Definition Of Purchasing And Procurement

Definition Of Purchasing And Procurement Purchasing is defined as to buy materials of the right quality, in the right quantity form the right source delivered to the right place at the right time at the right price. Procurement is the process of obtaining good or service in any way, including borrowing, leasing and even force or pillage (Lysons et al, 2006). According to John, Chandra, Tim (2008) defined that, procurement includes sourcing and purchasing and coves all of the activities involved in the product/ service sourcing, purchasing and delivery from supplier to the customer. It is a very important activity in manufacturing supply chain as purchased parts and materials account for over 60% of the cost of finished goods (John, Chandra, Tim 2008). For retail companies within the supply chain this percentage can be as high as 90% (John, Chandra, Tim 2008). Gerald, Sam (2007) state that purchase there exists a general tendency of pushing added value towards outsourcing. Although in the majority of companies this tendency causes the share of material costs and external services to increase, purchasing departments are still largely operations as traditional mid-size order department and not as modern procurement management units (Gerald, Sam, 2007). Therefore the potential of optimizing the purchasing system and hence improving the profit margins is often neglected (Gerald, Sam, 2007). Now many companies are precisely in procurement via in the internet that there is still quite deal of potential (Gerald, Sam, 2007). Therefore, as a purchasing or procurement manager should understand than in order to be able to judge the efficiency of industry flow of materials, it is necessary to describe whether the manufacture made-to -order or make-to-stock (Gerald, Sam, 2007). Afterwards manager should plan on industry material requirements. In order to have minimum stocks on hand at maximum disposition, a material requirements planning has to be carried out (Gerald, Sam, 2007). Reason for choice of topic Academic Objectives of the Project This aim of this research is going to discuss, the reason of choosing this title is to determine the career match in module on logistics and supply chain management. For this purpose, this study of purchasing can be approached from several perspectives, such as the process, functions, relationship and link in the supply chain process. 2.0 (c) Purchasing and Sourcing Knowledge Management 2.1 Organizing for Supply Research Purchasing market research has been increasing in recent years many large companies, like IBM, Honda of America, Lucent Technologies and Philips Electronics have introduced corporate commodity teams which are responsible for the worldwide sourcing of strategic parts and materials (Arjan 2005). Supply research is the systematic collection, classification, and analysis of data as the basis for better supplier decisions, so that will influence the procurement of goods and services for the purpose of meeting present and future company requirements in such a way that they contribute to an optimal return .Figure 1 shows that of the data (information) that might be required for effective buying decisions. Ingredients of Effective Buying The studies conducted in supply research include projects under the major research headings of: (1) purchased materials, products, or services (value analysis), (2) commodities, (3) suppliers, and (4) supply processes. Supply research, if approached in an organized manner, also has the potential for generating major improvements in supply decision making. A firm could conduct supply research in one of three ways: (1) full-time research positions, (2) inclusion of research as a part-time responsibility of supply personnel, or (3) cross-functional teams to bring an expanded knowledge base to the research process (Leenders et al, 2006). According to Purchasings [Purchasing Magazine (www.purchasing.com) recent Internet-usage survey researching potential suppliers is the number-one reason buyer log on to the Internet. Chris Golec, vice president of marketing at Supply Base, noticed a similar trend. Manufacturing was looking for reliable third-party information to differentiate supplier based on performance, risk and other business factors, says Golec. According to Arjan (2009) state that, once the buyers has identified a prospective supplier, detailed DB reports, including the supplier evaluation report (SER) and the supplier performance review (SPR). Therefore SER measures the financial stability of a supplier and quantifies the risk of doing business with them (Arjan, 2009). The SPR determine how well a supplier performs in key areas, like quality, tech support and delivery, relative to the industry average (Arjan, 2009). 3.0 (d) World Wide Sourcing 3.1 World Wide Sourcing Defined According to Martin (2007) note that, world-wide purchasing of supplier is response to the globalization process that has had tremendous impact on international business. In order to understand the concept of low-cost country sourcing, the aim of this section is to examine development in purchasing and supply chain management in an international business environment (Martin, 2007). Leontiades (1985) notes that, one of the most important phenomena of the 20th century has been the international expansion of industry. Today, virtually all major firms have a significant and growing presence in business outside their country of origin. According to Leenders et al (2006), in attempting to seize opportunities in the global marketplace, companies are deploying their organizations on global scale. The reasons for sourcing abroad are many and vary with the specific requirement (Leenders et al, 2006). However, the underlying, summary reason for using an international supplier that better value is perceived to be available from that source than from a domestic supplier (Leenders et al, 2006). The first stage, domestic purchasing only, as the name implies, the company on purchases from domestic supplier (Robert J. Trent Robert M. Monczka, 2002). Although the company might have international operation, such as, marketing or sales, the purchasing activities do not encompass country borders (Martin, 2007). The reasons to pure domestic sourcing to pure domestic sourcing are many, but could include lack of scale economics, lack of need resources or lack of competencies need to internationalize purchasing activities (Martin, 2007). Reasons for internationalizing purchasing is a primarily to lowest cost, but could also be due to a lack of domestic suppliers (Trent Monczka, 2003). Marci- economic such as tax rates, increased price levels in the home country market and exchange rates all are play a role. The second stage, international purchasing as needed, is usually reactive rather a proactive initiative in order to cope with market forces (Robert J. Trent Robert M. Monczka, 2002). Therefore this mean that international purchasing is only done sporadically, without any long-team objective. Thus, international purchasing as such is not yet institutionalized (Martin 2007). The third step, international purchasing as part of sourcing strategy, the company is starting to realize the advantages of international purchasing, and is thus recognizing the need for more long-team strategies (Robert J. Trent Robert M. Monczka, 2002). In the four steps, integration and coordination of global sourcing strategies , implies that the company is starting to integrate and coordinate global procurement needs the company worldwide (Robert J. Trent Robert M. Monczka, 2002). In order hand to realize this, the company needs to have implemented enterprise-wide IT systems such as ERPs, and have hired qualified staff with a global mindset, and an organization that enables central coordination (Trent Monczka, 2003). 3.2 Benefits of International Sourcing The benefits of international sourcing are clearly shown on Table 2.0. Benefits of International Sourcing 4.0 Supplier Management and Development According to Kenneth and Brian (2006) note that, supplier development has been to defined as, any activities that a buyer undertakes to improve a suppliers performance or /and capabilities to meet the buyers short or long-team supply needs. This applies not within organizations but between organization as in the purchaser-supplier business relationship and the especially in the area of supplier development (Krause and Ellram, 1997). Effective communication is a critical aspect of successful purchaser-suppler relationship (Carter and Miller, 1989) however Krause and Ellram (1997) also suggest that the performance of supplier can be significantly raised by the buying firm communicating their expectations to supplier in an effective manner. However, achieving transparency can be challenging, especially in a product development context a customer-supplier relationship (Bob, Myfanwy, Roger, 1998). The supplier relationship management from a supply perspective is to bring both sides into an effective working relationship (Leenders et al, 2006) . This will require substantial coordination work inside the purchasers organization to ensure that the people most vitally concerned with a particular suppliers performance are fully involved in the planning and execution of a program leading to the desired long-term relationship (Leenders et al, 2006). Next, supplier development also been defined as any business activity that a buyer undertakes to improve a suppliers performance and/or capabilities to meet the buyers short or long term supply needs (Lysons et al, 2006).There are nine steps in a supplier development programme (refer to Appendix 2). The actual process may differ according to the organization and whether the development is primarily results or process orientated (Lysons et al, 2006). The development function has a Supplier Development Department who are responsible for ensuring that each suppliers co-development performance is assessed accurately, reliably and consistently (Bob, Myfanwy, Roger, 1998). The department uses a performance measurement system as means of ensuring that the relevant data is collected, analysed and recorded and later presented to the supplier (Bob, Myfanwy, Roger, 1998). This is a highly structured attempt to provide clear information to suppliers, and unusual in being applied in development (Bob, Myfanwy, Roger, 1998). 5.0 (b) Supplier Evaluation and Selection 5.1 Evaluating Supplier Performance and the Supplier Selection Decision Perhaps the most powerful risk prevention approach is the development of a rigorous supplier evaluation and selection decision (Robert et al, 2009). Select a set of world class supplier and watch how much the easier life become (Robert et al, 2009). Select a set of poor performers and be prepared to dust off the risk contingency plans (Robert et al, 2009). Nest, the key performance indicators (KPIs) is use to evaluation of supplier performance have been quality, delivery and price. While these are still basic to supplier evaluation, such as e-procurement, JIT (Just-in-Time) and lean manufacturing, integrated supply chains have made the evaluation of supplier relationships and important consideration. The number of KPIs that may be used is almost limitless. The ten supplier evaluation factors are shown in Appendix 3 (Lysons et al, 2006). This decision to place a certain volume of business with a supplier should always on a reasonable set of criteria (Leenders et al, 2006). Besides that, Some of the more important supplier attributes related to those prime criteria mentioned above may include past history, organization and management, technical strength and, financial status, communications, reputation, labour relations, systems, procedural compliance, and location (Leenders et al, 2006).. Obviously, the nature and amount of the purchase will influence the weighting attached to each objective and hence the evidence needed to support the decision (Leenders et al, 2006). 5.2 Buyer-Supplier Relationship Narasimhan and Das (2001) explored that the relationship between purchasing integration and supplier management practices (buyer-supplier relationship development, supply base leveraging, and supplier performance evaluation). Form the comparison of alternative statistical models, they concluded that purchasing integration has a moderator effect on the impact of supplier management practices on manufacturing performance (Michael, 2008). This study suggested that only a combination of externally and internally focused on purchasing initiatives may be able to elevate purchasing into a strategic function. ( Narasimhan and Das 2001, P.607). Purchasing integration, summarizing practices such as purchasing strategy alignment with corporate strategy, involvement in the new product design and process improvement, and focus on corporate value creation, seems to be a prerequisite to capture the value from strategic supplier management and cooperative supplier relationship (Michael, 2008). According to Ian (2005), the relationship between buyer and the supplier changes with the type of contract or commercial arrangement. Assuming the supplier able to deliver the same activities as the buyer but at a lowest cost, the difference in costs translates to a profit margin for the supplier (Ian, 2005). In the outsourcing model the discussed in previous sections, the suppler is no longer required to follow the processes previously owned by the buyer (Ian, 2005). Therefore, the suppler is now free to make modifications to the original process, motivated by profitability. In the governance of the outsourcing, both the supplier and buyer work in an agency environment (Ian, 2005). So the potential contract relationship model addresses the organizational needs of control and flexible (Ian, 2005). Here, the commercial arrangements including joint ventures, multiple supplier, individual and joint-venture spin-offs, consortia and shared service structures re-emphasize the importance of the quality of supplier-buyer relationship (Ian, 2005). 6.0 (a) Supplier Quality Management 6.1 Quality System and Quality Dimensions Robert et al (2008) note that, supplier quality represents the ability to meet or exceed current and future customer (i.e. buyer and eventually end to customer) expectations or requirements within critical performance areas on a consistent basis. There are three parts to this definition: Ability to meet or exceed is means that suppliers satisfy or exceed buyer expectations or requirement each and every time (Robert et al 2008). Inconsistent supplier performance, whether in physical product quality or on-time delivery, is not a characteristic of the quality supplier (Robert et al 2008). Current and future customer expectations or a requirement is meaning that, suppliers must meet or exceed todays demanding requirements while also possessing the ability to anticipate and satisfy future customer requirements (Robert et al 2008). A supplier than can satisfy todays requirement but cannot keep pace with future requirement is not a quality supplier (Robert et al 2008). Within critical performance areas on a consistent basis. Supplier quality does not apply to the physical of a product (Robert et al 2008). Quality suppler satisfy a buyers expectation or requirement in many areas, including product or service conformance, current technology and features, product or service delivery, and total cost management (Robert et al 2008). The multiplicity of customer-designed supplier quality improvement models can confuse many suppliers (Gopal, 1995). A strategic of quality improvement model has to be consistence with the product and process technology (Gopal, 1995). However, as a supplier, who is most knowledgeable about the technology, is in a better position to design the quality improvement model (Gopal, 1995). Therefore most of the customer, have a supplier quality improvement model of their own. The suppliers valuable resource may end up being spent in continuously rearguing and rewriting their procedures to satisfy may never find time to focus on creating a strategic quality improvement model consistent with product or process technology (Gopal, 1995). A quality system typically applies to, and interacts with, all activities pertinent to the quality of a service or product (Lysons et al, 2006). Figure 4 is showing involves all phases, from the initial identification to final satisfaction of requirements and customer expectations. The advantages of a properly documented quality management system such as that required by BS EN 9001:2000, are that it: Ensures all aspects of quality are controlled. Provides objective evidence for determining and correcting the causes of poor quality. Increases customer confidence. Indicates best practice. Ensures consistent, efficient work practices. Gives competitive advantage (Lysons et al, 2006). Quality Loop Supplier quality is a complex term, according to Professor David Garvin of the Harvard Business School, defined that least eight dimensions: Performance. The primary function of the product or service. Features. The bells and whistles. Reliability. The probability of failure within a specified time period. Durability. The life expectancy. Conformance. The meeting of specifications. Serviceability. The maintainability and ease of fixing. Aesthetics. The look, smell, feel, and sound. Perceived quality. The image in the eyes of the customer (Lysons et al, 2006). 6.2 The Benefits of TQM TQM is a practical but strategic approach to running an organization that focuses the need of its client or customers (Edward, 2002). TQM is not a set of slogans, but a deliberate and systematic approach to achieving in appropriate levels of quality in a consistent fashion that meet or exceed the needs and wants of its customer (Edward, 2002). The success of TQM strategic is depends on a genuine commitment to quality to each organizational. The benefits claimed for TQM include: Improved customer or client satisfaction. Enhance productivity. Reduced product led time. Improved customer service and delivery times. Reduced work-in-progress. Reduced waste and inventory with consequential reduced costs. Improved quality of goods and services. Increased flexibility in meeting market demands. Better utilisation of human resources (Lysons et al, 2006). (g) Contract Management The contract management and financial control flow largely in chronological order within overall facilities management process (Brian, Adrian, ). If earlier procedures have been followed carefully, the management of contract should in the sense on their administration- relatively straightforward (Brian, Adrian, ). Sufficient precedents exist for contract administration, largely in context if the monitoring, control and, where necessary, corrective action (Brian, Adrian, ). Contract management has aspects of facilities management that can represent a significant issue for client organization, not least because they are on going to commitments (Brian, Adrian, ). 7.0 (f) Negotiation 7.1 Negotiation Strategy and Practice According to Robert et al (2008) note that, not all purchase requirement will require buyers and seller to conduct a thorough and detailed negotiation. For many items, the competitive bidding process will satisfy on a buyers purchase requirements, as may be this case for items that are low value, are widely available commodities, or have pre-existing standards (Robert et al, 2008). In other hand, according to Richard (2005) also state that, Negotiations are an important part of the purchasing process, because their effective use can help safeguard in the interests of a sports medicine program. Physical trainer should negotiate in the following three categories of purchases. Capital equipment. This is the expensive, durable equipment that often makes up the bulk of the rehabilitation and therapeutic modality inventory for a sports medicine program (Richard, 2005). Medium- priced annual re-buys. These are usually purchases of services that require annual renegotiation (Richard, 2005). For instance salaries, physician consulting fees, ambulance services, and athletic insurance. Lower-cost consumable supplier. These items constituted the bulk of the sport medicine supply budget (Richard, 2005). Although some of the suppliers will have to be reordered throughout the year, careful planning will allow the athletic trainer to place only one major supply orders for entire year (Richard, 2005). This method will strengthen the athletic trainers negotiating position because of the discount normally of associated with quality purchasing (Richard, 2005). Although negotiation on the price of a supply, item of equipment, or service is common, athletic should also consider on other areas in which they can realize cost saving through negotiation (Richard, 2005). Furthermore, the athletic trainer also negotiate the way in which the goods will be supplied, their quality, shipping costs, and support after the purchase (Richard, 2005). The following five elements can be negotiated for purchases in each areas are stated clearly in Table 3. The discussion of some of the elements and considerations that affect the price of an item makes it obvious that negotiation can be a valuable technique to use in reaching an agreement with a supplier on the many variables affecting a specific price (Leenders et al, 2006). Negotiation Strategy Practice Negotiation strategy refers to overall approach used to reach the mutually beneficial agreement with a supplier that holds different points of view from the buyer (Robert et al, 2008). A major part of the strategic planning process involves the application of tactics- the skill or act of employing available means to accomplish to end, objective, or strategy (Robert,). They are included the current set of actions plans and activities adopted to achieve the negotiation objective and strategy (Robert et al, 2008). Strategic negotiation issues involve the broader question regarding who, what, where and how to negotiate (Robert et al, 2008). The situation is to have a well-developed negotiation strategy with appropriate and ethical tactics that support that strategy (Robert et al, 2008). As an analogy, consider a military battle, the best-development strategy will fail unless a commander has the tactics and the resources to implement that strategy in the field (Robert et al, 2008). Negotiation is a complex, fascinating subject which, since it involves people, contains many variables (Peter et al, 2005). This list and the related discussion are meant only to indicate the area and other writes have noted as pertaining to successful negotiation. Those who negotiations are successfully: Plan well Can deal with pressure Understand people well Observe well Can handle confrontation Have sound business judgement Are skill at dealing with risk and asking questions Can handle time effectively (Peter et al, 2005) 9.0 (h) Supply Chain Information Systems for Procurement 9.1 Definition of Information Systems Information supply chain within an enterprise are often more complex, difficult and less systematic than those between with enterprises (Joseph L et al, 2006). Besides that, information system is comprised of interconnected components that process, store, and collect data and distribute information to support, control, decision making and coordination within the organization environment (Leenders et al, 2006). However the information system technology allows the organization to connect with partners or supplier in their supply chain network. According to Joseph L et al, (2006) state that, the intranet is a relatively secure method to move business processes online by providing a common interface and communication environment. Data can be input without concern for where the information resides, thus enabling more complete and timely reporting because organization data is to provide (Joseph L et al, 2006). However manual internal processes, such as sourcing, requisitioning, purchasing, receiving, releasing, and contract management, can be performed online to reduce manual and paper-intensive processes (Joseph L et al, 2006). Information systems can be classified to four types, each can consider to serve the requirements and needs of the organization at different levels of management and across functions (refer to Appendix 6) (Leenders et al, 2006). 9.2 The Benefit of Electronic Data Interchange (EDI) Electronic data interchange (EDI) technology was gives organizations an opportunity to exchange their information and message electronically, instead of with paper documents, and leads to new way of doing business known as electronic (EC) (Syed et al,2000). According to James (1998) EDI is the electronic transfer of document from one computer system exchange to another. The purpose of EDI is to provide accurate external information (James, 1998). EDI takes externally produced and transmitted information and allows the information to be electronically received into the host system (James, 1998). Then, the host system is able to electronically send the information or data to another external computer system (James, 1998). Because of the transaction is free from human intervention, so EDI provides a high level of accuracy for the information being received and transmitted (James, 1998). Besides that, the benefit of EDI is that it can reduces information lead-times, and thus allows the logistics network to be more responsive to customer needs and changing market conditions (James, 1998). It system also reduces the transportation and order processing lead-times (James, 1998). However Syed et al (2000) also defined that, the benefit of EDI include less delay in data handing and labour saving in the areas of data transcription, controls and error investigation and correction. As a result implementation of EDI improves the following: The internal operation of the firm by reducing the process-cycle time, Trading supplier or partner relationship, Responsiveness to customer, and The ability to compete, both domestically and internationally (syed, 2000). According to Paul et al (2000) note that, realizing enormous competitive advantages of EDI, an increasing number of firm have attempted to formulate a viable implementation of strategy. However, a successful EDI implementation strategy should address the following key issues. Trading partner agreement: due to the nature of EDI that inherently promotes inter organizational communication and information transfer, the EDI initiating firm (or a Hub company) may not gain the full benefit of EDI without the support of its to trading partners (Paul et al, 2000) Management support: regardless of the potential EDI benefits, unconvinced management would lack of commitment to EDI investment and would be less inclined to provide adequate financial and personnel resources required for company-wide EDI implementation. It was be more difficult to manage system to EDI programs without senior management commitment (Paul et al, 2000). Performance measurement: to justify EDI investment, a firm should conduct an objective cost-benefit analysis of the proposed EDI program covering its in life cycle. EDI can bring numerous operating of benefit along with some intangible benefit along with some intangible benefit such as higher employee morale, increase competitive advantages, improved customer loyalty, and enhanced trading partnerships (Paul et al, 2000). How the EDI is implemented showing on Figure 5. The sequence is as follows: Firm A creates a purchase order using EDI internal business software. EDI software translates the order to supplier. Firm A sends the 850 purchase order to suppler B over a third-party value added network (VAN) or encrypted in EDIFACT format over the Internet. Supplier B receives the 850 purchase order document and will translate it from EDI to its proprietary format and, typically, company B will send an acknowledgement to firm A (Lysons et al, 2006). EDI Implementation Figure 5: EDI Implementation (Lysons et al, 2006) By implementing EDI, firm can reduce the lead time in receiving parts from their suppliers because buyers and suppliers work together in real-time environment. Therefore, a firm can reduce the lead time in delivering product or goods to customers; delays of delivery can be reduced. 10.0 (i) Performance Measurement and Evaluation As part of a company-focused purchasing and supply chain measurement approach, firms should follow a systematic process to maximize results and achieve vertical and horizontal alignment of the purpose (Robert et al, 2008). As company objectives drive specific strategies such as being the low-cost producer and technology leader (Robert et al, 2008). These company strategies should then drive appropriate and prioritized purchasing and supply chain objectives and strategies (Robert et al, 2008). Apart from that, perhaps the best way to summarize the vast number of separate is by developing performance measurement each category, many separate measures relate to each general category (Robert et al, 2008). Most purchasing and supply chain measures fall into one of the following categories: Revenue Quality Price performance Cost-effectiveness Time/ delivery/ responsiveness Technology or innovation Supplier performance Strategic performance (Robert et al, 2008). However, on compiling the finding into a report with summarised recommendations and supporting reason, the audit should be presented to purchasing senior management (Kenneth et al,2008). When preparing such report, auditor should highlight policies, procedures and personnel where efficiency and effectiveness can be improved, commend good practice and performance, and think beyond simple quantitative measure of performance and consider the full sequences, side-effects and reactions likely to occur with these recommendations are presented (Kenneth et al, 2006) 10.1 Approaches to Performance Measurement Approaches to performance measurement may be grouped under five main headings: Accounting approaches, namely: Profit centres Activity-based costing Standard costing and budgetary control Economic value added (EVA) The purchasing management audit approach Comparative approaches Benchmarking and ratio Integrated benchmarking, such as EFQM and balanced scorecards Management by objectives (MBO) Miscellaneous approaches, such as SERVQUAL and six sigma (Lysons et al, 2006). 10.3 Benefits of Benchmarking The benchmarking is the continuous measuring of product, services processes, activities, and practices against a firms best competitors or those companies recognized as functional or industry leaders (Robert et al, 2008). Formally the benc

Marketing and Britannia Essay

The story of one of India’s favorite brands reads almost like a fairy tale. Once upon a time, in 1892 to be precise, a biscuit company was started in a nondescript house in Calcutta (now Kolkata) with an initial investment of Rs. 295. The company we all know as Britannia today. The beginnings might have been humble-the dreams were anything but. By 1910, with the advent of electricity, Britannia mechanized its operations, and in 1921, it became the first company east of the Suez Canal to use imported gas ovens. Britannia’s business was flourishing. But, more importantly, Britannia was acquiring a reputation for quality and value. As a result, during the tragic World War II, the Government reposed its trust in Britannia by contracting it to supply large quantities of â€Å"service biscuits† to the armed forces. As time moved on, the biscuit market continued to grow†¦ and Britannia grew along with it. In 1975, the Britannia Biscuit Company took over the distribution of biscuits from Parry’s who till now distributed Britannia biscuits in India. In the subsequent public issue of 1978, Indian shareholding crossed 60%, firmly establishing the Indianness of the firm. The following year, Britannia Biscuit Company was re-christened Britannia Industries Limited (BIL). Four years later in 1983, it crossed the Rs. 100 crores revenue mark. On the operations front, the company was making equally dynamic strides. In 1992, it celebrated its Platinum Jubilee. In 1997, the company unveiled its new corporate identity – â€Å"Eat Healthy, Think Better† – and made its first foray into the dairy products market. In 1999, the â€Å"Britannia Khao, World Cup Jao† promotion further fortified the affinity consumers had with ‘Brand Britannia’. Britannia strode into the 21st Century as one of India’s biggest brands and the pre-eminent food brand of the country. It was equally recognized for its innovative approach to products and marketing: the Lagaan Match was voted India’s most successful promotional activity of the year 2001 while the delicious Britannia 50-50 Maska-Chaska became India’s most successful product launch. In 2002, Britannia’s New Business Division formed a joint venture with Fonterra, the world’s second largest Dairy Company, and Britannia New Zealand Foods Pvt. Ltd. was born. In recognition of its vision and accelerating graph, Forbes Global rated Britannia ‘One amongst the Top 200 Small Companies of the World’, and The Economic Times pegged Britannia India’s 2nd Most Trusted Brand. Today, more than a century after those tentative first steps, Britannia’s fairy tale is not only going strong but blazing new standards, and that miniscule initial investment has grown by leaps and bounds to crores of rupees in wealth for Britannia’s shareholders. The company’s offerings are spread across the spectrum with products ranging from the healthy and economical Tiger biscuits to the more lifestyle-oriented Milkman Cheese. This is because NutriChoice SugarOut is sweetened with â€Å"Sucralose,† derived from sugar, which provides the same sweetness as any other biscuit, without the added calories of sugar. This range is available in 3 delicious variants namely Lifetime, Chocolate cream, and Orange cream, targeted towards all health sensitive people. It is also relevant for consumers with sugar related ailments. Customers are pleasantly delighted with its great taste and equally surprised to know that it has no added sugar. Don’t be taken for a ride when you read â€Å"Sugar Free† label on many biscuit packs marketed in India or abroad. Even with 100% no-added sugar, wheat-cereals in biscuits have their own natural sugar content. Britannia has chosen to represent these biscuits with â€Å"No Added Sugar† claim, as there is no added sugar in the processing of NutriChoice SugarOut. Britannia 50-50 Pepper Chakkar The launch of the latest 50-50 variant left everybody guessing â€Å"What it eez? † From TV ads, radio, outdoor and in-store display materials to events, a website and SMS and email blasts, traditional and new media were blended synergistically to create excitement and curiosity about the unique taste of the biscuit. The tangy and distinctive pepper flavoured biscuit, that’s thin and crispy and more like a snack, caught the imagination of a younger audience craving something to nibble on. The 50-50 Pepper Chakkar launch is truly a case of leveraging the marketing mix to best advantage. Biscuits derive its name from a French word meaning twice backed bread; Biscuits in general have a good shelf life, which is higher than all other snack items available in the market. India is the second largest producer of biscuits in the world after the U. S. A. but still the per capita consumption is only 2. kg/year of developed countries. As per the latest survey done by N. C. A. E. R. , 49 biscuits are consumed in rural areas. The penetration of biscuits into households stands at an average of 83. 2% with the rural penetration at 77% and urban penetration at 88%. Biscuits are reserved for the small scale sector but there are strong possibilities of the industry being deserved in line with the government policy of liberalization. The net effect thus would be greater choice for the consumer as well as a check on the costs. The country production of the biscuits during 2004-05 was 18. Lac tons of which 1/2 were manufactured by the organized sector. The industry turn over was 5322. 7 Crores of which organized sector contributed 2519. 3 crores. Britannia, makers of Britannia biscuits, doubled capacity from 25 tonnes a day to 50 tonnes and plans to be a national brand soon. In an aggressive mode, the North dominated biscuit player has increased its ad budget to Rs. 5 crore this year from Rs. 3 crore last year. Britannia has also recently invested about Rs. 5 crore in the modernization and expansion of its production and packing its production capacity of 40 tonnes per day to 100 tonnes per day by next year. The aim: to take the current turnover of Rs. 50 crore to Rs. 100 crore by the year. The low priced brand claims to have a 15 per cent market share in the North and is aggressively eyeing a bigger bite of the Rs. 2,500 crore biscuit industries. The brand plans to gain a 40 per cent market share in the North by the year of. The company’s strategy has been to attract new consumer segments and widen its consumer base with its well packaged low priced offerings. Britannia’s success has also come from its formidable. The applicability of various branding strategies play crucial role in arketing in product. the applicability has grown due to the liberalization, competition and technological changes taking place in corporate world. In this project the various branding strategies adopted by the company has been studied and compared on the basis of current market scenario. It gives the idea about the market share enjoyed by the different companies in the Biscuit Industry. It provides the adequate coverage of many issues related to biscuit industry. The objective of this report is to give the market share of Britannia biscuits in the Indian capital (New Delhi). It has been made possible by knowing the consumer’s behaviour and by studying the patterns adopted by the retailers. It gives us very precise view about the existing demand of Britannia biscuits and demand of their products as compared to other competitors. It also highlights the changing market trends and consumer preferences, why they have shifted from finally pack to pouch pack. The annual growth rate of the industry is about 12. 5%. However, the growth of cream biscuits, assorted or special variety is the range of 30-40%. The organized sector consists of large, medium and small scale biscuit manufacturers who produce packed biscuits. The major players in this sector are Britannia, Bakeman’s, and Parle, etc. the unorganized sector comprises of small bakery units, cottage and household type manufacturing plants. These units distribute their biscuits in the surrounding vicinity of their manufacturing locations of say 20-50 kms. The country production of biscuits during 2005-06 is estimated to be about 19. 5 lack tons. Out of which 1/2 again is expected from unorganized sector.

Ch 2 Solution

CHAPTER 2 Mechanics of Futures Markets Practice Questions Problem 2. 8. The party with a short position in a futures contract sometimes has options as to the precise asset that will be delivered, where delivery will take place, when delivery will take place, and so on. Do these options increase or decrease the futures price? Explain your reasoning. These options make the contract less attractive to the party with the long position and more attractive to the party with the short position. They therefore tend to reduce the futures price. Problem 2. 9. What are the most important aspects of the design of a new futures contract?The most important aspects of the design of a new futures contract are the specification of the underlying asset, the size of the contract, the delivery arrangements, and the delivery months. Problem 2. 10. Explain how margins protect investors against the possibility of default. A margin is a sum of money deposited by an investor with his or her broker. It acts a s a guarantee that the investor can cover any losses on the futures contract. The balance in the margin account is adjusted daily to reflect gains and losses on the futures contract. If losses are above a certain level, the investor is required to deposit a further margin.This system makes it unlikely that the investor will default. A similar system of margins makes it unlikely that the investor’s broker will default on the contract it has with the clearinghouse member and unlikely that the clearinghouse member will default with the clearinghouse. Problem 2. 11. A trader buys two July futures contracts on frozen orange juice. Each contract is for the delivery of 15,000 pounds. The current futures price is 160 cents per pound, the initial margin is $6,000 per contract, and the maintenance margin is $4,500 per contract. What price change would lead to a margin call?Under what circumstances could $2,000 be withdrawn from the margin account? There is a margin call if more than $1 ,500 is lost on one contract. This happens if the futures price of frozen orange juice falls by more than 10 cents to below 150 cents per lb. $2,000 can be withdrawn from the margin account if there is a gain on one contract of $1,000. This will happen if the futures price rises by 6. 67 cents to 166. 67 cents per lb. Problem 2. 12. Show that, if the futures price of a commodity is greater than the spot price during the delivery period, then there is an arbitrage opportunity.Does an arbitrage opportunity exist if the futures price is less than the spot price? Explain your answer. If the futures price is greater than the spot price during the delivery period, an arbitrageur buys the asset, shorts a futures contract, and makes delivery for an immediate profit. If the futures price is less than the spot price during the delivery period, there is no similar perfect arbitrage strategy. An arbitrageur can take a long futures position but cannot force immediate delivery of the asset. The d ecision on when delivery will be made is made by the party with the short position.Nevertheless companies interested in acquiring the asset will find it attractive to enter into a long futures contract and wait for delivery to be made. Problem 2. 13. Explain the difference between a market-if-touched order and a stop order. A market-if-touched order is executed at the best available price after a trade occurs at a specified price or at a price more favorable than the specified price. A stop order is executed at the best available price after there is a bid or offer at the specified price or at a price less favorable than the specified price. Problem 2. 14. Explain what a stop-limit order to sell at 20. 0 with a limit of 20. 10 means. A stop-limit order to sell at 20. 30 with a limit of 20. 10 means that as soon as there is a bid at 20. 30 the contract should be sold providing this can be done at 20. 10 or a higher price. Problem 2. 15. At the end of one day a clearinghouse member is long 100 contracts, and the settlement price is $50,000 per contract. The original margin is $2,000 per contract. On the following day the member becomes responsible for clearing an additional 20 long contracts, entered into at a price of $51,000 per contract. The settlement price at the end of this day is $50,200.How much does the member have to add to its margin account with the exchange clearinghouse? The clearinghouse member is required to provide 20 ? $2, 000 = $40, 000 as initial margin for the new contracts. There is a gain of (50,200 ? 50,000) ? 100 = $20,000 on the existing contracts. There is also a loss of (51, 000 ? 50, 200) ? 20 = $16, 000 on the new contracts. The member must therefore add 40, 000 ? 20, 000 + 16, 000 = $36, 000 to the margin account. Problem 2. 16. On July 1, 2010, a Japanese company enters into a forward contract to buy $1 million with yen on January 1, 2011.On September 1, 2010, it enters into a forward contract to sell $1 million on January 1, 2011 . Describe the profit or loss the company will make in dollars as a function of the forward exchange rates on July 1, 2010 and September 1, 2010. Suppose F1 and F2 are the forward exchange rates for the contracts entered into July 1, 2010 and September 1, 2010, and S is the spot rate on January 1, 2011. (All exchange rates are measured as yen per dollar). The payoff from the first contract is (S ? F1 ) million yen and the payoff from the second contract is (F2 ? S ) million yen.The total payoff is therefore ( S ? F1 ) + ( F2 ? S ) = ( F2 ? F1 ) million yen. Problem 2. 17. The forward price on the Swiss franc for delivery in 45 days is quoted as 1. 1000. The futures price for a contract that will be delivered in 45 days is 0. 9000. Explain these two quotes. Which is more favorable for an investor wanting to sell Swiss francs? The 1. 1000 forward quote is the number of Swiss francs per dollar. The 0. 9000 futures quote is the number of dollars per Swiss franc. When quoted in the same way as the futures price the forward price is 1 / 1. 1000 = 0. 091 . The Swiss franc is therefore more valuable in the forward market than in the futures market. The forward market is therefore more attractive for an investor wanting to sell Swiss francs. Problem 2. 18. Suppose you call your broker and issue instructions to sell one July hogs contract. Describe what happens. Hog futures are traded on the Chicago Mercantile Exchange. (See Table 2. 2). The broker will request some initial margin. The order will be relayed by telephone to your broker’s trading desk on the floor of the exchange (or to the trading desk of another broker).It will be sent by messenger to a commission broker who will execute the trade according to your instructions. Confirmation of the trade eventually reaches you. If there are adverse movements in the futures price your broker may contact you to request additional margin. Problem 2. 19. â€Å"Speculation in futures markets is pure gambling. It is n ot in the public interest to allow speculators to trade on a futures exchange. † Discuss this viewpoint. Speculators are important market participants because they add liquidity to the market.However, contracts must be useful for hedging as well as speculation. This is because regulators generally only approve contracts when they are likely to be of interest to hedgers as well as speculators. Problem 2. 20. Identify the three commodities whose futures contracts in Table 2. 2 have the highest open interest. Based on the contract months listed, the answer is crude oil, corn, and sugar (world). Problem 2. 21. What do you think would happen if an exchange started trading a contract in which the quality of the underlying asset was incompletely specified?The contract would not be a success. Parties with short positions would hold their contracts until delivery and then deliver the cheapest form of the asset. This might well be viewed by the party with the long position as garbage! O nce news of the quality problem became widely known no one would be prepared to buy the contract. This shows that futures contracts are feasible only when there are rigorous standards within an industry for defining the quality of the asset. Many futures contracts have in practice failed because of the problem of defining quality.Problem 2. 22. â€Å"When a futures contract is traded on the floor of the exchange, it may be the case that the open interest increases by one, stays the same, or decreases by one. † Explain this statement. If both sides of the transaction are entering into a new contract, the open interest increases by one. If both sides of the transaction are closing out existing positions, the open interest decreases by one. If one party is entering into a new contract while the other party is closing out an existing position, the open interest stays the same. Problem 2. 23.Suppose that on October 24, 2010, you take a short position in an April 2011 live-cattle f utures contract. You close out your position on January 21, 2011. The futures price (per pound) is 91. 20 cents when you enter into the contract, 88. 30 cents when you close out your position, and 88. 80 cents at the end of December 2010. One contract is for the delivery of 40,000 pounds of cattle. What is your total profit? How is it taxed if you are (a) a hedger and (b) a speculator? Assume that you have a December 31 year end. The total profit is 40, 000 ? (0. 9120 ? 0. 8830) = $1,160 If you are a hedger this is all taxed in 2011.If you are a speculator 40, 000 ? (0. 9120 ? 0. 8880) = $960 is taxed in 2010 and 40, 000 ? (0. 8880 ? 0. 8830) = $200 is taxed in 2011. Further Questions Problem 2. 24 Trader A enters into futures contracts to buy 1 million euros for 1. 4 million dollars in three months. Trader B enters in a forward contract to do the same thing. The exchange (dollars per euro) declines sharply during the first two months and then increases for the third month to close at 1. 4300. Ignoring daily settlement, what is the total profit of each trader? When the impact of daily settlement is taken into account, which trader does better?The total profit of each trader in dollars is 0. 03? 1,000,000 = 30,000. Trader B’s profit is realized at the end of the three months. Trader A’s profit is realized day-by-day during the three months. Substantial losses are made during the first two months and profits are made during the final month. It is likely that Trader B has done better because Trader A had to finance its losses during the first two months. Problem 2. 25 Explain what is meant by open interest. Why does the open interest usually decline during the month preceding the delivery month?On a particular day there are 2,000 trades in a particular futures contract. Of the 2,000 traders on the long side of the market, 1,400 were closing out position and 600 were entering into new positions. Of the 2,000 traders on the short side of the market, 1 ,200 were closing out position and 800 were entering into new positions. What is the impact of the day's trading on open interest? Open interest is the number of contract outstanding. Many traders close out their positions just before the delivery month is reached. This is why the open interest declines during the month preceding the delivery month.The open interest went down by 600. We can see this in two ways. First, 1,400 shorts closed out and there were 800 new shorts. Second, 1,200 longs closed out and there were 600 new longs. Problem 2. 26 One orange juice future contract is on 15,000 pounds of frozen concentrate. Suppose that in September 2009 a company sells a March 2011 orange juice futures contract for 120 cents per pound. In December 2009 the futures price is 140 cents. In December 2010 the futures price is 110 cents. In February 2011 the futures price is 125 cents. The company has a December year end.What is the company's profit or loss on the contract? How is it realiz ed? What is the accounting and tax treatment of the transaction is the company is classified as a) a hedger and b) a speculator? The price goes up during the time the company holds the contract from 120 to 125 cents per pound. Overall the company therefore takes a loss of 15,000? 0. 05 = $750. If the company is classified as a hedger this loss is realized in 2011, If it is classified as a speculator it realizes a loss of 15,000? 0. 20 = $3000 in 2009, a gain of 15,000? 0. 30 = $4,500 in 2010 and a loss of 15,000? 0. 5 = $2,250 in 2011. Problem 2. 27. A company enters into a short futures contract to sell 5,000 bushels of wheat for 250 cents per bushel. The initial margin is $3,000 and the maintenance margin is $2,000. What price change would lead to a margin call? Under what circumstances could $1,500 be withdrawn from the margin account? There is a margin call if $1000 is lost on the contract. This will happen if the price of wheat futures rises by 20 cents from 250 cents to 270 ce nts per bushel. $1500 can be withdrawn if the futures price falls by 30 cents to 220 cents per bushel. Problem 2. 28.Suppose that there are no storage costs for crude oil and the interest rate for borrowing or lending is 5% per annum. How could you make money on August 4, 2009 by trading December 2009 and June 2010 contracts on crude oil? Use Table 2. 2. The December 2009 settlement price for oil is $75. 62 per barrel. The June 2010 settlement price for oil is $79. 41 per barrel. You could go long one December 2009 oil contract and short one June 2010 contract. In December 2009 you take delivery of the oil borrowing $75. 62 per barrel at 5% to meet cash outflows. The interest accumulated in six months is about 75. 2? 0. 05? 0. 5 or $1. 89. In December the oil is sold for $79. 41 per barrel which is more than the amount that has to be repaid on the loan. The strategy therefore leads to a profit. Note that this profit is independent of the actual price of oil in June 2010 or December 2009. It will be slightly affected by the daily settlement procedures. Problem 2. 29. What position is equivalent to a long forward contract to buy an asset at K on a certain date and a put option to sell it for K on that date? The equivalent position is a long position in a call with strike price K . Problem 2. 30. Excel file) The author’s Web page (www. rotman. utoronto. ca/~hull/data) contains daily closing prices for the December 2001 crude oil futures contract and the December 2001 gold futures contract. (Both contracts are traded on NYMEX. ) You are required to download the data and answer the following: a) How high do the maintenance margin levels for oil and gold have to be set so that there is a 1% chance that an investor with a balance slightly above the maintenance margin level on a particular day has a negative balance two days later (i. e. one day after a margin call). How high do they have to be for a 0. 1% chance.Assume daily price changes are normally distribu ted with mean zero. b) Imagine an investor who starts with a long position in the oil contract at the beginning of the period covered by the data and keeps the contract for the whole of the period of time covered by the data. Margin balances in excess of the initial margin are withdrawn. Use the maintenance margin you calculated in part (a) for a 1% risk level and assume that the maintenance margin is 75% of the initial margin. Calculate the number of margin calls and the number of times the investor has a negative margin balance and therefore an incentive to walk away.Assume that all margin calls are met in your calculations. Repeat the calculations for an investor who starts with a short position in the gold contract. The data for this problem in the 7th edition is different from that in the 6th edition. a) For gold the standard deviation of daily changes is $15. 184 per ounce or $1518. 4 per contract. For a 1% risk this means that the maintenance margin should be set at 1518 . 4 ? 2 ? 2. 3263 or 4996 when rounded. For a 0. 1% risk the maintenance margin should be set at 1518 . 4 ? 2 ? 3. 0902 or 6636 when rounded. For crude oil the standard deviation of daily changes is $1. 777 per barrel or $1577. 7 per contract. For a 1% risk, this means that the maintenance margin should be set at 1577 . 7 ? 2 ? 2. 3263 or 5191 when rounded. For a 0. 1% chance the maintenance margin should be set at 1577 . 7 ? 2 ? 3. 0902 or 6895 when rounded. NYMEX might be interested in these calculations because they indicate the chance of a trader who is just above the maintenance margin level at the beginning of the period having a negative margin level before funds have to be submitted to the broker. b) For a 1% risk the initial margin is set at 6,921 for on crude oil. This is the maintenance margin of 5,191 divided by 0. 75. ) As the spreadsheet shows, for a long investor in oil there are 157 margin calls and 9 times (out of 1039 days) where the investor is tempted to walk away. F or a 1% risk the initial margin is set at 6,661 for gold. (This is 4,996 divided by 0. 75. ) As the spreadsheet shows, for a short investor in gold there are 81 margin calls and 4 times (out of 459 days) when the investor is tempted to walk away. When the 0. 1% risk level is used there is 1 time when the oil investor might walk away and 2 times when the gold investor might do so.

Religion, Gender, And Sexuality - 966 Words

â€Å"Get comfortable being uncomfortable. That s how you break the plateau and reach that next level.† That quote was from Chalene Johnson, and I thought it fit well when describing the first outside religion event I went to. The event I chose to attend was called Religion, Gender, and Sexuality in the Multifaith Alliance room at Hamline University. It was something that was challenging for me and that s why i’ll be explaining what the event was, the content of the event and what I learned from it, and how this event related to what we have been talking about in class. The event was a big discussion with people of all different faiths. It was led by a girl named Kayla that is a sophomore at Hamline. She had a long list of discussions questions for the group to talk about. The way she started off the discussion was by having us introduce ourselves, and what religion we belonged to. This was a eye opener because there wasn t a lot of Christians like I’m accustomed to. It also helped me as a person because we talk about different religions in class, but we don’t actually have someone there that is practicing a different faith. This was a major reason why I thought this discussion event would be beneficial for me to attend. The purpose of the event was to get us out our comfort zone, and get us in a situation that isn’t very normal. The discussion did a great job because I was actually part of a minority group for once. There were people that were Muslim, christians,Show MoreRelatedGender, Sexuality, Race, And Religion Essay2485 Words   |  10 PagesIntroduction UC Berkeley students are diverse in their age, gender, sexuality, race, and religion. As a result, their aspirations for their career and family life can differ on a person-to-person basis. In her study, Gerson interviewed 120 individuals, averaging an age of 24, and found that the majority of both men and women sought an egalitarian relationship. 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