Internal Marketing in Banks

Internal Marketing in Banks Management Information System The worlds local bank About HSBC BANK Headquartered in London, HSBC is one of the largest banking and financial services organizations in the world. HSBCs international network comprises around 9,500 offices in 85 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by around 200,000 shareholders in some 100 countries and territories. The shares are traded on the New York Stock Exchange in the form of American Depositary Receipts. Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services: personal financial services; commercial banking; corporate, investment banking and markets; private banking; and other activities. History The HSBC Group has an international pedigree which is unique. Many of its principal companies opened for business over a century ago and they have a history which is rich in variety and achievement. The HSBC Group is named after its founding member, The Hong Kong and Shanghai Banking Corporation Limited, which was established in 1865 to finance the growing trade between China and Europe. Internal Marketing in HSBC BANK 1. Target Base Promotion Offers Under one of the Policies of the Bank, it provides the promotion depending upon the target which is met by the employees on the quarterly basis. The employees who will achieve the target get the Incentive and the next month foreign tours. For example on the target of the 8account opening, if any employee opens 10 accounts then he is given next month foreign trip. Thus the prompt target based promotion builds up employee’s motivation to give better services to the customer 2. Hierarchal form of Management HSBC BANK have a hierarchal form whereby each employee is answerable to one of the senior and this makes the obligation on the employees to motivate one to the other . The burden of business is transferred from one employee to the other in such a way that each one is responsible for the other performance. This way each internal customer is able be keep under the eye of its superior. Moreover the communication link which is important for a service industry is possible with the help of the this management system. 3. Event Management Under this head various events are organized from time to time in the banks to lure the high professionals for example Sales Tax Advocates, Income Tax Advocates and the Chartered Accountants etc so that external marketing could be more effective. Now the responsibilities of these events are on the internal customers and if they organize these events successfully it add on the credibility and the profitability of the internal customers and they are awarded with the various recognition prizes and awards for there effective leadership skills. This also helps to build up a relationship between the internal and external employees. 4. On The Roll Training High focus is always there on the training aspect of the internal customers. Training of the employees are given due importance from time to time and with the touch points of Human Resources for example whenever Bank want to design training schedule for its internal customers, it design it in the Five –star hotels with all the luxuries there out with all the facilities away from there routine work so this enables the internal employees to be stress-free and grasp the training modules practically. As an HR policy this enables the employees to increase in there efficiency and feel free from the routine work. As a result the employees will be able to add on more practical knowledge to it , when they return to there work. This is one of the prominent factor of the foreign Banks that they stress on the training module of the internal employees , which give them a chance to be more interactive with the other professionals of other branches and if they facing any problem they can sor t out with the help of the various training modules 5. Strong Management Information System Strong MIS base is one of the basic strength of any Foreign Bank, So in HSBC Bank also holds a good MIS system for example here the reporting system is so designed so as to provide no chaos among the internal employees and they can easily report to there seniors online only. 6. Online Tests/Quizzes/Learning Modules These tests are specially designed for every class of the employees in the HSBC so as to increase the handling efficiency of the internal customers with the help if of the case studies and the real life examples. Some of them are basic modules and they have to be cleared by the internal customers and some are there just to give them ranking by the HR professional which add-on to the character sketch of the employees and help them to be rated accordingly. 7. Systematic Employees coding Under this head the internal customers (employees) are given the Employee Code and the People Shop Code. Employee code is given to the employees so as to assess their performance, rating grading whereas the PS is given to the facility of the HR department so that the various online tests, HR activities n be handled conveniently. Thus we can see that how effectively the separate identification no for the Human resource convenience is given which benefit each and every internal customer separately. 8. Excellent Information Technology HSBC Bank has tied up with SAP in Asia to enhance the financial institutions bank corporate client integration system targeted for use globally. The improved system also has the potential to enable the exchange of richer information between HSBC and its business customers, according to the bank. HSBC currently offers a service that provides corporate clients access to an automated host-to-host system to facilitate secure transactions. Called HSBC Connect, the service enables the back-end systems of the bank and its enterprise customers to communicate seamlessly and securely. 9. Recreational Activities Time to time recreational activities are designed for the internal customer so as to decrease the stress of the employees. For example visit to Jim Corbett Park with full fledged facilities are provided to the employees. Thus as a foreign Bank internal marketing strategy they always focus on the Human resource aspect of the internal employees by provided the employee friendly environment with the help of the various recreational activities. 10. Employees Rating HSBC BANK has full-proof rating system whereby the employees are divided into the four categories as 1st 2nd 3rd and 4th .The level of the employees are rated according to this rating. Currently 1st batch rating is not given in HSBC India but it have been achieved by the international HSBC superiors. 11. Customer Friendly Environment As a internal customer friendly environment the internal customers are given flexible time allotment which makes the environment of the Bank more friendly. Basic amenities being a service sector is well considered in the foreign banks which actually amounts to the total increased efficiency American Express Service India Ltd Certain facts: A survey wad conducted by India Today in which 20 most reputed foreign banks were surveyed on certain parameters and American Express ranked 6th in Employee Satisfaction. (Source: India Today , June 2008 issue) American Express ranks 9th in the list of Fortune 500 companies.It comes under the A++ Category. Service Blueprint of American Express. Following are the steps involved in making their credit cards available to their customers:-1) Call to customer 2) Appointment 3) Meet customer 4) Documentation 5) Employee back to office 6) Prepare Dispatch 7) Send an E-mail to the processing department 8) Verification 9) Dump (rejection) 10) Card Approval 11) Card Issue 12) Payment 1) Call to customer :-A prior database is prepared of the prospective customers and they are called randomly by the tele callers of American Express. The details are narrated to them over the phone and those interested are promptly followed up. 2) Appointments :-The tele callers fix an appointment of the Relationship Officers with the interested customers. 3) Meet Customer :-A venue and time is decided according to the convenience of the customers and the Relationship Officer meets the customer as per the appointment fixed. 4) Documentation:- The Relationship officer asks the pre-requisites like personal details, type of credit card desired , what all are previously held by the prospect, etc. and the Relationship officer is required to verify all the details. 5) Employee back to office:-The relationship officer comes back to the office after collecting all the relevant details and prepares a summary of the case. 6) Prepare Dispatch :-The Relationship officer prepares a soft copy as well as a hard copy to be sent to the processing department. 7) Send an E-mail to the processing department :- The soft copy is mailed by the Relationship Officer to the processing department. 8) Verification:- The processing Department checks for the authenticity of the prospective client. They search their past records as to whether or not they have had any prior contact with the prospect. If in case it is revealed that their has been a prior association and the prospect was a defaulter in that case then they come in the category of â€Å"Cibil† clients. 9) Dump (rejection) :- The Cibil clients are simply rejected. 10) Card Approval:-A list of those customers is prepared who can be granted the credit cards. 11) Card Issue:- Thereafter, the card is issued to the customers. 12) Payment :-The bank sends the statement to the customers after one month and the customers are supposed to make their payment within a span of 45 days. Hierarchy of American Express Internal Marketing In American Express Bank The responsibility of dealing with the customers at American Express is on two people Recruitment: Both the telecallers and Relationship Officers are hired through consultants. However, holding an M.B.A. degree is a must for the Relationship Officer. In case the person does not hold an M.B.A Degree then he is expected to have served in the same industry for a period of not less than 3 years. The Relationship Officer is expected to have a dynamic personality, excellent Communication skills, good motivator, should have good convincing powers, etc. All these attributes are necessary because the Relationship Officer is the person who makes the direct contact with the prospective customers. He has the maximum â€Å"Encounters† with the customers. Training: The American Express bank has hired an International body, which provides training in Bangalore and Delhi in the five star hotels. The duration of training is 10-15 days. Training is provided at all the levels. The new employees are told about the history of the company, the company profile, their services, customer profile, area/location, market share, competitors and industry associates. It is basically a knowledge enhancing session. The trainer asks the new employee to deal with him as a customer. These will provide relevant insight as to how he reacts to customer queries and such training prepares him for crucial service encounters. Appraisal: The Appraisal System at American Express is Target Achievement oriented. The KPAs and KRA’s are predefined. A target of 21 points is given to them in a month on the basis of their dealing with the Externals and Internals. Externals are first time users and Internals are those that had a previous association. If a deal is done with Externals they get 3 -1/2 points and if with Internals they get 1 point. In the end their appraiser combines all the points and on the basis of that they are given rewards, promotions, demotions, counseling, training, etc, as the case may be. Employees are also appraised on the basis of the category they belong to: G TargetsM – Interpersonal Skills G1 M1 – Targets over achieved and excellent interpersonal skills.G2 M2 – 100% achievement of targets and good interpersonal skills.G3 M3 – 50%– 60% achievement of targets and average interpersonal skills.G4 M4 – Targets not achieved and poor interpersonal skills. Culture :-Core Culture :- Quality, cleanliness, service and price.â€Å" The paramount idiom in American Express is total customer satisfaction†.There is no job pressure and since the employees are highly satisfied and motivated sothey service they provide to the customer is also very satisfactory. Strategies for Internal Marketing Adopted By American Express Bank Ltd. FAIR PRACTICES CODE FOR CREDIT CARD OPERATIONS American Express Bank Ltd. (hereinafter referred to ‘the Bank’) has a reputation for customer service and sound compliance. The Bank has various policies and procedures that govern its business activities and operations. Further, the Bank has compliance and other internal programs designed to ensure compliance with laws and regulations of countries where it does business. This Fair Practice Code (hereinafter referred to as ‘the Code’) for credit card operations is designed to guide and demonstrate the Bank’s commitment to fair and ethical management of its business activities operations related to issuance of cards, customer service and other related activities. BANK’S VISION AND OPERATING PRINCIPLES Vision: To become the worlds most respected service brand. Operating Principles: We must provide a superior value proposition to Everything we do shouldØWe must achieve Best-in-Class EconomicsØcustomersØour BrandØsupport the American Express BUSINESS ETHICS AND COMPLIANCE WITH THE LAW The Bank and its employees shall ensure that ethical conduct shall permeate all our business dealings and relationships. In a rapidly evolving credit card business, the Bank and its employees shall ensure ethical conduct in offering products and services, business activities, operations and customer services. The Bank shall conduct its business in accordance with applicable laws and regulations The Bank has competent individuals managing regulatory affairs and advising business leaders about compliance requirements. The Bank has a sound compliance program to ensure high level of compliance to applicable laws and regulations. CARDS – SALES AND MARKETING The Bank shall provide full and complete disclosure of products and services, their features and costs to enable a prospective customer to make an informed decision / choice The Bank shall provide information on: Applicable fees Key features of our products and services particulars, Documents required with regard to identity, contact and other charges How a customer’s personal information §employment, financial standing, etc. Terms Details of Bank contact for seeking additional information shall be used billing and payment, and conditions related to fees and interest charges, other aspects related to maintenance and §renewal, termination procedures and card accounts. management of The Bank’s advertising and marketing campaigns shall use truthful and whole statements about Bank’s products and services The Bank shall ensure that the whole of an advertisement is truthful, shall inform customers of costs and obligations as well as benefits and features. The advertisements may not mislead by using tricky or clever wording. The Bank shall have a Code of Conduct for its agents and others who sell, distribute or otherwise market Bank’s card products. The Bank shall ensure that all agents who sell, distribute or otherwise market Bank’s card products have a Code of Conduct for their dealings with prospective customers and Cardmembers. The Bank shall have monitoring process in place to review the agent’s compliance to this code, at regular intervals. CARD OPERATIONS AND CUSTOMER SERVICE The Bank shall have effective processes and systems to ensure quality in operations and customer service The Bank shall maintain effective processes and systems to maintain quality in following card operations activities: Timely § Dispatch §decision to customers §processing for applications and communication of communication to inform about §of credit card in a secured mode and follow-up Availability of contact centers such as telephone service §issuance of card centers for customers to contact for information or queries on products, services and related subjects Timely dispatch of credit card statements Timely processing of payments received from credit card customers Receipt and satisfactory disposition of customer correspondences and complaints The Bank may have processes to honor customers’ choices and preferences during the period of customer relationship The Bank may have processes to honor customers’ choices with regard to the following, subject to certain terms and conditions: Change of payment modes within types offered by the Bank Opting out from receipt of Bank’s marketing and promotional materials Voluntary termination of credit card facility The Bank shall treat customers with respect and dignity during collection efforts The Bank has policies and employee training programs to guide employees to exhibit courteous and fair behavior during collection efforts. The Bank shall ensure that all collection and recovery agents have a Fair Practice Code for their dealings with the customers.The Bank shall have monitoring process in place to review the agent’s compliance to this code, at regular intervals. CUSTOMER PRIVACY The Bank shall safeguard the privacy, confidentiality and security of customer data entrusted with it. The Bank has privacy principles to ensure that the customer information collected is relevant, accurate and confidential. The Bank has adequate standards to protect customer accounts and information. These standards allow customers to remove their names from lists used for mail, telephone and online marketing. All employees shall be trained in customer privacy principles as appropriate to their work. FAIR COMPETITION The Bank shall comply fully with the letter and spirit of laws designed to preserve free and open competition The Bank strongly supports vigorous but fair competition. The Bank shall make completely factual and truthful statements about our own products or those of our competitions, whether in advertising or in speaking to customers or others The making of false or misleading statements about our competitors is inconsistent with our reputation for integrity. The Bank and its employees shall deal fairly and honestly with all customers and suppliers. COMPLIANCE WITH THE CODE This is a non-statutory code and the Bank shall take efforts to adhere to it during normal operating environment. The Bank shall not be held responsible for non-compliance due to force major conditions and other reasons for which the Bank enjoys privilege and right over the code. This code does not in anyway prevent the Bank from exercising its rights and discharging its duties and obligations under law, regulations, agreement, terms and conditions, etc. in force and varied from time to time. Process Of On-Line Marketing through excellent Internal Marketing Practices At American Express Bank Information Collection If the customer is not registered for any online service from American Express, he can browse the Site anonymously. They do not collect personal information such as the customer’s name, address, phone number or e-mail address if you are only browsing this site. American Express does, however, use cookies to collect information about how our site is used. Information, such as the server your computer is logged onto, the customer’s browser type (for example, Netscape or Internet Explorer), and whether the customer responded to an American Express banner ad or e-mail is collected and tracked in aggregate and not linked to you personally. They use this information to measure response rates to banner ads and e-mail offers. Registration for Online Products and Services If the customers want to apply for or take advantage of our online products or services, the Bank will need them to give us some personal information, including their e-mail address and account number. The bank only collect information about the customer, which they need to process application, to service accounts and other needs, to offer new products and services, and to satisfy legal requirements. The Bank will also use this information for purposes such as correspondence, site registration, allowing customers to check your statement or other account details online, to make a purchase, or to participate in online surveys etc. The Bank will also share such information with our affiliates and other for the purposes described elsewhere in this Statement. Quality of Information The Bank uses advanced technology, documented employee procedures and internal monitoring to help ensure that the personal information is accurate and up-to-date. In addition, they require high standards of quality from credit reporting agencies and others who provide us with information about prospective customers or other services. Security Before you can send confidential personal information or account information to us on an American Express Web site, we require that a secure session is set up using Secure Socket Layer (SSL). About SSL and the safety and confidentiality of personal information transmissions over the Internet. They use a range of security processes to protect the confidentiality and security of your personal information CONCLUSION In this section, we attempt to review the important and role of internal marketing in foreign banks of India. Service sector contributes major part of gdp of India. And is one of the most sectors which have too much potential in the sector. There is approx 10% growth in financial sector every year. And hence it’s very important to have continues reforms in that area. India’s leading bank is SBI, there are number of public and private banks too having good market. Still a number of people didn’t want to go on for banks because of fear of all the different technicalities and other factors. It’s in mind of customers that they have to run from 1 place to other without any result and there money in not secure. So now banks are paying more stress in internal marketing. With the liberalization of economy few foreign banks have entered in India and with that new techniques of marketing are growing. This study is to know the internal marketing of foreign banks especially American bank and HSBC. Foreign banks pays quite stress on the internal marketing because in services customer have to deal with employees directly and its quite important to have a proper selection process too. In service sector more than marketing word of mouth plays important role, a satisfied customer will lead to many more customers. And foreign players are quite good in implementing this concept in there work process. Now Indian banks are laso using the concept of internal marketing effectively. Bibliography WEBSITES www.online.citibank.co.in www.hsbc.co.in https://home.americanexpress.com/corp www.db.com www.deutschebank.co.in www.teachermarketing.com www.poolonline.com/archives/iss5fea2.html

Graduation Speech: An Amazing Year! :: Graduation Speech, Commencement Address

To be completely honest, at the end of my junior year, I felt ready to be up here. I watched a lot of my friends go through their senior year and felt completely prepared to move on. I could hardly stand the thought of another year at County High School, in what I thought would be stagnant water. At that point in my life, I had no idea how much I had left to learn and how much one more year at County High would mean. It ended up being, collectively, one of the most amazing experiences I have even had. From the very beginning, it was not what I expected. Boys tennis, never a very strong team at County High, surprised me, and alone was an unforgettable experience. I never envisioned myself playing in the league finals, I was as surprised as anyone, and when I missed out on state, I was as disappointed as anyone. Other activities left their mark; finally being involved in art, finally playing with the jazz band, finally being completely done with pit orchestra. I also never imagined a thing called 'knowledge bowl' could be so much fun. Each activity, in itself, built a memory I will forever hold. More even than the activities, the people I became close to this year have grown to be cornerstones of who I've become. Most of my good friends graduated last year and I thought I would be lost without them. The situation ended up being the exact opposite, however, and I now cannot imagine what I would be like had I never become close to my good friends now. I have watched myself, and those around me become better, stronger people. I now can say that I would not give up a second of my time here for anything. The teachers here, the other students, the opportunities and the experiences have made me what I am today.

In Our Time :: essays research papers

The Nick Adams stories were my favorite of the collection because I got to know Nick through the reading. I started to understand Nick and I could anticipate the actions and feelings that he was feeling. I am not sure if this is because I became familiar with Nick or because I have done many of the things Nick has done and was able to understand what he was doing."Big Two-Hearted River: Part I and II" were the most enjoyable short stories of the ones I read. The language that Hemingway uses is ideally suited for describing Nick's activities by the river. Hemingway's simple declarative sentences are all that is needed to convey the wonderful scene of Nick struggling with his pack, setting up his tent, and cooking his food. I have also done all the things that Nick was doing by the river and I was able to understand his satisfaction at pulling up a sound tent. Little sentences like "He was careful not to let the hook bite into his finger" convey so much meaning to anyone who has ever tried to tighten a fishing hook on a line that you can only help but nod your head in agreement.I must admit that despite not being at the center of your course I could not help but think of how much Hemingway's content was influenced by his life. Many of the stories like "The Doctor and the Doctor's Wife" were based directly on personal experiences of Hemingway's life. Since it is not the focus of your course, I am trying to just accepted the content and concentrate more on writing style and the way Hemingway writes something. I have found it difficult to pay close attention to both the story and the writing at the same time and have had to reread several times.

Political Risk in Malaysia

†¢ The fact that Prime Minister Mahathir has seen fit to take a two month vacation is the strongest evidence in a long time that his position within UMNO remains unchallenged. The political succession issue also seems clearer now that Mahathir has permitted his deputy to assume the title of Acting Prime Minister. Such a privilege was not given to trusted lieutenant Ghafar Baba in 1989, when the prime minister was recovering from a coronary bypass operation. Anwar's performance will be watched closely in the coming weeks. Another test of the extent to which Mahathir is at ease with Anwar will be the degree to which the prime minister gives Anwar free reign to deal with any public controversies which arise while he is on leave. †¢ The by-election victory of the opposition Democratic Action Party in Perak in mid-May surprised many observers. However, it would be an exaggeration to suggest that the result portends a significant shift of ethnic Chinese support away from the government in the nation as a whole. Local issues were paramount in the campaign, and voters knew that they could support the opposition without threatening the National Front's two-thirds majority in parliament. †¢ The differing approaches taken by Malay politicians (who have been calling for a tough stand against Singapore) and the Chinese business community (which has been urging moderation) has not yet led to any appreciable rise in ethnic tension. However, the situation could change quite significantly should Malay leaders suggest that the nation's ethnic Chinese were siding with Singapore. Tension between Singapore and Malaysia has remained remarkably persistent, over the last few weeks, egged on by the semi-official press in both countries. An informal boycott of Malaysia by Singapore travel agencies during the school holiday season has been followed by a variety of tit for tat moves in Malaysia aimed at reducing Malaysian exports through Singapore and cracking down on Singaporean professionals working illeg ally on social visit passes. While politicians on both sides of the causeway have been more careful in their public statements, it is difficult to believe that the critical tenor of the reporting by the mass media of both countries does not have at least the tacit support of the two governments. Even so, things are unlikely to be allowed to get out of hand. †¢ Relations with the US, however, are improving. Once a staunch opponent of an American security presence in Asia, Kuala Lumpur now appears quite willing to cooperate with the US military in the region, with a number of US warships making high-profile calls at Malaysian ports in recent months. The policy shift appears to be related to efforts by Prime Minister Mahathir to woo US companies to invest in his pet project, the Multi-Media Super-Corridor (MSC). By providing facilities to US forces, Kuala Lumpur hopes to send a reassuring signal to the American companies it hopes to attract to the MSC. pic] Near-Term Outlook Steady as she goes Given a choice, Mahathir would probably very much like to concern himself with foreign policy issues in the coming months. However, it is very likely that domestic issues will continue to push their way to the top of the political agenda, forcing the prime minister to intervene belatedly to settle various issues which emerge while he is overseas. To the extent that the prime minister will want to sh ow any serious interest in domestic affairs, his attention will probably be focused on corruption. Mahathir appears to have concluded that graft — and Malaysia's growing reputation for it — is becoming an increasingly serious obstacle to his efforts to win the country the international respect and admiration he believes it deserves as a result of its economic achievements. Meanwhile, Deputy Prime Minister Anwar Ibrahim's grip on the finance portfolio is under threat, with rumors circulating in Kuala Lumpur that the prime minister is none too pleased with the way he has handled several matters in the last few months. A series of missteps by Anwar has certainly left many in the private sector wondering whether the deputy prime minister is really the most suitable man for the job. There is little doubt that Dr. Mahathir remains in firm control of the country. So much so that uncertainties regarding policy issues only seem to emerge when he is not around. With the UMNO partly polls out of the way and national elections not due for some time, Dr. Mahathir can be expected to spend an increasing amount of his time pursuing his long-held interest in foreign affairs in locations such as Tokyo, Beijing and Seoul while putting domestic matters on hold. This year, Kuala Lumpur plays host to two important ASEAN meetings, and the prime minister will want to make the most of them. The first (in July) is the ASEAN ministerial meeting and its accompanying ASEAN Regional Forum with the grouping's dialogue partners. The second (in December) is the ASEAN informal summit. In the run-up to both, Dr. Mahathir can be expected to make his views known on a variety of internationally controversial issues. Apart from a few more speeches about perceived Western arrogance, the prime minister will be pushing for the acceptance of Myanmar as a full member of ASEAN. There will also be more talk about the formation of a de facto EAEC, with Kuala Lumpur inviting participation from countries such as China, Japan and South Korea. With the prime minister traveling overseas quite a lot, it is possible to argue that the prospect of short-term government policy paralysis this year is greater than is generally realized. On several occasions now, the government has revealed a lack of decisiveness when faced with a controversial issue while the prime minister was out of the country. A case in point is Anwar's foot-dragging early last year over the implementation of the rotation system for the position of Sabah Chief minister. Yet another was the unfavorable High Court decision last June which forced a temporary halt to work on the Bakun Dam in Sarawak. In both cases, flagging political resolve only revived when Mahathir returned to take charge of events. The more recent furor over the uncomplimentary remarks of Singapore's Lee Kuan Yew regarding the crime situation in the southern Malaysian state of Johore are yet another example of the same thing. Although the matter appeared to have been resolved before Mahathir left for Tokyo, ministers emerged from a subsequent Cabinet meeting chaired by Anwar to make off-the-record comments to the press to the effect that Malaysia had decided to â€Å"freeze† its relations with Singapore in the wake of remarks by Singaporean leaders that implied that Malaysia had overreacted. The resulting media reports shocked the business community in both countries, since such reports inevitably conjured up visions of the 1965 split and suggested that a wide range of business and political ties would be disrupted. Yet another possible source of uncertainty in the coming months relates to the extent to which corporate rivalries will continue to reflect an ongoing political rift between Dr. Mahathir and Anwar. Reports that Renong has come up with a proposal to build a high-speed train line between Kuala Lumpur and Singapore — an idea which clashes directly with similar plans by DRB-Hicom — certainly suggests that they will. In the popular mind, Renong is associated with UMNO Treasurer Daim Zainuddin (a close Mahathir confidant), while DRB-Hicom is seen as being more closely linked with individuals associated with Anwar. The reality, however, is probably a little more complicated, with the late Tan Sri Yahaya of DRB-Hicom (who died suddenly in early March) arguably at least as close to Mahathir as he was to Anwar. Either way, the two companies have such powerful connections that the battle between them will almost certainly involve political as well as purely economic criteria. Local pundits may not have got it exactly right in the case of Renong and DRB-Hicom, but there is little doubt that policy differences between the prime minister and his deputy do have some impact on the corporate scene. A case in point is the recent refusal of the finance ministry to provide financial guarantees to Ekran, the company responsible for the construction of the massive Bakun Dam. Anwar has never really embraced the project, and it is not hard to conclude from this decision that the finance minister is determined to make things as difficult for Ekran as possible, despite the fact that the Bakun Dam is one of Mahathir's pet projects. Of more relevance to the business community in general, however, is Anwar's performance as minister of finance. With the economy doing well, it may be argued that the fact that he lacks a solid background in economics is of little consequence. All that is really required is an intelligent personality capable of taking advice from experts in both the ministry and the central bank. At this level, Anwar seems to measure up. However, a closer look suggests that he is also capable of making errors of judgment which could create quite serious problems in the future if they are made at a time when the economy is less resilient. Take the problem we mentioned earlier about the Cabinet decision regarding Singapore. Anwar could have ended the confusion over the freezing-of-relations reports as soon as they arose, but he chose not to do so. Instead, he issued a press statement which, while stopping short of announcing a trade and investment boycott, appeared to support widespread rumors that such a decision had actually been taken. In this way it may be argued that he allowed the alarm to spread though the business communities of both countries. As a result, the value of both the ringgit and Singapore dollar dropped overnight. Perhaps Anwar was trying to send a political message to Singapore. If so, it is worth noting that although Mahathir has had some high-profile tiffs with Western nations in the past, even he has never before sent such a blunt message to a neighboring country. Yet another apparent lapse in judgment concerns the way the central bank (technically under the control of Anwar's finance ministry) handled an announcement at the end of March about new guidelines aimed at reducing lending to the property sector. A vaguely worded statement to the effect that the authorities had imposed a new 20% limit on bank loans to the sector sent the stock market reeling, with property and finance stocks in particular taking a beating. The new policy also redefined lending for share purchases in order to curb what monetary authorities said was excessive share speculation. Left to draw their own interpretations, some banks stopped giving out such loans altogether while checking whether they had exceeded the new limits. Anwar did little at first to clarify the situation, merely informing the press that he was satisfied with the CB move. It was not until several days later when the monetary authorities released details of the new guidelines (which contained exemptions that significantly watered down the effect of the new curbs) that the market stabilized. Not surprisingly, the incident has pleased nobody, with a number of economists privately accusing the authorities of backing down on an important measure designed to reduce the exposure of the banks to the property market. For Mahathir, the timing could not have been worse. The prime minister is particularly anxious to ensure that the listing of the Bakun Hydro-electric Corporation in June comes off well. With foreign investors shying away from the project, the company is now relying on the domestic market to absorb a massive M$3 billion in new shares. This will not be easy to do on a falling stockmarket, and Mahathir will now probably want to make sure that he is still in the country in the run-up to the IPO so that he can settle any last minute hitches. Meanwhile, with a Cabinet reshuffle on the cards in the coming months, the Deputy Prime Minister's political opponents can be expected to once again press for Anwar's removal in favor of Trade and Industry Minister Rafidah Aziz. Since the beginning of the year, Mahathir has lost two senior figures who played an important role in promoting projects in which he is especially interested. The uncertainties created as a result of the sudden death of businessman Tan Sri Yahaya show the sort of thing that can happen as a result of current Malaysian development strategies which place heavy reliance on individual entrepreneurs to run major companies in strategic industries. Of particular concern now is the fate of Malaysia's national car project which Tan Sri Yahaya headed. The resignation of Selangor Chief Minister Tan Sri Tun Mustapha in mid-April as a result of corruption allegations is another case in point. The loss of Tun Muhamad was not a serious political blow to the prime minister, since the latter was not considered a key Mahathir loyalist. However, it has raised questions about the extent to which his successor will be willing to push the Multimedia Super Corridor project and support the development of Putra Jaya, the new administrative capital. The Sultan of Selangor does not appear to be especially interested in cooperating with Mahathir in selecting a replacement, and has instead made disparaging remarks about transfers of land ownership during Tun Muhamad's tenure. The loss of key individuals in other economic sectors could also upset the apple cart. The huge M$15-billion Bakun Dam project in Sarawak, for example, is very closely associated with Tan Sri Ting Pek Khiing. The fact that he suffered a mild stroke last year cannot be regarded as good news for the hundreds of subcontractors — both local and foreign — which are expecting him to push the project through to completion. None of these problems, either by themselves or in combination, are likely to trip up a seasoned politician such as Mahathir, but they are going to be distractions from the foreign policy agenda the prime minister would rather follow. Two other developments are worth monitoring. The first concerns the degree to which the current anti-corruption drive can really be expected to take off, while the second concerns the (not entirely unrelated) political revival of UMNO Youth. The current anti-graft campaign really got going in the run-up to the UMNO party elections late last year when Mahathir ordered a blanket ban on campaigning in order to keep candidates from showering money and favors on delegates. Then, at the convention itself, he launched an emotional attack on graft, saying that it would destroy the party. The result has been that several corruption-tainted candidates competing in the party elections lost heavily. Since then, proposals have been tabled in parliament designed to increase the effectiveness of the Anti-Corruption Agency (ACA), the Selangor Chief Minister has been forced to resign, and no less than eight other senior officials have been placed under investigation. On this issue, Mahathir appears to have Anwar solidly behind him, although the latter has sometimes operated as something of a loose cannon, embarking on investigations that could ultimately implicate staunch Mahathir supporters such Works Minister Samy Vellu, for example. The latter development also points to a serious problem facing a national leadership wishing to pursue the matter further: how to launch a determined attack on graft without undercutting one's own political support. For this reason alone, it is a fairly safe bet that the current campaign will not be a comprehensive one. More likely, a few carefully chosen cases will be vigorously pursued in the hope that this will have a demonstration effect on other greedy individuals. Ahmad Zahid Hamidi, the newly elected leader of UMNO Youth, has not been wasting much time getting the once-influential organization back into the headlines. Although generally regarded as an Anwar man, Mr. Hamidi has an independent streak which could yet embarrass the deputy prime minister and see the youth organization setting off on a course quite different from that of the national leadership in the coming months. The violent way in which a conference on East Timor was broken up by Malay youths last year certainly put Anwar in the difficult position of having to distance the government from the actions of his political ally. Since then, Mr. Hamidi has taken on far less politically troublesome (for Anwar! ) issues such as the Australian racism debate, Singapore-Malaysia relations and Malay social problems. However, the ability of UMNO Youth to act independently in the future should not be underestimated. It would not be surprising, for example, if the organization turns out to be the prod that keeps the current anti-corruption drive alive much longer than many local politicians would like.

Natsume Soseki has written Kokoro

Natsume Soseki has written Kokoro in such a way that the reader be acquainted with Boku and Sensei.   Through them, Soseki believed that a person’s actions should be coming from their true emotions and not by what others perceive of it.   A person should always do things in accordance to what he thinks is right and not by merely considering what the people dictates to him.   Sometimes people tend to live up to what the people tell them because their reputation is at stake.   Just like the planned graduation party of Boku[1].   Even though Boku did not want to have a party, his parents insisted because his father has a reputation to maintain in their community. Kokoro was also written in such a way that there is a special connection between Sensei and Boku in being able to see their imperfections by means of their shallowness.   Despite the two characters having different worldly views, they still found company in each other’s presence.   Boku is somewhat a person who wants to know who Sensei really is and Sensei was not the type of person who would reveal the real him. The style of the first part of Kokoro resembles that of a detective novel, and helps first to establish the reader’s curiosity towards Sensei. Narrator Boku provides no self-introduction and no adequate explanation for his interest in Sensei. Instead, he continuously feeds the reader small ‘clues’ – pieces to the puzzle of Sensei – to gain the reader’s curiosity. ‘â€Å"I cannot tell you why,† Sensei said to me, â€Å"but for a very good reason I wish to go to that grave alone. Even my wife, you see, has never come with me.† [End of passage]’[2] Sudden breaks in narrative are often used to leave these clues hanging, helping to compound the suspense felt by the reader. Additionally, despite having already experienced all the events he describes, Boku chooses to present them in the original chronological order and to narrate his original thoughts regarding each event.    â€Å"I wondered also why Sensei felt the way he did towards mankind.†[3] Revealing his thoughts and experiences in this manner assists Boku in linking with the reader, as it constructs between them a shared interest towards Sensei. Soseki seeks to direct this interest, as evident in the sentence: â€Å"Had I been curious in an impersonal and analytical way, the bond between us would surely not have lasted.†[4] This explanation of the nature of Boku’s curiosity can be interpreted as a suggestion to the reader; in order to complete the puzzle of Sensei, the reader needs to explore Sensei on a more personal level – not simply to analyse from a third person perspective, but rather to attempt to interpret Boku’s regard for Sensei by examining the similar attitudes and values that the two espouse. In the third part of Kokoro, Soseki switches to a new narrative frame, and we read Sensei’s letter through the eyes of Boku. Sensei directly addresses Boku in the letter – driving us as readers even closer to Boku, as we to try to interpret Sensei’s words through the mindset of Boku. Contrastingly, despite the title ‘My Parents and I’, part two of the novel serves to distance the reader from Boku’s family. As readers, our interest draws to a peak when Sensei agrees to tell Boku about his past. However, Sensei does not, and instead Boku’s father’s illness forces Boku to leave for home. This is frustrating for Boku, and for the reader, as is revealed in the passage: ‘†¦ there was much that I did not know about Sensei. He had not told me about his past, as he had promised. I could not be content until he was fully revealed to me.’[5]  Even as Boku’s father lies on his deathbed, Boku’s thoughts wander towards Sensei – physically represented by his moving back and forth between his bedroom and his father’s bedroom. In the process of affiliation with Sensei and Boku, the reader is exposed to the two characters’ disdain towards external appearances and opinions.  Both Sensei and Boku show their disregard for academia. Boku shows little regard for his diploma – he ‘pretends his diploma is a telescope’ surveys the world outside his window in it, and then throws it down on his desk. Similarly, Sensei does not know where he put his diploma.  In contrast, Boku’s parents hold Boku’s diploma in the highest regard. They scold Boku for not having taken better care of the diploma, and display it in the house. Boku’s narration shows that he also is not interested in the appearance of things.   He tends to observe, conclude and investigate on it.   Just like what happened when he saw Sensei at the beach centre.   He overlooked at Sensei’s appearance and focused his attention more on his behaviour thus speculating Sensei’s state of mind.  Ã‚  Ã¢â‚¬Å"He was always aloof and [†¦] seemed totally indifferent to his surroundings†.[6] Sensei bears a similar disregard towards appearances to others and describes it:  Ã¢â‚¬Å"I used to consider it a disgrace to be found ignorant by other people. But now, I find that I am not ashamed of knowing less than others †¦Ã¢â‚¬ [7]  Sometimes people tend to pull themselves down because they think they know less about things.   But come to think of it, even though a person does not graduate high school or college, it means that he is more ignorant than those who have graduated.   People know different things and not all individuals can learn everything. With these, it forms a sharp contrast with Boku’s parents.   The parents of Boku have a high regard for the physicality of things while Sensei and Boku do not.   Boku’s parents seem to relate the physical aspect of a thing with its value just like the diploma.   For them, being able to have a diploma is something that should be cherished, treasured and be well cared of.   While for Sensei and Boku, a diploma is somewhat like a representation of the knowledge acquired while in the university.   A diploma is just a paper, nothing more, nothing less.   What is important are the learning obtained during the years studying in the university. In conclusion, Kokoro is a classic example of presenting two characters that may turn out to be indifferent from one another at first but later on saw their similarities.   Even though these two characters obviously come from different generations, they still were able to find a common ground.   These two started out as complete strangers and tended to avoid the fact that they needed each other’s company but in the end, it just proves that no matter the distance of two persons, they still are close when always remembered. Bibliography Soseki, Natsume. Kokoro (Part 2) Chicago: Regnery Gateway, 1957. 21 Jan. 2000. http://www.eldritchpress.org/ns/k2.html [1] Natsume, Soseki. Kokoro. Online Version, 2001. part 2                                                                                                                               [2] Natsume, Soseki. Kokoro. Quiet Vision Publishing, 2001. p11 [3] Natsume, Soseki. Kokoro. Quiet Vision Publishing, 2001. p22 [4] Natsume, Soseki. Kokoro. Quiet Vision Publishing, 2001. p11 [5] Natsume, Soseki. Kokoro. Quiet Vision Publishing, 2001. p65 [6] Natsume, Soseki. Kokoro. Quiet Vision Publishing, 2001. p5 [7] Natsume, Soseki. Kokoro. Quiet Vision Publishing, 2001. p37

Dance in my life Essay

Ever since I was a little girl dance has always been an important part of my life. When I was five, my mom enrolled me in dancing classes after my sister, never realizing that dancing would ever lead to anything serious. For the first year, dancing was a side hobby to help keep me busy after school. Even though dancing was really fun to me, it did not become serious until my dance teacher looked me in my eyes and said â€Å"Lexus you have a big and lovable heart and I want you to dance with that heart of yours because I know that you have what it takes to become a great dancer.† That moment I knew that dance was going to always be a passion of mine. Over the years dance has helped me to grow in other ways. From it I have learned that hard work really does pay off. I learned that discipline and self-control are not only a vital part of dancing, but a necessary part of life. Also, I have recognized that motivation and perseverance are keys to success. What matters is not who wins in the beginning, but who is still on her feet in the end. Perhaps the most important lesson dance has taught is responsibility. Kaleidoscope has helped me in a lot of areas; even though I am small and tiny, I am very athletic, strong and I have a high self-esteem that anything is possible as long as you put your heart to it. I am encouraged now more than ever to try my best in class even if I look stupid because practice makes perfect. Becoming a Kaleidoscope officer hasn’t been a dream of mine till this year. Last year I thought I didn’t have what it took to become one, but this year, seeing how much you encouraged me to become a better dancer, it encouraged me to become a better person. When I tried out for Kaleidoscope, I wasn’t expecting to make it because I wasn’t in a dance class and I didn’t know Mrs. Karl personally at all. One day after school my friend told me to try out with her because she was scared to try out by herself. When I walked into the dance room I would have never thought I would be staying in that dance room. When I tried out, I took it as if god was giving me a chance to dance again and to fulfill a dream of mine. The term leader is someone who is in an advanced position to take the initiative in order to go forth and show the way but also to be able to make intelligent and creative decisions quickly and efficiently. Dance teams are all about unity. An exceptional dance group glides across the floor with all of its dancers moving as one. There are no individual standouts. No weak links. But there is one person whose job is to make the team as strong as  possible, on the floor and off. It’s one thing to be a good team player, but it’s another to be a good leader. Few will have the opportunity to feel the weight of the responsibilities and the happiness of knowing you are making a difference. Becoming a leader of any type of organization in my eyes is a huge job. It’s teaching respect by showing respect. It’s helping the other dancers, including myself, to strive and push themselves to be the best dancers I know we all can be. Having the title of being a Kaleidoscope Officer doesn’t mean being the boss of everyone, being in front of every dance, or just thinking that the Officer should come before everyone else. Officers are the inspiration of the team. They’re the person that everyone looks up to. Being a natural born leader is also a big role of a dance team. That means having self-confidence, good communication skills, courage, clear desire to make progress towards a goal, and a fair degree of understanding your fellow teammates. Being a leader requires focus on the big picture, doing what’s best for your team even on your worst days. If you’re negative, the team will take on the same attitude, even if everyone else has had a great day. As Officer of your dance team, I’ll definitely encounte r some sticky situations, like have to confront one of my teammates when they aren’t practicing full-out or not trying they’re hardest.

Chesapeake Energy Corporation

natural gas† {Chesapeake Annual Report, 1998, p. 1}. Recently, Chesapeake finished the transformation from an aggressive exploration company focused on developing short-reserve life, to a lower-risk, longer reserve life natural gas producer. Chesapeake†s operations are focused on â€Å"developmental drilling and producing property acquisitions.† These operations are â€Å"concentrated in three major areas: the Mid-continent, the onshore Gulf of Mexico and far northeastern British Columbia, Canada† [Chesapeake Annual Report, 1998, p. 1]. Aubrey K. McClendon is Chesapeake†s Chairman of the Board, Chief Executive Officer and Director. Tom L. Ward is the President, Chief Operating Officer and Director. â€Å"McClendon met cofounder Tom Ward in the 1980†³s. Both were independent oil producers; they teamed up in 1983† [Morgenson, p. 2]. They each have more than 16 years of experience in the oil and natural gas industry. All other members of the management team have multiple years of experience in the industry. Chesapeake has concentrated on expanding its holdings in natural gas since the company†s incorporation in 1989. Chesapeake thinks that natural gas will be the fuel choice of the 21st century. The company has been highly competitive in both its exploration activities and efforts to increase its inventory of undeveloped leasehold land. This combination should enable Chesapeake to remain a competitive force in the energy producing industry. New technology in the oil and gas industry has made exploration and production more profitable. This is key for the survival of American businesses that compete with OPEC and other foreign cartels that have very low production costs. New technology, including three-dimensional imaging, which has greater resolution than the previously existing technology, will enable Chesapeake to detect reserves more accurately. Also, horizontal drilling has enabled companies to drain more than one reserve at a time. With profits continuing to be squeezed within this industry, new technology is necessary to help American businesses compete on a global scale. The oil and gas industry is truly a global market. The industry boosted gains in 1999 from increased production efficiency and a decrease in the current supply. U.S. firms, along with OPEC, have voluntarily reduced their total production, which has increased the price. OPEC currently supplies approximately 40% of the world oil production. If OPEC chooses to produce at a lower output, Chesapeake could easily increase production with its low production costs and huge reserves. Many other nations are emerging as competitors, such as the former Soviet Union and Latin American countries. The continuing increase in supply from other nations would potentially saturate the market, causing lower prices and lower profits. Demand is expected to rise only slightly more than two percent through the year 2005. The outlook for this industry is for increased competition domestically (from smaller companies) and internationally from emerging nations. The U.S. has superior technology, which will help keep profits up as supply increases and demand remains relatively constant. Natural gas makes up 72% of Chesapeake†s revenue. They usually sell the product to third parties and are not dependent on any one buyer. Less than 10% of their revenues are generated from two buyers. Governmental Regulations – Operational and Labor Relations The oil and gas industries are subject to considerable government regulation. These laws and regulations are primarily directed toward â€Å"the handling and disposal of drilling and production waste products and waste created by water and air pollution control devices† [Chesapeake 10-K, 1998, p. 10]. The oil and gas industry is accountable to numerous government agencies, including the Environmental Protection Agency, the Department of the Interior, the Department of Energy, the State Department and the Department of Commerce. Virtually every aspect of operations is subject to complex and ever changing regulations. The oil and gas industry is tightly regulated in regard to labor relations by government department and agencies, including the Occupational Safety and Health Association (OSHA) and the National Labor Relations Board (NLRB). Some states have their own state sponsored occupational safety plans, while the remainder must comply with federal OSHA regulations. Some of the topics covered under OSHA include personal protective equipment, hazardous communication (HAZCOM) and safety process training. Chesapeake had 453 employees as of March 15, 1999. None of these employees were represented by organized labor unions. The company considers its employee relations to be good [Chesapeake 10-K, 1998, p. 13]. Unocal (NYSE: UCL) employed 7,880 people as of December 31, 1998, of which 575 were represented by various U.S. labor unions [Unocal 10-K, 1998, p. 12]. Both companies are subject to new laws and regulations regarding the environment and labor. Chesapeake and Unocal cannot predict what adverse financial conditions the new laws and regulations will bring. However, short-term and long-term costs will increase as companies improve existing operations to become and remain compliant with government regulations. As a result, all companies in petro-chemical industries are experiencing tremendous difficulty operating profitable businesses. Several businesses have ceased operations as a result of increased regulation coupled with poor profit margins. Chesapeake is at a higher risk regarding this scenario since most of its operations are domestic. Unocal, although a U.S. based company, operations are concentrated primarily overseas, and therefore experience increased leniency regarding environmental and labor regulations. During the last two years, Chesapeake Corporation took a significant hit in terms of earnings, stock price and credit ratings. Positive 1996 earnings turned to a loss in 1997 and tumbled to a bigger loss of $10 per share in 1998. This earnings decline caused the stock price and credit rating to plummet. The company also faces a class action lawsuit stemming from alleged violations of federal securities laws. Top management and directors are accused of using insider information to sell personal holdings in the company at artificially inflated prices. Chesapeake had very disappointing years in 1997 and 1998 as evidenced by the fall in the stock price. The company underwent a substantial repositioning to increase natural gas holdings and reduce risk. As a result of this repositioning, Chesapeake incurred considerable debt and is dependent on the market prices of oil and natural gas to increase, and in effect, improve profit margins. Additionally, in 1997, Chesapeake changed their fiscal year end from June 30th to December 31st. As part of the repositioning, Chesapeake increased long term debt over $400 million to a total of $920 million, coupled with a short-term indebtedness of $25 million. This increased borrowing drastically reduced the company†s ability to obtain additional financing. Standard Poor†s and Moody†s placed Chesapeake on review with a negative outlook. The ability to meet obligations for this additional debt will depend on the production and financial performance of the company, market prices of oil and natural gas, and general economic conditions. Common Size Income Statement Analysis Chesapeake had an extremely large write-down of assets (impairment) as a result of reduced oil and gas prices during the past few years. This charge increased operating costs by over $1.2 billion during 1997-98 with 72% of that cost coming in 1998. The asset write-down, combined with expense increases in production, marketing and interest, were the main contributors of total operating costs to be over three times total revenue. The result was 1998 EBIT of ($920) million, and a non-existent ROE, since the company had a net loss approaching $1 billion. Unocal†s ROE was 5.9% in 1998 and 25.1% in 1997. The impairment cost reported by Chesapeake is questionable because of the very large amount that was charged. In perspective, Unocal with over $5 billion in property assets recorded an impairment charge of $97 million during 1998. If oil and gas prices rise in the near future, the impairment costs may be reversed giving the impression that the company is doing very well. Future investors of Chesapeake equities should consider this fact prior to making any investment decisions. Chesapeake had a $140 million reduction to both sides of the balance sheet. The repositioning of the firm focused on increasing inventory of natural gas reserves, â€Å"the fuel of choice for the 21st century† [1998 Annual Report, pg. 18]. Oil and gas properties nearly doubled from 1997 to 1998, totaling $2.2 billion. However, nearly $1.6 billion was depreciated, depleted and amortized. Additionally, cash decreased nearly $100 million, short-term investments were liquidated, and paid-in capital exceeded $1.1 billion over the past two years to provide additional cash for purchases of gas reserves. As a result, total property, plant and equipment was 85% of total assets in 1998 compared to 77% in 1997. In comparison, Unocal†s PPE was 66% and 64% of total assets respectively. Long-term debt increased over $400 million in 1998, totaling $920 million compared to $510 million in 1997. The $920 million was 113% in relation to total liabilities and owners equity of $813 million. In 1998, current liabilities were $131 million compared to current assets of $118 million. This resulted in a reduced current ratio of .90 from a 1997 ratio of 1.42. The Unocal current ratios during 1998 and 1997 were 1.01 and 1.29 respectively. Chesapeake has relied primarily on cash flow through financing activities during the past few years. Cash flow from operations was approximately $95 million in 1998 and $180 million in 1997, while cash flow from financing was $365 million and $278 million respectively. Sales accounted for $378 million in 1998 and appear to be rising approximately 35% annually from 1996 and 1997. However, an accurate comparison is unavailable because of the change in the company†s fiscal year end. Low oil and gas prices forced Chesapeake to borrow, sell equity, and liquidate short-term investments in order to continue operations and invest in oil and gas properties. The company is dependent on the rise of prices during 1999 to continue operations and provide shareholder wealth. The company has several restrictions from being able to borrow additional funds. Additionally, the price of stock has dropped from a high of $34 in 1996 to a low of $.63 in 1998. This has further reduced the company†s ability to generate cash. The current ratios for Chesapeake Energy are as follows: 1.00 (June 96), 2.03 (June 97), 1.42 (December 97), and .90 (December 98). Current liabilities remained constant over this period, ranging from a high of 19% (June 96) to a low of 15% (June 97), with the current level at 16% of total assets. Extreme levels of change in current assets caused the current ratio to fluctuate drastically. Current assets declined from a high of $297 million (31% of total assets) to a current low of $117 million (15% of total assets). This decline in current assets caused the deterioration of the current ratio. The acid test ratios are as follows: .94 (June 96), 2.00 (June 97), 1.37 (December 97), and .81 (December 98). As previously mentioned, current liabilities remained constant. Net accounts receivable remained flat as a percentage of total assets: 9% in 1996, 7% in 1997 (Both June December), and 9% in 1998. Marketable securities were sold off during the past three years, decreasing from 11% ($104 million) of total assets to zero. Cash decreased from 13% ($124 million) of total assets in 1997 (both June December) to 4% in 1998. The combination of severe decreases in both cash and marketable securities are the reasons that the acid test ratio decreased so dramatically. The quick ratios are as follows: .96 (June 96), 2.00 (June 97), 1.38 (December 97), and .86 (December 98). As mentioned previously, current liabilities remained constant and current assets declined. As with the current ratio, the main reason for the deterioration of the quick ratio is the continued loss of current assets. The above ratios and the reasons for their poor trends indicate Chesapeake is currently in a liquidity crisis. This, in combination with the increased debt liabilities, is an extreme warning to both investors and management. This condition also adds to the suspicion that assets are being sold off to fund current debt obligations. The firm†s ability to meet its obligations with cash, as they come due, is approximated by the cash flow liquidity ratio. As previously mentioned, solvency improved and then deteriorated as indicated by the current and quick ratios. The trends are confirmed when looking at cash flow. From 1995 to 1997, Chesapeake†s cash flow liquidity improved from 1.47 to 1.8. 1997 to 1998 showed a large drop in liquidity from 1.8 to 0.95. The company†s financial statement data gives an indication as to why. From 1995 to 1997, short-term solvency improved from 1.47 to 1.8. When looking at the data, cash from operations rose from $55 million in 1995, to $139 million in 1997. The 1997 rise was due to a change in the accounting period. During this same period, cash on hand rose from $56 million to $123 million and marketable securities rose from zero to $13 million. While cash was increasing, current liabilities rose from $75 million to $153 million. Current liabilities doubled during this period, while cash flow increased 150%. The larger increase in cash flow, relative to short-term obligations, accounts for the improvement in solvency during the 1995 to 1997 period. During the 1997 and 1998 periods, liquidity deteriorated as shown by the decrease in the cash flow liquidity ratio from 1.8 to 0.95. The data indicates that cash from operations dropped approximately 32% to $95 million. When looking at the Cash Flow Statement, the large decrease in operating cash is mainly due to the large net loss incurred during the period. At the same time, cash dropped 76% to $30 million while marketable securities fell to zero. Much of the cash appears to have gone to fund the company†s payables and accrued liabilities. Current liabilities were reduced 15% to $131 million. The larger reduction in cash flow relative to current obligations accounts for the deterioration in short-term solvency. The cash flow data confirms that Chesapeake†s liquidity suffered severe deterioration. A reduction in current liabilities is a good sign, but the little amount of cash generated and being used to fund current obligations is not enough. Cash assets are being used to fund these obligations as well. In comparison to the industry debt ratio of .31, Chesapeake ended with a debt ratio of 1.31 in 1998 compared to .71 in 1997. The long-term debt to total capitalization ratio increased from .64 in 1997 to 1.37 in 1998, while the industry average was .44. The tremendous increase in debt was attributable to significantly lower oil and gas prices during the past three years, and a failed drilling venture known as the Louisiana Trend. The company was forced to liquidate assets and take on a substantial amount of debt to meet operational expenses and increase oil and gas field reserves. Chesapeake was added to the Standard Poor†s â€Å"CreditWatch with negative implications† [Yahoo Finance, Nov. 14, 1999] in December of 1998. The low price of fuel during fiscal years 1996 through 1998 was the primary reason for Chesapeake†s troubles. The debt incurred has covenants restricting the company from seeking additional debt and from paying dividends to preferred stock holders. Principal on a large portion of the outstanding debt is not due until 2004 allowing the company time to improve operations. This will also give fuel prices a chance to rise, which is determinant to the company†s survival. The industry average for times interest earned is 5.2, while Chesapeake†s operating profit was ($856) million. The ratio equated to well below zero in 1997 and 1998. In 1998, interest payments were more than $68 million. The financial leverage index could not be computed since there was not a return on equity. Chesapeake overextended their credit by substantially financing with debt and has jeopardized their ability to make obligated payments for their debt and fixed costs. Chesapeake Energy Corporation natural gas† {Chesapeake Annual Report, 1998, p. 1}. Recently, Chesapeake finished the transformation from an aggressive exploration company focused on developing short-reserve life, to a lower-risk, longer reserve life natural gas producer. Chesapeake†s operations are focused on â€Å"developmental drilling and producing property acquisitions.† These operations are â€Å"concentrated in three major areas: the Mid-continent, the onshore Gulf of Mexico and far northeastern British Columbia, Canada† [Chesapeake Annual Report, 1998, p. 1]. Aubrey K. McClendon is Chesapeake†s Chairman of the Board, Chief Executive Officer and Director. Tom L. Ward is the President, Chief Operating Officer and Director. â€Å"McClendon met cofounder Tom Ward in the 1980†³s. Both were independent oil producers; they teamed up in 1983† [Morgenson, p. 2]. They each have more than 16 years of experience in the oil and natural gas industry. All other members of the management team have multiple years of experience in the industry. Chesapeake has concentrated on expanding its holdings in natural gas since the company†s incorporation in 1989. Chesapeake thinks that natural gas will be the fuel choice of the 21st century. The company has been highly competitive in both its exploration activities and efforts to increase its inventory of undeveloped leasehold land. This combination should enable Chesapeake to remain a competitive force in the energy producing industry. New technology in the oil and gas industry has made exploration and production more profitable. This is key for the survival of American businesses that compete with OPEC and other foreign cartels that have very low production costs. New technology, including three-dimensional imaging, which has greater resolution than the previously existing technology, will enable Chesapeake to detect reserves more accurately. Also, horizontal drilling has enabled companies to drain more than one reserve at a time. With profits continuing to be squeezed within this industry, new technology is necessary to help American businesses compete on a global scale. The oil and gas industry is truly a global market. The industry boosted gains in 1999 from increased production efficiency and a decrease in the current supply. U.S. firms, along with OPEC, have voluntarily reduced their total production, which has increased the price. OPEC currently supplies approximately 40% of the world oil production. If OPEC chooses to produce at a lower output, Chesapeake could easily increase production with its low production costs and huge reserves. Many other nations are emerging as competitors, such as the former Soviet Union and Latin American countries. The continuing increase in supply from other nations would potentially saturate the market, causing lower prices and lower profits. Demand is expected to rise only slightly more than two percent through the year 2005. The outlook for this industry is for increased competition domestically (from smaller companies) and internationally from emerging nations. The U.S. has superior technology, which will help keep profits up as supply increases and demand remains relatively constant. Natural gas makes up 72% of Chesapeake†s revenue. They usually sell the product to third parties and are not dependent on any one buyer. Less than 10% of their revenues are generated from two buyers. Governmental Regulations – Operational and Labor Relations The oil and gas industries are subject to considerable government regulation. These laws and regulations are primarily directed toward â€Å"the handling and disposal of drilling and production waste products and waste created by water and air pollution control devices† [Chesapeake 10-K, 1998, p. 10]. The oil and gas industry is accountable to numerous government agencies, including the Environmental Protection Agency, the Department of the Interior, the Department of Energy, the State Department and the Department of Commerce. Virtually every aspect of operations is subject to complex and ever changing regulations. The oil and gas industry is tightly regulated in regard to labor relations by government department and agencies, including the Occupational Safety and Health Association (OSHA) and the National Labor Relations Board (NLRB). Some states have their own state sponsored occupational safety plans, while the remainder must comply with federal OSHA regulations. Some of the topics covered under OSHA include personal protective equipment, hazardous communication (HAZCOM) and safety process training. Chesapeake had 453 employees as of March 15, 1999. None of these employees were represented by organized labor unions. The company considers its employee relations to be good [Chesapeake 10-K, 1998, p. 13]. Unocal (NYSE: UCL) employed 7,880 people as of December 31, 1998, of which 575 were represented by various U.S. labor unions [Unocal 10-K, 1998, p. 12]. Both companies are subject to new laws and regulations regarding the environment and labor. Chesapeake and Unocal cannot predict what adverse financial conditions the new laws and regulations will bring. However, short-term and long-term costs will increase as companies improve existing operations to become and remain compliant with government regulations. As a result, all companies in petro-chemical industries are experiencing tremendous difficulty operating profitable businesses. Several businesses have ceased operations as a result of increased regulation coupled with poor profit margins. Chesapeake is at a higher risk regarding this scenario since most of its operations are domestic. Unocal, although a U.S. based company, operations are concentrated primarily overseas, and therefore experience increased leniency regarding environmental and labor regulations. During the last two years, Chesapeake Corporation took a significant hit in terms of earnings, stock price and credit ratings. Positive 1996 earnings turned to a loss in 1997 and tumbled to a bigger loss of $10 per share in 1998. This earnings decline caused the stock price and credit rating to plummet. The company also faces a class action lawsuit stemming from alleged violations of federal securities laws. Top management and directors are accused of using insider information to sell personal holdings in the company at artificially inflated prices. Chesapeake had very disappointing years in 1997 and 1998 as evidenced by the fall in the stock price. The company underwent a substantial repositioning to increase natural gas holdings and reduce risk. As a result of this repositioning, Chesapeake incurred considerable debt and is dependent on the market prices of oil and natural gas to increase, and in effect, improve profit margins. Additionally, in 1997, Chesapeake changed their fiscal year end from June 30th to December 31st. As part of the repositioning, Chesapeake increased long term debt over $400 million to a total of $920 million, coupled with a short-term indebtedness of $25 million. This increased borrowing drastically reduced the company†s ability to obtain additional financing. Standard Poor†s and Moody†s placed Chesapeake on review with a negative outlook. The ability to meet obligations for this additional debt will depend on the production and financial performance of the company, market prices of oil and natural gas, and general economic conditions. Common Size Income Statement Analysis Chesapeake had an extremely large write-down of assets (impairment) as a result of reduced oil and gas prices during the past few years. This charge increased operating costs by over $1.2 billion during 1997-98 with 72% of that cost coming in 1998. The asset write-down, combined with expense increases in production, marketing and interest, were the main contributors of total operating costs to be over three times total revenue. The result was 1998 EBIT of ($920) million, and a non-existent ROE, since the company had a net loss approaching $1 billion. Unocal†s ROE was 5.9% in 1998 and 25.1% in 1997. The impairment cost reported by Chesapeake is questionable because of the very large amount that was charged. In perspective, Unocal with over $5 billion in property assets recorded an impairment charge of $97 million during 1998. If oil and gas prices rise in the near future, the impairment costs may be reversed giving the impression that the company is doing very well. Future investors of Chesapeake equities should consider this fact prior to making any investment decisions. Chesapeake had a $140 million reduction to both sides of the balance sheet. The repositioning of the firm focused on increasing inventory of natural gas reserves, â€Å"the fuel of choice for the 21st century† [1998 Annual Report, pg. 18]. Oil and gas properties nearly doubled from 1997 to 1998, totaling $2.2 billion. However, nearly $1.6 billion was depreciated, depleted and amortized. Additionally, cash decreased nearly $100 million, short-term investments were liquidated, and paid-in capital exceeded $1.1 billion over the past two years to provide additional cash for purchases of gas reserves. As a result, total property, plant and equipment was 85% of total assets in 1998 compared to 77% in 1997. In comparison, Unocal†s PPE was 66% and 64% of total assets respectively. Long-term debt increased over $400 million in 1998, totaling $920 million compared to $510 million in 1997. The $920 million was 113% in relation to total liabilities and owners equity of $813 million. In 1998, current liabilities were $131 million compared to current assets of $118 million. This resulted in a reduced current ratio of .90 from a 1997 ratio of 1.42. The Unocal current ratios during 1998 and 1997 were 1.01 and 1.29 respectively. Chesapeake has relied primarily on cash flow through financing activities during the past few years. Cash flow from operations was approximately $95 million in 1998 and $180 million in 1997, while cash flow from financing was $365 million and $278 million respectively. Sales accounted for $378 million in 1998 and appear to be rising approximately 35% annually from 1996 and 1997. However, an accurate comparison is unavailable because of the change in the company†s fiscal year end. Low oil and gas prices forced Chesapeake to borrow, sell equity, and liquidate short-term investments in order to continue operations and invest in oil and gas properties. The company is dependent on the rise of prices during 1999 to continue operations and provide shareholder wealth. The company has several restrictions from being able to borrow additional funds. Additionally, the price of stock has dropped from a high of $34 in 1996 to a low of $.63 in 1998. This has further reduced the company†s ability to generate cash. The current ratios for Chesapeake Energy are as follows: 1.00 (June 96), 2.03 (June 97), 1.42 (December 97), and .90 (December 98). Current liabilities remained constant over this period, ranging from a high of 19% (June 96) to a low of 15% (June 97), with the current level at 16% of total assets. Extreme levels of change in current assets caused the current ratio to fluctuate drastically. Current assets declined from a high of $297 million (31% of total assets) to a current low of $117 million (15% of total assets). This decline in current assets caused the deterioration of the current ratio. The acid test ratios are as follows: .94 (June 96), 2.00 (June 97), 1.37 (December 97), and .81 (December 98). As previously mentioned, current liabilities remained constant. Net accounts receivable remained flat as a percentage of total assets: 9% in 1996, 7% in 1997 (Both June December), and 9% in 1998. Marketable securities were sold off during the past three years, decreasing from 11% ($104 million) of total assets to zero. Cash decreased from 13% ($124 million) of total assets in 1997 (both June December) to 4% in 1998. The combination of severe decreases in both cash and marketable securities are the reasons that the acid test ratio decreased so dramatically. The quick ratios are as follows: .96 (June 96), 2.00 (June 97), 1.38 (December 97), and .86 (December 98). As mentioned previously, current liabilities remained constant and current assets declined. As with the current ratio, the main reason for the deterioration of the quick ratio is the continued loss of current assets. The above ratios and the reasons for their poor trends indicate Chesapeake is currently in a liquidity crisis. This, in combination with the increased debt liabilities, is an extreme warning to both investors and management. This condition also adds to the suspicion that assets are being sold off to fund current debt obligations. The firm†s ability to meet its obligations with cash, as they come due, is approximated by the cash flow liquidity ratio. As previously mentioned, solvency improved and then deteriorated as indicated by the current and quick ratios. The trends are confirmed when looking at cash flow. From 1995 to 1997, Chesapeake†s cash flow liquidity improved from 1.47 to 1.8. 1997 to 1998 showed a large drop in liquidity from 1.8 to 0.95. The company†s financial statement data gives an indication as to why. From 1995 to 1997, short-term solvency improved from 1.47 to 1.8. When looking at the data, cash from operations rose from $55 million in 1995, to $139 million in 1997. The 1997 rise was due to a change in the accounting period. During this same period, cash on hand rose from $56 million to $123 million and marketable securities rose from zero to $13 million. While cash was increasing, current liabilities rose from $75 million to $153 million. Current liabilities doubled during this period, while cash flow increased 150%. The larger increase in cash flow, relative to short-term obligations, accounts for the improvement in solvency during the 1995 to 1997 period. During the 1997 and 1998 periods, liquidity deteriorated as shown by the decrease in the cash flow liquidity ratio from 1.8 to 0.95. The data indicates that cash from operations dropped approximately 32% to $95 million. When looking at the Cash Flow Statement, the large decrease in operating cash is mainly due to the large net loss incurred during the period. At the same time, cash dropped 76% to $30 million while marketable securities fell to zero. Much of the cash appears to have gone to fund the company†s payables and accrued liabilities. Current liabilities were reduced 15% to $131 million. The larger reduction in cash flow relative to current obligations accounts for the deterioration in short-term solvency. The cash flow data confirms that Chesapeake†s liquidity suffered severe deterioration. A reduction in current liabilities is a good sign, but the little amount of cash generated and being used to fund current obligations is not enough. Cash assets are being used to fund these obligations as well. In comparison to the industry debt ratio of .31, Chesapeake ended with a debt ratio of 1.31 in 1998 compared to .71 in 1997. The long-term debt to total capitalization ratio increased from .64 in 1997 to 1.37 in 1998, while the industry average was .44. The tremendous increase in debt was attributable to significantly lower oil and gas prices during the past three years, and a failed drilling venture known as the Louisiana Trend. The company was forced to liquidate assets and take on a substantial amount of debt to meet operational expenses and increase oil and gas field reserves. Chesapeake was added to the Standard Poor†s â€Å"CreditWatch with negative implications† [Yahoo Finance, Nov. 14, 1999] in December of 1998. The low price of fuel during fiscal years 1996 through 1998 was the primary reason for Chesapeake†s troubles. The debt incurred has covenants restricting the company from seeking additional debt and from paying dividends to preferred stock holders. Principal on a large portion of the outstanding debt is not due until 2004 allowing the company time to improve operations. This will also give fuel prices a chance to rise, which is determinant to the company†s survival. The industry average for times interest earned is 5.2, while Chesapeake†s operating profit was ($856) million. The ratio equated to well below zero in 1997 and 1998. In 1998, interest payments were more than $68 million. The financial leverage index could not be computed since there was not a return on equity. Chesapeake overextended their credit by substantially financing with debt and has jeopardized their ability to make obligated payments for their debt and fixed costs.