The tourism system model

The tourism system model The Tourism System In early tourism research, it was argued that by analysing disaggregated components of tourism, it is possible that an understanding of tourism as a whole could be achieved (Pearce, 1989). However, these reductionist claims often result in a failure to explain the different complex relationships, interactions, interdependencies and impacts within the tourism system (Carlsen, 1999). For example, traditional tourism models such as Leiper (1979) tourism system model assumes that tourism players function in a coordinated manner, suggesting that tourism could be controlled in a top-down approach (McKercher, 1999). However, tourism displays all the characteristics of complexity. Failing to acknowledge the elements of uncertainty, chaos, dynamics and non-linearity in tourist systems, these simplistic traditional approaches to tourism seems to become irrelevant and invalid. Tourism is an activity in which people freely engage in, for personal satisfaction or pleasure, where their behaviour is voluntary and discretionary proceeding from ones own free choice (de Freitas, 2002). Thus, tourists participation is expected to decrease as discomfort and dissatisfaction increase. â€Å"Should climate change, so will be the tourism demand† (De Freitas, 2005, 35). Over the years, more sophisticated models have been developed in attempting to explain what tourism is, its composition and the relationships and interactions that exist within it. From the tourist personality type models (Plog 1974; Pearce 1990), Maslows hierarchy of needs (Maslow, 1954), expectancy theory based on Vrooms theory of work motivation by Witt and Wright (1992) to the Mieczkowski Tourism Climate Index (1985) and the push-pull tourism framework (Dann, 1977; Crompton 1979; Iso-Ahola, 1982, 1989; Klenosky, 2002), these approaches provide different but valuable insights for examining the motivations underlying tourist and visitation behaviour. These models have also been useful for the study of the importance of climate to tourism as well as the research on climate change and tourism, providing an understanding and agreement of the varieties and kinds of activities and stakeholders involved. Climate, a Tourism Resource Climate exists outside of any tourism project. However, it becomes a resource when incorporated within a good or service. This is illustrated by the high demand of North Europeans travelling to the Mediterranean resorts, seeing it as a land of paradise. In addition, climate is often said to delimit optimal zones for tourism at a global and regional scale, as illustrated by the warm tropical zone, considered optimum for sun and beach tourism (Burton 1991). In this way, climate, a natural resource becomes part of the tourism product. All of respondents of the survey agreed that climate is important to tourism with 89% ranking it as â€Å"very important†. With the aim of accessing how climate fares in relation to other important considerations in tourism demand, Table 2.1 illustrates the ranks respondents give to each of the factors relevant to their visit to a country for tourism. Attractions in the destination were viewed as the most important factor followed closely by climate. Of considerable importance to this study which may have been omitted in many studies focusing on the temperate regions, 95% of respondents believed that escaping from their countrys winter cold is at least of some importance in their decision for travel. This shows how weather and climate are intrinsic components of the vacation experience and can act as a central motivator in an individuals selection of holiday destination, the timing of holiday travel as well as a salient factor in tourism spending and holiday satisfaction. This study measures up to many other researches such as that done by Hu and Ritchie (1993). Measuring the importance of destination characteristics, they reviewed several destination image studies from the 1970s and found that â€Å"natural beauty and climate† were of universal importance in defining destinations attractiveness. Using a representative survey, Hamilton and Lau (2005) confirmed that climate is at least the third most popular attribute in tourists decision making. Climate can directly affect tourism. There seems to be a clear connection between weather, climate, and human sensitivity. Atmospheric weather conditions may impact tourist demand, participation, experiences and satisfaction (de Freitas, 2003; Yu et al, 2009). People usually dislike very cold or hot climates and possibly very humid ones probably for good reasons founded in evolutionary biology (Heal and Kristrom, 2002). Survey result of this study proves similar conclusion where 74% of respondents indicate that they were more likely to travel during their countrys winter and 19% during summer. None of the respondents chose autumn and spring as the season they would want to travel out of their country. A warm climate seems to be a huge attraction for many of the mid-latitude tourists with 100% citing a â€Å"hot and sunny† weather condition as the preferred choice in the country they visit, even for those who want to escape the summer heat in their country. This proves Maddison and Bigano (2000) findings that the ideal temperature at the most popular tourist destinations are those offering warmer temperatures of around 31oC. In Context: Sentosa Climate has been argued to be one important component which shapes a destinations image and in some regions of the world, constitutes the resource on which the tourism sector is predicated (Lohmann and Kaim 1999). For example, marketed as â€Å"The Island for All Seasons†, the Mediterranean climate which Cyprus, Greece has been blessed with, has identified as the fundamental attribute attracting tourists to the destination. Mather et al contends that â€Å"the climate is a dominant factor in much of the travel that takes place from northern Europe to the Mediterranean () Not only is the purpose of this mass movement of people primarily leisure-based, visiting a sunny beach destination is the intrinsic reason for travel† (2005, 70). Being a tropical country, Singapore and in particular Sentosa has the perfect conditions for the creation of the ideal tourist coast all-year sunshine, warm water, white sandy carbonate beaches and coral reefs -popularised in the three â€Å"Ss†: sun, sea and sand (Wong, 2003). Sentosa is Singapores premier island resort getaway and Asias leading leisure destination. It receives over 6 million visitors yearly, making it the most visited paid-access attraction in Singapore. According to partial break-down of visitor arrivals to all the paid attractions in Singapore as seen in Figure 2a, it show consistency with Sentosa being the most visited paid-access attraction among all groups of tourists. Thus, it makes a good case study for studying climate as a resource for beach tourism in Singapore. Findings in this study shows that although the warm tropical climate of Singapore appeals to the mid-latitude tourists, inducing them to visit the Island of Sentosa as well as their beaches, weather did not prove to be the ultimate choice affecting tourists decision to Sentosa. In fact, although weather ranks second after attraction/activities, given only a choice, only about one quarter, specifically, 27% of the tourists chose weather to be the most important. One reason for this may be because climate invokes the concept of weather which is what tourists anticipate experiencing at a specific destination and is a key factor of consideration for tourists, consciously or implicitly during travel planning (de Freitas, 2002; Gomez Martin, 2005). Thus, having already considered Singapores hot and humid climate before the trip, factoring in possible weather conditions that might be experienced, attractions and activities that can be found in Singapore is determined to be more important at the expense of weather. This result corresponds to the activities that respondents carry out in Sentosa illustrated in Table 2.2, with â€Å"visiting attractions† being the most carried activities by all tourists during their day in Sentosa. The preference of tourists for certain climatic and weather conditions highlights the relationship between tourism and climate. Naturally, different tourism types and activities require different climatic conditions. Thus, climate is one important variable that influences among other factors, what and when particular kind of tourism activities can be done carried out. For example, climate has been identified as the fundamental attribute attracting tourists to the Mediterranean area (Mather et al, 2005; Amelung and Moreno, 2009). Seeking and enjoying the sun is one of the main reasons why many tourists go away on holiday, evident in 70%-80% of UK holidaymakers citing better climate abroad as the primary reason for their trip (Perry, 1993). Similarly, winter sports depend directly on climatic resources. Without snow or low temperatures for the artificial production of snow, the development of ski resorts would not have been possible (Gomez Martin, 2005). In this study on Sentosa, the activities that can be carried out by tourists (Table 2.2) could be sub-divided into two categories: weather dependent and weather independent. Swimming/sun tanning, picnicking and water sports/playing volleyball is to a large extent dependent on weather, especially to the presence of sunshine and rainfall. Although a large percentage of 59% tourists came to Sentosa specifically for sun tanning and swimming, respondents seems to participate largely also in non weather specific activities such as visiting attractions, shopping and dining in an indoor eatery. This result points to an important fact that although Sentosa depends largely on its beaches as well as some outdoor attractions, they provide a diversified range of activities which tourists are also attracted in but do not solely tap on the appeal of the weather. Climate versus Weather Climate invokes the concept of weather in that it is defined as the accumulation of daily and seasonal weather events over a long period of time whereas, weather is the condition of the atmosphere at any particular time and place (de Freitas, 2002). In a study of this nature, McEvoy (2008: 103) reminds that it is important to differentiate between visitor responses to climate versus weather conditions. Decision-making relating to tourism such as the destination and period of travel has been found to be based largely on climate information. On the other hand, the vacation period is much more weather-dependent and reliant on short term forecasts where actual weather information is more important than climate information (Matzarakis, 2007). The nature of the relationship between the atmospheric environment and the enjoyable pursuit of outdoor recreational activity may be seen to be a function of facets of on-site atmospheric conditions, the weather. Pleasant weather increases tourist satisfaction, whereas severe weather conditions such as rain and strong winds disrupt outdoor activities. In southern Alaska, for example, tour operators noted a marked difference between the sunny, dry summer of 2004 and wet summer of 2006. Although this study fully acknowledges the importance of climate to tourism, with weather being an important factor, survey results show the possibility that destinations may also be chosen in spite of the likely bad weather. Figure 1 illustrates the findings. The result suggests that even if it rains on the day that tourist decides to go to Sentosa, 49% of the respondents would not alter their original plan to visit the island. The reasons cited were more or less similar in that they would â€Å"choose to visit other attractions within Sentosa† and â€Å"stay in indoor venues†. All of the 28% tourists who states that there will be changes to their plans to Sentosa were at Sentosa beach specifically for the purpose of outdoor beach activities such as swimming, sun tanning and picnicking. Therefore, with some tourist activities more sensitive to weather than others, metrological conditions may affect or disrupt the construction of the planned days event. On the other hand, Sentosa Island with many indoor attractions, allows for contingency plans to be made which enables tourists to be independent of weather conditions. With â€Å"visiting attractions† being the most carried out activity for respondents (Table 2.2), as well as â€Å"attraction/activities† cited as the most important factor affecting their decision to visit Sentosa, it suggests why majority of tourists may not change their plans to visit Sentosa even under unforeseen weather events. Therefore, although climate and weather is one of the many factors that may influence tourist decisions, good weather may not be the primary reason for selecting destinations. Weather Forecast Mark Twains famous quote of â€Å"Everybody talks about the weather but no one does anything about it† is often held up as a truism but Twain himself have said this â€Å"aint necessarily so†. Along the same line of argument, Dewar (2005) contends that humans may not be able to alter the day-to-day weather but they do alter their behaviours to either avoid or take advantage of these weather conditions. To some extent as discussed previously, a majority of respondents seems to have predicted that they would alter their behaviours, by visiting indoor attractions to avoid unfavourable rainfall events. Weather forecasting is a useful way to alter ones behaviour or plan activities to suit prevailing weather conditions on the day of event. Favourable climate and weather conditions are essential advantages which influences the degree of satisfaction, allowing tourists to enjoy their holiday activities safely and comfortably, helping them fulfil the desires that originally brought them to the destination (de Freitas 1990, 2003; Blazejczyk, 2001; Gomez-Martin, 2005). However, it is surprising that although 59% of respondents engaged in a pre-planned weather dependent activity of sun tanning and swimming as well as 10% for picnicking, only a small percentage of 13% admitted to have checked the weather forecast before coming to Sentosa.

The Woman In Black Sound Analysis

The Woman In Black Sound Analysis How Sound is Used in The Woman In Black I saw a production of the play The Woman In Black at the Theatre Royal in Windsor. The play is set in England in Victorian times. This play really put me on the edge of my seat in some scenes and terrified the life out of me in others, the sound in the play really did go a long way to achieving this. Sound is very important in this production as it creates tension, makes the play nerve-shredding and really helps to tell the story as the stage is set as a minimalistic stage so the sound is vital to the story telling. The director (Robin Hearford) hired Rod Mead as the designer of sound. One scene Rod Mead uses sound effectively is where Kipps was sleeping at Eel Marsh house. The sound used here was non-diegetic and was a low rhythmical thudding. Thiss was a very good use of sound as it created an eerie atmosphere. This sound was played from speakers positioned around the audience to make the audience feel involved in the play. I thought this was a great use of sound as it really created a sense mystery and the audience didnt know what would happen next. Rod Mead used sound effectively in many ways. Often he used it to legitimise the location of a scene for example in the graveyard where Jerome and Kipps are paying their respects to Mrs. Drablow. There was a recorded sound of ravens which is a noise associated with death and hauntings. The non-diegetic sound was played from speakers which were behind the actors. This makes it realistic for the audience because Rod Mead is making us use our senses to make us more in depth and into the story, its making the audience experience what The Actor, who in this scene is playing Kipps, experienced. This is clever as it builds tension because it is bringing the audience deeper and deeper into the story and is enhancing the separation from the real world and as it was a minimalistic stage setting the sound was really important as it was the main sense the audience had to picture the scene.I thought this was a brilliant use of choosing to place the sound and it really supported the action that wa s going on, onstage. Also there is a reverb on the vicars voice. This is implying that the church was mostly empty and makes the audience wonder about why Mrs. Drablow was so unpopular. Another way sound is used effectively is in the office scene where Kipps and Jerome are talking at Jeromes desk. In this scene Rod Mead uses non-diegetic sound really well to create an extremely clear atmosphere. In the background there was the sound of the busy market place, which include the voices of traders, the footsteps of people walking through the market and in the office there were sounds of light murmuring from employees and chairs being moved etc. This was very smart from Rod Mead as it gave the sense that the audience were really in an office scene and it drew the audience in to the story. These distant sound effects had been mixed cleverly to create a background and atmosphere for the scene. I think this was a very good way of supporting the action of this scene and I think it really helped the audience paint a picture in their heads. Near the start of the play when Kipps and Sam Dailey are in the train, Rod Mead creatively uses non-diegetic to give real sense of the atmosphere of the train carriage. If you listened, you could hear sound effects that had been mixed cleverly to create a background for the scene. There were sounds of the steam puffing out of the steam engine, the clickety clack of the wheels rolling away on the track, and the gentle hum of the engine. These sounds were amplified around the room with a speaker at the front.This was a very clever technique as it gave the impression that we were really in a train carriage in these scenes. I thought this was a brilliant use of choosing where to place the sound. It also gave a brilliant atmosphere for the upcoming jump scare because it involved you in the play and it felt as if you were actually there on the train and it seemed normal. So when the climax, a loud train horn (which was recorded sound coming out from the speakers), accompanied by a straw ge lled rotating gobo, which simulated a passing train, actually came it was extremely scary because it came from nowhere and was a sudden unexpected shock. Also there was very little on so the location and the atmosphere was created through sound. So in conclusion, I can see how recorded music as well as live and recorded sound effects are all used together to communicate and tell the story of The Woman In Black, Robin Hearford and Rod Mead clearly worked together well to help one another and the overall effect was fantastic.

Young Goodman Brown Essay -- essays research papers

The main theme of the Nathaniel Hawthorne’s, â€Å" Young Goodman Brown,† is the struggle between Goodman Brown’s faith, power to resist his own evil impulses and his own doubts within him. It is a story of Young Goodman Brown’s personal conflict over his inner desires and its greater meaning conflict between good and evil in the world. The characteristics of Young Goodman Brown are similar to the life of Nathaniel Hawthorne. Nathaniel Hawthorne had his own doubts about his own Puritan life and beliefs. There are numerous examples in this story whereby Hawthorne clearly demonstrates to the reader Goodman Brown’s personal internal conflict between good and evil. Hawthorne’s knowledge of the historical background of Puritanism combined with the personal experience of his early life and the history of his own family merge into the actions that Young Goodman Brown takes. â€Å"Good men† in Hawthorne’s day were those who came from a â€Å"proper† family. The influence of Puritan religion, culture and education had a major role in how someone perceived themselves and their community around them. Goodman Brown claims that he is from a family of good men that have â€Å"never been into the forest on such an errand† to meet the devil; Hawthorne utilizes this information in order to show the reader how Goodman Brown’s ancestries played a vital role on how Goodman Brown thought of himself (as of good character). This view is quickly challenged by the devil himself when he states that all of his ancestors were with him as they tortured women in Salem or burned Indian villages to the ground, and afterwards the d evil and his ancestors would go for a friendly walk. Goodman response to this allegation was; â€Å"We are a people of prayer, and good works to boot, and abide no such wickedness.† Goodman disbelieves that his ancestors could do such wickedness. Hawthorne calls into question the chaste foundation of Young Goodman Brown's heritage, as well as the societal viewpoint of what is respectable, simply by pointing to a few facts. Given the existence and the importance of religion in the era of the early nineteenth century, Goodman Brown may be expressing a desire to break loose from a rigid puritan lifestyle. The puritan life style required their followers to doubt themselves and their community so much that a reality in which one could achieve Grace did not exist. It taught that one could not... ...lls for his Faith, he gets no answer. Brown only sees the pink ribbon fall, and his awareness of the conflict between good and evil is complete. He gives himself over to a new perspective. The pink button represents the pure innocents that has disappeared. This tears Goodman apart and creates so much doubt within him that it alters his perception about all the good people that are around him. We can never be sure if good or evil won the fight waged within Young Goodman Brown, but Hawthorne makes it abundantly clear that Brown was scared for his life due to his experience. This journey that Young Goodman Brown encounters could of been a dream or even a true event that is manifested by his own internal desires. Unable to accept that society is a mixture of both good and evil, Goodman Brown chooses his own damnation. In the forest Brown saw a mixture of religious and wicked people, and it was strange to see that "the good shrank not from the wicked, nor were the sinners abashed by the saints." Brown ultimately decides to accept that everyone is evil, and he loses his chance at redemption when he makes the decision to completely isolate himself from society and even from his own wife.

Revenge in Emily Brontes Wuthering Heights Essay -- Wuthering Heights

Wuthering Heights:  Ã‚   Revenge – The Strongest Theme  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     When Wuthering Heights, by Emily Bronte, first appeared in 1847, it was thought to be obscene and crude (Chase 19).   To the common person, it was shocking and offensive, and it did not gain popularity until long after it was first published.   When the piece of literature became widely read and discussed, however, Bronte was declared as a â€Å"romantic rebel against repressive conventions and a writer who made passion part of novelistic tradition† (Chase 19).   Unlike earlier writers, Bronte used factors from her own life and passions that she personally held to construct her classic novel.   For example, Joseph’s bible-thumper character most likely symbolizes her father, who was a minister.   However, Bronte’s book is not only a breakthrough to literature in these ways.   The narration of the story is also very unique and divergent because there are multiple narrators.   Bronte’s character Lockwood is used to narrate the introductory a nd concluding sections of the novel whereas Nelly Dean narrates most of the storyline.   It’s interesting that Nelly Dean is used because of her biased opinions.   In addition, the structure of Wuthering Heights displays a uniqueness.   Just as Elizabethan plays have five acts, Wuthering Heights is composed of two â€Å"acts,† the times before and after Catherine’s death.   However, unlike stereotypical novels, Wuthering Heights has no true heroes or villains.   â€Å"Although this work was written in the Romantic Period, it is not a romance.   There are no true heroes or villain... ...built up anger and resentment inside him and towards others.   The hurt that Hindley feels is clearly understood, but sympathy for Hindley is only temporary because it is still his own fault for his predicaments.   Hindley’s loss of Wuthering Heights to Heathcliff and his mysterious death reflect how revenge does not make anything better, only worse.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Bronte corroborates that revenge is not only a harsh and rash way to live life, but is counter-productive and hurtful.   Out of all of her major themes, revenge is the most imminent.   The self-hurt involved with vengeance shows there are better ways to solve conflicts.   Bronte sends a great message across by showing how negative revenge can be.   There is no solution to obeying the spontaneous reaction of this negative reprisal.

Business Studies Easter Project Essay

Introductinon As you probably already know Asda is one of the leading food superstores in Britain today. Asda is part of the Wal-Mart group however before this Asda was on its own. Asda has been part of the Wal-Mart retailers since 1999. Asda was formed in 1965 by a group of farmers from Yorkshire, today Asda has 245 stores, with 19 depots across the U.K. Asda’s aim is to sell its products 10-15% cheaper than its main competitors. Asda sells a variety of products including fresh food, grocery, clothing, home, leisure and entertainment goods. In my report I have gained my information form the Asda website and I also interviewed the store manager of the Asda store in Longsight. In my report I will discuss the following performance indicators: Labour Turnover, Labour Productivity, Absenteeism and the Morale of workers. Performance of Company Asda has recently been valued at being worth à ¯Ã‚ ¿Ã‚ ½1.3 billion, which includes all its assets. Anyway I think that it will be too complicated to discuss the performance indicators on such a large scale. This is why I am going to just concentrate on the performance of the Asda store in Longsight. When I asked Sue (the manager) if labour turnover was high, she replied by saying that it is an average level. (i.e. not too high and not too low). I then said to her that this must mean that staff must feel demotivated and therefore leave. She replied by saying that it was because they employed a lot of young students and this was the reason for a lot of people leaving because they couldn’t fit the shifts in with their work. I believe that this means that although labour turnover is high, it is not an extremely bad point. When we discussed the labour productivity of the workers, she said that the staff, work very hard in every department whether it is the deliveries, clothing, music or work on the checkout. Many products were sold in each department but obviously some were sold much more than others. The labour productivity really determines how many products are sold, as items are obviously not being produced at the store they are being sold there. She also mentioned that everyday there are at least 2 people who are around the store to just help customers or provide tasters of foods. I believe that this helps to increase productivity, because customers may feel more welcome and more sales may be made. I then asked what the turnover of the store was each day. Sue replied by saying that on the weekends they generally make more money and she said that last Saturday they had a turnover of approximately à ¯Ã‚ ¿Ã‚ ½500,000. I believe that this clearly shows that labour productivity is high at the Asda store in Longsight. I then went on to talk about absenteeism. Sue said that this was generally low without any notice, and that there were hardly any people who didn’t give notice when they were going to have a day off. But she also said that absenteeism was a good point because it gives workers a change because they can swap shifts with one another. I agree and believe absenteeism with notice is not so bad. Sue said the the morale of workers was generally high. She said that staff were paid at a time rate starting from à ¯Ã‚ ¿Ã‚ ½4.15 per hour. The following incentives could be motivating factors for the staff at Asda: Tell the team- putting your ideas across Stars- can be cashed in for gifts. ABCD- A certificate for dedicated workers. Bonus payments- for reaching certain targets Share plan Private Healthcare Discount on new cars Travel insurance Staff Discount Card I believe that the following incentives will make workers feel motivated. This is because it makes the workers feel that they are being recognised and that there work is appreciated. It is not only the financial incentives that are important for motivation. It is also for example the certificate for working hard which could motivate. And even the fact that workers can put their ideas across, which may make them feel a real part of the company. There are some improvements that could be made to the performance indicators. Firstly as we know labour turnover at the Longsight store is at an average level as many workers are students. We can solve this problem by allowing the shifts to fit in with the workers education, by offering them certain shifts. And then there is the labour productivity which is already very high, so I believe that this should just be kept at a constant level. And workers should just continue with the good work. Absenteeism is a problem when the workers don’t come into work without any notice. To solve this problem I believe that managers should phone up absent workers to see where they are. And if they persist in not coming into work then this must mean that they feel demotivated, so managers should try to find out what the problem is. I know that the incentives that Asda offers are very good, but I generally believe that managers should talk to their staff a little more and just give them general assurance that they are doing the job in the right way and to show that their work is appreciated. Conclusion I believe that as Asda is worth over à ¯Ã‚ ¿Ã‚ ½1.3 billion this must mean that they are not going too wrong. And another fact that shows that Asda is doing well is that it was voted the best company to work for in the year 2000 by the Times Newspaper. And in 2001 it was also voted supermarket of the year.

Linear Programming in Finance, Accounting and Economics

Linear Programming in Finance, Accounting and Economics Sijia Lu 7289928683 Abstract This article is literatures review about five articles, which apply linear programming to Finance, accounting and economics. The mathematical method is found of crucial importance in those fields. The paper shows how theoretical inference in linear programming throws light upon realistic practice, and how empirical evidence supports those theories. Keywords: finance; accounting; economics; linear programming; investment analysis Linear Programming in Finance Application of Linear Programming to Financial Budgeting and the Costing of Funds† explored how to allocate funds in an enterprise by applying linear programming. As Charnes, Cooper and Miller analyzed, at least three problems are to be considered to solve the allocation problem: 1) Plans for production, purchases, and sales under certain structure of the firm’s assets, in order to maximize its profit or reach other objectives. 2) Th e change of the firm’s profit per unit change in the structure of the assets. 3) Opportunity cost of the firm’s funds.The article starts with a simple example with one commodity and one warehouse. Let B be the fixed warehouse capacity, A be the initial stock of inventory in the warehouse, xj be the amount to be sold in period j, yj be the amount to be sold in period j, pj be the sales price per unit in period j, and cj be the purchase price per unit in period j, then we have due to the cumulative sales constraint; due to the warehouse capacity constraint; due to the buying constraint; due to the selling constraint; and with our goal of maximizing The dual problem is also obvious.It is to minimize subject to and to where As we learned, â€Å"dual theorem of linear programming† says that the two optimal values of the original problem and the dual problem should be equal. Using this theorem, the authors then reached a new method of evaluating assets. Because , we h ave in which the two sides must have the same units of measure. So it is now obvious that t*k represents the value per unit of net warehouse capacity and u*k represents the value per unit of initial inventory in the warehouse. Similarly, consider the financial problem, which has liquidity constraints as here j-? represents payments and j-r represents receipts, M0 is the initial cash available and M is the balance the firm desired the maintain. By examining the dual problem of this, we can find corresponding dual variables for the problem called, say, vk. Again, from the equality we found before, we can learn that the two sides of the equation have the same units of measure. It is then seen that the v’s should be dollars per unit time per dollar invested. The valuation of assets or investments is of crucial importance to any business.So far, by simply applying the dual theorem, Charnes, Cooper and Miller have created a new method of evaluating assets or investments. This metho d of evaluating is also easy to find out answers. It is intelligent to examine the units of measure rather than try to solve the specific problems. The interesting thing is that in realistic problems, we can find true meanings of theoretical dual variables. Then the authors mixed the two former problems together to see a more realistic case – a warehouse problem with financial constraints.So the following new constraints are added: Now if we define We’ll get the new dual problem: Here, V1 is the incremental cumulative internal yield rate. Or it is the opportunity cost the capital invested – â€Å"it shows the net amount to which an additional dollar invested in the firm will accumulate if left to mature to the end of the planning horizon. † This is also easy to understand in terms of economics, maximizing profit can be the same as minimizing the opportunity costs. The article then went through several practical problems using the dual variable evaluating method.It is also interesting to find out that all the commodities are directly linked to the funds-flow while the goods-flow can be avoided in the warehouse problem with multiple commodities. An Example â€Å"A linear programming model for budgeting and financial planning† created an accounting experiment in which the dual variables introduced earlier were calculated which can also be considered as a sensitivity analysis. This can be seen as application and verification of Charnes, Cooper and Miller’s earlier theory. In the linear programming problem listed below, (1) represents the interests earned with a rate of 0. 29%; (2) holds because firm’s sale of securities will not be more than the beginning balance of this amount; (3) represents the maximum collection of receivables will not exceed the beginning balance of account receivable; (4) means the initial cash balance constraints the purchase of securities; (5) indicates â€Å"contribution† on a unit s ale per unit deduction from the ending goods inventory, with prevailing selling price being $9. 996 and cost of production $2. 10; (6) holds because of the cost structure: in the $2. 10 cost, $1. is the material cost and $1. 1 is the conversion cost (direct labor cost and direct overhead); (7) represents the production capacity limits by limiting the value of raw materials; (8) holds because conversion is also limited to raw materials at the beginning of the period; (9) means market limit to the sales by constraint on the standard cost; (10) means sales are also limited because it can not be more than the beginning balance of completed goods; (11) represents the repayment of loans will not exceed the beginning balance of outstanding loans. 12) indicates the limit of accounts payable; (13) is the depreciation charge equation with a rate of 0. 833; (14) indicates the structure of costs to be incurred in the current period, including fixed expenses ($2,675,000), variable cost, effectiv e interest penalty for discounts not taken on accounts payable (at a rate of 3. 09%), and interest on loans (at a periodic rate of 0. 91%); (15) represents income tax is accrued at 52% of net profit and the dividend equals to $83,000 plus(minus) 5% of the excess(shortage) of the expected profit, $1,800,000; (16) is the limit of minimum cash balance required by the company policy; (17) holds because an expected price rise in the next period leads the company to decide the ending inventory should be at least the minimum sales expected in the next period; (18) means ending materials must be sufficient for the production of next period; (19) is the payment limits: all income taxes payable and dividends must be paid by the end of current period.And because we can considers our goal as maximizing net additions to retained earnings, we have substitute the K’s with figures of balance sheet, which is showed below, we can calculate the X’s As we learned before, a dual evaluator indicates the change in net addition to retained earnings if the constraints corresponding to the given evaluator were relaxed by one dollar. For example, the dual evaluator of (7) is $3. 594936. This means that if production capacity ere increased in case that exactly one additional dollar’s raw material is used, the retain earnings will increase $3. 94936. To see this case in detail, table 5 shows what happens after altering the firm’s raw material processing capacity by one unit. Additional cash can be obtained in 3 ways: a) selling securities; b) borrow from a bank; c) delay payment on account payable. But the cheapest way is a). Thus we can calculate the opportunity cost per dollar by: the firm loses interest income of $0. 00229 of every dollar of securities sold while savings from taxes and dividends can relieve this loss, calculate the periodic loss, it is $0. 00104424. Evaluate this loss from an aspect of infinite periods:Apply this to the last step of deductio n, we get $3. 594936, again. Our former inference is thus confirmed. Not only from the mathematical aspect but also from the accounting aspect. In this case, linear programming offers a highly flexible instrument. As in the case, â€Å"all sensitivity changes within any specific part of the model are evaluated in terms of their effect on the entire model. † It is also highlighted, as we mentioned above, this kind of evaluation can be done without actually solving the entire problem. Thus this method is not only reasonable but also convenient.Linear Programming in Economics So far we have seen the application of linear programming in the field of finance and accounting. Now let’s see an interesting example which apply linear programming to economics. A linear program can approximate product substitution effects in demand. In general, the demand function may be written as (1) where p is an N * 1 vector of prices, q is an N * 1 vector of quantities, a is an N x 1 vector o f constants, and B is an N x N negative semidefinite matrix of demand coefficients. And the objective function for the competitive case can be written as maximize 2) where c(q) is an N * 1 vector of total cost functions, q >= 0, AND Substitute (1) into (2) We have the new objective function Maximize (3) In economics, we know that the total welfare of transactions can be separated into two parts: consumers’ surplus and producers’ profit. In mathematics, these two parts can be written as We also represent the resource scarcity by adding constraints (4) The Kuhn-Tucker conditions, which are necessary (but not su? cient) for a point to be a maximum are: Thus the Kuhn-Tucker necessary conditions for the original problem are equation (4) plusFor monopoly market, the object function is a little different, it is to Maximize (5) while the Kuhn-Tucker necessary conditions are equation (4) plus From the competitive market objective function (3) and the monopoly market objective f unction (5), we can see that both involve a quadratic form in p. In order to set up the LP tableau, define a function representing the area under the demand curve as (6) And the total expenditure function as (7) Then we can derive the following figure for (6) and (7): The representation of the piecewise linear approximation in LP is shown for the two-good, separable-demands case, in table 1. here costs for the ith product in the jth activity producing it are represented by cij; unit outputs of the ith product in the jth activity producing it are given by yij; The quantities sold of the ith product corresponding to the endpoint of the jth segment are defined as qj; Values of W for the ith commodity corresponding to the amount sold, qj, are given by wij; Values of R for the ith commodity corresponding to the amount sold, qj, are represented by rij; The target level of producer's income is denoted by Y*.Note that the LP problem has its certain properties. In table 1, no more than two a djacent activities from the set of selling will enter the optimal basis at positive levels. And also, by use of the function R in the constraint set, the model includes a measure of income at endogenous prices. The article then looks into a more complicated case where there exists substitution of demands. That is, one good’s demand can be substituted by the other one’s.An assumption, as the basis of the approximation procedure developed for this situation, is that commodities can be classified into groups, which allow the marginal rate of substitution (MRS) to be zero between all groups but nonzero and constant within each group. Then consider a group consisting of C commodities. We can create table 3 for the situation: The authors pointed out that â€Å"each of the blocks of activities [W's R's -Q's 1] constitutes a set of ‘mixing’ activities for one segment of the composite demand function for the commodity group†. i. e. [W's R's -Q's 1]T=Relative prices of commodities in the group are assumed fixed, both within and between segments, and are defined by Also define the quantity index as and price index as where Then we create table 4, which is a simple extension of the single product case. Only the selling activities are shown. in which The price-weighted total quantity is (8) To extend the case of demand in fixed proportions within a group, define matrix A as The elements in matrix Q can now be calculated as (9) substitute (8) into (9), we have The price-weighted total quantity, q*sm, is given by so (9) is equal to hen calculate the elements of W and S Now we are able to calculate the MRS By rearranging we get MRS=-p2/p1, the required result. An Expansion The use of linear programming in the field of economics was continued in the paper â€Å"Endogenous Input Prices in Linear Programming Models†. In this paper, the author provides a method for formulating linear programming models in which one or more factors have upw ard sloping supply schedules, and the prices are endogenous. Instead of examining the demand function, Hazell starts from the function of the producers, whose goal is to maximize their profit here x is a vector of output levels; p and c are vectors of market prices and direct costs, respectively; d is a vector of labor requirements; L is the amount of labor employed at wage w. Now if the buyer of labor is monopoly, or the market is a monopsolistic market,due to economic definition we’ll have Then the problem becomes Again we use Kuhn-Tucker conditions to solve for the optimal solution. L;0, so we have = w+? L Thus, given the optimal amount of labor used (L*), the associated market-clearing wage is w* = a + PL*, and this is smaller than ? by PL*.This is correct by intuition and empirical evidence. Similarly, if the situation is competitive market , we can derive? =w, which is quite different from the former case. Using the method of Duloy and Norton, Hazell calculate the suppl y curve of labor, which is actually a stepped function, showed as below: Hazell pointed out that â€Å"stepped supply functions arise artificially from using linearization techniques, but they also arise in reality when different sources of labor are identifiable which can be expected to enter the labor market as the wage reaches critical levels. And then he also mentioned another way to find out the supply function of labor. This article is a development and application of the former article. The method for achieving these results utilizes the sum of the producers' and consumers' surplus, and is an extension of existing methods for solving price endogenous models of product markets. Linear Programming in Daily Investing Linear programming is such a useful tool that we can find its advantages in finance, accounting and also economics. But what about in our daily life?How can linear programming help when we make decisions about our own investing, say, our own financial portfolios in various stocks? In 2004, C. Papahristodoulou and E. DotzauerSource wrote an article about these questions, named â€Å"Optimal Portfolios Using Linear Programming Models†. This paper is about three models: The classical quadratic programming (QP) formulation and two new ones — (i) maximin, and (ii) minimization of mean absolute deviation. The first model is to s. t. where i and j are securities; ?ij is the covariance of these securities; xj is the portfolio allocation of security j.These are the variables of the problem and should not exceed an upper bound uj; ? is the minimum (expected) return required by a particular investor; and B is the total budget that is invested in portfolio. The second model is established so the minimum return is maximized. Regarding the constraints, one might assume that every period's return will be at least equal to Z. For period t, this constraint can be formulated as: where rjt, is the return for security j over period t. The third mod el simplifies the Markowitz classic formulation is to use the absolute deviation as a risk measure.It is proved by Konno and Yamazak that â€Å"if the return is multivariate normally distributed, the minimization of the mean absolute deviation (MAD) provides similar results as the classical Markowitz formulation†. And as is known, MAD is defined as We define first all Yt >0 variables,t = 1, †¦ ,T. These Yt variables can be interpreted as linear mappings of the non-linear Thus, the objective function is to minimize the average absolute deviation and the constraints added are Then the author tested all three models, using monthly returns from 67 shares traded in the Stockholm Stock Exchange (SSE), between January 1997 and December 2000.As expected, the maximin formulation yields the highest return and risk, while the QP formulation provides the lowest risk and return, which also creates the efficient frontier. The minimization of MAD is close to Markowitz. The results are as follows: All three formulations though, outperform the top equity fund portfolios in Sweden. They also conclude, â€Å"When the expected returns are confronted with the true ones at the end of a 6-month period, the maximin portfolios seem to be the most robust of all. † Conclusion We have seen the crucial importance of linear programming to finance, accounting, economics and also our daily life.It turns difficult problems into easier ones. By using this mathematic way of solving problem, we can achieve more intelligent choices while wasting less. The study of linear programming is so useful that in the future, it will hopefully find more use in the world of economics and management. References â€Å"Application of Linear Programming to Financial Budgeting and the Costing of Funds†, A. Chares, W. W. Coopers, and M. H. Millerss, The Journal of Business, Vol. 32, No. 1, Jan. , 1959 (pp. 20-46) â€Å"A Linear Programming Model for Budgeting and Financial Planning†, Y. Ijiri, F. K. Levy, and R. C.Lyon, Journal of Accounting Research, Vol. 1, No. 2, Autumn, 1963, (pp. 198-212) â€Å"Prices and Incomes in Linear Programming Models†, John H. Duloy and Roger D. Norton, American Journal of Agricultural Economics, Vol. 57, No. 4, Nov. , 1975 (pp. 591-600) â€Å"Endogenous Input Prices in Linear Programming Models†, Peter B. R. Hazell, American Journal of Agricultural Economics, Vol. 61, No. 3, Aug. , 1979 (pp. 476-481) â€Å"Optimal Portfolios Using Linear Programming Models†, C. Papahristodoulou and E. Dotzauer, The Journal of the Operational Research Society, Vol. 55, No. 11, Nov. , 2004 (pp. 1169-1177)

Sony Strategy Analysis

SONY Strategy Case Analysis Executive Summary Sony is currently faced with the problem of low operating margin and stagnant market share in the videogame console industry. PlayStation3 of Sony is competing with Xbox360 of Microsoft and Wii of Nintendo. Despite the high technology, Wii outsells PlayStation in the market. This shows that the traditional strategy of Sony based on hardware should be reviewed according to the new trend. Considering gradually increasing market size and harsh competition, Sony should invest more on creating new customers and software. AnalysisAfter experiencing the five or six cycles defined by advancement of underlying technology, there are currently three main competitors in the videogame industry: Sony, Microsoft, and Nintendo. The PlayStation of Sony and the Xbox360 of Microsoft can be characterized by high technology and interoperability with other electronic products. Meanwhile, the Wii of Nintendo emphasizes innovative and user-friendly capabilities such as wireless motion-sensing controllers. Therefore, the Wii could appeal to more widespread customers such as senior people including traditional gamers.Based on enthusiastic reactions to Wii, the leading market share of PlayStation in the prior generation is replaced by the Wii of Nintendo. As of 2008, the Wii substantially outsells the two rivals. According to Five Forces Analysis, Sony has been faced with the following characteristics in the game industry. Suppliers: The bargaining power is relatively high since videogame console makers outsource the manufacturing of console. Also, they need the support of game developers. In this respect, the one of the main reasons why the PlayStation and PlayStation 2 could succeed as a new entrant would be the supplier-friendly strategy of Sony.Sony took the policy to license any PlayStation software as far as it does not clash with hardware. Also, Sony provided third-party developers with various development tools and soft libraries. Buy ers: Compared with past customers who could enjoy the limited game console suppliers, current customers could enjoy the various types of game platforms. Also, based on the high technologies, the games for every age or demographic are coming out to the market. Therefore, game console makers should ensure as many customers as possible to enjoy the economy of scale in the increasing market size.This gamer-friendly environment results in the high bargaining power of customers. Regarding customer-based viewpoint, Sony failed to captivate the people from all levels. Even though PlayStation software is targeted at a more mature audience, PlayStation of Sony has been usually used by the traditional gamers of young age. Threat of new entrants: In the game industry, the possibility of new entrants to succeed is very slim because new platform based on high technologies requires high cost and risk.Therefore, small or medium sized companies are very difficult to finance R&D and marketing. Also, it is very difficult for new entrants to find game developers. Three giant companies (Sony, Microsoft, Nintendo) overwhelmingly dominate the market of videogame console and there exists a big entrance barrier. It is the reality that a small company cannot help being pushed out by three major companies. Since Sony got into the game industry, the biggest threat of new entrants would be the appearance of new contender, Microsoft, in 2001.Threat of substitute products: There exists the high possibility of substitutes from other industries. Personal computers or mobile handheld devices could be the potential substitute of videogame consoles. The reality is that many people are enjoying games using other devices such as I-Phone or I-Pad over time. In addition, consumers don’t have to bear the additional cost when they change from game consoles to other substitutes. Considering the high diffusion rate of personal computers or mobile devices, potential substitute products could be hi gh threat to selling game consoles.Positioning among current competitors: Definitely, Sony is the major entity in the game console market. However, the market situation is not so bright as the past over time. As a new entrant in 2001, Sony could get a huge success through giant money, high technology, stylish design and support of game developers. However, Sony is now suffering from negative operating profit and turned over the status of top maker to the Wii of Nintendo. So, Sony needs to set up new strategies in the videogame industry. RecommendationFirst of all, Sony should broaden customer scope from traditional gamers to the general public. Game industry is still growing although the attractiveness is waning over time. Sony is trying to position the PlayStation as the ultimate hub for digital living room. However, the people are still not familiar with PlayStation and consider it just game machine. Therefore, Sony needs to enforce the marketing for family-friendly game console m aker. The one of the main reasons for Wii’s success is that Nintendo targeted the niche market that other competitors have ignored.Nintendo focused on the general public with the easy and simple game consoles instead of expensive and complicated ones. Wii contributed to letting the public general realize the fun of game. Now, Sony needs to leverage the opponent’s assets as a Judo Strategy as Sega did in the past. If the family-friendly image is added to the high technology of Sony, the PlayStation could appeal much more to the general public. Lastly, Sony needs to more invest on its software. Sony has been focused on the product itself based on high technology and attractive design.As Nintendo makes high margin based on the customer-friendly software forgoing high price of console, Sony needs to broaden available games for PlayStation. A wide range of Adult users could bring new Blue Ocean of profits. Utilizing the advantages of PlayStation, the high technology and int eroperability with other electronic devices, Sony could set up the new digital hub replacing TV and Computer at home. To do this, above all, Sony should establish the affluent in-house software associated with developers as Apple make additional profits through various apps.