach kids how to be safe online. In fact there are many points that have to be noticed by children before entering online surfing. First and foremost, parents must be present while children are online and secondly, identify the purpose of surfing such as whether it is for the purpose of education, online games, chatting, shopping or for any other purpose. Thirdly, encourage children to enter through search engines, explaining the importance of finding good sources of information for education purposes, or directly by having an accurate web site address / URL . This enables children to click on a particular link that is required for further information. For instance, children above the age of 6yrs usually are quick to learn about online skills and enjoy playing online games. In such case, parents must take initiative to find a web site which contains free online games which are both educative and entertaining viz. , math games, puzzle games, doll games and many other sport games. Parents must explain that by typing â€Å"online games† in google search engine a plethora of games websites are displayed which are good and entertaining for children. Children are very smart than parents, with the fact that anything explained once is remembered and from the very next minute, children pick up so fast in learning concepts. Therefore, it is the responsibility of parents and teachers to teach online safety measures to children for the health and benefit of children. Step by step guidance is what is required for children instead of blackboard teaching. Teaching through videos, online training are some of the best methods to teach children how important it is to tread safely on Internet. There must be a friendly and warm atmosphere at the time of parents participation with children while teaching internet skills. Many a times, children do not agree or parents disagree with the online surfing. In such instance, rules must be framed as a formal contract that would be signed by both parents and children. In this manner, children would be compelled to listen to what parents teach about online skills. Apart from this open discussion, also brings good results with the fact that, when parents ask questions about Internet surfing, children get encouraged and begin to provide a great amount of information which enables parents to realize whether children are entering any unacceptable web areas or zones. There are quite a danger zones that harm children to the developing personality especially, information on weapons, forbidden web sites for children age and above all harmful images that trigger the emotions of innocent kids. Even chatting rooms have to be checked by parents, with the fact that at times, net friends provide false age and false information whereby children begin to build friendship with the above age group and ultimately fall prey as a victim to the net criminals/hackers. Children are even motivated to disappear from parents and especially in western world, parents suffered a great loss for not being aware of Internet in the primary stage of its launch. With some of these negative effects, Microsoft has even designed a code of conduct that must be signed between parents and children which is reproduced as below: â€Å"Online code-of-Conduct Contract. I will: Talk with my parents to learn the rules for using the Internet, including where I can go, what I can do, when I can go online, and how long I can be online ( ___ minutes or ___ hours). Never give out personal information such as my home address, telephone number, my parents’ work address or telephone number, credit card numbers, or the name and location of my school without my parents’ permission. Always tell my parents immediately if I see or receive anything on the Internet that makes me feel uncomfortable or threatened, including e-mail messages, Web sites, or even anything in the regular mail from Internet friends. Never agree to meet anyone in person that I have met online, without my parent’s permission. Never send pictures of myself or other family members to other people through the Internet or regular mail without first checking with my parents. Never give out my Internet passwords to anyone (even my best friends) other than my parents. Not do anything online that could hurt or anger other people or that is against the law. Never download, install, or copy anything from disks or the Internet without proper permission. Never do anything on the Internet that costs money without first asking permission from my parents. Let my parents know my Internet logon and chat names, listed below: _____________________ _____________________ _____________________ _____________________ Name (child) _______________________ Date ____________ Parent or guardian _______________________ Date ____________ Several hours of browsing may also be harmful to the sensitive eyes of children which is why there should be a protective screen on computer monitor, otherwise there is every possibility of backache, development of eyesight, and even dark circles around eyes. It is important to take note here that children should be instructed to blink eyes every second and staring at web sites while playing games or visiting web sites without blinking eyes, causes lot of eye sight problems. Conclusion Internet is truly benefiting to children wherein children are educated at a fast pace as never before through blackboard teaching whereas measures of care would yield good results. Reference Protect your family : Beyond the basics, Prevention guidelines Accessed January 28, 2008 http://www. microsoft. com/protect/family/guidelines/default. mspx.

Limiting Reactant Essay

In chemical reactions, the significance of knowing the limiting reactant is high. In order to increase the percent yield of product, increasing the limiting reactant, possibly, is the most effective. In this experiment we were able to calculate limiting reactants from the reaction of CaCl2. 2H2O + K2C2O4.H2O(aq). As a group, we obtained our salt mixture of calcium chloride and potassium oxalate, and weighed the mixture. We were able to make an aqueous solution from the mixture and distilled water. We boiled and filtered off the solution, leaving the precipitate. Once the precipitate was dried overnight, it was weighed and the mass was measured. Then we calculated the moles of the precipitate. From these calculations, we established moles of the limiting reactant, were the same amount of moles in the product based on the stoichiometrically balanced equation. Next the percent yield of the limiting reactant was calculated. In Part B of this experiment, two solutions were added to the aq ueous product in order to determine the limiting reactant. Once each solution was added, we were able to visibly see the precipitate forming when 0.5 M CaCl2 was added. This made us conclude the limiting reactant was in fact CaCl2. Introduction Stoichiometry is a section of chemistry that involves using relationships between reactants and/or products in a chemical reaction to determine desired quantitative data. Doing stoichiometry can calculate masses, moles, and percent’s with a chemical equation. The use of stoichiometry is how we were able to find the limiting reagent in this lab. We know that the limiting reagent is the chemical that will be used up first. Two factors affect the yield of product in a chemical reaction: the amounts of starting materials and the percent yield of the reaction. Under certain conditions such as temperature and pressure, can be adjusted to increase the yield of a desired product in a chemical reaction but because the chemicals react according to fixed mole ratios, only a limited amount of product can form from measured amounts of starting materials. A way for us to better understand this concept of the limiting reactant is to observe the reaction in our experiment. The reaction of cal cium chloride dehydrate, CaCl2 ·2H2O,  and potassium oxalate monohydrate, K2C2O4 ·H2O, in an aqueous solution. For the reaction system in this experiment, both the calcium chloride and potassium oxalate are soluble salts, but the calcium oxalate is insoluble. The ionic equation for the reaction is Ca2+(aq)+2Cl-(aq)+2K+(aq)+C2O42-(aq)+3H2O(l) ®CaC2O4 ·H2O(s)+2Cl-(aq)+2K+(aq)+2H2O(l) presenting only the ions that show evidence of a chemical reaction, formation of a precipitate, and by removing the spectator ions, no change of ionic form during the reaction, we have the net ionic equation for the observed reaction: is Ca2+(aq)+ C2O42-(aq)+H2O(l) ®CaC2O4 ·H2O(s). In Part A of this experiment the solid reactant salts CaCl2 ·H2O forms and K2C2O4 ·H2O form heterogeneous mixture of unknown composition. The mass of the solid mixture is measured and then added to water-insoluble CaC2O4 ·H2O forms. The CaC2O4 ·H2O precipitate is collected by gravity filtration and dried, and its mass is measured. In Part B, the limiting reactant for the formation of solid calcium oxalate monohydrate is d etermined from two precipitation test of the final reactant mixture from Part A. The first test we tested the mixture for an excess of calcium ion with an oxalate reagent and the second test the mixture is tested again for an excess of oxalate ion with calcium reagents. Materials and Methods Materials Lab coat Safety goggles 1 250ml beaker 1 piece of filter paper funnel 1-2 grams of salt mixture A hot plate A weighing scale Methods 1. Experimenters obtained one 250 ml beaker and weighed it on the weighing scale and recorded the results 2. The 250 ml beaker was then filled with 1-2 grams of the salt mixture and weighed again 3. 100 ml of distilled water was added to the salt mixture 4. The beaker was placed on the hot plate and brought to a boil then removed 5. After cooling, the experimenters filtered the mixture using the filter paper and funnel 6. Experimenters left the filter paper to air dry overnight 7.The air dried filter paper was then placed on the weighing scale and results were recorded Results In experiment A the results from the precipitation of CaC2O4 H2O from the salt mixture were obtained by weighing the items listed on Table 1 on a scale. Table 1. Mass of Beaker (g) 102.994g Mass of Beaker and Salt Mixture 104.683g Mass of Salt Mixture (g) 1.689g Mass of Filter Paper (g) 1.336g Mass of Filter Paper and CaC2O4 H2O (g) 2.000g Mass of Air-Dried CaC2O4 H2O (g) 0.664g In Experiment B the limiting reactant was determined to be CaCl2 when two drops of the test reagent 0.5 M CaCl2 was added to the supernatant liquid in test tube 1, and a precipitate formed. Since there was a reaction, there was C2O42- in excess and Ca2+ is the limiting reactant in the original salt mixture present in test tube 1 . This was further confirmed when two drops of the test reagent .05M K2C2O4 was added to the supernatant liquid in test tube 2. There was no precipitate because Ca2+ was not present since it was the limiting reactant and instead C2O42- was in excess. Table 2. Moles of CaC2O4 H2O precipitated (mol) .0045 (mol) Moles of limiting reactant in salt mixture (g) CaCl2 .0004 (mol) Mass of limiting reactant in salt mixture (g) CaCl2 .4995 (grams) Mass of excess reactant in salt mixture (g) Ca2C2O4 1.113 (grams) Percent limiting reactant in salt mixture (%) CaCl 34% (34.1%) Percent excess reactant in salt mixture (%) K2C2O4 66% (65.8%) Discussion The data of the mass of the salt mixture was a big key for finding the moles of CaC2O4 precipitated. The molar mass of CaC2O4 H2O was 146.097 grams. The mass of the air-dried CaC2O4 H2O CaCl2, was .664g as recorded in table 1. Using a calculation of .664 x 1 mole / 146.097 a result of .0045 mol was recorded in table 2. The test done in Experiment B allowed us to know without any calculations that Ca2+ is the limiting reactant. This allowed us to conclude that the moles of the limiting reactant were .0004 (mol) of CaCl2. In order to achieve the grams of the limiting reactant, the moles of the limiting reactant must be multiplied by the molar mass of the limiting reactant. Therefore the mass of the limiting reactant was .0045 moles and multiplied by its molar mass of 111g to result in .4995g of the limiting reactant in the salt mixture. Next the mass of the excess reactant in the salt mixture was calculated using the same method as the limiting reactant except the molar mass of the excess reactant was used to result in 1.113 (grams) Ca2C2O4 . The final step in the process was to find the percent by mass of the limiting reactant. Since Experiment B allowed us to determine that Ca2+ is the limiting reactant, therefore to find the percentage composition it is necessary to divide the limiting reactant mass by the mass of the original sample then multiply by 100. This provided a result of 34%, and to find the excess percentage, this value was subtracted from 100 to yield 66% of K2C2O4 as the percent of excess reactant in salt mixture. Error Analysis Possible errors might be attributed to careless errors in reading the scale to measure the mass of the beaker, salt mixture or filter paper. Even when  proper care is taken in reading the instruments, systematic errors can present themselves in the instrument used to measure mass. Here, a calibrated scale was used to measure mass, and the systematic error is unknown since it is one of the hardest errors to detect. These two sources of errors might help explain the .1% missing from the CaCl2 and K2C2O4 salt mixture recorded in Table 2. Precision and Accuracy While accuracy deals with how close a measured value is to a true or accepted one, precision deals with how reproducible a given measurement is. Here the mass of the beaker, salt mixture, and filter paper are all precise because they are easily reproducible since it simply involves putting the items on a scale. If the process was repeated 50 times the results would not vary or at the least by .0001 grams based on some outside factor. The mass of the air-dried CaC2O4 H2O is accurate because it was calculated as true by subtracting the mass of the filter paper from the mass of the filter paper and the CaC2O4 H2O. Conclusion As we have stated previously, CaCl2 was our limiting reactant based on the precipitates observed. We were able to rule out Ca2C2O4 because of the lack change in our precipitate.. It was important to note that a limiting reactant in a chemical reaction limits the amount of product that can be formed. The reaction will stop when all of the limiting reactant is consumed. The excess is the reactant in a chemical reaction that remains but there is nothing with which it can react. Taking this knowledge we have gained in appropriately observing the results, we can apply it to future experiments in chemistry in order to evaluate how much product one might want to produce in a given chemical reaction. Reviewing other experiments, from other schools, it is apparent that the need for appropriate data collection in this type of experiment, will help in identifying the excess and limiting reagents. As was the case in UCCS’s Chem 103 Lab Manual, following the procedures and doing them in the proper order are vital to ensuring success in proper reactions. References Tro, Nivaldo. Chemistry A Molecular Approach. 3rd ed. Boston, MA: Pearson Education, Inc.; Beran, J. A. Laboratory Manual for Principles of General Chemistry. 8th ed. Hoboken, NJ: John Wiley & Sons, Inc.; 2009 Beran, J. A. Laboratory Manual for Principles of General Chemistry. 9th ed. Hoboken, NJ: John Wiley; 2010 UC Davis ChemWiki. Stoichiometry and Balancing Reactions. http://chemwiki.ucdavis.edu/Analytical_Chemistry/Chemical_Reactions/Stoichiometry_and_Balancing_Reactions UCCS Chem 103 Laboratory Manual. Experiment 3 Limiting Reactants. http://www.uccs.edu/Documents/chemistry/nsf/103%20Expt3V-LR.pdf Masterson, W, Hurley, C. Chemistry: Principles and Reactions. 6th ed. Belmont, CA: Brooks/Cole Cengage Learning; 2009.

Feminists Want Women to Be the Same as Men Essay - 1

Feminists Want Women to Be the Same as Men - Essay Example Feminists advocate for the rights of women as equal individuals in the society with men in the society and they support the equal treatment of all people within the society and in which case they are able to propagate the issues that promote the livelihood of all. In many instances, people have said that feminists have advocated for the gender equality in which men and women have to be treated in the same way regardless of the differences that exist between them. However, this caused a debate between in the people considering the fact that some people argue from the perspective of the modern feminists who advocate for gender equity rather than gender equality advanced by others (Kunin, 2012, p. 3-7). In this respect, the debate of whether feminists want women to be the same as men remain important and relevant among people who have knowledge about the perspectives of the feminists and the things they support. In the introduction of feminism in the society, the proponents had advanced the notion that there was unequal treatment between men and women who were expected to raise people to a level of worship. The inequalities that people pointed out did not favor women and therefore, they felt that there was a need to establish a system in which people who do similar jobs in an organization were to receive equal treatment in all aspects (Kunin, 2012, p. 12). This was aimed to improve the status of working in the society so that both women and men are able to benefit from what they do in the society and ensure that all effort is rewarded equally in the society. Feminists of the early times advanced the perspective that payments and other benefits that are guaranteed to one gender can be extended to other people regardless of the fact that they have differences. Feminism in its original form worked to establish gender neutrality between men and women so as to eliminate biases that existed in extending benefits to men and women who did similar jobs.

A Competence of Children Safeguarding Service Research Paper

A Competence of Children Safeguarding Service - Research Paper Example Since many of the managers from the established management team have been working in their departments for over 30 years, there has been much resistance on their part when it comes to implementing changes within their organization. In fact, I have been considered a threat to these managers. The Operations Manager, for instance, feels that change within her organization is absolutely unnecessary since they have gotten positive feedback regarding their services in the past. However, after assessing the performance of all the managers, I have found out that there are indeed a number of problems that need to be addressed. These are namely, 1) Poor response or lack response, 2) poor information systems, 3) lack of support and training for managers and staff members, 4) poor and infrequent supervision, 5) the failure to implement policies and procedures, 6) poor structures within services, 5) infrastructure is fragmented and disorganized. This report shall provide information pertaining to implementing change within an organization and managing members of the staff, especially with regards to introducing change. I shall also make references to the current issues when it comes to safeguarding children social workers undertaking child protection services. Clearly, considering that the managers are not welcoming change within their organization as they should, there is a need for this report in order to provide information regarding appropriate human resource management, organizational culture, and organizational behavior.   I have decided to use journals as sources, as well as articles from the Internet and books.

Physics lab report Example | Topics and Well Written Essays - 1250 words

Physics - Lab Report Example The experiment made use of a glider placed in an air track and suspended on two springs. The setup is at rest and remains at rest because the springs subject an equal force on the glider; they cancel each other; it is at a stable equilibrium position. The force applied on the setup in particular direction results a net force that acts on the glider and tries to return to the equilibrium state. The combined forces pull in a manner that the resultant force takes It to the original position; determined as restoring force. When the glider is brought to the original position, it is still under the influence of velocity and therefore goes beyond the default position by overshoot moving to the opposite direction from the earlier force. The overshoot results in the whole drag to equilibrium starting all over again. The back and forth motion is referred to as an oscillation. Mathematically known as sine and cosine function; simple harmonic motion. To analyze the problem let x be an instantaneous position of the glider while x0 is the equilibrium position. When the glider moves from the equilibrium position, the restoring force is F. without applying too much force resultant forces are linear hence force equation is; It implies that when the glider moves away from the equilibrium, restoring force becomes bigger. F is proportional to x. k is the spring constant. The sign (-) represents the restoration character of the force in the setup. A positive different in (x-x0) indicates that the force is negative x direction. A negative (x-x0) implies a positive force direction. Given a displacement initially A = x-x0, F = -kA, and accelerates towards the negative x-axis towards equilibrium; x = x0 where the restoring force is zero. It passes beyond x0 to the opposite direction and arrives with x-x0 = -A at zero velocity and it is pulled back. This forth and back motion goes on and results to oscillations. Without friction, kinetic energy and potential energy remain the

Strategic Plan to Reduce Falls and all Realated Injuries on the Essay

Strategic Plan to Reduce Falls and all Realated Injuries on the Alzhiemers Disease Unit - Essay Example As the AD progresses, complex motor sequences become disorder, and this issue increases the victims’ risk of falling. In the advanced stage, AD patients will be completely dependent on their caregivers. According to the Center for Disease Control and Prevention (2014), falls and fall related injuries constituted the leading cause of both fatal and nonfatal injuries among older adults in 2010 (CDC). This paper will introduce a strategic plan to reduce falls and all related injuries in Alzheimer Disease Unit. The occurrence of falls in AD victims is very frequent and this problem results in dreadful consequences like fractures, cognitive decline, and lack of independence. Many studies have identified the fatal consequences of falls among AD patients with intend to develop potential prevention/intervention strategies. Statistical data from an Alzheimer’s disease unit in a nursing home in Chicago indicate that there have been 6-7 hips surgeries and one death resulting from fall over the last two months. According to Alzheimer’s Association (2013), 26% of the AD related hospitalizations in 2013 could be attributed to syncope, fall, and trauma. Orcioli-Silva, Simieli, Barbieri, Stella, & Gobbi1 (2012) reflect that as compared to healthy elders, elderly people with AD are highly vulnerable to falls, falling nearly 4-5 times a year. Referring to various studies, the authors add that ‘touched or stumbled on the obstacles’ constitute one of the leading causes of falls in AD patients. High cognitive load in AD patients causes motor changes, which in turn leads to decreased automated motor of gait and increased risk of falling. Kato-Narita and Radanovic (2009) clearly state that â€Å"elderly with dementia have a doubled to threefold risk for the occurrence of falls, probably due to motor impairment, attentional deficits, use of psychotropic medication, and behavioral

The go Essay Example | Topics and Well Written Essays - 250 words

The go - Essay Example $1.5 trillion are imposed as taxes and the spending is not expected to go down below 23% of the nation’s economy. The budget that is proposed by Republicans is called â€Å"The Path to Prosperity†. It is claimed that this budget will bring down the spending by $6.2 trillion. According to the study that is conducted by Hertage Center for Data Analysis, almost 1 million new jobs will be created if this budget is accepted. Important features of this budget are reduction in spending, welfare reforms, retirement and health security, tax reform and budget enforcement. It proposes to bring down the spending on various government agencies. It includes important welfare programs that end up in generating jobs. The reform programs will save Medicare. Most importantly it will protect the retirement and health security. Furthermore, this budget is likely to emphasis on growth by bringing reforms in the country’s backdated tax code and by bringing down the tax rates. Lastly t his budget recognizes the importance and requirement of ‘change’ in the way of spending that is done by government.

How to Improve College Education in the United States Essay

How to Improve College Education in the United States - Essay Example This essay stresses that the importance of education is that it plays a major role in determining the future of the concerned individuals. At times, it seems to widen the gap between the high and low income families with regard to the level of education that is present. Placing hopes on education simply means that only those who are educated prosper in life. Needless to mention, that the gap between the rich and the poor widen with the presence of education. In reference to this, it is important that the United States assesses student learning in higher education institutions. Assessment basically entails educational improvement where ideas are enacted on the type of learning that has more value to students and aim at assisting in its achievement. The values should incorporate both, what we choose to assess and how we do it. This paper makes a conclusion that the United States should ensure their colleges and universities regain back their glory as some of the best universities worldwide. This could be done through ensuring that the level of education is taken to a notch higher and more complex cognitive skills are taught to prepare graduated to a working experienced world. The college and universities should not be highly taxed especially for foreign students as this discourages them from joining the institutions. Through this, there will be a grantee of an improvement in the college education in the United States.

Vacation at the Lake Essay Example | Topics and Well Written Essays - 750 words

Vacation at the Lake - Essay Example If a person asks for a relationship of a notion of an ideal vacation, it would be everything that the lake has to provide. To take a walk along the sandy beach made up of wood cautiously arranged to safeguard the delicate shoreline, and have a feeling of the soaked and moist and soft between the toes is better than any treatment or massage for anyone’s soles. In addition, chipmunks and small squirrels play tag through the tall trees, moving from one tree to another while revealing their annoyance at one another with little squeaks and chirps. Also, the deer of the bushes come with their young ones and let them run all over until they are tired, and watch over them cautiously in case humans make any move that is deemed hostile by them. It is largely a family vacation, where numerous recognizable faces congregate in the summertime to get pleasure from these components, and many more inside the lake. The chilly waters of the lake also offer something that can be enjoyed by everyo ne. Whether it is for the young ones having fun at the shallow end with the small fish pinching at their small feet so long as they can stand it, or it is for the older people resting on the docks, making their feet just soaked adequately to have a pleasant feeling of the refreshing temperature. However, teenagers and people in their twenties prefer the more adventurous side of the lake which has turbulent waves and the promise of a chaotic event of any form. There is nothing which can match the excitement felt after a pleasant jet skiing, wakeboarding, or tubing experience in the fierce conditions. Normally, the lunch period is spent out on the relaxed side of the lake, swimming and taking in the sun until the legs and arms refuse to function adequately. People engage in activities that please them the most in the afternoon, some continue with the wild antics of the earlier period while others go sailing. Also, others remain in-shore and take part in a friendly match of water volle yball.  

How are derechos detected by weather satellites Research Paper

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The Relationship Between Exchange Rates Essay Example for Free

The Relationship Between Exchange Rates Essay The relationship between exchange rates, interest rates †¢ In this lecture we will learn how exchange rates accommodate equilibrium in ï ¬ nancial markets. For this purpose we examine the relationship between interest rates and exchange rates. Interest rates are the return to holding interest-bearing ï ¬ nancial assets. In the previous lecture we have pointed out that as being a ï ¬ nancial asset exchange rates tend to adjust more quickly to new information that goods prices. Like exchange rates, interest rates are also the prices of ï ¬ nancial assets and hence adjust quickly to new information. †¢ The proï ¬ t-seeking arbitrage activity will bring about an interest parity relationship between interest rates of two countries and exchange rate between these countries. †¢ A U.S. investor deciding between investing say in New York and in Tokyo must consider several things: – the interest rate in the U.S., i$ , (interest rate in aU.S ¿ dollar denominated bond, or rate of return in a U.S. dollar denominated US stock etc), interest rate in Japan (iY ; – the spot exchange rate, S; and – the future exchange rate for maturity date, forward rate, F . †¢ If the investor did not lock in a future exchange rate now, the unknown future spot exchange rate would make the investment risky. The investor can eliminate the uncertainty over the future dollar value of the investment by covering the investment with a forward exchange contract. †¢ If the investor covers the investment with a forward contract the arbitrage between two investment opportunities results in a covered interest parity (CIP) condition: (1 + i$ ) = (1 + iY ) 1 F S (1) which may be rewritten as (1 + i$ ) F = (1 + iY ) S (2) †¢ The interest rate parity equation can be approximated for small interest rates by: i$ − iY = F −S S (3) †¢ This later equation says that interest diï ¬â‚¬erential between a US denominated investment instrument and a Yen denominated investment instrument is equal to the forward premium or discount on the Yen. †¢ Example: i$ = 5%, iY = 3%. Suppose S = 0.0068 dollars per Yen. What should be the 90-day forward rate? 0.05 − 0.03 = F − 0.0068 0.0068 F = 0.0068 + 0.02 âˆâ€" 0.0068 = 0.00694 Thus we expect that a 90-day forward rate of $0.00694 to give a 90-day forward premium equal to the 0.02 interest diï ¬â‚¬erential. †¢ If the forward exchange rates were not consistent with the respective interest rates, then arbitrageurs could proï ¬ t by immediately changing currency in the spot market, investing it and locking in the proï ¬ table forward exchange rate. These actions in the market would increase the spot rate and lower the forward rate, bringing the forward premium into line with the interest diï ¬â‚¬erential. †¢ Suppose the actual 90-day forward rate is not 0.00694 dollars per yen but 0.0071 dollars per yen. Then proï ¬ t-seeking arbitrageurs could buy Yen spot, then invest and sell the Yen forward for dollars, since the forward price of Yen is higher than that implied by the covered interest parity relation. These actions will tend to increase spot rate and lower the forward rate, thereby bringing the forward premium back in line with the interest diï ¬â‚¬erential. 2 †¢ The interest rate parity condition (CIP) can be used to compute eï ¬â‚¬ective return on a foreign investment. Re-write (3) as: i$ = i Y + F −S S (4) This latter equation says that the return on a US dollar denominated asset (US dollar interest rate) is given by the Japanese interest rate plus the forward premium or discount on Yen. If CIP holds then equation (4) will hold as well. †¢ What happens when an investor does not use the forward market? Then we can not expect eï ¬â‚¬ective return on US dollar denominated asset be given by (4) as the investor in question will not be able to get the premium on Yen (or lose the discount). In this case, we say investor has an uncovered investment. The eï ¬â‚¬ective return then will be determined by the Japanese interest rate plus the change in the spot exchange rate between today and say 90 days from now. Letting it be the domestic interest rate on a domestic currency denominated asset, say US Dollar, between date t and t + 1, and similarly iâˆâ€" stands for foreign interest rate, t the eï ¬â‚¬ective return on a domestic currency denominated ï ¬ nancial asset will be given by: â ˆâ€" it = it + ∆St+1 (5) Which in our example will be i$ = iY + ∆S without time subscript. †¢ Suppose in the example we have been considering so far, the US investor did not use the forward market. After 90 days when the investor go to change Yen back to dollars, she ï ¬ nds that the Yen has appreciated against US dollar say by 1 percent. This means that your Yen buys 1 percent more dollars than they did before. This means that eï ¬â‚¬ective return on Yen investment then will be given by iY + ∆S = 0.03 + 0.01 = 0.04. 3 Hence, the return on a foreign investment plus the expected change in the exchange rate (in the value of Yen) is our expected return on a Yen investment. †¢ If the forward exchange rate is equal to expected future spot rate (Mathematically this means that E [St+1 | given all the available information] = Ft ) then the forward premium/discount is also equal to the expected change in the exchange rate. In this case we say that uncovered interest parity, (UIP) holds. †¢ More formally UIP condition says that the expected change in spot exchange rate is equal to interest diï ¬â‚¬erential. E(St+1) − St = i t − iâˆâ€" t St (6) where for E denotes the expectation operator. At this level you don’t need to worry about what this operator means, you can simply think ESt+1 denoting the expected future value of spot rate. †¢ As above analysis indicate forward exchange rates incorporate expectations about the future spot exchange rates. If the forward exchange rate is equal to the expected future spot rate, then the forward premium is also the expected change in the exchange rate. In this case, UIP is said to hold. †¢ Empirical studies indicate that there are small deviations from CIP. These deviations are possible due to presence of transactions cost, diï ¬â‚¬erential taxation across countries on the returns from investing in ï ¬ nancial markets, government control, and political risk involved in investing in diï ¬â‚¬erent countries. However, these deviations are small enough to assume that CIP holds true almost exactly in the real world data. Therefore, we can say that proï ¬ t-seeking arbitrage activities eliminate proï ¬ t opportunities in the exchange rate markets. Hence, CIP condition can be viewed an equilibrium condition that characterizes the relationship between spot exchange rate, forward rate and interest rates of two countries. 4 †¢ The problem arise in showing if the UIP holds or not in the data. Extensive studies have shown that UIP does not hold in the data especially for the industrialized countries. This means that percentage change in expected future spot rate is not equal to interest diï ¬â‚¬erential. Or, forward rate is not equal to expected future spot rate. Mathematically, this implies that there are deviations from UIP condition stated in (6) above. That is, it − iâˆâ€" − t ESt+1 − St =0 St This means that eï ¬â‚¬ective return diï ¬â‚¬erential is not equal to zero. There are several explanations given in the literature. – there should be proï ¬ t opportunities in the exchange rate market that are being exploited by the investors. That may be possible if the inside trading type of activities are possible and used extensively. In other words, there are informational asymmetries in the market, some investors have more information than others and they make positive proï ¬ ts. Although, this may explain part of the puzzle especially in the very short run, it is hard to believe that these informational asymmetries persist for a long time, especially in ï ¬ nancial markets where information ï ¬â€šow is very rapid and exchange rates adjust rapidly to new information. – It is possible to think that investors are systematically making mistakes in predicting the future value of spot exchange rate. That is, Ft = ESt+1 for a prolonged period of time. This means that forward rate is a biased predictor of future spot rate. Here biased means that it does not correctly predicts the future value of spot exchange rate on average. In other words, an unbiased predictor means that it predicts on average correctly the future value of a price, say exchange rate, so that over the long run the forward rate is just as likely to overpredict the future spot rate as it is to underpredict. Unbiased predictor does not mean that forward rate is a good predictor. What it 5 means is that forward rate is just as likely to guess too high as it is too low future spot rates. There is some evidence that indicates that investors in foreign exchange rate market make systematic mistakes in predicting the future value of spot exchange rate and hence causing systematic deviations from UIP. It may be possible to think scenarios where investors make mistakes in their forecast of future values of asset prices, but the magnitude of these mistakes shouldn’t be that large to account the large deviations we observe in UIP. That is, it is hard to understand why especially over longer time periods investors make big mistakes in a systematic fashion. Over time at least we should expect these errors to shrink a level where deviations from UIP become smaller. – Another explanation is that there should be a premium to take a risk by not covering the investment. This idea is based on the behavior of investors in taking risk. The eï ¬â‚¬ective return diï ¬â‚¬erential between two countries should be dependent on the perceived risk on each asset and the risk aversion of the investors. The risk aversion refers to the tendency of investors to prefer less risk. In terms of investments two investors may agree on the degree of risk associated with two assets, but the more risk-averse investor would require a higher interest rate on the more risky asset to induce her to hold it then the less risky-averse investor would. In ï ¬ nance, by risk we mean the variability of return from any given investment. This is because the more variable the return from an investment is, the less certain we can be about its future value. If investors diï ¬â‚¬er in their risk taking behavior we may observe that deviations from UIP and hence, changes in risk and risk aversion are associated with changes in eï ¬â‚¬ective return diï ¬â‚¬erential (that is interest diï ¬â‚¬erential). That is, it − iâˆâ€" − t ESt+1 â ˆ’ St = f (risk,riskaversion) St 6 The left hand side of this equation is the eï ¬â‚¬ective return diï ¬â‚¬erential (or deviations from UIP). The right hand side can be viewed as the risk premium. âˆâ€" – Since CIP conditionit − it = Ft −St Stholds almost exactly, subtracting ex-pected change in exchange rate from both sides: âˆâ€" it − it − Ft − St ESt+1 − St ESt+1 − St = − St St St Ft − ESt+1 ESt+1 − St = St St (7) or it − iâˆâ€" − t (8) Thus, we ï ¬ nd that the eï ¬â‚¬ective return diï ¬â‚¬erential (or deviations from UIP) is equal to the percentage diï ¬â‚¬erence between forward and expected future spot exchange rate. The right hand side of (7) is usually considered to be a measure of risk premium in the forward exchange rate market. If eï ¬â‚¬ective return diï ¬â‚¬erential is zero, then risk premium will be zero. If it is positive, then there is a positive risk premium on the domestic currency, because the expected future spot price of foreign currency is less than the prevailing forward rate. In other words, traders are oï ¬â‚¬ering to sell foreign currency for domestic currency in the future will receive a premium, in that foreign currency is expected to depreciate (relative to domestic currency) by an amount greater than the current forward rates. Conversely, traders wishing to buy foreign currency for delivery next period will pay a premium to the future sellers to ensure a set future price. The relationship between interest rates and inï ¬â€šation †¢ The real interest rate reï ¬â€šects the nominal interest rate with an adjustment for inï ¬â€šation. In other words, real interest rate is the nominal interest rate adjusted for inï ¬â€šation. †¢ Generally, the nominal interest rate will tend to incorporate inï ¬â€šation expectations. The relationship between interest rates and inï ¬â€šation is given by the Fisher equation: i=r+Ï€ (9) where i is the nominal interest rate, r is the real interest rate and Ï€ is the expected inï ¬â€šation rate. An increase in Ï€ will tend to increase the nominal interest rate. †¢ If the real rate of interest is the same across countries, then the Fisher can be combined with CIP equation: i$ − iY = Ï€U S − Ï€J = F −S S (10) This latter equation says that if real interest rates are the same internationally, then nominal interest rate diï ¬â‚¬erential diï ¬â‚¬er solely by diï ¬â‚¬erences in expected inï ¬â€šation. †¢ Note that relative exchange rate is given by the inï ¬â€šation diï ¬â‚¬erential and assuming that PPP, Fisher equation, and interest rate diï ¬â‚¬erential hold then real interest rates are equalized across countries. The expected exchange rates and the interest rates †¢ The pattern of interest rates over diï ¬â‚¬erent time periods for diï ¬â‚¬erent investment opportunities is known as term structure of interest rates. There are several interest rates. Short run interest rates, long run interest rates, namely 1 month, 3-month, 6-months etc. There are several theories explaining the the structure of interest rates on diï ¬â‚¬erent investment opportunities over time. – Expectations: the long term interest rates tend to equal to the average of short-term rates expected over the holding period. The expected return that will be generated from holding a 10 year bond should be on average be the the sum of holding a series of short term bonds, say 30-day bond rates. – Liquidity premium: Long term investment instruments must incorporate a risk premium since investors prefer short term investments. As the term of 8 holding an instrument rises, the interest rate on that instrument should rise as well. – Preferred Habitat: There exists separate markets for short and long term assets, with interest rates determined by conditions in each market. †¢ Under conditions of freely ï ¬â€šowing capital across countries, the term structures in diï ¬â‚¬erent currencies infer expected exchange rate changes, even if forward exchange markets for these currencies do not exist. †¢ If the term structure lines for two currencies are: – parallel, then exchange rate changes are expected to be constant; – diverging, then the high interest rate currency is expected to depreciate at an increasing rate over time; – converging, then the high-interest rate currency is expected to depreciate at a declining rate relative to the low-interest rate currency.