Sustainability and Trends of the Global Trade Imbalance

Introduction Background: Global Trade Imbalance Within the context of international trade, the process of constantly changing patterns of trade is inevitable and, therefore, sustaining a trade balance is a serious challenge for the global community. Trade relations between different countries are not confined merely to the purpose of importing and exporting goods.Advertising We will write a custom research paper sample on Sustainability and Trends of the Global Trade Imbalance specifically for you for only $16.05 $11/page Learn More Rather, the importance of establishing trade contact is much more valued than the trade process itself. Tracing different patterns of trade and production, the problem of global trade imbalance is closely connected to trade determinants, including proximity, offshoring, natural resources, and different levels in technological development (Feenstra and Taylor 15). Hence, the probability of importing goods from a country is pri marily dependent on the degree of technological advancement, rather than on such important factors as proximity and natural resources. Hence, if one economy gains an advantage over manufacturing one product, other countries will definitely have fewer chances to compete with this country. As a result, a concept of comparative advantage emerges at the international market that is largely affected by the level of development of specific countries. Because of the relative fluctuation in the capital and labor in different markets, the shift in comparative advantages leads to the problem of global trade imbalances implying unequal allocation for the above-presented trade determinants. Such a situation excludes the consideration of the concept of comparative advantage. The current issues of global trade imbalance have been highlighted with connection to the global financial crisis, is the major outcome of the former. In particular, current account surpluses in emergent market economies hav e imposed a significant pressure on global interest rates, which contributed to credit boom in developed economies because of account deficits (Feenstra and Taylor 15). Within these perspectives, it is purposeful to consider the main factors contributing to the major global imbalances and highlight the main reasons and underpinnings of existing problems in terms of interest rates, cross-boundaries activities influencing capital flows.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Excess in saving in the developing countries has exerted serious pressure on the global interest rates. The decrease has forced a credit book and risks in major developed countries, such the USA, whose economic policy of credit share has become the premise for the global financial crisis. In this respect, Borio and Disyatat argue, â€Å"†¦the international monetary and financial system lacks suffic iently strong anchors to prevent excessive credit growth and to contain the â€Å"elasticity† inherent in global finance† (200). At this point, the major failure of the global imbalance lies in extreme flexibility and elasticity of the macroeconomic sphere, but not in excess saving. International financial and monetary systems, therefore, suffer from imbalance because of the excess elasticity leading to a financial crisis. Purpose of the Study The main purpose of the research is to define the main underpinnings of trade global imbalance and analyze which patterns have emerged as a result of the phenomenon. Evaluation of sustainability of global imbalance is also significant for defining future trends of international trade development. Finally, specific policies addressing global trade imbalance should be considered in terms of their effectiveness and appropriateness. All these approaches are estimated through the analysis of internal and external dilemmas in the sphere of trade. Important insight should be made to the historical analysis to highlight the roots of the problem and analyze the shifts to be made to provide solutions. Discussion Factors Contributing to Global Trade Imbalance U.S. Trade Deficit The complex international relations of the United States with other countries, particularly China and Japan, have become a milestone in trade deflection from balance. American policymakers have viewed China’s exchange rate as the reason for extreme U.S. trade deficits. At the end of 2008, China increased its foreign reserves up to $ 3 trillion, which was $ 2 trillion larger than two years before. Moreover, China managed to displace Japan and receive the largest trade surplus while holding trade with the USA (Liew 656).Advertising We will write a custom research paper sample on Sustainability and Trends of the Global Trade Imbalance specifically for you for only $16.05 $11/page Learn More Many US political pla yers focused on the Yuan as the major scapegoat for the emerging trade gaps in the US. Using this beneficial strategy allowed to assume this is a sophisticated tactic that the Chinese policymakers chose to impair the US financial system and economy. According to Liew, â€Å"†¦.US trade deficit is constrained not just by the structural and behavioral factors†¦but also by the demands of China’s domestic political economy† (657). Because of these assumptions, the American policymakers have perceived the Chinese economy as a threat to the U.S. trade prosperity and superiority on the global arena. The US authorities perceived the large US trade imbalance in partnership with China as a serious security issues. The danger of trade gap was due to a number of reasons. First, there is an assumption that continuous trade influenced current US industrialization (Liew 658). Because of China’s trade policies, the US manufacture base was put under the threat. Second, the attention should be given to the relationship between the U.S. trade gap and the growing U.S. international debt. Because of deteriorating positions of the US international investment, the country, which had previously been recognized as a world’s net creditor, became the biggest debtor in the world in 1990. The growing U.S. trade deficits worsened the situation with the external debt and, as a result, they reinforced its position of the top debtor in the world, making the country depend on foreign purchases. The third factor contributing to the U.S. deficit was considering the trade relations with China as a security concern in terms of the capacity that this financial advantage was provided to enhance China’s prosperity in the global economy (Liew 660). While referring to the Richardian model of comparative advantage, China surpassed the US economy by means of introducing effective source powers, which is one of the determining factors in trade. China’s t echnological capacity was much stronger than that of the USA.Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Finally, heavy dependence on the oil-importing countries put the United Stated out of competition with China and other developing economies. Improving its financial and technological strength, China managed to increase its financial independence because it introduced significant funding of a research and development field. The above-presented factors revealed the actual reasons for the US dollar devaluation as a result of the aggressive and superficial policy of the United States with the developing countries. A failure to establish fruitful cooperation in the Asian region has left a serious imprint on the US economy and financial stability. Current Account Imbalance Current account imbalances should specifically be concerned with the most industrialized countries in the world, including the USA, Great Britain, Canada, Italy, France, Japan, and Germany. At this point, the current account deficits and surpluses in the identified economies with flexible exchange rates and open capital markets are considered a common equilibrium phenomenon. Moreover, the concept of current account adjustment in the developing economies and the interaction between this adjustment and financial crisis recently became the major problem. In addition, the focus on the so-called Great Seven provides a comprehensive analysis of adjustment of the US trade deficit (Gourinchas and Rey 11). At this point, it is reasonable to take a deep look at the historical perspectives of commercial development of the United States to define the origins of current account imbalances in the world. While measuring the U.S. net foreign asset situation from 1952 to 2004, one can view a remarkable decline from 15 % of GDP in 1952 to -26 % of GDP in 2004 (Gourinchas and Rey 12). Regarding the net investment position from period 1989- 2008, the recession tendency influenced further financial imbalances in the country (See Appendix 1). Judging from this figure, the valuation components – differences betwe en net foreign assess and the current account series had a potent impact on the dynamics of the external position of the United States. Therefore, the rise of net liabilities in the country did not contribute to the overall rise in net income payments. Despite the exceeding rate of gross liabilities, the US income account was still positive. To support the idea, Gourinchas and Rey state, â€Å"the income generated by the (smaller) U.S.-owned assets abroad is larger than the income paid on the (larger) foreign-owned assets in the United States† (18). In addition to the above, the yield represents another important component of the total revenues of the United States external liabilities and assets. The USA is considered as the world’s important trade center, despite the failure of the exchange rate regime. Represented as the World Banker, the United Stated managed to carry out short borrowing and lend long-termed credits. The US balance sheet is regarded as a venture ca pitalist with risky investments. The currency prevalence of assets is a very sophisticated issue because it is able to denominate the price of liabilities in dollars, thus changing the exchange rate exposure in the other economies. The US external balance sheet is instrumental in stabilizing the external account of the emerging economies (Gourinchas and Rey 22). In this respect, the US dollar depreciation positively contributed to the external position in terms of net exports and rise of the value of US assets. With the United States in the centre of the current account imbalance, other countries have suffered from the financial gaps as well. In particular, the country has faced a serious challenge while adjusting the emerging imbalances at a domestic level because the causes of the problem are connected to foreign emergencies. The focus on such Middle East countries as Saudi Arabia and Lebanon demonstrates the controversies occurred in terms of oil export and import operations. At this point, the average current account t in this region is positive and amounts to 9.5 % from 2000 to 2010 (Wille 26). Therefore, the current account of the countries exporting oil equals to 13.4 %, whereas the oil-importing countries witness a negative current account of 0.8 % in the similar decade (Wille 27). This concrete example can be applicable to other oil-exporting countries having an underdeveloped industry sector unlike to the developed economies. Phenomenon of Trade Savings Glut As it has been determined previously, the U.S. trade deficit is strongly associated with the net foreign asset position. Due to the fact that U.S. investment rates surpass the U.S. saving rates, the foreign borrowing was the only way to fill in the financial gap. As a result, many theorists believe that lack in the U.S. saving rate caused the trade deficit and, in order to address this emerging issues, the American policymakers strived to cut down the trade deficit by promoting national saving (L abonte 2). The chairman of the Federal Reserve, Ben Bernanke noted that the major reason for the trade deficit did not lie in insufficient domestic saving, but in the internal saving glut (Labonte 2). At this point, the author provides Bernanke’s view on the saving glut who states, â€Å"†¦world saving is so abundant because foreign saving rates in the industrialized world are high and investment demand is low as a result of its rapidly aging populations† (Labonte 7). Such a situation contributed to a world’s change from â€Å"from a net borrower to a net lender† (Labonte 7). To take a closer look at the situation, several reasons occur. To begin with, the period of the financial crisis at the end of 1990s put the developing world in the necessity to borrow. This was of particular concern to such countries as Mexico, Turkey, Argentina and Southern Asian (Labonte 8). In this respect, the flowing capital in the third-world countries required a new dire ction. The financial crisis also triggered the improvement of fiscal position by involving less borrowing budget deficits and introducing foreign exchange reserves. As a result of the foreign exchange accumulation, the central became as the source of capital outflows, which led to the current account surplus. Increasing foreign reserves is also a kind of national saving carried out by the central bank, but not by private citizens. In addition to the above, the oil prices boosting also caused increase in saving and income for most of the developing countries exporting oil. The rise of global saving glut, therefore, supports the reasons for the U.S. saving recession. Because the capital inflows increased, the U.S. assets prices made the Americans wealthier in the 1990s (Labonte 8). Therefore, they U.S. citizens were more likely to consume more and save less. At the same time, the foreign capital inflows led to lower interest rates, which increased the American housing prices. Accordin g to the Federal Reserve chairman, the rise in household welfare due to the price increase was also the main reason for decline in savings and intensity in consumption (Labonte 8). With regard to the global saving glut as the major underpinning of imbalances, it can be assumed that current account imbalances can either temporary or permanent. Discrepancies in business cycle at domestic and foreign levels belong to a contemporary factor. At this point, the United States has currently been promoted to the economic expansion in comparison with other industrial countries. The second factor is premised on the decrease in investment rate in some East Asian economies that strive to cut their foreign borrowing. Finally, the governmental intervention to lessen exchange rate value in the Asian region has also influenced the current account imbalance. Evaluating Sustainability of Global Trade Imbalance Estimating External Deficits With regard to the investment and saving behavior and dynamic o ptimization, the external balances, along with the exchange rate, are consistent. Due to the U.S. trade deficit caused by the dollar expansion, the prices significantly increased and the employment rates did not correspond to the existing economic standards. This negative shift was closely connected with the external deficit at the end of the 1990s. The problem is that US policy trade suffered a difficult situation because of the failure to mediate the supporters and opponents of the liberalization in the country. Judging from the above-presented assumptions, the high evaluation of dollar caused a growing external imbalance. According to Institute of International Economics, â€Å"dollar overvaluation†¦is demonstrably the most accurate leading indicator of protectionist trade policies in the United States† (41). With regard to the assumption based on the historical facts, future trends can resemble the previous ones. The consequences of the U.S. trade deficit had a signi ficant impact on the European trade surplus and currency undervaluation. In particular, the external surplus of the European Union ranged between 1 % and 1.5 % at the end of 1990 (Institute for International Economics 42). The unusual situation triggered an abrupt deterioration of the EU trade balance that was also followed by the deplorable unemployment rates. As soon as the European currency sets its credibility, the portfolio diversification will start. In other words, a shift from dollars to euro appreciation will occur, which will result in a significant reversal of the EU’s external position. It will later move into a substantial deficit leading to a financial crisis and, as a result, the monetary dynamic in Europe and the United needs to be reevaluated to avoid overvaluation of the currency and eliminate the huge deficit. Perspectives of Current Account Balance While evaluating the exports and imports within the countries and outside them, the perspectives of current a ccount balance provide a complicated picture. In particular, they are expressed in connection to the world GDP to provide an analysis of their global appropriateness. In this respect, countries such as Asia, Japan, and oil-exporting countries confront the current account deficit in the United States. In contrast, the current account balance is observed in the European region. In order to understand the future trends of reversal and change, it is reasonable to link them to the development of current account balances for a longer period of time. While focusing on the United States and Europe and their GDP levels, a negative movement of the current account can be observed (Lane et al. 7). This is of particular concern to the 1980s when both Europe and the United States undergo significant current account fluctuations. At this point, the European countries underwent a positive trade balance, whereas the United Stated experienced a strongly negative trade balance. In 1990s, the internati onal trade faced serious shifts due to the deterioration of current account balances in both regions. Drawing the parallels between the periods, the 80s witnessed a negative balance of -0.68 whereas 1996-2006 witnessed a positive increase of balances up to 0.40 (Lane et al. 7). Within the perspectives and future trends, collective deficit will not exceed the current value, which about 3 % of GDP in 2006 (Lane et al. 8). It is twice larger than in 1980s that reflected the extreme deficit in the USA. While combining the trade balances of Japan, Europe and the United States, future tendencies will not differ significantly from the figures established in the 80s of the past century. With regard to the different roles and degrees to which current account balances fluctuations among the developed and developing countries, it should be stressed that the future trends in international trade will be preserved in terms of the entire external balance. Evaluating International Capital Markets R eferring back to the problem of borrowing and lending, specific attention should be paid to the analysis of the international capital market to understand the main underpinnings of the global trade imbalance. In this respect, acting as lenders and borrowers, the emerging countries are under the greatest threat because of the possibility of default. Because lenders often denominate their currency, they are unlikely to risk due to the constant discount rates they receive. As a result, the emerging economies can be detached from the international capital market, contributing to the rapidly growing global trade imbalances. According to Flood and Marion, â€Å"because lenders to [emerging economies] countries understand that default is possible, they require a â€Å"spread† above the offshore safe rate to make EM lending profitable over the long run† (880). Otherwise, there is a possibility for the emerging economies to be excluded from the international capital market shar e with no lending rates becoming beneficial. At this point, the risk-neutral lenders do not lend because they acknowledge that higher rates of lending can lead to the risk of default. Among the risk factors that the borrowing countries can face, it is possible to single out such issues as fluctuations in foreign interest rates, returns to output growth, and output variance. In addition, in case of the countries’ default, the high probability of being out of the threat provides the borrowing countries with an incentive to take advantage of high-variance projects. Consequently, such countries are likely to have output variance as compared two the developed countries with a lower risk of default. Assuming the fact that there is a rigid disparity between the developed and the developing economies, the international capital market share of the latter is the smallest one. Nevertheless, the third-world countries are greatly motivated by the ability to receive an option value of not being defaulted and, therefore, their projects are much more competitive than those proposed by the developed economies. Policies and Solutions to Address the Problem of Global Trade Imbalance With regard to the complicated and diverse nature of the global trade imbalance, the solutions should also approach the problem in a multi-dimensional way. More importantly, both domestic and international perspectives should be taken into consideration to define how those are interchanged. At a domestic level, the country experiencing trade deficit should widen their perspective and consider issues other than inflation targeting regimes. Policy frameworks should strengthen the monetary policy and provide an opposition to the financial imbalances. At the international level, complicated issues are involved. In particular, excess focus on the domestic trade can deprive the country of the possibility to global spillovers. In this situation, the country can leave the problem unsolved because of t he unfulfilled possibility of international cooperation. In addition, the excess elasticity of the financial system provides much wider policies to introduce. In particular, the focus n the fiscal policy is a beneficial point because this sphere should carefully be tackled so as to avoid the trade imbalances. Judging from the above-presented problems and solutions, there is a potential need for a more systematic financial and monetary policies addressing to the macroeconomic issues. Increasing elasticity of the credit economy can allow the financial system to generate more approaches to gain revenue and stay afloat at the international market. In other words, the role of money in the international economy is critical and, therefore, reference to the traditional economic paradigms can provide a fresh insight to solving the problem of global trade imbalance. Conclusion The importance of sustaining a global trade imbalance designates future successful development of fixed and emerging economies. The importance of establishing trade relations attains increasing importance because it identifying the constantly changing patterns of international trade. In particular, input and output operations are closely associated with such trade factors as geographic location, natural resources, and technological development — all these determinants in complex shape the overall current account balance and international capital market. More importantly, the financial aspects of international trade are largely dependent on the surpluses and deficits rates, as well as the stability of the currency exchange rates. Looking from these perspectives, the U.S. trade deficit, its complicated relationships with the Asian countries, as well as undervaluation of the European currency have greatly contributed to the trade imbalance. Other nuances, such as impossibility of emerging economies to engage with the international capital market operation, are also considered as the underpinni ngs of the identified problems. In order to address the issue, a more systematic and broader view should be introduced to define the positions and potential of the international market. Widening elasticity and focusing on money as the primary source of relations are obligatory for sustaining the trade imbalance. Works Cited Borio, Claudio, and Piti Disyatat. â€Å"Global Imbalances and the Financial Crisis: Reassessing the Role of International Finance.† Asian Economic Policy Review 5.2 (2010): 198-216. Feenstra, Robert and Alan Taylor. International Trade. US: Worth Publishers, 2008. Print. Flood, Robert, and Nancy Marion. â€Å"Getting Shut Out Of The International Capital Markets: It Doesn’t Take Much.† Review Of International Economics 17.5 (2009): 879-889 Gourinchas, Pierre-Olivier, and Helene Rey. â€Å"From World Banker to World Venture Capitalist U.S. External Adjustment and the Exorbitant Privilege†. G7 Current Account Imbalances: Sustainability and Adjustment, Issue 12194. Ed. Richard H. Clarida. US: University of Chicago Press, 2007. Print. Institute for International Economics. Launching New Global Trade Talks: An Action Agenda. US: Peterson Institute, 1998. Print. Labonte, Marc. â€Å"Is The U.S. Trade Deficit Caused By A Global Saving Glut?: RL33140.† Congressional Research Service: Report (2005): 1. Lane, Philip R., Milesi-Ferretti, Gian Maria, and International Monetary Fund. Europe and Global Imbalances, Issues 2007-2144. US: International Monetary Fund. Liew, Leong H. â€Å"US Trade Deficits and Sino-US Relations.† Journal Of Contemporary Asia 40.4 (2010): 656-673. Wille, Adrian. Current Account Imbalances of Selected Middle Eastern Countries: Why and How to Solve it. Germany: GRIN Verlag, 2011. Print. Appendix: US Net Foreign Asset Position with Adjustments This research paper on Sustainability and Trends of the Global Trade Imbalance was written and submitted by user Juliana P. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Business Environment Example

Business Environment Example Business Environment – Coursework Example PESTEL on the behavior of VAA or Virgin Atlantic Airlines Political factors Like other private airlines, Virgin Atlantic Airlines is subject to numerous government regulation for political, economic, and safety concerns. For instance, Air passenger tax by government results to increase in air travel prices and such price increments could discourage passengers from opting to travel. As a result, the airline is directly impacted. The impact is that airline industry functioning and the universal policies on environmental emissions are violated. Further, some nations offer unfair benefit and charge lower than market situation.Economic factorsFuel policies result to increased fuel prices that affect the airline industry including fuel supply thereby affecting airline sustainability (Halpern and Graham 55). Other factors economically affecting airline industry include terrorist attacks, and environmental restriction in terms of security and insurance costs. However, globalization is expect ed to continue boosting long term air traffic especially in growing markets like East Asia and China. For Virgin Atlantic Airlines, expanding into these markets will boost profitability.Technological factors Virgin Atlantic Airlines value technology in its airplanes and its engineers ensures that the best technology is used to improve security, entertain passengers waiting for arrival, including video entertainment through individual screens for every seat. According to Doyle and Bridgewater (64), innovation in marketing has played a key role in marketing the company’s launch of new products and system innovation especially through the company’s webpage and social media. Additionally, the company’s onboard entertainment offers numerous video and audio channels leaving the passenger to choose. The company also uses e-marketing, and internet marketing for online bookings and information.Social factors Since Virgin Atlantic Airline operates in numerous regions in t he world, the company is keen to keep in touch with different cultural aspects, customer attitudes, seasons and cuisines (Halpern and Graham 55-57). For each region, social factors represent variable attitudes which the company uses to price and shape its services. For instance, holidays seasons result to increased passenger traffic and VAA has to be aware of and ready to serve its customer base.Doyle, Peter and Susan Bridgewater. Innovation in Marketing. London: Routledge, 2012.Fleisher, Craig and Babette Bensoussan. Analysis without paralysis : 12 tools to make better strategic decisions. Upper Saddle River, NJ: FT Press, 2013.Halpern, Nigel and Anne Graham. Airport Marketing. London: Routledge, 2013.

A Novel IS Fiction

A Novel IS Fiction A Novel IS Fiction A Novel IS Fiction By Maeve Maddox Ive noticed that some people talk about fiction novels. A novel IS fiction. One can talk about writing a novel OR about writing fiction. To combine the two is to wear a belt with suspenders. (Another example of reluctance to let the word do the work.) In writing terms, fiction is any non-factual narrative composition. It may be short or long. It may contain historical or scientific facts, and it may describe characters named for historical personages, but the conversations and treatment of events are understood to have been made up by the author. Fiction may be written in various lengths. Here are some guidelines. A short story is a fictional narrative of no longer than 20,000 words and no shorter than 1,000. Most short stories run between 3,000 and 10,000 words so that they may be read at a single sitting. A novelette is a fictional narrative of from 7,500 to 17,500 words in length. A novella is a fictional narrative between 17,500 and 40,000 words. A recent fad called flash fiction concerns itself with the writing of extremely short narratives. People disagree as to the length of flash fiction. The only point of agreement is that it is shorter than the traditional short story, no longer than 2,000 words. Most flash fiction is between 250 and 1,000 words. Various terms for these very short narratives are in use. The oldest is short short story. More recently one hears postcard fiction, micro-fiction, micro-story, and sudden fiction. Some websites now feature what are called one sentence stories. The ones Ive read dont appear to be anything more than well-crafted sentences one would expect to find in a conventional story. They tend to be descriptive and anecdotal, but not true stories. Finally there is the novel, a long fictional narrative that can be from 60,000-100,000 words. For some authors 100,000 words are not enough: James Joyce, Ulysses: 250,000 words (It only seems longer.) Victor Hugo, Les Miserables: 513,000 words. Leo Tolstoy, War and Peace: 460,000 words in the original; 560,000 words in English translation. Ayn Rand, Atlas Shrugged: 645,000 words. Samuel Richardson, Clarissa: 969,000 words. (English majors have to read this early example of an epistolary novela story told as a collection of letters.) AND THE WINNER IS Marcel Proust, A la recherche du temps perdu (In English Remembrance of Things Past/In Search of Lost Time): 1.5 million words published in 13 volumes. NOTE: the above Wikipedia quotation has since been corrected to read 1.5 million words published in 7 volumes. Proust was still working on this 7-volume monument when he died. The first English translation, by Scott Moncrief, was published in 12 volumes. Publishing history of A la recherche du temps perdu. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Fiction Writing category, check our popular posts, or choose a related post below:Homograph Examples40 Synonyms for â€Å"Lie†Plurals of Proper Names

Trust and Religion Counseling Essay Example | Topics and Well Written Essays - 1250 words

Trust and Religion Counseling - Essay Example The problem is that the trust that once broken is so difficult to restore, and sometimes it is never restored. Once my friend wanted to solve a problem in his family, I advised him to consult a counselor, who also happened to be my best friend. My friend revealed the story to the counselor and sought the best advice. But the counselor, who was without any professional ethics, disclosed even the minute details to me. Here, the trust is broken and the trust reducing behavior of the counselor is the reason behind the problem. The trust reducing behavior from either side may result in the temporary or permanent break in a relationship. There are so many factors that reinforce the trust-building measures, and because of the negative influence of these factors, it is more difficult to maintain the trust. To maintain a healthy relationship the qualities that a person must possess are: word keeping habit, keeping honesty in communication, respecting the other person’s skills and abilities, and unguarded interaction. The fulfillment of the expectations from either side strengthens the trust and negligence of expectations badly affects the trust. There are certain factors that negatively influence the trust. Concealing the real motive and to act, i.e. to pretend as a trustworthy person and conceal the real motive is just cheating. Sometimes, relevant information may be twisted or falsified for personal benefit. This attitude leads to misunderstanding among people and hinders trust. Dominating tendency and misbehavior also hinder the growth of trust. Accepting the credit for others work create misunderstanding and ultimately to mistrust. The most powerful factor which hinders trust is gossiping. Because of uncontrollable tendency to create gossips about others, once, my friend was forced to attend a counseling session. After three successive sessions, he was able to withstand the bad habit.  

My personal capital Essay Example | Topics and Well Written Essays - 1000 words

My personal capital - Essay Example What exactly will be the nature of business under the plan for my group? As a business consultant and empanelled with local chapter of chamber of commerce, I will seek to organize a seminar on emerging businesses that involve local as well as international venturing. Technical experts from various fields will be invited to take part in the workshop and discussions forming part of this seminar. Ideas about new products and services on the horizon will get exchanged; and after attaining details about two or three alternative ventures from these workshop and discussion forum the matter will be deliberated at the group level in order to take a final decision about the venture to be pursued. Next step will involve utilization of my capabilities in deciding the type of business entity to be established for the business. Do we need to incorporate our business or form a partnership is a crucial decision to be taken? The fact is that ‘the nature of your business is one of the factors th at must be evaluated in determining the best business entity for your business.’(Sherri K. DeWitt) . Though corporation provides certain protection from liabilities to shareholders, but partnerships have certain advantages as well. Partnership can be a general partnership or limited liability partnership. Then there is another alternative in shape of LLC. So the decision about incorporating the business or not is a crucial one; and my experience and capabilities intuit me to suggest corporation status as the business should always be of permanent nature and not depending upon the vagaries of ownership.

The Role Of Macronutrients

The Role Of Macronutrients In developed countries such as the UK, diets and lifestyles have changed dramatically since the end of the Second World War. Coronary heart disease (CHD) is the principal cause of death among adult men and women accounting for approximately ninety four thousand deaths (Diet, nutrition and the prevention of chronic diseases, WHO, 2003). The increase in the incidence of CVD is supported by evidence which suggests that the leading factors contributing to this condition are obesity, high blood pressure, psychological stress, poor cardiovascular system health, an unsuitable diet and tobacco and drug use (Diet, nutrition and the prevention of chronic diseases, WHO, 2003; BBC heath website; De Lorgeril et al, 1999). 33% of all deaths are believed to be caused by CVD with developing countries hit the hardest (Diet, nutrition and the prevention of chronic diseases, WHO, 2003) It is possible too that the developing world which includes countries like China, India, some middle east countries, A frica and South America will suffer large effect sizes in the incidence of CVD in the future. Macronutrients that increase the risk of CVD Various fatty acids including LDL cholesterol (low density lipoprotein) sometimes called saturated fatty acids, have been highlighted by many types of study as increasing the incidence of CVD among samples of the populations tested (De Lorgeril et al 1999; Diet, nutrition and the prevention of chronic diseases, WHO, 2003; BBC heath website, 2011). High blood cholesterol levels and CVD are strongly and positively correlated (BBC health website, 2011). Amongst these, myristic acid and palmitric acid have been found to increase the risk of CVD and are abundant in foods such as diary and meat products. Myristic acid is a common saturated fatty acid and can be found is foods such as coconut milk and butter oil as well as in animal fats. Palmitric acid is another saturated fatty acid and is commonly found in plant and animal fats as well as butter, cheese, milk and some meats. Trans-fatty acids are another risk factor for CVD and are found in the form of a monounsaturate and a polyunsatura te and have been found to increase LDL cholesterol (BBC health website, 2011). Folate (vitamin B9) and homocysteine (a  homologue the amino acid cysteine) have both been found to be risk factors for CVD (Diet, nutrition and the prevention of chronic diseases, WHO, 2003). However, both folic acid and homocysteine may be a consequence and not a cause of conditions such as arthrosclerosis (De Lorgeril et al, 1999; Diet, nutrition and the prevention of chronic diseases, WHO, 2003). High sodium content in the diet has been strongly correlated with CVD (De Lorgeril et al 1999; Diet, nutrition and the prevention of chronic diseases, WHO, 2003; BBC heath website, 2011). High blood pressure associated with excessive ingestion of sodium salts has been shown in many studies to be a predictor of myocardial infarction and subsequently increases the probability of both types of stroke with the greatest risk being among the male obese populations (BBC heath website; De Lorgeril et al 1999; Diet, nutrition and the prevention of chronic diseases, WHO, 2003). Macronutrients that decrease the risk of CVD Foods such as fresh vegetables, fruits, fish oils have been found to be effective in reducing the risk of CVD (Diet, nutrition and the prevention of chronic diseases, WHO, 2003; De Lorgeril et al 1999; BBC heath website). Polyunsaturated vegetable oils such as linoleic acid have been found to be promoters of low risk for CVD (De Lorgeril et al 1999; BBC heath website). Some fibres consist of polysaccharides and lignin which is a constituent of plant cells walls and aids water transport and structure. These types of fibre along with more traditional celluloses have been found to reduce the incidence of LDLs as part of a regular diet (Diet, nutrition and the prevention of chronic diseases, WHO, 2003). Wholegrains are another type of fibre that has in clinical trials been found to reduce the risk of CVD, this type of fibre is abundant in the cereal crops. Antioxidants are found in fresh fruit and vegetable and have been suggested to reduce the risk of CVD (Diet, nutrition and the preven tion of chronic diseases, WHO, 2003; De Lorgeril et al 1999; BBC heath website) however the evidence for this is not strong and the decreased risk of CVD may be due to other nutrients present in the food. For example, vitamin C, E and beta-carotene have all been studied for their potential positive effects on individuals at risk from myocardial infarction and stroke. The results of this research are as yet however inconclusive (Diet, nutrition and the prevention of chronic diseases, WHO, 2003). Flavonoids are also present in many plants and display anti-allergic, anti-cancer, anti-microbial and anti-inflammatory properties (Diet, nutrition and the prevention of chronic diseases, WHO, 2003). A negative correlation has been found between some flavonoids and incidence of CVD although methodological problems have been mentioned in such studies (Diet, nutrition and the prevention of chronic diseases, WHO, 2003). Potassium salts have been found in a number of cohort studies to be a protec tive factor in CVD an may measurably decrease systolic and diastolic blood pressure (De Lorgeril et al 1999; Diet, nutrition and the prevention of chronic diseases, WHO, 2003). Some of these studies found an inverse relationship between risk of a stroke and potassium salt ingestion as part of a regularly monitored diet. The essential fatty acids such as omega-3 have been found to be conducive to the reduction in the risk of CVD for a number of reasons including reducing triglycerides (a VLDL) which is associated with high incidence of atherosclerosis, heart disease and stroke (De Lorgeril, 1999). Omega 3 is an unsaturated fatty acid found in oily fish such as tuna and herring, other beneficial cardiovascular effects may be reduced blood clotting (helping to reduce aneurisms and other blockages) and possibly promoting heart beat regulation (BBC health website, 2011). Stanols and sterols are plant derived esters which have been found to reduce levels of LDL cholesterol in the blood supply of sample populations (BBC website, 2011). These types of esters can be found in fruits, vegetables, nuts, seeds, cereals, legumes, and vegetable oils and may help to reduce previously high levels of cholesterol. Moderate levels of alcohol have been found in some studies to reduce the risk of CVD (BBC website, 2011). This beneficial effect however is based upon the consumption of the no more than the recommended daily limit for a person of a given weight, height and age (BBC website, 2011). Alcohol ingestion has been correlated with increases in the beneficial HDL cholesterol. Pathophysiological processes that occur in relation to macronutrients and CVD The major pathophysiological change that may occur in the human body in relation to macronutrients or lack of is cardiovascular disease which may also be associated with obesity and diabetes (Poirier et al, 2006). Atherosclerosis is a disease of the arterial system in which the arterial vessels become blocked due to a build up of the LDL fats (atheromas or atherosclerotic plaques) which accumulate inside the epithelium of the vessel walls thus reducing the blood flow and increasing the risk of infarction (Merck medical library, 2008). All the factors already mentioned above have been strongly linked to atherosclerosis (tobacco smoke, long term saturated fat ingestion, diabetes, lack of exercise, stress and excessive levels of cholesterol in the blood supply). The vital organs are particularly vulnerable (heart, kidneys brain) as well as some not so vital areas like the arteries of the legs. (Merck medical library, 2008; Poirier et al, 2006). Subtle repeated injury to the arterial sys tem appears to be the main developmental factor leading to atherosclerosis, the artery gradually becomes thicker and loses its elastic ability, this leads to a situation where the blood is restricted and the heart is placed under greater and greater pressure due to the resistance in the increasingly furred arteries (Merck medical library, 2008; Poirier et al, 2006). This effect can be compounded by obesity and diabetes which interfere with circulation and metabolism and may even lead to infection (Merck medical library, 2008; Poirier et al, 2006). Atherosclerosis can be recognised histologically when arterial walls creates endocrine signals that cause monocytes and T cells to accumulate within the affected artery. Monocytes and T cells move into the wall of the artery where they are signalled to turn into another type of cell, foam cells. Foam cells accumulate cholesterol and trigger growth of smooth muscle cells in the artery wall. These foam cells form patchy deposits and are cove red with a fibrous cap. Over time calcium accumulates in these plaques. Plaques normally form where the arteries branch and over time cause such a stress upon the cardiovascular system that it may suddenly fail (usually bought on by a combination of high blood pressure, bad diet and obesity) or a major blockage may form causing a stroke (Merck medical library, 2008; Poirier et al, 2006; Diet, nutrition and the prevention of chronic diseases, WHO, 2003; De Lorgeril et al 1999; BBC heath website).

Snap Fitness

Snap Fitness ACC/566 July 16, 2012 David Kochevar Snap Fitness Executive Summary Owning a business is a dream for many people and one way to obtain that dream is to take advantage of a franchise opportunity. Work-out centers are a rapidly growing business. â€Å"Economically, the health club industry has proven to be recession-proof, averaging an 8% annual growth rate since the early 1990’s across all health clubs and gyms†(Snap Fitness, 2012). The following paper will reflect information concerning owning a fitness center and benefits to an individual who seeks to own a business in this industry.Individuals across the country who want to be fit often join fitness centers and most people want a no commitment month to month membership. Snap Fitness offers memberships such as this at a reasonable cost. The purpose of this paper is to describe Snap Fitness and identify cost-volume-profit analysis as well as break even analysis. Snap Fitness estimates each location will hav e $4,000 expense for fixed operating expenses and $2000 to lease equipment. In order for an individual looking to own a franchise such as Snap Fitness, in order to make a profit the business may only need 300 members.The paper will provide an estimate of variable costs, monthly sales in dollars and members will be identified to determine what is needed to achieve a target net income of $10,000 for the month. Five examples of variable costs for a fitness center will be identified and discussed. Lastly, the paper will discuss summarized information concerning purchasing a franchise and will conclude with a decision whether purchasing a fitness franchise is a wise decision or not. CVP AnalysisCVP (Cost Value Profit) Analysis allows an investor to determine if an investment is profitable and at what point the total revenues are equal to the total costs (Kimmel, Weygandt, & Kieso, 2009). CVP are very basic analysis that provide a very quick and easy to ready snap shot analysis. CVP Analy sis for Snap Fitness contemplates the connection between the volume of members of the fitness center, the monthly fee (no annual contract is needed), the variable costs encored, and the fixed costs. Snap Fitness will assess no sales mix as sales cannot be mixed when only one service is offered (Kimmel, Weygandt, & Kieso, 2009). Snap Fitness | |CVP Income Statement | |For the Month Ended June 30, 2012 | | |Total | |Sales (300 members X $26. 0 monthly fee) |$7,800 | |Variable costs |$1,800 | |Contribution margin |$6,000 | |Fixed costs (monthly operating expenses + equipment lease |$6,000 | |Net Income | $-0- |Variable costs Variable costs are the operating cost that varies in direct proportion to the quantity of units either sold are produced (Kimmel, Weygandt, & Kieso, 2009). For the variable cost analysis it was assumed that the only fixed costs are the estimated monthly operating expenses of $4,000 and the equipment lease of $2,000 per month. In order to Break-even the Net income r esult for the below equation would be zero if the expenses and sales are equal. The newspaper assessed that the break even would be meet if 300 members paid a monthly fee of $26. 0 each. The newspaper theory was used to complete the sales data, but this data point should be considered a soft number as it is based off of a newspaper assumption. Break-even analysis uses the formula of Sales = Variable costs + Fixed costs + Net income (Kimmel, Weygandt, & Kieso, 2009). |Sales = |Variable costs + |Fixed costs + |Net income + | |$7,800 = |$1,800 |$6,000 |$0 |Monthly Sales Snap Fitness is only able to be successful and profitable as a company if they set their monthly sales goals to achieve. The set monthly sales goals are crucially needed to be set to insure the company’s has the ability to barometer to gauge. This will allow the Snap Fitness to verify cash flow and meet all of the company’s financial obligations. Snap Fitness is also able to use the information to verify t he sales team is meeting their individual and team goals and performance levels.Snap fitness is required to meet $17, 800 in monthly sales to meet the target net income of $10,000. Income amount of $10,000 will insure Snap Fitness will be able to make a profit for the investors and cover costs. For the sales team to make $17,800 they will need to sign-up additional 685 new members. The required sales to meet the $10,000 goal the Target net income formula will need to be used. Required Sales = Variable Cost + Fixed Cost + Target Net Income $17,800 = $1,800 + $6,000 + $10,000 Variable Costs Examples Variable costs are costs that vary in total directly and proportionately with changes in the activity level. If the level increases 10%, total variable costs will increase 10%. If the level of activity decreases by 25%, variable costs will decrease 25%† (Kimmel, Weygandt, and Kieso, 2009, p. 914). Variable costs for this type of franchise will rise as members join. Utilities are vari able costs and will fluctuate based on the amount of activity at the gym. Salaries for staff will also be a variable cost.Personal trainers’ salaries will be different than a sales associate, for example. If the location offers health and wellness programs, a registered dietician will more than likely be employed at the location. A new gym will have less staff in the beginning as opposed to an established gym. As more members join, additional staff will be added to accommodate customers. Taxes and insurance will naturally fluctuate. Insurance is necessary to ensure the business has coverage in the event a customer is injured and to protect the building itself (damages, fire, accidents).As the equipment is consistently used, repairs or replacements will be necessary. These repairs or replacements are a variable cost and will more than likely increase as the business grows and more customers utilize the facility and equipment. In relation to variable costs, business owners will find having knowledge of marginal distribution will help evaluate business performance. Marginal distribution can be calculated as follows: Marginal contribution = Marginal contribution per unit * Number of units sold Marginal contribution per unit = Selling price – Unit variable cost The marginal contribution is the difference between total revenue and totals variable costs and explains how changes the operating profit as changing the number of units sold† (Busan and Dina, 2009, p. 103) . Franchise Opportunities The decision to start a business can sometimes be very difficult due to all of the work associated with planning and implementation. Franchises opportunities are the happy medium to business ownership. A franchise is when an individual or a group has established a right to market a company’s goods or services within a specific area. In a franchise opportunity a rand/ image has already been established for a company as well as products. The owner(s) is r equired to pay an initial fee to start the business while a percentage of the monthly sales have to be paid back to the company. For example anytime fitness, McDonalds, and Subway are all example of franchise operations. Establishing a fitness center has a minimum initial contribution of $80,000 however if the owner(s) are military veterans discounts will be offered. The initial covers equipment, demographics help, a secure surveillance system, customer tracking data, and a well together fitness plan and package.Snap Fitness also offers a financing program which helps with the initial investment cost. Once the agreement has been signed the franchisee is provided with all the benefits and perks. Training is also provided at the corporate headquarters and an advertising plan is in place to help attain new clients. The franchise fee is a set fee that does not increase with sales. Franchise’s make business ownership simplified because the leg work has been done already. However, the negatives are yes a percentage of the sales have to be sent to the franchisor.Understanding the benefits of franchises compared to small business ownership will help make decisions easier about which operation works best. Conclusion As we see franchising a fitness center is a very beneficial investment for individuals or groups looking to operate a business. As an investor it is important to have a concept as to which ownership and entity type works best for them. The breakdown of the variable cost and the break even analysis gives great insight in regards to how the business would need to operate on monthly bases.These key equations are imperative to business operation but it also helps predict future earnings as long as goals are achieved. A franchise opportunity has many perks with a limited amount of risk involved so understanding how things work is beneficial. Snap Fitness offers the ability to open a franchise with great support and package benefits throughout the whole pr ocess. Fitness and health is a great industry because American is trying to be more health conscience. References Anytime Fitness. (2012). Retrieved from http://www. anytimefitness. com/franchise-opportunitiesBusan, G. , & Dina, I. (2009). Using cost-volume-profit analysis in decision making. Annals Of The University Of Petrosani Economics, 9(3), 103-106. Kimmel, P. D. , Weygandt, J. J. , & Kieso, D. E. (2009). Accounting: tools for business decision making (3rd ed. ). Retrieved from The University of Phoenix eBook Collection database. Snap Fitness (2011) About Snap Fitness. Retrieved from Snap Fitness (2011). http://www. snapfitness. com/corporate/about Snapfitness. com (2012). Fitness Franchise Opportunity. Retrieved from http://www. snapfitness. com/corporate/franchise-opportunities