Project Management And Construction Of The Project

All the financing, sourcing, bidding management and construction of the project are decided by MOR internally7. Eventually, the power centralized into three people – former Minister of Railways Liu Zhijun, former railway ministry chief engineer Zhang Shuguang and former China Railway Communication Group Corp. Chairman Ma Cheng. Liu Zhijun, who had the main leadership responsibility for the accident and acted as the executive sponsor, was sacked and detained in Feb, 2011, before it happened, being accused of corruption6, while Ma Cheng died of a heart attack in the following weeks of the accident. They were all accused of abuse of power and accepting bribes which somehow reduced the budget for the contractual supplier. As a result, corner cut on materials during the construction is common and poses a tremendous risk on riding the train. Cause of failure 3 – transparency and oversight: Transparency is always crucial in project management. However, it has been a problem in Chinese society for thousand years. For example, after the accident, the relevant authorities tried to bury the fallen carriages without thorough life inspection (one little girl was found alive after the carriage was half-buried) and cover up the fact from being exposed to the public8. Even though it is not clear what happened during the project, it is believed that serious transparency problems underlie the deadly accident. Who made the decision to award contracts? How decisions were made forShow MoreRelatedProject Management Of Construction Projects Essay3459 Words   |  14 PagesINTRODUCTION Construction projects can be extremely complex and fraught with uncertainty. Risk and uncertainty can potentially have damaging consequences for the construction projects. 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Thoreaus Transcendentalism - Free Essay Example

Sample details Pages: 4 Words: 1181 Downloads: 7 Date added: 2019/07/08 Category Philosophy Essay Level High school Topics: Transcendentalism Essay Did you like this example? In the early 19th century, a philosophy known as transcendentalism emerged in America. Members of the transcendentalist movement believed that the thoughts of individuals were bastardized due to societal issues such as politics and religion. Although transcendentalists held numerous beliefs, the three essential values of transcendentalism are idealism, individualism, and the divinity of nature. Don’t waste time! Our writers will create an original "Thoreaus Transcendentalism" essay for you Create order Transcendentalists believed that individuals should be independent, and not influenced by the rules of society. Along with individualism, members of this movement used creative writing in order to describe the significance of nature, and demonstrate their love and respect for the natural world. In order to live a successful life free from the judgement of society, transcendentalists believed that it was crucial to connect and understand nature. One of the most influential writers of this period, Henry David Thoreau, was very passionate about nature. Thoreau is most well-known for his book Walden, which describes the importance of living a simple life and being able to provide for yourself while preserving a connection to nature. The transcendentalist themes reflected in the piece were inspired by the time Thoreau lived away from society in a cabin he built himself on Walden Pond. After Thoreaus death, another piece titled Walking was published. In this piece, Thoreau writes on the subject of nature, and dismisses the ideas of society that hinder both individual thought and the experiences provided by nature. Both of these pieces reinforce Thoreaus message that there is value in self-reliance and discovery as well as a connection between man and nature. Throughout both texts, Thoreau explains that nature represents the natural aspect to man that has been subdued by society. Unlike most people, Thoreau believes it is more important to be independent in both social and economic situations than to rely on society to make those decisions. Thoreau finds contentedness in solitude, and refuses to interact with society, unless it is on his own terms. Thoreau also expresses that he does not understand how people can be content in life without a strong connection to nature. A passage from Walking describes Thoreaus opinions on normal members of society, I think that I cannot preserve my health and spirits, unless I spend four hours a day at least†and it is commonly more than that†sauntering through the woods and over the hills and fields, absolutely free from all worldly engagements You may safely say, A penny for your thoughts, or a thousand pounds. When sometimes I am reminded that the mechanics and shopkeepers stay in their sho ps not only all the forenoon, but all the afternoon too, sitting with crossed legs, so many of them†as if the legs were made to sit upon, and not to stand or walk upon†I think that they deserve some credit for not having all committed suicide long ago. Thoreau believes that people are distracted by society, and no longer take the time to enjoy the beauty of nature, and this is incomprehensible to him. In Walden, Thoreau reinforces this idea when he states, Simplicity, simplicity, simplicity! I say, let your affairs be as two or three, and not a hundred or a thousand; instead of a million count half a dozen, and keep your accounts on your thumbnail In both texts, we see that Thoreau expresses his distaste for society. Instead of a mentality exhausted by societal issues, Thoreau encourages readers to think deeply about themselves and their personal connection to nature. In Walking Thoreau says, In my afternoon walk I would fain forget all my morning occupations and my obligations to society. But it sometimes happens that I cannot easily shake off the villageWhat business have I in the woods, if I am thinking of something other than the woods? Thoreau believes that the only way to fix the issues faced by members of society is to keep the interactions with others to a minimum and to take the time to enjoy the splendor of the natural world. Thoreau begins Walking with a quote that that captures the theme of the piece; his admiration of the natural world, I wish to speak a word for Nature, for absolute freedom and wildness, as contrasted with a freedom and culture merely civil†to regard man as an inhabitant, or a part and parcel of Nature, rather than a member of society. Throughout the essay, he describes the wildness present in both man and nature, and uses the activity of walking to explain the human attempt to understand nature. Thoreau believed that man was a part of nature and completely separate from society, and elaborates on this concept in Walden. In order to understand nature himself, Thoreau took a trip to Walden Pond. At the pond, Thoreau lived a simple life and supported himself. He knew that society would be skeptical of his endeavor, but wished to gain valuable knowledge about himself by surrounding himself with the natural world. Unlike other members of society who focused on materialistic things, Thoreau was content with simplicity, and focused his attention on nature. Not only did Thoreau build the cabin he inhabited himself, but he lived off the land eating foods that nature provided, and found entertainment and intellectual simulation in the animals and plants surrounding him. He proved that it was possible to live successfully among nature, and that people who escaped the grasp of society would be more satisfied and aware if they accepted themselves as a part of nature. Thoreau explains that after spending time in nature, he no longer felt that human connection was significant; In the midst of a gentle rain while t hese thoughts prevailed, I was suddenly sensible of such sweet and beneficent society in Nature, in the very pattering of the drops, and in every sound and sight around my house, an infinite and unaccountable friendliness all at once like an atmosphere sustaining me, as made the fancied advantage of human neighborhood insignificant. While Walking and Walden share many of the same themes, the way in which Thoreau presented the ideas was very different. In Walking, concepts are presented more dramatically than they are in Walden. Although he presented his ideas differently in each of the texts, the relationship between the texts explained Thoreaus reasoning for appealing to humans. In fact, an article published by Slate Magazine, claims that Walking is Waldens counterpart. Wen Stephenson said, If you understand Walking, you can almost skip Walden. (Im not really recommending that†in fact, please dont.) What I mean is this: Its clear that Walking, and the actual walking that inspired it, leads to Walden. Within a year of delivering the Walking lecture for the first time, in the spring of 1851, Thoreau was back at his draft of the big book, revising and expanding with renewed creative energy. You could almost say Thoreau walked to Walden. The natural correlation between the two pieces allowed for Thoreau to co nvey to people that in order to live a successful and happy life, they should not depend on society to guide their actions, and that humans were not superior, but equal to nature.

The Juxtaposition Of Private Witt And First Sgt. Welsch

The juxtaposition of Private Witt and First Sgt. Welsch in The Thin Red Line by Terrence Malick is used to illustrate the two ways that a man can view the world, in the most basic sense. John Cottingham also discusses these two ways in his book Philosophy of Religion. Cottingham describes the two ways as the atheist, who cannot see past the â€Å"disorganized concatenation of contingent episodes† in his experiences, and fails to find transcendent meaning in his experience of nature (Cottingham 61). This describes Welsch’s worldview. He has experienced war and from that experience he has concluded that there is no vertical plane that can draw him up. There is only the darkness here and now, all we can do is try to survive as long as we can. However, there is another way of seeing things, the way of the theist, or Private Witt. According to Cottingham, the theist not only can, but must have a sense of joy, reverence, and thankfulness for the experiences we have, because t he theist can see the beauty, or as Witt would say, the glory, that shines through all things. The theist has a transfigured experience of reality. A theist encounters God in a profound way through his experience of nature, art, literature, and the like. The two views are strikingly different, and Mallick uses Witt and Welsch’s interactions, as well as nearly every other moment in the film, to illustrate the two manner of seeing the world. In their first interaction, Welsch spells out his beliefs about self

The Rights Of The United States - 2558 Words

During class, a topic was brought up that was very interesting and needed to be further investigated and researched. The topic is the rights of artists in the United States and what laws have been passed to deal with them, lawsuits that have occurred, and what the artists themselves think about the different rights. There has been a battle over copyright, moral rights, and resale rights of artists in the United States. Copyrights are basic rights that are given by acts that have been passed and they protect any creative works. Moral rights are trickier and are not as clearly defined. Resale rights are interesting to discuss because some artists have differing opinions, with each other and with the government officials. The rights of†¦show more content†¦Some artists also have the rights of attribution and integrity, meaning they can claim authorship and prevent the use of their name for works that are not theirs. There are different time constraints for a work to be copyrigh t-protected in the United States according to the Artists Rights Society. They also explained that any changes in copyright terms have occurred over the years, but now there is a total of 95 years of copyright protection of works published before January 1, 1978, and a term of the lifetime of the artist plus 70 years for works published after January 1, 1978. The term of copyright protection is different from country to country and depends on what the individual nations decide to do. On the â€Å"Copyright Basics† page of Artists Rights Society, they state that in 1994, the European Union, as a whole, established a term of the lifetime of the artist plus 70 years. Understanding the background information about copyright in the United States is helpful when discussing the specific issues right for artists. The moral rights of artists are somewhat difficult to explain because they are similar to copyrights. As specified by the College Art Association, â€Å"Copyright is seen a s a property right, one that creates economic incentives for authors to create works by giving them exclusive rights to control their work†¦By exploiting these rights, copyright owners can, if they are fortunate, earn an income.† Because a copyright is on the property, it ensures that the

Assessment of Financial Health Free Essays

string(65) " to less creditworthy individuals or inattention to collections\." Reocities Home Neighborhoods Making Of Cases in Finance – Final Project Report Friendly Cards, Inc. (1988) Gary Cao Noah N Flom Robert Harris Srini Pidikiti May 1997 TABLE of CONTENTS 1 Assessment of Financial Health Pro Forma Financial Statements 1. 1 Review of History and Statement of Financial Health 1. We will write a custom essay sample on Assessment of Financial Health or any similar topic only for you Order Now 1. 1 Industry 1. 1. 2 Friendly Cards History 1. 1. 3 Friendly Financials 1. 2 Review and Evaluation of Pro Forma Statements 1. 3 Financial Policy / Covenants 2 Beaumont’s Decisions 2. 1 Envelope Machine Proposal 2. 1. 1 Evaluation 2. 1. 2 Financial Effect of Investment 2. 1. Recommendation 2. 2 Evaluation of West Coast (new equity offer) 2. 2. 1 Advantages 2. 2. 2 Disadvantages 2. 3 Valuation of Creative Designs, Inc. 2. 3. 1 Capital Structure Argument 2. 3. 2 Weighted Average Cost of Capital Assumptions (WACC) 2. 3. 3 Cash Flows, Terminal Value, Equity Value Valuations 2. 4 Pooling Implictions (Friendly + CD) 2. 5 Friendly Cards Stock Valuation 3 Overall Assessment 4 Goals for the Financial Structure of Friendly Cards, Inc. ——————————————————————————- PART 1. Assessment of Financial Health Pro F ormas 1. Review of History and Statement of Financial Health Wendy Beaumont, president of Friendly Cards, Inc. , has rapidly expanded her greeting card business through internal growth and acquisitions. Ms. Beaumont realizes that money is currently tight, however, she is adamant about future growth and has sought our opinion as to determine her best course of action. In presenting a decision we will first conduct an analysis of the industry, then give a short history of Friendly Cards, Inc. (Friendly), and then examine Friendly’s financial statements to determine the financial health of the company. Industry Information The greeting card industry is dominated by three large companies, (Hallmark, American Greetings, Gibson), which are referred to as ‘The Big Three’. ‘The Big Three’ dominate market share, and the remaining competitors are predominantly small private and family owned firms. The greeting card industry is characterized high fixed costs due to: large inventory costs, large investment costs in the establishment of efficient distribution lines, and the need for a highly diversified product lines. Market leaders enjoy great economies of scale which tends to hinder new ntrants into the market. As a result, the card industry is capital intensive and very competitive. The number of firms competing in the industry has decreased by an annualized rate of 15% over the last three decades. Exiting firms were typically smaller in size, the majority of which had less than 50 employees. Additionally, the competitive nature of the market results in a high d egree of price sensitivity which culminates in smaller margins on sales. Sales tend to be very seasonal in nature with peaks during major holidays. There is trending toward a larger variety of card offerings (increasing inventories), shorter carrying/selling periods, increased diversification of product lines, and an increase in sales of everyday cards as compared to holiday cards. Friendly Cards, Inc. Beaumont Greeting Card Co. was founded by Wendy Beaumont in 1978, in New York City. She later acquired Lithograph Publishing Co. and took these companies public a year later for $3 a share under the name Friendly Cards, Inc. Friendly has rapidly expanded by acquiring Glitter Greetings of Lansing, Michigan (for cash and equity), whose primary market was selling cards to supermarkets. Soon thereafter, it acquired Edwards Co. of Long Beach, New York (for cash), whose primary market was selling juvenile valentines through chain, drug, variety, and discount stores, as well as, to wholesalers and supermarkets. These acquisitions greatly enhanced Friendly’s distribution line expanding it to a regional power. Later Friendly acquired a California firm (Friendly Artists) which extended the distribution line to a national basis. Friendly Artists’ primary market was prepackaged cards direct to the warehouse. Twenty-five percent of Friendly’s sales are prepackaged boxes, which have a higher margin than regular cards due to lower return rates and lower handling costs. Currently, Friendly appears to be a niche player in the prepackaged box cards market and has avoided entry into the premium card market, thus, avoiding direct competition with the ‘Big Three. ‘ Friendly’s sales are more concentrated than the industry with the majority of sales occurring near Christmas at 30% (vs. Industry 32%), and Valentines Day at 25% (vs. Industry 7%). Thus, over 55% of sales occur within a 3 month period. Plants at Friendly are being used at capacity thus, growth would necessitate further additions or acquiring contract services. Friendly’s distribution line is effective for a smaller firm due to its structure. Of twenty salesmen, one-third work on commission thus lowering Friendly’s costs. However, one problem with using salesmen on commission and having such a small sales force is the tendency to sell to rack jobbers and wholesale distributors. This decreases the potential margin on cards by two-thirds. Friendly’s Financials Sales have increased by over 50% between 1985 to 1987. Cost of goods sold has decreased as a percentage of sales in each of those years thus, producing an increasing margin ( 29. 36% in 1985 to 35. 15% in 1987). The rapid growth by acquisition and the national distribution channels that were accomplished by it, have affected the number slightly. In 1986 selling and delivery expenses increased by 1. 45% and this leveled out in 1987. GA expenses also spiked in ’86, reflecting the recent purchase of another company, and then settled back in 1987. However, while sales may have grown rapidly they have not matched the increase in asset growth, which nearly doubled in 1986. Growth in this company is being funded by improving margins and by increasing leverage, as indicated by the Dupont Data. Although the acquisitions were acquired by both cash and equity, the majority were debt financed, which explains why the ROE figures have increased so dramatically (almost 16%) in the last three years. The activity ratios indicate that the receivable to payable were in arrears by 36 days in 1985 increasing to 52 days in 1987. This is probably a result of increased sales to less creditworthy individuals or inattention to collections. You read "Assessment of Financial Health" in category "Papers" Inventory turnover umbers are shrinking due to the continually larger inventories being carried. Net fixed asset turnover has decreased by 2. 3% between 1985 and 1987. This can be explained by higher growth in assets than in sales. The liquidity ratios indicate that the asset to liability ratio for this company is trending down. The current ratio indicates that the company i s becoming slightly more insolvent with a current ratio of 1. 18 during ’87. However, by looking at the Quick ratio and discounting for the affect of inventory in the asset number, the company is dramatically less liquid at 0. 67 in 1987. This indicates that the company is very highly leveraged and is using its large inventory levels in order to support its substantial borrowing needs. Friendly’s actual growth rate exceeded the sustainable growth rate in 1986 and was equivalent in 1987. This difference in 1986 produced a need for added debt to finance growth. However excess funds were not needed to fund additional growth in 1987 since the actual rate of growth did not exceed the sustainable rate of growth. This can also be seen in the total debt to equity ratio which increased from 3 in 1985 to 5. 21 in 1986 and reduced to 4. 1 in 1987. The leverage ratios indicate that the bank loans to debt are fairly well matched, with loans being less than receivables, however, increasing in percentage. Interest bearing debt jumped dramatically in 1986 as a result of debt funded acquisitions but continues to level off along with total debt to equity figures in 1987. Finally, debt to assets has increased dramatically in the last three years, increasing by 7. 5% to 82. 5% in 1987. Thus Friendly Cards seems to be very highly leveraged, even more so than other firms in the industry although the trend is to increase debt. This highly leveraged position coupled with the high fixed costs and low margins characteristic of the industry, exposes Friendly as extremely susceptible to fluctuations in the market. Therefore, further debt growth may not be advisable–especially since it is currently violating its existing debt covenants. However, Continued growth, however, is needed as to allow the company to further take advantage of its existing distribution lines and realize further economies of scale. 1. 2 Review and Evaluation of Pro Forma Statements The parameters that Ms. Beaumont has set for the pro formas seem reasonalbe for the most part. There are, however, some questionable numbers. For instance, all the forecasts are based on continued sales growth at 20% per year. When compared to astronomical growth rates of 58% in 1986 and 27% in 1987, these estimates appear almost conservative. The majority of the growth in the past, however, were associated with major acquisitions which served to inflate the sales numbers. The historical reluctance to use equity to grow would serve to limit growth if continued into the future. Furthermore, it may be difficult to continue to grow at such a high rates in an increasingly competitive market. Holding costs of goods runs at 65% of sales and may also present a problem depending on whether the company can continue to manage its costs as it continues to grow. It could be argued that the reason CGS has dropped recently is due to the acquisition of Friendly Artists and the increasing reliance on a sales mix made up of low cost prepackaged boxes of cards. A shift in the mix away from these items could increase costs. Also, further acquisitions will serve to push up delivery and selling costs. For our purposes, however, holding them flat seems reasonable. The tax rate seems low at 38% but, depending on the new volume of sales and the maximum tax rate for a corporation, this rate could be even higher. And while the rest of the numbers seem to follow their previous assumptions, the inventory turnover, debt to asset, and interest rate assumptions could be assumed differently. As a result of increased competition in the industry, increasing variations of cards as well as shorter holding duration, it is very unlikely that inventory turnover would improve to 1. 1, and it may very well drop well below this number, possibly to 1. 75. Since growth is likely to continue into the future, an increased amount of inventory will be needed for new market areas. Debt to assets needs to decrease, but this will be difficult to do without funding growth by equity rather than debt. The large sales growth assumptions are directly related to acquisitions, thus increasing assets. If this is done through equity, this number is very realistic. Finally, there may be a problem with the assumption that interest rates on LTD will be 11%. The Monetary Policy Report to Congress indicates that rates should tend to decrease in the future so this rate may be attainable even to such a highly leveraged firm as Friendly. Without more information this estimate seems fine. 1. 3 Financial Policy / Covenants Friendly’s apparent financial policy is rapid growth by debt. This debt-financed growth may be due to a ownership issues that could affects Ms. Beaumont’s control over her company. The financials indicate that growth is also taking place at the expense of margins, as indicated by the Dupont data. The company believes in the economies of scale of the industry and appears to be establishing a national distribution network. While costly in the short run, this strategy may enable a viable and profitable position in the industry. The elements of Friendly’s financial policy appear to be the following. Friendly’s capital structure mix is governed by a debt orientation. Its debt/assets ratio is currently at 82. 5% which places is significantly below the AAA rate. AAA bonds are listed at 9. 7% while Friendly can only borrow at 11. 5%. While equity has been used in recent acquisitions there is a strong preference by management to use debt funding. Without question, Friendly is at an integral juncture. Existing lines of credit are maxed out and the bank is imposing new covenants on future loans: bank loans ; 85% of AR and liabilities not to exceed three times the BV of the company. Friendly currently has a $6. 25 million line of credit. Under the current structure Friendly will be in violation in 1987 with bank loans at 87% of AR and debt to equity is at 3. 13 times. Significantly, bank and trade credit for Friendly is expected to reach over $9 million in Dec. ’87. Long term and short term debt are both fueling growth. The basis is assumed to be the prime rate (which is 8. 5%) plus 2. 5% points. This is assumed to be a fixed rate established at the time of borrowing. The company’s currency is the U. S. dollar and the company does not have any exotica policy to mention. Control of the company rests solely with Ms. Beaumont as she is both the president and the leading shareholder, possessing 55% of the stock. An additional 20% of the stock is owned by employees and officers of the company. Finally, earnings are retained for future growth and meeting current obligations. There are no dividend payments and the stock has depreciated in value from a high of $15 a share. PART 2. Decisions faced by Ms. Beaumont 2. 1 Envelope Machine Investment Evaluation of the Envelope Machine We do not agree that the investment in the envelope machine will result in a return of 31%. The reason for this is that the working capital needed to fund the machine would be funded by additional debt by the company. The interest on the debt needs to be considered before evaluating the total return on the investment. Under this scenario, and considering that Friendly Cards’ interest on debt is 11% the interest expense is $22,000 per year before taxes. Our Estimated Annual savings from Operation of Envelope Machine, Years 1 through 8 ( Dollar figures in thousands) is as follows: Savings: Outlays for envelopes purchased in 1987 $1,500 Incremental expenses from manufacturing envelopes: Materials$ 902 Warehouse 94 Labor 91 Depreciation 62 Total Expenses $1,149 Increase in Profit before Taxes (decrease in COGS) 351 Interest Expense on Working Capital 22 Actual Increase in Profit before Taxes 339 Increase in Income Taxes @. 38 125 Increase in profit after taxes $ 204 The projected Cash flows for the investment in the machine are: (attachments). Based upon the cash flows projected in the above Table the internal Rate of Return on the investment is 26%. Based upon Friendly Cards Cost of Equity which is 20% (Appendix WACC) buying the machine with all equity at 20% or debt at 11% is recommended Financial Effects of Investment The Financial effects of buying the envelope machine are can be examined in detail in Appendix Machine. The activity ratios for Friendly if the investment in the machine is made are: (attachments). The investment in the machine has the following effects: * Decreases Cost of Goods Sold by about 1. 5 % which in turn increases the Gross Margins * Decreases Inventory Turnover from 1. 91 to 1. 86 * Increases Funds needed in 1988 by $418,000, in 1989 by $323,000 and in 1990 by $112,000. * Earnings per share increase to $2. 89 in 1990 from $2. 53 in 1990 without investment * By making the investment in the machine Friendly would not be able to meet both of the covenants required by the bank The ratio of the bank loans to receivables exceeds . 85 in all three periods. * Ratio of Friendly’s total liabilities to the book value of the company’s net worth exceed 3 in 1988 and 1989 which do not meet the covenant but in 1990 the ratio drops down to 2. 94 where it meets the covenants. 2. 2 Evaluation of West Coast Offer (New Equity) We agree with Ms. McConville’s conclusion that Friendly should accept the offer from the West Coast Group at the terms stated if that was the only option available to Friendly Cards. The advantages of this proposal would be: Agency costs will be only 5% compared to the actual costs if an investment bank was used to sell securities of the company in a public offering. * The infusion of equity would enable Friendly to meet all the covenants required by the banks (Appendix WC) enabling Friendly to continue its rapid growth without any financial restrictions from the bank. * The equity infusion would enable Friendly to invest in the envelope making machine and reduce its cost structure and still meet all covenants required by the bank. * The uncertainty about how many securities will be sold if a public stock offering is held is eliminated. Continuing rapid growth would enable Friendly to retain most of the sales representatives who might shift to a competing firm if growth is slowed to enable Friendly to meet its financial covenant s * The price that Friendly is getting is more than reasonable based upon the present value of the discounted cash flows as shown in (Appendix Valuation) Disadvantages of accepting the proposal would be: * Loss of control. Ms. Beaumont’s who presently owns 55% of the outstanding shares would own 40. 37% of the company after the equity infusion. Even though along with the employees of the company she would own 60% of the company she would not be able to make unilateral decisions. * The West Coast Investors who would own 26% of the company would have a significant say in how the company should be run which may affect the current management structure and aversely effect their ability to mange the company as they wish. * Reduction of EPS. Earnings per share would be reduced to $2. 29 per share from the projected $2. 89 per share in 1990 with the purchase of the machine and without equity infusion due to the dilution effect of the new shares. This earnings dilution would probably result in a lower share price. (Approximately $18. 32 instead of $23. 12 considering a price multiple of 8). 2. 3. Valuation of Creative Designs, Inc. Capital Structure Argument Ms. Beaumont had been considering a possible acquisition of Creative Designs, Inc. (CD), a small mid-western manufacturer of studio cards. She had examined the details of CD’s operations for four months, and believed that under her management, CD could immediately reduce cost of goods sold by 5%, and reduce other expenses by 10%. If Friendly acquires CD in early 1988, assumptions are made that CD’s sales would stay flat during 1988 but would grow at 6% per year thereafter. Based on the following table from case facts, there is a wide range of Debt-to-Equity Ratios for the four companies within the same industry. American Greetings'(AG) D/E ratio increased from 0. 35 in 1985 to 0. 63 in 1987. The reason for this upward trend was that American Greetings had diversified its business segments; from solely relying on greeting card sales AG expanded into gift wrap and stationary goods, such as playing cards, gift-books, and college study guides. Such diversification efforts demanded higher debt levels. In addition, AG was a large company with annual sales of $1,174 million in 1987, up 16% from 1985. Gibson Greeting’s (GG)D/E ratio decreased from 0. 71 in 1985 to 0. 49 in 1987. The reason for this downward trend was that Gibson was a relatively small company, with annual sales of $359 million in 1987, an 8. 8% increase from 1985. GG’s growth rate was significantly lower than American Greetings. The total debt-to-equity ratio of Creative Designs would decrease over the next several years. Since CD’s sales in 1987 was $5 million, it was much smaller than the above two companies. Based on the pro forma financial statements for the period of 1988 to 1990, we see growing sales and EBIT. As a small-size manufacturer, the best capital structure would be: financing its operations mainly by internal growth and a significant reduction in the company’s debt levels. Ms. Beaumont wanted to acquire CD for the following reasons: * In the highly competitive market with high cost in distribution and low margin, Friendly had to grow in order to survive, and CD was a good target; Since CD’s shareholders agreed to the acquisition by stock-exchange, â€Å"pooling of interests† accounting method would be used, and the consolidated financial statements more attractive than without CD, and Friendly need not record goodwill (if any) and avoid amortization of goodwill; * Since CD had a relatively low debt level and a very low â€Å"bank loan to receivable ratioâ⠂¬ , while Friendly had difficulty meeting its bank borrowing restrictions, acquiring CD would make possible for Friendly to meet the covenants; Friendly can easily integrate CD to its high growth strategy, and expand Friendly’s market presence in the mid-western region. Weighted Average Cost of Capital Assumptions (WACC) Based on the case facts that the premium for equity risk was 6% on long-term governmental bond rate of 8. 37%, we may calculate the unleveraged beta for American Greetings and Gibson Greeting, and use a derived estimate as a proxy for CD’s unleveraged beta. 1987 Financial Data for Two Large Publicly Traded Companies To be conservative, we assume the unleveraged beta for CD is 0. 77. Since the cost of debt was 11% and the tax rate was 38%, we calculated CD’s cost of equity is 13. 97% in 1988, and the weighted average cost of capital (WACC) is 11. 07%. Over the next five years, CD’s WACC would increase to 11. 92% in 1992 due to the decreasing D/E ratio and therefore the tax shield effect. Cash Flows, Terminal Value, Equity Value Valuations In addition to the above information on WACC and sales growth rate, we have made the following assumptions: * Sales will stay flat in 1988, but will grow at 6% per year after 1989. * Cost of goods sold will stay at 55. 2% of sales level. * Depreciation, â€Å"Selling, delivery, and warehousing expenses†, and â€Å"general and administrative expenses† will grow proportionately to sales growth. * Increased Retained Earnings will be used to reduce long-term debt. * Prepaid expenses will increase by a small amount each year. * Interest expenses will decrease over the period since the debt level will decre ase. * No dividend will be paid after 1988. Based on the above assumptions, we found that the total present value for CD was $4. 349 million. Adjusting for the interest-bearing loans totaling $1. million, the net worth of CD would be $3. 049 million, $1. 168 million higher than the calculated value of the stock exchange ($1. 881 million). This indicates that acquiring CD is a good transaction for Friendly. 2. 4 Pooling Implications (Friendly + CD) By using the â€Å"pooling of interests† accounting method, we constructed the Friendly and CD consolidated financial statements. (see Appendix Valuation – Friendly + CD) The impact on 1988 pro forma financial statements is as follows: * New bank loans needed decreased from $1. 585 million to $1. 357 million; * EPS increased from $1. 7 to $1. 73; * Net profit margin increased from 4. 96% to 5. 49%; * Assets turnover increased from 1. 01 to 1. 03; * ROA increased from 5. 01% to 5. 49%; * ROE decreased from 25. 23% to 20. 5%; * Days in Receivable reduced from 157 to 149; * Bank loan to receivable ratio decreased from 0. 9 to 0. 74; * Interest bearing debt to equity ratio decreased from 2. 62 to 1. 92; * Total debt to equity ratio decreased from 4. 04 to 2. 62. The overall impact of acquiring CD to CF is positive. The result of pooling is in line with Friendly Cards’ financial strategy. In the long run, acquisition of CD would become an integral part of Friendly Cards’ strategic plan for the next few years to achieve a higher growth rate and increased market share. In the short run, acquisition of CD would meet Friendly Cards’ immediate financial needs enabling the company to meet the bank’s covenants, specifically, to reduce the â€Å"bank loan to receivable† ratio to an estimated 0. 9 in 1988 to 0. 85 or lower, and to decrease â€Å"total liabilities to equity ratio† from an estimate 4. 04 in 1988 to 3 or lower. The result of pooling shows that these two requirements are met. 2. 5 Friendly Cards Stock Valuation Assumptions: Capital structure Based upon the pro forma financial statements and the bank covenants’ requirements, we assume the capital structure to be 75% debt and 25% equity. Any other capital structures with the reduction of debt would make it more difficult to get additional capital through equity. We need the debt financing to be able to meet Ms. Beaumont’s growth requirment. Discount rates We assume the cost of debt to be 11%. This is based upon the following facts: In early 1988, interest rates were declining, the 10-year Treasury Notes rate declined from 9. 52% in October 1987 to 8. 9% in January 1988; even though the short-term Prime Rate increased to 9. 07% by October 1987, it had decreased to 8. 5% by January 1988; furthermore, the Federal Reserves Monetary Policy Report(Jan. 1988) stated that â€Å"high rates of capacity utilization and low unemployment suggest the needs in maintaining progress toward price stability†, indicating that interest rates would stabilize at the present level. Also the need to reduce the trade deficit, business and labor would continue to exercise restraint in price and wage behavior, indicating the Fed would hold interest rate at the present level, or even reduce them. We assume the interest rates would hold stable at the present level of 8. 5% and that the lending institution will continue its premium of 2. 5% over prime. We assume all the funding for the debt to be short term as most of the debt would be used to fund the current assets (receivable and inventories). This would be a proper matching of funds. Based on the valuation of Friendly Cards, we found that * FCFE Method (Free Cash Flows for Equity): the valuation was -$ . 95 per share ; * Free Cash Flow for Capital: the valuation was -$5. 5 per share ; * Book Value Method: using 11/2 times Book Value the valuation was $7. 40 ; * P/E ratio (multiple) method: using the industry average P/E ratio of 7, the valuation was $9. 50 per share. (Please refer to appendix Valuation – Friendly Cards, Inc. ) The only way the company’s stock price was worth $8 to $9. 50 per share was that West Coast Investors and Creative Designs valued the company using a Price to Earnings multiple method. * *Note** We attempted to back out a discounted cash flow model that would justify an $8 or $9. 50 share price. By altering certain assumptions, most specifically the sales growth rate we can achieve positive valuations of the stock price. Slower growth in sales PART 3 Overall Assessment Our recommendation to Ms. Beaumont is to (1) First, acquire CD with a stock exchange of 198,000 shares at $9. 5/share, (2) With the additional leverage obtained by the CD acquisition, purchase the envelope machine. As evidenced by the above matrix and graphs, even though Friendly Cards would achieve a higher EPS by not acquiring CD but buying the machine, it would not meet the bank covenants. Advantages of our recommendation: * Meet all of the bank’s covenants; * Meet Ms. Beaumont’s growth needs; * Meet Ms. Beaumont’s requirement on D/E ratio of 2 by 1990; * Maintain a relatively high level of control for Ms. Beaumont over the company; * Position the company for future growth by providing a more favorable D/E ratio. Disadvantages of our recommendation: * EPS dilution by acquiring CD from $4. 64 per share in 1992 as compared to $4. 15 with the CD acquisition; * Reduce Ms. Beaumont’s control from currently 55% to 41. 5% with CD acquisition. PART 4 Goals for the Financial Structure of Friendly Cards, Inc. 4. 1 Friendly Cards capital structure consideration Our recommendation is that Ms. Beaumont to move Friendly Cards’ capital structure closer to 60% debt and 40% equity (a D/E ratio of 1. 5). Our reasoning for such a recommendation is as follows: Flexibility: For future growth and possible acquisitions, Funds for acquiring more assets (another envelope machine! ) to reduce costs. Risk: Ability to deal with possible adversity into the future (i. e. , low sales) Lower risk level than current D/E ratio Income: Future growth in earnings due to ability to acquire market share through acquisitions. Further exploit the economies of scale to reduce CGS, Handling and Distribution Costs Control: Maintain controlling interests in the company Timing: Having a higher D/E Friendly can issue equity at more favorable terms at a later date when EPS is higher, the market environment is â€Å"friendlier†, and the company will be in a better financial position. Our recommended target capital structure for Friendly Cards, Inc. of 60/40 D/E is realistically attainable within 3-4 years (mid 1991). Friendly Cards Case Attachments How to cite Assessment of Financial Health, Papers

International Marketing Australian Tourism Department

Question: 1.What communication messages about Australia as a tourist destination are most likely to appeal to middle class consumers from Canada? 2.Discuss how time orientation affects marketing of sporting events in France as compared to China.1 Answer: 1. Australia has seen an increased growth of 7% since last year in visitors from Canada and a rise of 10% in their spending and expenditures while on tour. The mission statement of Australian Tourism Department is to increase visitors leisure and provide best quality in every manner to every guest they escort. The reason Canadians visits Australia on higher ratio is the marketing strategies of the country and how they attract citizens of Canada to visit their country. The communicating messages about Australia are the prominent step in achieving tourist targets which are as follows (Allen, 2010). Australia is a country that is comprised of everything international consumer dreams of security and safety, natural beauty with spectacular views, people who are very friendly and makes you comfortable with a home like atmosphere during your tour and while communication, a virgin environment and on the top of all world class food with wine (Brislin 2014). Researches have shown that promotion of nature beauty, food and wine has provided a competitive advantage to Australia over others, hence since 2013 Australia Tourism department is campaigning Restaurant Australia as its major marketing activity (Allen, 2010). When middle class consumers choose some destination for a holiday, Food and Wine tops the list of preference thus this campaign highlights Australias world-class wine along with food (Brislin 2014). To attract customers from Canada management introduced a Restaurant Australia-themed food trucks in Canada during an occasion where majority of middle class people gathers. The improved economy of Australia also attracts middle class consumers from Canada, enhanced outlook of Australias global economy and specifically the continuous financial repossession in Australias traditional inbound source markets for example the USA and the UK along with an increase of interest in leisure travel bodes is also a reason that appeals middle class consumers of Canada as strong economy results in less expenditures on leisure. Another marketing technique or can be said as communicating messages to citizens of Canada is a campaign Theres nothing like Australia which highlights the best tourists attractions and experiences that Australia has to offer. By the time this campaign has already achieved much success and continually achieving more. The campaign has already been translated and presented in 17 languages across 25 countries and Canada is one of them. The aim of this campaign is to increase consumers knowledge on what Australia has to offer them and to build a positive perception towards Australia as a tourist destination (Gengler, Klenosky and Mulvey 2013). They also informs about various budget packages through this campaign which includes food, travel expenses and even sightseen and an option to customize according to consumers need. These types of packages attract middle class consumers of Canada the most as they can easily fit into the budget of a common man. Australia tourism department are also concentrating and investing in social media platforms and digital platforms as these are the most famous advertising channels with less cost and response received through these communicating channels are always greater. In previous couple of years Australia Tourism joined Canadian Airlines and more than 15 distribution partners in Canada to advertise and promote its both campaigns Theres nothing like Australia and Restaurant Australia. This campaign ran primarily through social channels and digital mediums and showed an increase of 21 percent consumers from Canada in bookings through the distribution partners (Campbell, Bommer and Yeo 2015). The frequent flyers of Canadian Airlines were benefitted through an innovative campaign Enrich Hearts Australia around Feb, 2015 (Campbell, Bommer and Yeo 2015). In this campaign a scheme was launched through which consumers could redeem a discount of 30 to 50 percent on their flights between Vancouver, Sydney, Brisbane, and Toronto. 2. Games discover physical brilliancy of an individual which makes him selective in a crowd. At Olympics, individuals from different countries unite to celebrate their culture along with physical talent. Many of those individuals have originated from two countries China and France. In recent Olympics at Rio China stand at 3rd position winning 26 Gold out of total 70 while France is at 7th position with 10 Gold and total 42 medals. This article is going to discuss how the difference in attitudes of people of these two countries affects sports and its marketing (Martin 2016). It has been found in a study that the value system of China and France contrasts considerably. The individuals from China who are highly involved in sports, considers goofing off at work highly wrong and possess negative attitude towards it as they thought of it as counterproductive and unethical while individuals from France values the system of goofing off at work and believes that it is a good way to socialize and facilitates teamwork and it helps to maintain good relations with co-workers (Li, Lam and Qian 2010). So it is clear from the study that in France marketing of sporting events are related to free-will and teambuilding while in China it is related to teach discipline to a greater extent. Talking about effectiveness, if the atmosphere is disciplined, chances of efficiency are more and it also increase the focus during training of sports, while free-will and relaxed atmosphere might increase enthusiasm towards sports but could sometimes result in decreasing motivation and c ommitment at leading levels (Li, Lam and Qian 2010). Selection of national teams in the field of sports are juxtaposing systems in both countries, China uses a centralised top-down approach to select its team members while France uses bottom-up approach to select the same. In china, heavy funds are spent on selection programme and marketing events related to sports (Collinson and Houlden 2015). More than six thousand schools are there in China for sports training which sends filtered students to leading levels training centres and at these centres best are selected. Individuals who seems to possess good talent are admitted to one of the training centres and proper training is provided to them at free of cost while in France there is no such selection procedure and individuals plays at school levels only or other private organized programmes until there talent is recognized by someone and they are identified as an professional player. Only after that Frances Sports Management team involves with the player and chances are there to appear at Olympics (Mead 2008). It is clear from this that in France at childhood levels children plays as many sports as they want and may develop better motor skills for one or two while in China just a single skill is concentrated since childhood till adolescence (Barr and Glynn 2014). But in China, once considered as possessing physical talented, all the expenses are on government while in France athletes do not have financial support from government until later. So, sporting individuals of France are not merely one who responds to orders from superiors but are involved in policy-making and elite training, but opportunities to enhance physical flexibility and refining skills are less so it could be concluded that athletes from France are not able to prepare as comprehensively as their Chinese counterparts (Sweeny 2012). The government of China plays a very strong and important role in controlling sport and activities related to it (Barr and Glynn 2014). An athlete who performs well at national levels or international levels is granted privileges by government and even gets a relaxation on tax. Conversely, In France An athlete is not supported by state or national government directly. The observations show the clear difference amongst both countries time orientation differences and its effect on Sports. In China where sport is considered as an art to be practised and perfected, conversely in France it reflects the dream of Freedom and equality (Collinson and Houlden 2015). References Barr, S. and Glynn, M. (2014). Cultural Variations in Strategic Issue Interpretation: Relating Cultural Uncertainty Avoidance to Controllability in Discriminating Threat and Opportunity, Strategic Management Journal, vol. 25, no. 1. Collinson, S. and Houlden, J. (2015). Decision Making and Market Orientation in the Internationalization Process of Small and Medium-Sized Enterprises, Management International Review, vol. 45, no. 4 (Fourth Quarter 2005). Li, J., Lam, K. and Qian, G. (2010). Does Culture Affect Behavior and Performance of Firms? The Case of Joint Ventures in China, Journal of International Business Studies, vol. 32, no. 1. Martin, J. (2016). Cultures in Organizations: Three Perspectives, Oxford University Press, New York. Sweeny, B. (2012). Hofstedes Model of National Cultural Differences and Their Consequences: A Triumph of FaithA Failure of Analysis, Human Relations, vol. 55, no. 1. Mead, R. (2008). International Management: Cross-cultural Dimensions, 2nd ed. (Oxford: Blackwells. Allen, M.W. (2010). The attribute-mediation and product meaning approaches to the influences of human values on consumer choices, In F. C. Huntington (Eds), Advances in Psychology Research (Vol. 1, pp. 1-76). NY: Nova Science Publishers. Brislin, R.W. (2014). Translation and content analysis of oral and written materials, In H. C. Triandis J. W. Berry (Orgs.). Handbook of cross-cultural psychology (Vol. 4, pp. 398-444). Boston: Allyn Bacon. Campbell, D.J., Bommer, W. and Yeo, E. (2015). Perceptions of appropriate leadership style: participation versus consultation across two cultures, Asia Pacific Journal of Management, 10(1), 1-19. Gengler, C.E., Klenosky, D.B. and Mulvey, M.S. (2013). Understanding the factors influencing ski destination choice: a means-end analytic approach, Journal of Leisure Research, 25(4), 362- 79.

Conflict of Values in Malaysian Society

Question: Discuss about the Conflict of Values in Malaysian Society. Answer: Introduction The occurrence of conflicts regarding different values is prevailing throughout the entire Malaysian culture. It becomes significant for the people to understand the causes of these conflicts as it will help in reducing the conflicts and will increase the effectiveness throughout the Malaysian society (Atran, 2016). This research paper reflects the causes of conflicts of values and the ways of reducing it. Moreover, the paper evaluates the fact that people from different religion enforce people coming from other religion to follow their own sets of values and culture. The biased decisions taken by many of the people without understanding the concerned matter needs to be stopped as its affects the culture of the society in various ways. People needs to respect the values and beliefs of the other religion as it will help in reducing the conflicts and will hell in strengthening the power of the entire Malaysian community. Conflict of values in social science The conflict of values is mainly defined as the difference between the opinions which are created due to the different beliefs and views. This type of conflict is not resolved easily because the differences are based on the individual beliefs not based on the fact. For changing an individuals opinion convincing and logical arguments are needed but at the time of changing the values this convincing and logical arguments are not so effective. From the ancient days, the conflict of values always throw the challenge and create obstacles against the traditional procedures or methods to resolve the conflict which arises due to the differences between the values of an individual and nation (Bercovitch, 2016). There is also an effective way or method to resolve such type of conflicts. The values which are mostly agreed and accepted by the individuals are implemented as newly accepted value in the society. Due to globalization and cultural diversity, day by day the level of conflicts is incre ased among the individuals due to the differences in their core values along with their various socio-cultural personalities and individuality. The conflict of values can create tension within the individuals and among the groups internally at various step of development of the society. The citizens or people of any democratic society are free to make choices about their political leaders who can drive the nation towards development and are able to achieve the societal goals. However, some of the time the citizens face some difficulties at the time of making a political choice because the citizens involve and bring in some conflicting values or principles. The conflict of values is actually an expression of the political attitudes which is common and significant. In the recent days social values is only an important term which is related to an individuals social point of reference. The value conflict theories are the perceptions or a point of view about the social and political ineq ualities within a social group. The basic part of social science is Value Conflict. The Malaysian people are generally affected by many kinds of biases (Carla J, 2016). Such type of biases is a biased escalation, biased perception and biased fairness. Sometimes these biases hamper the values of the society. At that time a clash or conflict arise related to the values among the people of Malaysia. These biases created some social issues which are related to self interest. In the recent days there is a new trend of modernization, urbanization, secularism and liberalization which affects the society or the nations tremendously (Vijay K. Verma, 2016). Each and every society tries to follow this modernization for the growth and development of their society. At the time of making these changes resistance is a common reaction (Coy, 2013). Though, this new trend is beneficial for every society. It increases the growth rate of any society. For this reason development of the nation is also co nfirmed. However, afterward the clash or conflicts which are arising between the liberty and morality of the Malaysian people has increased. When any group has different ideas about quality of life at that time they obviously lead to a conflict (Dora, 2016). The morals or values are the set of meanings by the help of which any individual or nation can judge any decisions about which one is most important and valuable and which one is not. Generally, the people from same group or same culture in Malaysia have near about same types of mindsets and realities. The values, morals, procedures and assumptions all became a common sense for that particular group. The conflicts of values are generally occurred when the disputants are belonging to various social groups from throughout the world (Wan Hus, 2016). Basically these conflict of values happened due to many reasons such as misunderstandings, mistrust, negative stereotyping activity, and non-negotiable attitude (Elliott, 2016). The conflicts of values also have some harmful effects. The impacts of conflicts of values influence the society negatively. Some of the times, due to this conflict of value, the main issues about the topic become inappropriate and irrelevant and generate a new issue for conflict. Discussion of the conflict values which occurred and developed a contention throughout the Malaysian society It has been sent that evolution somehow give rise to both cooperation and competition. Moreover, in a particular environment having the limited amount of resources, the fittest persons are found to survive the desired competition of the resources. On the other hand, the different conflict values throughout the Malaysian society have given rise to the argument regarding the development of the conflict values. It becomes very important to understand the desired reasons for the occurrence of the conflicts between the different groups as it will help in reducing these conflicts increasing the effectiveness of the entire society concerned. Different people residing throughout the different areas have their own opinions and views which sometimes give rise to several conflicts (Gainous, 2016). Some of the other causes for the occurrence of the conflicts between the different groups of people are seen because diverse people have various views regarding the ways of organizing the society in a defined way. Therefore, it becomes very crucial to understand the different views of the people regarding the development of the entire society and moreover, people need to respect the views of the other people without arguing with them. There are different groups of the people throughout the society which give rise to different sets of moral values of the people and his becomes one of the major causes for the development of the conflicts between them. Furthermore, different people have own perception regarding the judging and deciding what is wrong and right and what sets of values needs to be developed in order to increase the effectiveness of the entire society (Haneef, 2016). It has been seen that the people of the diverse group of the people throughout the country helps in monitoring the implementation of these sets of the moral values for the development and growth of the entire Malaysian Society. The difference between the perceptions of the people regarding the identificati on of the moral values needs to be understood in an effective way as this helps in reducing the conflicts between them. The major point is that the conflicts occur when one of the groups enforces their particular moral decision or views on the other people. Different perceptions of help people as well as the moral values sometimes give rise to the occurrence of the conflicts which finally affects the execution of the work processes throughout the society concerned. There are several examples revealing the causes of conflicts throughout Malaysia such as the clash between the Malays and the Chinese people, urban Chinese giving rise to the Malaysian conflicts, religious tolerance throughout Malaysia and values conflicts regarding the satisfaction of the job throughout Malaysia. Religion is another factor which helps in providing a strongest bond between the groups of the people concerned. The development of the moral values comes from different religion of the people and therefore it becomes more important to understand the desired sets of moral values in a better way as to reduce he conflicts enhance the effectiveness of the entire Malaysian society. Religion supposed to polarized and serve both the desired source of the moral division and the moral unity as to strengthen the power of the entire Malaysian community concerned. It is evident to know that there are some of the people prevailing throughout the different parts of the society who affect the people by their own values and beliefs and this needs to be reduced and they should work as per the requirement of the entire society as to maintain an effective culture throughout the society (Hatta, 2016). Furthermore, people also believes that they are the right in following the correct sets of values and beliefs but the fact is that they needs to come across the values and the belief of other people and should respect the people as to reduce the desired conflicts (Hisham, et.al 2016). Therefore, the above discussion signifies that the people are the one who gave rise to the several conflicts because of their own perception, values and beliefs. The diverse group of people should pay respect to other people coming from different religion. Humanity needs to be considered to be more important as no religion signifies to harm any of the people concerned. The desired sets of values of different religion is merely o enhance the living standard of the people irrespective of the conflicts (Kinnander, 2016). One of the serious issues seen throughout the Malaysian culture is that people coming from different religion try to enforce their values and beliefs over the other group of the people from different religion. It has been noticed that the bias decision throughout the Malaysian culture aff ects the living standards of the people and therefore it needs to be understood that there needs to be development of the un-biased decisions. Avoid conflict of values in Malaysia It has been evaluated throughout the study of the Malaysian culture that Malaysia is suffering from many clashes in daily lives. Certain laws and rules have been observed to stop these conflicts among the people of Malaysia (Kohlrieser, 2016). First, comes, the principle of Peacemaking, which means exposure to the hidden goals and beliefs and determining the facts, which are essential to resolve the conflict throughout Malaysia. Secondly, the principle of Peacekeeping, and last comes the principle of Peace developing. Being sensitive towards the others position and perspective, somewhat emphasizing with one another, avoiding miscommunication and misperception among the people. The conflicts of national as well as international conflicts are to be reduced. For example, it often happens that, many people were killed due to violent armed conflicts in Malaysia, by the terrorist's attack (Hayes, 2008). The easy way to avoid the conflicts of Malaysia is to know the causes of the conflicts first, and, it also required of complex strategies. To solve the economic crisis of Malaysia, consumer goods are to be increased in higher costs. Certain arguments among the society of Malaysian people arise, regarding decision-making processes of various kinds of rules and ideas. The conflict related to power, organizational demands, various theories like traditional theories, and modern theories. The conflict situations often arise due to the arguments of changing new ideas based on generation (Krista, 2016). People must compete, collaborate, compromise, avoid and accommodate. Competing has high concern for personal goals and low concern for the citizens. Collaborating is the search for a mutually satisfactory solution, which is involved in high cooperation and low disagreement. In order to avoid the conflicts in mind, the conflict situation will solve the problem itself. Accommodating is involved with cooperation and low confrontation which acts as a common search ground. The go al incompatibility, goals to achievement competition for using the limited amount of resources, interpersonal difference, project priorities, the other causes related to research activities are the causes of conflicts, which if controlled, then the conflicts will never arise. People of Malaysia have a typical conflict about religious values that is of enforcing ones certain religious cultures into others. There are certain political issues which leads to the conflicts between the people in Malaysia, as well as throughout the world, which if ignored, it would be better. The bias decisions need to be overcome, people should understand, regarding the right and wrong decisions (Rahim, 2016). Moreover, identification of the entire matter related to any conflicts is very important and it needs to be done in an effective manner. There are three types of biases such as- biased fairness, biased escalation, and bias of perception which needs to be evaluated as to enhance the effectiveness thr oughout Malaysian culture, it becomes imperative for people to respect the desire sets of values and culture, of people coming from various religions. In general opinion, it becomes crucial for the Malaysian people to develop a common goal by which every Malaysian can contribute towards the development of a happy, united and a peaceful society. The development of an intellectual and creative society will help in providing several opportunities for bringing best creative talents in order to lead meaningful as well as positive lives. Reducing the conflicts that arise because of several reasons, it supposed to be vital for the expansion and growth of a peaceful society (Ron Fisher, 2016). One of the most significant causes of conflicts is of believing on different sets of values from own personal view. The development of a common goal including positive experiences of the society will help in increasing the effectiveness throughout the Malaysian cultures (Sida, 2016). Instead of believing on one particular set of values, people needs to understand the importance and development of a moral culture throughout Malaysia (Turkalj, and Fosi ?, 2016). For example, most of the Buddhists have a view about hell as a metaphor, a journey into the evil inside the self, whereas the descriptions of torturing monsters and levels of hell are sometimes explicit. In the same way, Muslims and Christians see it as area place, full of fire and the suffering of the people who does not have a faith in this. Conclusion Generally, a value conflict occurs when a specific value is accepted by a society but not granted by a particular group which is present within that society. This type of conflict is not resolve easily because the differences are based on the individual beliefs not based on the fact. For changing an individuals opinion convincing and logical arguments are needed but at the time of changing the values this convincing and logical arguments are not so effective. 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