The Impact of the A380 Project on the Financial Performance of EADS Essay Example For Students

The Impact of the A380 Project on the Financial Performance of EADS Essay ? Acknowledgements We would like to express our gratitude to the department for affording us the time and research facilities without which this report would not have been possible. Special thanks go to the head of department Dr. Anders Hederstierna, our supervisor Dr. Britt Aronsson and the course coordinator Dr. Klaus Solberg. Abstract Airbus has been making headlines in the past few months for all the wrong reasons. This iconic European corporation has undergone a turbulent period due to the problems surrounding the Airbus A380 project. A new flagship product that should have curved out an unassailable advantage for Airbus over Boeing went completely wrong. The Airbus A380 aircraft was a ground breaking concept that was meant to push EADS into a unique market segment. Instead, it threatened the very existence of the company and served as a catalyst for major surgery and a complete reorganization of the corporation starting from the top management down to the production floors. Numerous studies have been undertaken that have documented details of the Airbus A380 project and what, how and why it all went wrong. We will write a custom essay on The Impact of the A380 Project on the Financial Performance of EADS specifically for you for only $16.38 $13.9/page Order now The company and other stakeholders have been undertaking drastic steps to try and put the company back on track and ensure the survival of the commercial aircraft business unit. In this study we look at how the problems surrounding the Airbus A380 project have affected the financial health of EADS. The background to the problems and the financial performance of Airbus is studied and presented. A brief discussion of how the data we collected and used for the study and the data that we could not get access to is also presented early in the paper. From the data and analysis, a comparison of the two dominant players in the commercial aircraft manufacturing industry, Airbus and Boeing, is also undertaken. A brief highlight of the financial impact of a project in the computer/consumer electronics industry is also presented. Finally from these data and prior studies on this subject, we have tried to highlight the impact of the project on the short and long term financial direction of EADS. Table of Contents List of Tables6 6 List of Figures7 1 Introduction8 Theoretical Framework14 3 Data Collection25 4 EADS Background and Analysis27 5 Boeing Background and Financial Data50 6 Comparative Analysis of EADS and Boeing 59 7 Other Factors that Affected the Financial Health of EADS69 8 Long-Term Prospects72 9 Comparison to a Project in a different Industry78 10 Conclusions79 81 11 Future Work82 12 Reference List83 List of Tables Table 4. 1 Business Segment Data of EADS 36 Table 4. 2 Consolidated Cash Flow Statements of EADS. 36-37 Tabl e 4. Consolidated Income Statement of EADS.. 40 Table 4. 4 Consolidated Balance Sheet of EADS 40-41 Table 5. 1: Consolidated Statements for Boeing 55-57 Table 5. 2: Income Statements for Boeing. 57-58 Table 5. 3: Consolidated Cash Flow Statements of Boeing 58-59 Table 8. 1: The Order Book for A380 Aircraft 76-77 List of Figures Figure 4. 1: EADS stock ownership. 29 Figure 4. 2: EADS management structure.. 31 Figure 4. 3: Airbus management structure 32 Figure 4. 4: EADS divisions and revenue. 34 Figure 4. 5: EADS share price (25 Nov 05 to 25 Jun 07)†¦. 49 Figure 5. 1: Boeing distribution of stock. 51 Figure 5. 2: Boeing divisions, revenue and activities.. 52 Figure 5. 4: The management structure of Boeing.. 54 Figure 6. 1: Working Capital Boeing Vs EADS 61 Figure 6. 2: Revenue Boeing Vs EADS 64 Figure 6. 3: Airplane Delivery Boeing Vs EADS. 65 1 Introduction The commercial aircraft industry requires huge capital investments in manufacturing and research and development. This is a very competitive sector where industry consolidation has resulted in the emergence of two major players from either side of the Atlantic, EADS in Europe and Boeing in the United States of America. The two form a duopoly with market leadership in the sector largely rotating between these two corporate giants depending on the market dynamics. Commercial airlines and other air transport operators form the bulk of the customers. Governments are also important customers. The government involvement in the sector extends to investing, supporting (Aboulafia, Richard, 2000; O’Neal, Michael, 1990) and regulating. Any problems in the industry have implications that go well beyond the confines of the affected companies. Governments therefore subsidize and invest in aircraft manufacturing and research and development. This also serves to protect the highly skilled jobs in this sector and ensures that the respective countries remain technologically competitive (Wall, R. Sparaco, P, 2007). Big companies play an important role in the economics of the countries they operate in. They influence the conditions in the industries and directly impact employment rate in the countries where the manufacturing takes place. EADS and Boeing are the leading competitors in the aircraft manufacturing industry and demonstrate the high level of political interest in this sector and the way governments try to influence the business decisions made by such corporations (Wall, Robert Jens, Flottau 2007; Barrie, Douglas 2007). 1. Problem Definition Airbus is a subsidiary of EADS that has been a global leader in the manufacture of commercial aircraft. The launch of the A380 aircraft project was expected to become a huge success and elevate EADS to a new level of market domination. But following production delays and the cancellation of some orders for the A380 aircraft by some customers, the company found itself in a difficult position. The failure of a challenging project such as the A380 project can have far reaching financial consequences that could lead to bankruptcy. It could also serve to expose weaknesses and inefficiencies in the structure of an organization that could be a major hindrance to the success of a company. The popular media and professional journals have been full of news and articles concerning the problems with the A380 aircraft and Airbus in particular. The list of problems include workforce discontent, possible reduction in production activities, delivery delays, customer dissatisfaction and a lack of new orders, to mention only a few. The complex set of problems extends to the influence EADS has that can cause significant economic problems in the concerned countries. Numerous studies and articles have been written about EADS and the A380 project that catalogue the various organisational, technical and financial problems associated with the manufacture of the A380 super-jumbo aircraft. A systematic evaluation of the financial consequences of the project has not been carried out. 1. 2 Purpose The purpose of this research work is to evaluate the impact of the A380 project on the financial health of EADS. The following questions will be addressed: In the short run, what effect has the A380 project had on the financial performance of EADS? In the same period, what was the financial performance of Boeing, the direct competitor of EADS? Should EADS continue supporting the A380 project with additional financing? What long term financial impact will the A380 project have on the future of EADS? Finally, in order to fulfil the purpose we will also briefly discuss other factors that influenced the financial health of EADS, in addition to the A380 project 1. 3 Research Methodology The first stage of this research will involve reviewing the information that is available about the aircraft manufacturing industry with a focus on information about EADS and Airbus. Our focus will be on financial information. As a public company, EADS is obliged to publish financial data about the corporate structure and financial information containing revenues, profits and sales orders per EADS division such as Airbus. The A380 has been a major project at EADS for the past few years that has taken substantial preparations and investments amounting to significant annual expenditures (Thomas, J. , 2001; Gummesson, E, 2006). The main thrust of our research will be quantitative for aspects where we shall obtain the financial data needed to do the analysis. We shall also employ a qualitative approach to evaluate the leadership and organizational structure at EADS. To evaluate the financial impact of the A380 project on EADS, our primary focus will be on financial and ratio analysis of the company. We will examine the financial statements from EADS. This quantitative analysis will include the period from 2004 to 2005 that preceded the initial announcements delivery delay of the A380 as well as the period following the announcements, from 2006 to the first quarter of 2007. To analyze the changes in profits, revenues and cash flows, we will perform a comparative analysis of the years from 2004 to 2006 and evaluate the first quarter of 2007 in comparison to the first quarter of 2006. We will explore what influence the Airbus A380 project has had on the financial health of EADS. In order to get a clearer picture of the financial health of EADS, we will compare the financial performances of EADS and its main competitor, Boeing. The financial statements of Boeing Company are also generally available as it is a public corporation. Boeing has a similar structure, is engaged in the same activities and is comparable in size with EADS. Boeing also operates in the aircraft manufacturing industry, with its commercial aircraft unit also being the major part of the company’s activities. Therefore, the cross-company financial analysis between EADS and Boeing will provide some useful insights into the scale of the finanicial problems. Some A380 aircraft customers have already cancelled their orders and moved to Boeing instead. Since these two companies form a duopoly, most customers that leave EADS for Boeing increase the market share for Boeing. The foreign currency exchange rates between the US dollar and the euro have had an impact on the competitiveness of EADS. The manufacturing plants of EADS are located in Europe. The basic bills are paid in Euros (salaries, taxes etc), while customers outside Europe settle their contractual obligations in US dollars. The lead time between contractual agreements and actual aircraft deliveries, coupled with fluctuating US dollar versus euro exchange rate influence the financial performance of EADS. Depending on the direction the change takes, it can add to the losses from the A380 project, especially with the lead time from the date of agreement to the date of delivery being stretched by the delays The US dollar to euro relationship is therefore an area of interest, we will therefore analyze trends in exchange rates and evaluate its impact on EADS. We will also evaluate trends in stock prices of EADS and compare them to ones of Boeing. This will allow us to see how the market value of the company was affected by the A380 crisis and delivery delays. The market values of stocks are important indicators of financial stability and are of special interest to investors. Trends in the stock price will also show the possible direction of the company. A review of the financial position of EADS, that will include cash flows, revenues in total, total revenues and profits, revenues and profits by divisions in the period starting from 2005 to 2007 (both within the company and in comparison with Boeing), together with review of stock prices and exchange rates in 2005-2007, will help paint the picture of the A380 project impact on the short run financial performance of EADS. Evaluation of trends in profits and cash flows of EADS and review of order and delivery book of Airbus, the major source of revenues and cash flows for EADS will reveal the possible future direction of the company. Upon reviewing the trends in financial position of EADS (through ratio analysis) and examining the order or delivery book of Airbus, taking into account that this type of business involves cash transfers and recognition of revenues upon fulfilment of contracts, we will be able to determine how much of a burden the A380 project is for EADS and if the company can carry on without significant financial reorganization. Finally, we will briefly examine other factors which could additionally influence financial health of EADS. The corporate structure and leadership issues have important bearing on the operations of a company and could also influence financial state of a company. Our evaluation will be based on information from the companies on the existing organizational structures and scientific articles where available. Among others, the following issues will be examined: the composition of the Boards such as the number of independent directors and how focused the Boards are on business activities and how independent they are when making decisions. This will give us some insight into the efficiency of EADS as an organization, which has an indirect influence on profitability as well. The dynamics of exchange rates influence financial health of EADS as the company is based in Europe but sells big part of its products overseas. We will use data on exchange rates obtained from business media sources for this analysis. 1. 4 Possible Limitations We will be unable to accurately estimate certain values without sufficient data. This is a complex case, with several interrelated issues. We will use the available data. The available data will be sufficient to make qualitative conclusions as is usual in case studies. For example, without knowing the values of discounts offered to some customers, the values of penalties incurred, the impact of some customers exercising the option to buy alternative aircraft from Airbus, we may be unable to make exact quantitative conclusions on losses and net cash outflows from the project. We cannot definitely determine sources and values of external (from other projects) financing for the A380 project. We would liked to look at the A380 project appraisal (preferably with more comprehensive appraisal method, like NPV), but it will not be possible to do this as we will lack exact data necessary for this type of evaluation. The A380 project is an evolving story that has new developments all the time. The data from primary data that we sourced from some company’s websites may be skewed in favour of the respective companies as there is tendency for companies to put emphasis on positive information. 2 Theoretical Framework 2. 1 Introduction According to Brealey et al, 2006, managers are agents of the owners of the company, the shareholders. The manager’s main goal is to increase the value of the shareholders’ wealth. The board of directors are part of the corporate governance system and are meant to oversee the performance of the managers and strategic direction of the company. The board ensures that the managers are adequately compensated for the day to day running of the corporation and have the mandate to replace the managers if they do not deliver shareholder value or , among other reasons do not conduct the operations ethically or legally. There are several methods to evaluate potential success of a project in a company. This is an important step. In a large company and/or if a significant investment opportunity is considered, investment appraisal methods, such as NPV (Net Present Value) are applied. To analyse the impact of the A380 project on EADS, our approach was to look at the problem from three angles: the financial angle, the organisation structure (leadership and governance) and to compare EADS to a similar organisation. The theoretical foundations that we base our analysis on are described in the following sections of this chapter. . 2 Assessment of the Financial Health 2. 2. 1 Financial Statements – Ratio Analysis Potential investors, as well as other interested parties, always analyze past/present financial performance of a company before making investment. This is necessary to evaluate possibility of future returns. Trends in profits and cash flows of past few years not only show how effective was a company in the post, but can also indicate future direction of a company. Probably the best way to evaluate possible return from investment is by analyzing data available from financial statements of a company (40). The major financial statements are: Statement of Balance Sheet, Statement of Cash Flows and Income Statement. Income Statement is intended to disclose revenues and expenses, as well as profits of a particular period. It should be noted, that profits are often different from cash flows, as items like depreciation of fixed assets are not taken into account in net cash flow calculations, but they do influence profits. Statement of Balance Sheet shows the financial position of a company at a particular point in time. Namely, it shows the values of assets (both current and non-current), liabilities (both current and non-current) and equity. Following balance of Balance Sheet components is always maintained, if the statement is correctly prepared: Assets-Liabilities=Equity Statement of Cash flows discloses the way all cash resources have been used throughout a particular period of time. Cash Flow Statement consists of three basic parts: Cash Flows from Operating Activities, Cash Flows from Investment Activities and Cash Flows from Financing Activities. Income Statement, Statement of Balance Sheet and Cash Flow Statement can be analyzed to find out how effective the performance of a company in the past was and to forecast, what can be expected in the future. It should be pointed out, that basic financial statements of listed (parent) companies are readily available to general public (through company web sites, etc), while financial statements of subsidies (â€Å"daughter† companies), like Airbus, usually are not readily available. A. Millichamp, 1997, suggests three methods for assessing financial performance. Each figure (or number) in the financial statement should be compared with: 1) The corresponding figure of previous statements 2) The corresponding forecasted (budgeted) figure 3) The corresponding figure of another company in the similar business While comparison of subsequent statements of a company is important (to see improvements/backward steps etc), it is sometimes even more important and interesting to see how well a company is performing in comparison with direct competitor (e. g. in our case Boeing vs. EADS). The first method of assessment shows trends within a company, while cross-company evaluation shows if those steps are more effective than the ones taken by a competitor. Third method of an evaluation (i. e. comparison with budgeted values), while definitely being important, usually cannot be performed by an outsider, as budgets (i. . internal data) are rarely disclosed by companies. While comparison of absolute values of financial statements is often performed, comparison through financial ratios is frequently more relevant. Many financial values are inter-related. Besides, some trends are better seen through relative analysis of values, for instance, when two companies construct their financial statements in dif ferent currencies. Boeing does this in US dollars while EADS uses the euro. According to Williams et al, 2005, (p606): â€Å"Ratio is a simple mathematical expression of the relationship, of one item to another. .u69e1382ecf5ca546a058109ffc84c791 , .u69e1382ecf5ca546a058109ffc84c791 .postImageUrl , .u69e1382ecf5ca546a058109ffc84c791 .centered-text-area { min-height: 80px; position: relative; } .u69e1382ecf5ca546a058109ffc84c791 , .u69e1382ecf5ca546a058109ffc84c791:hover , .u69e1382ecf5ca546a058109ffc84c791:visited , .u69e1382ecf5ca546a058109ffc84c791:active { border:0!important; } .u69e1382ecf5ca546a058109ffc84c791 .clearfix:after { content: ""; display: table; clear: both; } .u69e1382ecf5ca546a058109ffc84c791 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .u69e1382ecf5ca546a058109ffc84c791:active , .u69e1382ecf5ca546a058109ffc84c791:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .u69e1382ecf5ca546a058109ffc84c791 .centered-text-area { width: 100%; position: relative ; } .u69e1382ecf5ca546a058109ffc84c791 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .u69e1382ecf5ca546a058109ffc84c791 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .u69e1382ecf5ca546a058109ffc84c791 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .u69e1382ecf5ca546a058109ffc84c791:hover .ctaButton { background-color: #34495E!important; } .u69e1382ecf5ca546a058109ffc84c791 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .u69e1382ecf5ca546a058109ffc84c791 .u69e1382ecf5ca546a058109ffc84c791-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .u69e1382ecf5ca546a058109ffc84c791:after { content: ""; display: block; clear: both; } READ: Should Racist Speech Enjoy Protection under the Fi EssayEvery percentage may be viewed ad a ratio-that is, one number expressed as a percentage of another†. 2. 2. 1. 1 Ratio Analysis Assessment of three basic types of activities can be conducted to evaluate overall financial performance of a company (35). Changes since previous period show short term improvements/steps backward, while overall trends in years can also indicate what can be expected in the future. These three activities are: Liquidity, Profitability and Gearing/Leverage. It should be noted, though, that this is not a strict classification and some ratios may â€Å"belong† to more than one perform ance appraisal subgroups. For better representation of subsequent statements, they are usually placed next to each other and percentages of each corresponding values are also given. 2. 2. 1. 2 Liquidity Measures Liquidity of a company refers to its ability to manage short term obligations. Short term obligations are those ones, which should be repaid within a year. In other words, it is an ability to repay current liabilities with available current assets. Current assets are assets readily convertible into cash. While current liability is an obligation which should be settled within a year. The basic term often used in relation to Liquidity is Working Capital. Simply, it is an excess of current assets over current liabilities. Basic ratios used to assess liquidity of a company are: 1) Current Ratio=Current Assets/Current Liabilities It is a measure of how well are current liabilities covered by current assets. To some extent, the more it is (hopefully over 1. 5), the better it is for a company, but too high Current Ratio may imply that current assets are not entirely utilized. 2) Quick Ratio=(Current Assets-Inventories)/Current Liabilities It is a similar measure to Current Ratio, but with the exclusion of inventories-the least liquid current assets. Sometimes it is a more relevant measure. Again, a value of Quick Ration in excess of 1 is usually expected, but it varies from industry to industry. 3) Working Capital Cycle is considered to be an important illustrative measure of Liquidity. It is calculated in days/months. By Working Capital Cycle we measure the period from the date purchase of raw materials to the date of cash collection from products manufactured from those materials. Working Capital Cycle equals: Period to collect cash from customers+ period to turn over inventories- period to settle trade liabilities Days to collect cash from customers= (Average Receivables/Sales Revenues) x 365 Days to turn over inventories = (Average Value of Inventories/Cost of Sales) x 365 Days to settle trade obligations = (Average Payables/Cost of Sales) x 365 If average values are not available, year end values can also be used. Generally, the shorter is the Working Capital Cycle, the better it is for a company, as it is an indicator of effective performance. 2. . 1. 3 Profitability Measures Profitability ratios can help us evaluate trends in profitability and help us find out if a company earns sufficient profits in comparison with available resources. One thing should be noted here. If a company has a very high profitability but low cash balance, it can lead to a collapse-company can run out of cash. It is called Overtrading. On the other hand, excessive cash balance wi th corresponding low profitability is an indicator of Overcapitalization-sign of inefficient use of available resources (assets do not generate sufficient profits). Trends in Profitability can be measured both in absolute terms and with the use of ratios. Following measures are used: 1) Gross Profit Percentage: Gross Profit/Sales Revenue It is an indicator of what is percentage of Gross Profit from Sales Revenue Earnings per Share: Earnings for Ordinary Shareholders/Number of Outstanding Shares is an indicator of earnings for one share. Two important measure of profitability are also used to evaluate the efficiency in use of assets and equity to generate profits. Return on Equity = Net Profits/Value of Equity Return on Assets = Operating Profit / Value of Total Assets Maintenance of high levels of profitability is the primary objective of a company. It is a sign of relatively safe continuity. But as it was stated above, high levels of profitability should not be confronted with low Liquidity. 2. 2. 1. 4 Measures of Gearing and Leverage By Gearing we mean the ability of a company to meet long term debt obligations. Debt composition of Balance Sheet is an important indicator of Gearing. Higher share of long term debt in comparison with to equity is an indicator of higher Gearing. While, generally, long term debt is considered to be the least expensive source of finance (less expensive than common stock issue), too much reliance on debts puts accompany into danger, as interest on debt should be repaid (unlike dividends) regardless of profitability level. Good indicator of Gearing is the Debt Ratio: Debt Ratio= Total Liabilities/Total Assets Another indicator of Gearing is Interest Cover: Interest Cover= Profit before Interest and Tax/Interest Expense The higher it is, the easier it is for a company to settle its long term debt interest. This ratio is also related to Liquidity of a company. All above mentioned ratios are calculated from Statements of Balance Sheet and Statements of Income. Additionally, examination of Cash Flow Statements can reveal how cash is used in a company, which items of the statement are seem to generate more/less cash than was expected and by how much has cash decreased/increased in the considered period. 2. 2. 2 Limitations of Financial Evaluations using Ratios Financial analysis through ratios is an important and useful method to evaluate financial performance of a particular company. But this type of evaluation has its limitations. One can never make convinced conclusions purely based on ratio analysis. One of the reasons can be so called â€Å"window dressing†, i. e. a case when a company intensively â€Å"improves† performance by the end of accounting period to make year end financial statements look â€Å"attractive†. This can lead to incorrect assessment of a company. Besides, measures used in financial analysis are relative measures, which indicate to relative changes and therefore do not always allow us to make absolute judgments on companies (Millichamp A, 1997; Williams R. t al, 2005). Nevertheless, comprehensive (including cross-company) evaluation of company performance through financial ratios can disclose not only past problems of a company but even allow us make forecasts on future financial health of the company. This evaluation is well supplemented by other non-ratio financial indicators, like stock price trends and (where rele vant) trends in currency exchange rates. 2. 2. 3 Stock Prices The wealth of shareholders in a company is generated from: 1) Dividends received; 2) Market values of shares Return from investment to shareholders can be generated from both received dividends and from capital gain due to increase in value of shares. Very important measures a company value is market value of all its outstanding shares. In order to increase the value of a company, management should achieve high profits so that it could distribute higher dividends and insure high values of shares (to allow higher capital gains). When market value of shares is low, the possibility of takeover from an outsider company is more likely. What is also significant, value of shares and trends of share prices are very important indicators of a company financial health for a potential investor. It is taken into account together with financial statements of a company (Millichamp A. 1997, Brealey R. et al, 2006). 2. 3 Additional Factors that can affect the Financial Health In this section we look at other factors that can have a bearing on the finances of EADS as factors like corporate structure, leadership and foreign exchange rates can have an influence on the financial stability of a company or indirect impact on projects within a company. The indirect influence of factors like corporate structure and leadership is reflected in the ability to avoid or reduce the negative impacts caused by a project while fluctuations of exchange rates can magnify losses or profits from projects when exchange rates are either favorable or unfavorable. However, the primary purpose of this thesis is to look at the impact of the A380 project. 2. 3. 1 Leadership The corporate culture, leadership and governance of a corporation influences the way the success of a company. Dubrin A. , (2007) has further catalogued the types of leadership characteristics that are needed for organisational success. These are especially relevant in organisations of the scale and complexity of EADS or Boeing that depend on the creativity and the innovation of the workforce. Dubrin also describes leadership traits needed to effectively manage international or geographically dispersed companies that are also culturally diverse are also. Other characteristics that have relevance to our subject matter relating to Airbus and EADS include teamwork, leadership development, succession and transformational leadership skills are required to lead an organisation through a crisis. This list is not exhaustive, it only seeks to provide a brief background to some of the leadership failures that could have led to the problems at Airbus, impacted on organisational efficiency and subsequently translated into financial woes for the company. 2. 3. 2 Corporate and Governance Structure Organizational structure can play a vital role in the performance of a company. The way the board of directors coordinate performance of top management and the manner it communicates with groups of shareholders is often as important as contemporary financial health of a company. The central role in organizational structure belongs to board of directors which usually consists of 8-15 members in a large corporation. The board should be independent to ensure independent and objective reporting and decision-making of the board (15). According to Walter J. Salmon: â€Å"Inside directors are often too committed to tradition and their new ideas. Outside directors, without independent sources of information are usually only capable of anaemic discussion and dissent. The result: consumers, competition, technology, and the economy may all change, but the company fails to keep up† (15, p4). According to Walter J. Salmon, a board of 8-15 members is optimum, with at least 2/3 of it being outside directors. An empowered board (15) has the ability and independence to monitor activities of management and to influence top management to revise their activities if their performance does not correspond to the strategic direction of a company determined earlier. The board should monitor the performance of the CEO and interfere if the company moves in the wrong direction to improve things before further damage occurs. The following steps are essential for Board empowerment (15): Directors receive independent and competent information on the performance of a company in the most easy-to-understand format The board consists of independent, competent members. It is an integrated board. Members of the board freely and frequently communicate with each other The board members also monitor the performance of the board itself. They set objectives for themselves and try to achieve them. 2. 3. 3 Governed Corporation vs. Managed Corporation According to John Pound, there are two types of organizational structures: a governed corporation and a managed corporation. The board of directors has a passive role in a managed corporation. Its main tasks are monitoring and selection and appointment of top management. The managers retain all leadership and decision-making rights (15). It is not considered to be the best governance model nowadays. Today many problems of large organization do not stem from power imbalances, but rather from poor decision-making. The governed corporation model proposed by John Pound is designed to remove the imbalances of the managed corporation model. It is centred on the decision making process in the company. The board of directors, top management and shareholders are more integrated and share responsibilities in decision making and formulation of the strategic direction of a company. Managerial duties are retained by CEO’s, but the board is not a passive onlooker. 2. 3. 4 The Impact of Foreign Exchange Rates Exchange rate of a currency is a rate at which one country’s currency can be traded in exchange to another country’s currency. Basically, exchange rate is determined by supply and demand of currencies at exchange markets. Following factors influence exchange rates: Government policy to influence exchange rates (limitation of maximum exchange value etc) Interest rates in the countries of those currencies The rates of inflation in those countries Trends in exchange rates (Euro to Dollar) can become a source of troubles for both importers and exporters of products, because â€Å"actual† amount received by them can fluctuate as exchange rates vary (35). There are some measures to be taken in order to avoid or reduce negative influence of exchange rates: 1) Contracts can be agreed in local currencies (Euro, in case of EADS) 2) Outsourcing of some activities can be done, i. . a company, operating in foreign country can deal with local suppliers-sell products manufactured from local supplies to local market etc. The danger, regarding exchange rates, for an importer is that enough revenues in local currency should be earned so that upon exchanging domestic currency, expected value is obtained (Brealy R. , 2006) To reduce impact of negative excha nge rates, following measures can be taken: Matching of receipts and payments should be made. This implies offsetting payments in one currency, with receipts in the same currency Company can also make forward exchange contracts. It implies fixed exchange rate for the future cash transfers to/from importer/exporter. Employing options for future contracts Employing hedging. For instance, an exporter can hedge against exchange risks by converting foreign currency into domestic one at the spot rate 3 Data Collection The financial data used for this study was obtained from the statements published EADS and The Boeing Company. They are listed companies whose stock is traded publicly. They are therefore legally bound to publish this and other information for the benefit of stakeholders. This data included: Annual reports containing: Income statements, cash flows, financial statements/position, statements of operations, segment information and statements on shareholders equity. Stock price data was also available from the company’s websites. Additional information was obtained from the Annual Reports published by the European Union Transport Commission on airplane manufacturers, EADS and Boeing. Statistical information published by the United States Department of Transport Federal Aviation Administration was also examined. The financial data was used in the ratio and other financial analysis, we employed a quantitative method for this data. Additional information about the aeronautical industry in general and EADS, Airbus, the A380 project and The Boeing Company in particular was sourced from scientific journals and articles that are listed in the references section. Our requests for detailed and specific information about the A380 project such as details about the feasibility studies, financial and cost projections (the method and data applied for investment appraisal), and the organization of the project team did not bear fruit. We did however obtain information about the expected number of airplanes to be delivered over the lifetime of the project and the number of airplanes needed to be delivered for the project to breakeven. Other data that we could not obtain was pricing information of the airplanes the financial value of the penalties incurred when planes were not delivered, the value of the discounts and the value of the options that Airbus negotiated with customers for them to buy alternative aircrafts if they did not wish to wait for the A380. Information on leadership, governance and organizational structures of EADS and Boeing was obtained from the companies-this data is available to general public. We employed a qualitative approach to analyse and compare the leadership, governance and organizational structures of these two organizations. 4 EADS Background and Analysis 4. 1 Background and Corporate Structure European Aeronautic Defence and Space Company, EADS, is one of the largest aerospace corporations in the world. It was formed in July, 2000 after a merger of French company Aerposspatiale-Matra, Spanish company Construcciones Aeronauticas (CASA) and German company Daimler-Chrysler Aerospace AG (DASA). Currently there are 800 million EADS shares outstanding. 30% of the share capital is held by French shareholders, 22. 5% by Germans, 5. 5%-by Spanish shareholders and the rest of shares are held by various minority shareholders. The diagram below shows the EADS stock ownership. Figure 4. 1: EADS stock ownership The EADS Board of Directors consists of a maximum of eleven members appointed and removed by the shareholders’ meeting. EADS has two chairpersons and Chief Executive Officers. The Board of Directors determines the manner of appointment and the responsibilities of the Chairmen and the Chief Executive Officers. As of December 2006, EADS had over 116,000 employees. The management structure with the extension to Airbus is shown below. The corporate governance of EADS reflects the complexity of the company. EADS is a multi-national company, with significant shareholding from governments or state agencies. In order to balance the requirements of the different large shareholders, the company has two Chief Executive Officers (CEO’s). One of them is nominated by Daimler-Chrysler group and the second one is chosen by SOGEADE group. There are 10 directors in the Board of Directors at EADS. Similar to nominations of CEO’s, four members of the board are nominated by German Daimler-Chrysler and four other inside directors are nominated by SOGEADE (i. e. French and Spanish) group. There are two independent directors, one of them nominated by Daimler-Chrysler and second one by SOGEADE. The directors nominated by Daimler-Chrysler elect one CEO, while the second one is elected by SOGEADE. The Board of Directors appoints two chairmen (again, chosen by two large stakeholders). In case of dispute between two CEO’s the issue is transferred to the chairmen. Figure 4. 2: EADS management structure Figure 4. 3: Airbus management structure Manufacturing, production and sub-assembly of parts for the Airbus aircraft are distributed around 16 sites in Europe, with final assembly in Toulouse in France and Hamburg in Germany. These locations are: The EADS centers of excellence are organized as follows: The UK has 2 locations specializing in wings and electrics .uf6eff859ff7c041ef95977e79146b0d7 , .uf6eff859ff7c041ef95977e79146b0d7 .postImageUrl , .uf6eff859ff7c041ef95977e79146b0d7 .centered-text-area { min-height: 80px; position: relative; } .uf6eff859ff7c041ef95977e79146b0d7 , .uf6eff859ff7c041ef95977e79146b0d7:hover , .uf6eff859ff7c041ef95977e79146b0d7:visited , .uf6eff859ff7c041ef95977e79146b0d7:active { border:0!important; } .uf6eff859ff7c041ef95977e79146b0d7 .clearfix:after { content: ""; display: table; clear: both; } .uf6eff859ff7c041ef95977e79146b0d7 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .uf6eff859ff7c041ef95977e79146b0d7:active , .uf6eff859ff7c041ef95977e79146b0d7:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .uf6eff859ff7c041ef95977e79146b0d7 .centered-text-area { width: 100%; position: relative ; } .uf6eff859ff7c041ef95977e79146b0d7 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .uf6eff859ff7c041ef95977e79146b0d7 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .uf6eff859ff7c041ef95977e79146b0d7 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .uf6eff859ff7c041ef95977e79146b0d7:hover .ctaButton { background-color: #34495E!important; } .uf6eff859ff7c041ef95977e79146b0d7 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .uf6eff859ff7c041ef95977e79146b0d7 .uf6eff859ff7c041ef95977e79146b0d7-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .uf6eff859ff7c041ef95977e79146b0d7:after { content: ""; display: block; clear: both; } READ: Ted Bundy (1453 words) EssayGermany has 7 locations specializing in cargo and cabin customization, forward and aft fuselage, vertical tail plane and electrics France has 4 locations working on nose and center fuselage And finally Spain has 3 locations that specialize in horizontal tail plane and A380 rear fuselage sections and belly fairing The major assembly and production is carried out in French and German factories and basic production associated with civil and military aircrafts. Besides aircrafts, EADS manufactures helicopters (it is the biggest helicopter producer in the world), satellites, missiles and other products. Airbus is a subsidiary and most important part of EADS and is involved manufacturing civil aircrafts. It is a direct competitor to the American aircraft-manufacturing company, Boeing. Airbus is a private company that is wholly owned by EADS. It has been the major generator of revenues and profits as well as cash for EADS. See the chart below that shows the size of the EADS divisions in terms of activity and revenue. Figure 4. 4: EADS divisions and revenue 4. 2 Airbus Airbus SAS is a subsidiary company of the EADS group and as stated earlier the company is one of the leading manufacturers of commercial aircrafts in the world. The main competitor of Airbus is The Boeing Company. Airbus recently increased its market share after obtaining larger number of orders and propelling it to number one in aircraft manufacturing and sales share. Airbus is a pan-European company that was founded in 1970. EADS initially had an 80% stake in Airbus with the remaining 20% held by the British company BAE Systems. In April 2006 BAE Systems sold its 20% stake to EADS through a put option, making EADS the sole owner of Airbus. The company manufactures aircraft components in four European countries: France, Germany, Spain and UK. Approximately 57,000 people are employed by Airbus. The company was formed as a European competitor to American aircraft manufacturing giant, Boeing. The first aircraft was manufactured by Airbus in early seventies but aircrafts of EADS had not been popular until 1981. Only after the launch of the A320 model in 1981 the company established itself as an important player in aircraft production business. Thereafter, the number of orders for aircrafts has been increasing significantly. Airbus manufactures the A300 range of aircrafts. Its smallest aircraft can accommodate 100 passengers. 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The project took five years of preparatory development and testing that cost over US$600 million. The development cost was projected at US$10 billion and a tax windfall of 3 billion euro in Europe alone and induced worldwide employment creation of about 200,000 jobs. It was also going to give Airbus a foothold in all commercial aircraft market segments meant to challenge and surpassing Boeing in the over 500 passenger carrier aircraft segment as well. The innovative manufacturing processes and novel materials required for the aircraft meant that there were however, going to be little or no synergies between the manufacturing of the A380 and the other Airbus families of aircraft. Other factors that promised success for the project included the growth in air traffic that was twice the industrial average, increasing revenue per passenger, ground and air congestion and the availability of new technology to improve the economics of operating large aircraft (11,15). The aircraft had 50 firm orders immediately after it was launched. The market for the A380 was projected to be 1235 aircrafts, 8% of all commercial aircraft deliveries and worth around US$77. 4 billion. Numerous tests involving potential customers around the world were carried out. The A380 is the biggest civil aircraft in the world and is produced by Airbus with a capacity to carry between 555 and 850 passengers. The development of this aircraft was probably one of the most significant and expensive project in the history of Airbus. Before the development of this plane, it had been assumed that due to growing number of long-distance flights and corresponding increase in fees paid by airlines per landing, it was reasonable to construct a double-deck, large capacity aircraft. That type of plane would have been capable of minimizing the operating costs for airlines especially on long haul flights such as between Europe and the USA. The average price for one A380 was estimated to be US$ 290 million, making it, by far, the most expensive aircraft in the world. The first orders for the plane were received in late 2001 from Emirates Airlines for seven aircrafts. Further orders followed soon and the company seemed to be very successful in attracting new customers. In 2006, the first test flight took place. 4. 2. The A380 Project Crisis In order to become successful, the company needed to fulfil its delivery and manufacturing obligations to customers. That did not happen. In June 2005, Airbus announced that due to technical problems, mainly problems attributed to internal wiring in aircrafts, there were going to be delays in the delivery of the A380 to customers. Initially, the delays were scheduled to last six months. But on 13 June 2006, Airbus announced anoth er delay of further six to seven months. This caused major shifts in the delivery schedule. The company was not going to supply the promised quantity of aircrafts on time in the following years. As a result of delays the chief executive officers (CEO’s) of both EADS and Airbus resigned. The EADS share price fell by 26%. The effect the announcement of delays to the delivery of the A380 had on the stock is illustrated in figure 5. 2. Existing customers began to express their discontent and some of them cancelled the contracts with Airbus and chose to place new orders with the rival, Boeing instead. Airbus set up a research group to analyse the problems and find a way out of the crisis. Upon completing its internal review, the Airbus crisis research group decided that further delays in manufacture were unavoidable and on 3 October 2006 the new delayed schedule for delivery was announced. This meant further delays to airlines. For instance, the first A380 aircraft to Singapore Airlines is now expected to be delivered in October 2007. In November 2006 and in March 2007 FEDEX and UPS opted to abandon Airbus and chose 747 and 777 aircrafts from Boeing. The 747 and 777 planes do not have similar specifications to the A380. EADS is currently trying hard to retain the existing customers and orders. It has also tried to maintain its market share by allowing substantial discounts to existing and new customers. Heavy losses and significant cash flow shortages are affecting EADS now. 4. 3 Financial Analysis EADS The following tables contain EADS’ financial data that is used in subsequent ratio analysis and in the chapter comparing EADS to Boeing. Table 4. 1 Business Segment Data of EADS EADS Consolidated Cash Flow Statements(In Million Euros, for Years Ended by 31 December) 2006 2005 Profit for the Period Attributable to Equity Holders of the Parent (Net Income) 99 1,676 Profit Attributable to Minority Interests 16 4 Adjustments to Reconcile Profit for the Period (Net Income) to Cash Provided by Operating Activities Depreciation and Amortization 1,691 1,653 Valuation Adjustments and CTA Release 426 261 Deferred Tax (Income)/ Expense -193 386 Change in Tax Assets, Tax Liabilities and Provisions for Actual Income Tax -160 63 Results of Disposal of Non-Current Assets -336 -170 Results of Companies Accounting for by Equity Method -152 -210 Change in Current and Non-Current Provisions 2,150 175 Change in Other Operating Assets and Liabilities -143 1,239 Cash Provided by Operating Activities 3,398 5,107 Purchase of Intangible Assets 2,708 -2,818 Proceeds from Disposal of Intangible Assets 76 101 Acquisition of Subsidiaries and Joint Ventures -82 -131 Proceeds of Disposals of Subsidiaries 86 89 Payments for Investments in Associates and Other Investments and Long Term Financial Assets -421 -659 Proceeds from Disposals of Associates and Other Investments in Long Term Financial Assets 813 485 Dividends Paid by Companies Valued at Equity 46 36 Increase in equipment of Leased Assets -147 -40 Proceeds from Disposal of Leased Assets 215 256 Increase In finance Lease Receivables -16 -219 Decrease in Finance Lease Receivables 79 85 Disposal of Non-Current Assets/Disposal Groups Classified as Held for Sale and Liabilities Directly Associated with Non-Current Assets Classified as Held for Sale 690 0 Change of Securities 3,357 1,008 Change in Cash from Changes in Consolidation 0 12 Cash Provided by Investing Activities 1,988 -1,795 Change in Long-Term and Short-Term Financial Liabilities 784 -344 Cash Distribution to EADS Shareholders -520 -396 Dividends Paid to Minorities -16 0 Payments Related to Ability for Puttable Instruments -2,879 -93 Capital Increase 94 187 Purchase of Treasury Shares -35 -288 Cash Used for Financing Activities 2,572 -934 Effect of Foreign Exchange Rate Changes and Other Valuation Adjustments on Cash and Cash Equivalents -57 17 Net Increase in Cash and Cash Equivalents 2,757 2,395 Cash and Cash Equivalents at the Beginning of Period 5,386 2,991 Cash and Cash equivalents at the End of Periods 8,143 5,386 Table 4. 2 Consolidated Cash Flow Statements of EADS 2006 % 2005 % 2004 % Dev(05-06) Eu ro % Revenues 39,434 100 34,206 100 31761 100 5,288 15 Cost of Sales -34,722 -88 -27,530 -80 -25522 -80 -7,192 26 Gross Margin 4,712 12 6,676 20 6239 20 -1,964 -29 Selling, Administrative and Other Expenses -2,462 6 -2,336 -7 -2296 -7 -126 5 Research and Development Expenses -2,458 -6 -2,075 -6 -2126 -7 -383 18 Other Income 297 1 222 0 314 1 75 34 Share from Profit from Associates under Equity Method 189 0 225 1 84 0 -36 -16 and Other Income from Investments Profit Before Finance Costs and Income Taxes 278 1 2,712 8 2215 7 -2,434 -90 Finance Costs -244 -1 -177 -1 -330 -1 -67 38 Income Taxes 81 0 -825 -2 -664 -2 906 -110 Profit for the Period 115 0 1,710 5 1221 4 -1,595 -93 Attributable to: Equity Holders of Parent (Net Income) 99 0 1,676 5 1203 4 -1,577 -94 Minority Interests 16 0 34 0 18 0 -18 -53 Earnings Per Share Basic 0. 12 2. 11 1. 5 -1. 99 Diluted 0. 12 2. 09 1. 5 -1. 97 Table 4. 3 Consolidated Income Statement of EADS 2006 % 2005 % 2004 % Non-Current Assets Intangible Assets 10,855 15 11,052 16 10549 15 Property, Plant and Equipment 14,315 20 13,951 19 12956 19 Investments in Associates under the Equity Method 2,095 3 1,908 3 1738 3 Other Investments and Long-Term Financial Assets 1,666 2 1,938 3 2110 3 Non-Current Other Assets 4,231 6 3,610 5 2548 4 Deferred Tax Assets 2,624 4 2,980 4 466 1 Non-Current Securities 1,294 2 1,011 1 7096 10 37,080 52 36,450 51 37463 55 Current Assets Inventories 16,892 23 15,425 22 12334 18 Trade Receivables 4,852 7 4,802 7 4406 6 Other Current Assets 4,545 6 3,675 5 5242 8 Current Securities 549 1 4,189 6 0 0 Cash and Cash Equivalents 8,143 11 5,386 8 8718 13 34,981 48 33,477 48 30700 45 Non-current Assets/Disposal Groups Held For Sale 76 0 881 1 0 0 Total Assets 72,137 100 70,808 100 68163 100 Total Equity Equity Attributable to Equity Holders of the Parent Capital Stock 816 1 818 1 810 1 Reserves 7,593 11 8,699 12 7899 12 Accumulated Other Comprehensive Income 4,955 7 3,982 6 7678 11 Treasury Shares -349 0 -445 0 -177 24 13015 19 13054 19 16210 Minority Interests 137 0 153 0 144 0 13,152 19 13,207 19 16354 24 Non-Current Liabilities Non-Current Provisions 9,063 13 7,997 11 6074 9 Long-Term Financial Liabilities 3,561 5 4,189 6 4405 6 Deferred Tax Liabilities 2,465 3 2,376 3 4134 6 Other Non-Current Liabilities 12,680 17 11,295 16 10267 15 27,769 38 25,857 36 24880 36 Current Liabilities Current Provisions 3,631 5 2,727 4 2350 3 Short-Term Financial Liabilities 2,196 3 908 1 818 1 Liability for Puttable Instruments 0 0 3,500 5 3500 5 Trade Liabilities 7,461 10 6,634 10 5860 9 Current Tax Liabilities 218 0 174 0 178 0 Other Current Liabilities 7,646 25 17,739 25 14223 22 31,152 43 31,682 45 26929 40 Liabilities Directly Associated With Non-Current Assets for Sale 64 0 62 0 62 0 Total Equities and Liabilities 72,137 100 70,808 100 68163 100 Table 4. 4 Consolidated Balance Sheet of EADS 4. 3. 1 Ratio Analysis of EADS from 2004 to 2006 4. 3. 1. 1 Liquidity For the years 2004, 2005 and 2006 Liquidity condition was quite good and become even better in 2006. 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Methods to Evaluate Non Tariff Measures on Trade Non-tariff measures are difficult to quantify as Tariff levels are published in tariff schedules, and these can be large, cumbersome and difficult to read. Non-tariff measures are politically sensitive and this may arise from the lobby activity of vested interests. Measures that are difficult to compute may also be less transparent, which helps to prevent public discussion. Several techniques may be used to evaluate the effect of non tariff measures for example ; data sources; Information about the effects on NTM’s can be gathered through different databases such as the ; 2013 National Trade Estimate Report on Foreign Trade Barriers which is organized each year by the Office of the U.S. Trade Representative to surveys important foreign barriers to U.S. exports, the European Unions Market Access Database, World Trade Organizations (WTO) Trade Policy Reviews and the World Integrated Trade Solutions (WITS) software developed by the World Bank which is described as Vald manole as a user friendly way . price gap measures; Non-tariff measuresincrease thepricepaidby consumers. The basic strategy method involves a comparison of prices before an dafter the NTM mark up where the difference is expressed as a Tariff equivalent. For example, the price of a product includes the cost of transport and insurance while wholesale of retail prices include the cost of transport. These factors must be removed from the observed price difference before the markup can be attributed to non-tariff measures. (Ferrantino,2006). Econometrics model The notable advantage of econometric analysis, relative to the â€Å"price gap†method, is that it can be used to study the trade effects of multiple non-tariff measures across multiple industries and countries simultaneously. They forecast that the price of trade between any two countries will be positively linked to the size of their economies and inversely connected to the distance (and other measures of trade costs)between them. Measures taken by the government to alleviate the impact of Non Tariff barriers Mauritius has effectively diversified its economic activities from a monocrop economy depending on sugar to an economy based on textile, tourism and financial services. Mauritius is regarded as a middle income country and ranks according the recent â€Å"Human Development Index† for 173 countries, Mauritius was ranked second in Africa. (Wikipedia) However, Non tariff measures are affecting Mauritian Trade. A workshop was organized on the 24 January 2013 by the International Trade Center (ITC) with the collaboration of the Mauritian Ministry of Foreign Affairs, where the core results about non-tariff measures (NTMs) affecting Mauritian exporters were discussed, along with solutions and potential policy options. The ICT’s NTM Program Manager Poonam Mayhem claimed that â€Å"Though Mauritian companies enjoy preferential access in the EU market, they complained about the technical and conformity assessment requirements which they find cumbersome in these markets. Labelling, namely the need for labelling in various languages, was also considered to be an important non-tariff barrier† (Anon 2013). Moreover, a report claimed that 29% of burdensome NTMs were encountered within COMESA in which Mauritius is a member . Thus ,in order to alleviate this problem, the government has decided to take concrete measures to eliminate Non Tariff Barriers that are unjustified. The measures were announced by the Dr. the Hon. A. Boolell, Minister of Foreign Affairs, Regional Integration and International Trade at the opening of the Workshop on NTBs in September 2013.The measures are as follows : To eliminate some 26 trade measures considered as NTB’s after a study carried out by Strataconsult which identified those non tariff measures that hold no justification and had to be either streamlined or eliminated., relating mainly to import and export procedures in 2012. The launching of the Mauritius Trade Portal to empower businesses by granting with all the relevant information concerning the import and export procedures. â€Å"A more ambitious project currently being developed is the single window that will link all Government agencies concerned with trade procedures – the objective being for traders to complete all trade procedures on line†(Anon 2013). This system will help to meaningfully eliminate the quasi totality of Non Tariff Barriers in Mauritius. The Government is also collaborating with the International Trade Centre to carry out a survey with organizations to examine the factors affecting trade. Dwell time for the release of goods at the port and airport have been significantly improved since the construction of a one stop center by housing Customs and other agencies under one roof. The Ministry with the collaboration of the World Bank has codified all existing NTB’s so as to facilitate their streamlining or elimination. Some people from the World Bank was in Mauritius recently to help us in setting the permanent data collection tool on NTMs, modelled on a new classification method that is more user friendly. Other measures taken by the government COMESA-EAC-SADC Training Workshop In addition , the COMESA-EAC-SADC Training Workshop was also organized and targeted at enabling trade on Non-Tariff Barriers. Mauritius is ranked first in Sub-Saharan Africa in the â€Å"Ease of Doing Business index of the World Bank†. Mauritius is rated 20th globally in the â€Å"Ease of Doing Business index of the World Bank†, 2nd among SIDS economies and is in the top 10 worldwide for the ease of starting a business. We need to eliminate all weaknesses and difficulties to trade so as to gain more markets since no markets will be at risk if the needs of consumers are satisfied . The World Bank Database on ‘Non Tariff Measures’ Moreover, The World Bank Database on ‘Non Tariff Measures’ (NTMs), including a catalogue of some 6 000 tariff lines, was given to the Minister of Foreign Affairs, Regional Integration and International Trade, Dr. Arvin Boolell, by the Ag Country Director of the World Bank, Mr. Constantine Chikosi, recently. The Database will allow Mauritius to carry out a regular study of the effects of NTMs on trade and competitiveness.It also facilitates exports by improving information on NTMs in export markets. It offers the government with necessary data to implement the right policies that improve the investment climate in competitiveness of Mauritian businesses. Measures taken in other countries are as follows: Elimination of NTM’S in the EU The elimination of NTM’s in the EU is based on three principles : â€Å"(i) non discrimination; (ii) mutual recognition; (iii) Community legislation to the functioning of the common market†(Carrà ¨re Jaime 2011). These values protect â€Å"the movement for goods, persons, services and capital and is the result of the abolition of customs duties, QRs, and measures having equivalent effect to customs duties†(Malouche et al. 2012). In addition, according to the European Commission, On 25 March 2013, the EU and Japan officially launched the negotiations for a Free Trade Agreement, which calls for the removal of EU duties and non-tariff barriers in Japan to merge together. They also enable the EU side to interrupt negotiations after one year if Japan does full fill its commitments to remove non-tariff barriers. Elimination of NTM’s in India India signed a framework contract for setting a free trade area with Thailand in October 2003. The agreementis similar toIndia-ASEANfree trade agreement. It also says that FTA should cover: (i)Non-tariff barriers (NTBs)imposed onany products covered in this Agreement,including, butnot limited toquantitative restrictions or prohibition on the importation of any product or on the export or sale for export of any products.(ii)Safeguards based on the GATT/WTO principles; (iii) Disciplines on subsidies and countervailing measures and anti-dumping measures based on the existing GATT discipline. The Government Oof India has also taken some internal measures like the instance, import restrictions levied certain products under Article XX. References Anon, 2014. â€Å"European Commission†. [online] Available From : http://ec.europa.eu/trade/policy/countries-and-regions/countries/japan/ [Accessed 27June 2014] Anon,2013. â€Å"Non-tariff measures affecting Mauritian Trade†. [online] Available From : http://www.intracen.org/Non-tariff-measures-affecting-Mauritian-trade/ [Accessed 27 June 2014] Carrà ¨re.,C and Jaime; (March 2011):†Non-Tariff Measures What Do We Know, What Might Be Done?†. MeloSource: Journal of Economic Integration, Vol. 26, No. 1, pp. 169-196 Published by: Center for Economic Integration, Sejong University Stable Malouche, M.,Cadot,O., Saez,S., 2012. â€Å"Streamlining Non-Tariff Measures†. [online] Available From : http://www.scribd.com/doc/93203908/Streamlining-Non-Tariff-Measures [Accessed 27 june 2014] Anon 2014. â€Å"EU and Japan exchange offer to open markets†.[online] Available From: http://www.euinjapan.jp/en/media/news/news2014/20140404/200044/ [Accessed 26 june 2014] Bacchetta et al ,2012. â€Å" World Trade Report Trade and Public Policies :A Closer Look at Non -Tariff Measures in the 21st Century† [online] Tomacinschi, L., Available From : http://www.scribd.com/doc/169205870/World-Trade-Report [Accessed 3rd July 2014] Anon â€Å"Origins Of The Wto And Its Transformation From Gatt International Law Essay† [online], Available From : http://www.ukessays.com/essays/law/origins-of-the-wto-and-its-transformation- from-gatt-international-law-essay.php [Accessed 14 July 2014] TheWorld Bank 2014 .,â€Å"Economy Rankings† [online], Available From :http://www.doingbusiness.org/rankings [Accessed 14 July 2014] Bose., A (2013) â€Å"Outsourcing to africa A Relative Ranking of 15 Country Locations† [online], Available From: http://www.slideshare.net/arindambos/outsourcing-to-africa-full-report-arindam-bose[Accessed 4 August 2014]

Tetanus Essays -- Health, Diseases

Introduction Clostridium tetani more commonly known as Tetanus is an acute infectious disease. Tetanus is not contagious and is a neurotoxin produced by Clostridium tetani. It is characterized by muscular spasms that mainly involve the voluntary muscle groups. Tetanus can affect horses, goat, swine, cat, dog, sheep, cattle and many other domestic animals. In cattle the disease is relatively rare, but in some cases can spread through a herd causing substantial economic loss. Clostridium tetani is a gram-positive anaerobic bacteria that can be found in the soil, intestines of many animals and therefore it is also naturally found in the feces of most animals. Tetanus is more common during warmer months and less common during the colder months when the ground is frozen. Tetanus enters the body through a wound, most commonly in cattle via a castration site or umbilical location of a newborn calf. History Tetanus is one of the earliest recognized diseases and was known and described by Hippocrates in the 6th century B.C. (Gibbons et. al, 1970) In 1844 scientist were able to produce tetanus in a rabbit. They had taken material from a human that died from the disease and injected into the rabbit. (Jensen et. al, 1973) Soon after the disease was produced in guinea pigs, mice and rats, this was accomplished by inoculating them with garden soil. (Gibbons et. al, 1970) It was not until 1889 that Clostridium tetani was cultured. Etiology Clostridium tetani is gram-positive, anaerobic bacteria that have poor motility and the ability to bear spores. The spores are strongly resistant to heat, light and drying and may survive in soil and feces for months to years. When the spores are allowed to be in contact with direc... ...g the skin. Vaccinations that protect against Clostridium tetani are also available. Treatment Without treatment the affected cattle may die in three to ten days and even so the mortality rate it sixty percent. In order to treat these animals they must be tranquilized. Penicillin or another antibiotic must be administered to halt bacterial multiplication and production on toxins. (Thomas et. al, 2009) Since the animals muscles will be in spasm and very rigid they will be unable to eat or drink, treatment must also include means of supportive care. This may be accomplished by giving intravenous fluids or force feeding via stomach tube. The supportive treatment must be maintained until the signs of muscle spasms have diminished and the animal regains control over its body. This may take as long as one to four weeks. (Thomas et. al, 2009)

Family Size

Would you rather be a member of a small family or a big one? Small families become spoilt over excessive resources. The advantages of having a small family weigh up to having a pretty good life. By being part of a small family you will receive more attention from your parents; go on holiday often and have money for yourself. Parents will not have to stress over money and budget issues. Although the advantages of a small family are everything most children would want in their lives, the disadvantages have a negative impact on your own and others lives.Disadvantages of children in a small family are that they don’t learn responsibility and become selfish due to having their own stuff and not having to share with siblings. They become spoilt because they are use to having everything their way and getting whatever they want at any time. Children also tend to become bored alone at home, holidays or outings. Being part of a big family introduces children to a balanced lifestyle.The advantages of being part of a family are children learn responsibility, do chores etc. It is also good for younger siblings to have someone they can talk to. On family outings there will be a joyful atmosphere because of the amount of people. They will learn to socialize easily and be able to share with others. Even though there are many advantages of being part of a big family, there are also disadvantages to consider. Children get less attention from their parents and have no privacy or space of their own.A major issue is sibling rivalry, which is when siblings don’t get along and compete with each other in academics, sports etc. Disadvantages for parents would be not having a lot of money to spend on each child and having a huge amount of stress to pay bills, fees etc. In my opinion, having and being part of a small family results in children being spoilt and unsocial. Having a big family is better for a child’s upbringing because of the jovial household atmosphere and responsibilities learnt. Total number of words: 337

Heres How Schrodingers Cat Works

Heres How Schrodingers Cat Works Erwin Schrodinger was one of the key figures in quantum physics, even before his famous Schrodingers Cat thought experiment. He had created the quantum wave function, which was now the defining equation of motion in the universe, but the problem is that it expressed all motion in the form of a series of probabilities- something which goes in direct violation to how most scientists of the day (and possibly even today) like to believe about how physical reality operates. Schrodinger himself was one such scientist and he came up with the concept of Schrodingers Cat to illustrate the issues with quantum physics. Lets consider the issues, then, and see how Schrodinger sought to illustrate them through analogy. Quantum Indeterminancy The quantum wave function portrays all physical quantities as a series of quantum states along with a probability of a system being in a given state. Consider a single radioactive atom with a half-life of one hour. According to the quantum physics wave function, after one hour the radioactive atom will be in a state where it is both decayed and not-decayed. Once a measurement of the atom is made, the wave function will collapse into one state, but until then, it will remain as a superposition of the two quantum states. This is a key aspect of the Copenhagen interpretation of quantum physics- its not just that the scientist doesnt know which state its in, but its rather that the physical reality is not determined until the act of measurement takes place. In some unknown way, the very act of observation is what solidifies the situation into one state or another. Until that observation takes place, the physical reality is split between all possibilities. On to the Cat Schrodinger extended this by proposing that a hypothetical cat be placed in a hypothetical box. In the box with the cat we would place a vial of poison gas, which would instantly kill the cat. The vial is hooked up to an apparatus which is wired into a Geiger counter, a device used to detect radiation. The aforementioned radioactive atom is placed near the Geiger counter and left there for exactly one hour. If the atom decays, then the Geiger counter will detect the radiation, break the vial, and kill the cat. If the atom does not decay, then the vial will be intact and the cat will be alive. After the one-hour period, the atom is in a state where it is both decayed and not-decayed. However, given how weve constructed the situation, this means that the vial is both broken and not-broken and, ultimately, according to the Copenhagen interpretation of quantum physics the cat is both dead and alive. Interpretations of Schrodingers Cat Stephen Hawking is famously quoted as saying When I hear about Schrodingers cat, I reach for my gun. This represents the thoughts of many physicists, because there are several aspects about the thought experiment that bring up issues. The biggest problem with the analogy is that quantum physics typically only operates on the microscopic scale of atoms and subatomic particles, not on the macroscopic scale of cats and poison vials. The Copenhagen interpretation states that the act of measuring something causes the quantum wave function to collapse. In this analogy, really, the act of measurement takes place by the Geiger counter. There are scores of interactions along the chain of events- it is impossible to isolate the cat or the separate portions of the system so that it is truly quantum mechanical in nature. By the time the cat itself enters the equation, the measurement has already been made ... a thousand times over, measurements have been made- by the atoms of the Geiger counter, the vial-breaking apparatus, the vial, the poison gas, and the cat itself. Even the atoms of the box are making measurements when you consider that if the cat falls over dead, it will come in contact with different atoms than if it paces anxiously around the box. Whether or not the scientist opens the box is irrelevant, the cat is either alive or dead, not a superposition of the two states. Still, in some strict views of the Copenhagen interpretation, it is actually an observation by a conscious entity which is required. This strict form of the interpretation is generally the minority view among physicists today, although there remains some intriguing argument that the collapse of the quantum wavefunctions may be linked to consciousness. (For a more thorough discussion of the role of consciousness in quantum physics, I suggest Quantum Enigma: Physics Encounters Consciousness by Bruce Rosenblum Fred Kuttner.) Still another interpretation is the Many Worlds Interpretation (MWI) of quantum physics, which proposes that the situation actually branches off into many worlds. In some of these worlds the cat will be dead upon opening the box, in others the cat will be alive. While fascinating to the public, and certainly to science fiction authors, the Many Worlds Interpretation is also a minority view among physicists, though there is no specific evidence for or against it. Edited by Anne Marie Helmenstine, Ph.D.

Explore the theme of love in Auden Essays

Explore the theme of love in Auden Essays Explore the theme of love in Auden Paper Explore the theme of love in Auden Paper Essay Topic: W H auden Poems This was an arranged marriage which allowed her to have the British citizenship and escape from Nazi Germany. Aden met his true love, the poet Chester Coalman, in New York in 1939. Coalman became Addends companion for the rest of his life. Love is a recurrent theme in Addends poetry but so are many others such as world war two, politics, indifference, nature or time. Therefore, we could ask ourselves how important love is in Addends poetry. As Aden has been in love for the major part of his life, a lot of his poems talk about it or at least mention it. Among them, the most famous one is Funeral Blues as it has been used in the movie Four weddings and a funeral. In this poem, Aden talks about the death of his lover. It is one of the rare poems in which Aden assumes his homosexuality when he says He Is Dead. It must be said that at this time, being gay was unacceptable and people could even end up in jail for that (this might be one of the reasons why in the memo Roman Wall Blues, Aden talks about my girl though we know that his lover was a man). In Funeral Blues, the poet describes how the lover meant everything to him, by using the lexical field of space North, South, East, West, time noon, midnight, but also senses such as the view or hearing especially in the first stanza. The entire poem is about the void that the death of the lover has left and how much he counted in Addends life. This is pretty much the same in the poem underneath the abject willow. Indeed, in the two poems the lover is dead. But in the second one, there is a positive note by the middle of the poem Strike and you shall conquer which become more and more imposing by the end of it. It ends up on a sign of hope walk then, come, no longer numb into your satisfaction which is contrasting with the beginning. This sudden change in the characters way of thinking almost makes the reader forget that at first, this poem was written after the lovers death and it could possibly be a way for the author to express his grief. This evolution of atmosphere is common with other poems such as The more loving one. It begins very sadly, the poet seems depressive for all they care, can go to hell. The use vulgarity is a sign of how fed up the poet is. He uses it again in stanza three stars that do not give a damn to emphasis that he has had enough. Indeed, being in love is never easy because as Aden says equal affection cannot be. One person always loves more than the other does. Aden wants to be the more loving one, not as a sign of sacrifice but rather as a sign of understanding of the situation. By the end of the poem, he seems appeased by his choice, or at least a little, and able to put things into respective l should learn to look at an empty sky. In this poem, Aden shows love as omnipresent in peoples lives as it keeps being a concern even at night time, under the stars. The evolution of atmosphere can be from a negative one to a positive one as we have just seen but it can also be inversely such as in O what is that sound and Refugee Blues. Indeed, in both poems, the atmosphere is quite pessimistic in the first stanzas but it becomes more and more obvious that the protagonists are wanted and that the end is going to be tragic. For instance, in O what is that sound, one of the two beakers still has hope in his voice at the beginning only the scarlet soldiers, dear, the soldiers coming but as we continue reading, we can feel that he starts worrying or perhaps a warning, now they are running and by the end, he is as scared as the first speaker is or maybe even more l promised to love you, dear, But I must be leaving. In Refugee Blues, the fact that the protagonists are wanted is really clear as soon as the first stanza yet theres no place for us, my dear, yet theres no place for us but it still becomes more ND more precise as long as we read the poem looking for you and me, my dear, looking for you and me. Those poems are both tragic as we understand that the characters are Jews wanted by the Nazi Germany. Love is here used as a way of moving deeply the reader as we can easily identify in the nickname dear used all along the two poems. The use of the theme of love can also be seen as a ploy to soften the harshness of reality. This use can also be found in Lullaby. Even though the major part of the poem is quite sad, love is present since the beginning lay your sleeping head, my love and until the ND watched by every human love. The love mentioned in this poem is not only romantic love, but also spiritual love. Indeed, Addends speech is quite philosophical, he wonders why the world is as it is. Love is one of the few elements that bring back the reader to the real world. It is shown as a positive thing that makes reality easier to accept. Sometimes though, love is not welcome. This is the case in Miss Gee, in which the old single lady is disgusted by the sight of the loving couples. It can be seen as a sign of jealousy and loneliness.

Discuss the relevance of anthropological concepts, like 'spheres of Essay

Discuss the relevance of anthropological concepts, like 'spheres of exchange' - Essay Example Lastly, the essay will end with a conclusion, which sums up all the arguments and ideas discussed in the paper. Introduction Spheres of exchange refer to an anthropological concept, which entails the analysis of restrictions in trade and societies that share communal resources. In discussing spheres of exchange, the main focus is on whether principles of the market and economic theories can be considered as true in economies of all societies (Hart & Ortiz 1). This concept is based on the assumption that maximization of profit is what motivates all exchanges. All people have the sole motive to accumulate considerable profits when they engage in exchange. Therefore, the concept seeks to examine the economics behind any form of exchange in the society (Hart & Ortiz 1). Anthropologists examine this concept under economic anthropology. Based on this, the concept seeks to compare and analyze consumption, production, and exchange in societies not based in the west. In studying spheres of ex change, economic anthropologists have had two aims. One of the aims includes establishing economic activities based on the social and cultural context. The second aim entails understanding the rationality behind the systems of exchange, which seem irrational and unconventional (Hart & Ortiz 1). The anthropologists who studied spheres of exchange include Laura and Paul Bohannan; they studied this concept in their field work, in Nigeria. They provided three types of spheres: the subsistence sphere, wealth, and marriageable female relatives. The subsistence sphere consisted of food, such as grains, yams, vegetables, among others. Wealth comprised cattle, slaves, white cloth, and brass rods (Hart & Ortiz 3). Economic anthropologists Karl Polyani, Marcel Mauss, and Karl Marx have had an impact in the explanations of spheres of exchange. Polyani made a significant contribution through his comparison of economic institutions. His ideas outlined in Trade and Market in the Early Empires repr esent his beliefs. He argued that the economy of capitalistic societies is guided by values and not aim for profit (Hart & Ortiz 3). In his works, known as the gift, Mauss examines the exchange of gifts in various societies. He holds that gifts have a reciprocal nature since the receiver has an obligation to pay back what he or she got from the giver. Karl Marx made contributions in the field of anthropology through his dialectics and his arguments of social class. Neoliberal Globalization Neoliberal globalization entails efforts to remove barriers to trade and privatization of services as well as resources. The main objective of neoliberal globalization of the economy is to leave prices at the control of market forces. This tends to benefit a few in the society, while the majority suffers due to increased prices and unfavorable conditions in the market. Neo-liberalism and globalization develops within certain circumstances, which tend to be social and historical. Neo-liberalists ar gue that this concept is a law of nature. Anthropologists take globalization to mean the escalation in flows and improvement, in connections of people, values, goods, ideas, symbols, and knowledge (Hart & Ortiz 1). In anthropology, the term entails descriptions on how the market has prevailed. As a result, the economy became less dependent on political, social, and cultural forces. This has led to profound dominance of the market in