Research Korner: Report Papers

Using counter-trades to the international marketing firm

Part A. Why should a detailed knowledge of counter-trades be part of international marketers training package on pricing methods? What are the disadvantages of Part A. Why should a detailed knowledge of counter-trades be part of international marketers training package on pricing methods? What are the disadvantages of using counter-trades to the international marketing firm compared to more conventional pricing arrangements? Discuss.   Several global phenomena like substantial industrial competition, dynamic process of internationalization and globalization and fast-tracking of technological innovations are among the factors that affect the global marketing and its related operations. With these phenomena that create significantly great impacts in all economies, there is a need to identify the most suitable marketing solution in order to cope up with such emerging effects – beneficial or destructive – not only to the marketing process but to the international firms in general. Marketing can be considered as one of the most important element underpinning successful business creation ( 1994). Perhaps because of its complex applications, marketing have been defined in a variety of ways (1988). The marketing concept was first promulgated in the late 1950’s ( 1991; 1990). The importance of marketing concept incorporates oft-repeated elements such as the idea of customer orientation, integrated marketing efforts, and resultant profitability among others. Today, more and more people and organizations are trying to be recognized in the business arena by using marketing as their core competitive identity. With this objective, these organizations had been able to competently and effectively adapt to the situation in the market place by using different strategies that enhanced their competitiveness. But the case is different in the aspect of international marketing particularly among trading countries. The knowledge that every marketer holds is important in order to deliver satisfactory marketing results. In international marketing, understanding global marketing principles is not enough to survive the highly dangerous competition. On this case, the concept of counter-trade is illuminated.   Counter-trade             To quote  (1998), “Countertrade is a global phenomenon that involves interaction between parties in different countries and is driven by reciprocity.” There have been numerous definitions of counter-trade. In this paper, several authors are quoted to give an idea on the key descriptions of the term.  (1988,), in his marketing rationale of counter-trade describe it as “various forms of reciprocal international trade whereby a party selling a products) in turn commits itself to assist the buyer in moving his products.” The U.S. Department of Commerce defines it as a variety of trade arrangements in which a seller provides a buyer with products and agrees to a reciprocal purchasing obligation with that buyer (cited in 1997).  (2004) considers it as a generic term that refers to any transaction involving a partial or full payment of goods instead of money. One of the most interesting features of counter-trades is its unique ability to take place and initiate close connection among countries even in there are varying political and economic differences existing among them. The requirements of counter-trade are typically not intended for centrally planned economies but also on a large number of developing countries. The trend is very much enforced and encouraged. In counter-trades, the most important thing to consider is the overall economic consequence of the allied transaction (1988).             In the same manner, there are variables of counter-trade as identified by  (1998), which include size of transaction, products countertraded, groupings of countries involved, and type of countertrade. The size of transaction must be large enough or containing large value so that it is worthwhile. Countertrade negotiations are complex and time-consuming. It is also important to consider what types of products are to be countertraded. For the past decades, most products originate from highly industrialized nations in Europe and the Americas (North). Countertraded products are based on the nature of economies in each participating country (initiating and responding countries) and these products might be different. The grouping of countries involved is also important. For example, the former centrally planned economies of the Eastern bloc are considered to have the most frequent involvement in countertrade. However, there is an increased involvement of the low-income developing countries and a decline among developed countries due to their disapproval of the given practice. The types of countertrade are barter, counterpurchase, offset, and buy-back or compensation.  These are outlined and discussed on the next part of the paper.             It is then important that a detailed knowledge of counter-trades is included in the training package of international marketers particularly on pricing methods because this will help them device pricing strategies, anticipate changes in pricing patterns, and ensure a competitive position in the market based on pricing strategy. Being the most powerful tool in marketing, price is identified following the company’s established goals and objectives. These goals range from enhancing the market share of the products, improving the demands in the target markets, to extending the sales at an even rate for one whole day, week, month, or year. Pricing is utilized in several ways namely (1) to increase unit sales so that resources of the firm; (2) to restrict sales, or limit the quantities demanded per unit time;(3) to make the market less attractive to actual or potential competitors; and (4) to attract buyers so that they will buy other items once the transaction has begun (Hitt et al. 2003).             In this paper, it is advocated that the core marketing principles are not properly applied in the case of counter-trades. There is a difficulty of application on the case of marketing mix particularly on pricing. It also affects the strategic 3Cs concept including the company, the customer, and the competition as well as the process of formulating a standardized marketing strategy and plan. In relation to marketing plan, marketing mix includes both short term and long term strategies makes for a more profitable marketing mix. Long term strategies build brand/company awareness and give sales revenue a permanent, gradual boost. Short term strategies create a temporary, immediate revenue boost by giving buyers an incentive to purchase. By implementing both long and short term strategies, you can attend to immediate sales goals while building your business reputation and goodwill ( 2004). Furthermore, it is also a factor in effectively using limited marketing resources, identifying unique market niches, improving profitability and helping to retain consumer loyalty. In marketing, there is clear definition of the market. On the case of the strategic 3Cs, the company must be able to identify the type of business, product or service offering, and the customers. The customers’ or the target market’s wants and needs are the basis of marketing strategy and objectives ( 2000). In countertrade, customers are the traders from both parties involved. Also, the basis for the market categorizations of customers includes demographic characteristics, geographical location, consumer behavior, and psychographic characterizations (2001). In countertrading, the basis includes the variables – size of transaction, products countertraded, groupings of countries involved, and type of countertrade. According to  (2000), competition is important since it affects the success of a business venture and that competition is more than just producing and distributing products and services that matches the needs of the consumers. Through an effective and efficient competitive advantage strategy, the organization will be able to reach its prescribed objectives and continuously operate in the chosen field of industry and at the same time earning more profit and expanding its operations. In countertrade, competition is not actually realistic as compared to what is exists in the global marketplace but to some extent observable. The marketing stimuli often consist of the four Ps of marketing: product, price, place and promotion while the other stimuli may include economic, technological, political and cultural factors which exist in the marketing environment. This may also appear in countertrade. The marketing stimuli necessitate the most effective strategy and plan. Marketing strategy and plan is the fundamental groundwork of marketing plans designed to achieve measurable marketing objectives (2003). It is given that a good strategy in marketing encompasses the organization’s marketing goals, policies, and action cycle. With this fact, strategy is the foundation of the marketing activity. In countertrading, strategy and plan seems vague yet the participating parties may utilize any.             Meanwhile, the disadvantages of using counter-trades to the international marketing firm compared to more conventional pricing arrangements include a rigid, slower, and more costly way of marketing as compared to regular international business traditions; most offered products do not sell easily and may be considered for discarding; it neglects trade restrictions and tolerates the unfairness of its requirements; and many others (2004;1998;1988). To illustrate these disadvantages, some organizations involved in countertrading see it as a nuisance rather than opportunity. But then again, the purposes of countertrade in the perspective of marketing include the following: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is an instrument of economic policy development among governments. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It prevents or hedges in opposition to future risks.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is a way of establishing synergistic alliances.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is a mode for transferring marketing expertise.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is a unique way of direct marketing.</li> </ul> In the case of pricing, countertrading is an instrument for price discrimination. It is illustrated on the case that if only different markets can be successfully divided into several units and subsequent resale of commodities is prevented, then countertrade can conceal eventual discount to specific merchandisers as well as buyers ( 2004). With the given importance of some marketing features and since countertrade includes conditional arrangement (1994), it is highly recommended that a detailed knowledge of counter-trades must be included in the training package of international marketers particularly on pricing methods because the marketing process is highly progressive and purposive.       Part B. Outline and discuss four types of counter-trade agreement and demonstrate how each of them can be used by marketing management in a particular overseas "pricing” agreement.   These types of countertrade can often be used in larger or transnational firms as an avoidance mechanism to overcome trade barriers and national regulations that leads to the reduction of potential corporate profits. Whereas, it overcome trade barriers and leading to profit maximization through transfer pricing, evasion of antidumping rules, and tax minimization (1998) and offload poor quality goods, or push products in world excess supply (2004). The four (4) most common types of countertrade agreement are barter, offset, counterpurchase, and buy-back or compensation. ·        Barter, according to (2004), is the oldest form of transaction. It is the direct transfer of goods or services or both between parties without monetary exchange. This is also similar to equal or offsetting value. The most frequent problem encountered in this transaction is the waiting time to receive the goods, the possibility of receiving goods that are not of potential use by the other party or of lesser than the expected value. This is perfectly demonstrated during the earlier colonial years wherein galleon ships travels to exchange goods in other countries. In today’s application, barter is not much utilized. ·        Offset is commonly used in the military trading for the purpose of making major purchases of military goods. This is the best way to illustrate this type of countertrade. This is also similar to counterpurchase but some or 100% of the counterpurchase obligation can be offset by buying from any company in the foreign country ( 2004). Countries with centrally planned economies are the usual participants. In offset agreement, the pricing strategy is based on consensus whereby the supplier of a product is asked to assist the buyer in exporting it based on a specific price. This type fosters certain economic goals. Pricing is absolutely critical. ·        Counterpurchase is a perfect case of reciprocal buying agreement ( 2004) wherein an exchange of goods between two parties is based on the use of two contracts in an agreement to mutually supply goods or services and to purchase all goods in cash. The fulfillment of their mutual sales obligations is defined over specified time duration. In terms of pricing, both parties enter into a formal written agreement with each other relating to pricing policies. The pricing decisions are expected to have a direct impact on the volume of the profits. ·        Buy-back or compensation includes an agreement between a company that will provide a plant or supply technology, equipment, and any other technical advice to another company. In return, it takes a portion or percentage of the output from the provided aid as payment. This fosters long-term relations among participating bodies. In pricing, legal and regulatory environments are involved particularly in global companies. It is because prices of products or goods sold in foreign markets are considerably higher in contrast to the domestic markets. In here, pricing policy is governed by terms of sale like in other types of countertrade agreements. There are also some other types of countertrade agreements like tolling and switch trading. However, these are less used and specialized in nature. All in all, these types of countertrade agreement are based on the idea of reciprocal exchange of goods based on agreed conditions and requisites. In terms of pricing, it is used in pricing discrimination toward economic gains favorable to both parties involved. In conclusion, countertrade is global in nature. It is conducted in all or most countries and it features in trade involving numerous industries including oil, basic metals, armaments, vehicles, industrial machinery, computers, paper, chemicals, furniture, food, and clothing. But because of its complexity, reciprocity and government involvement, countertrades should be well-thought before initiating any of its types. On this paper, it is advocated that a detailed knowledge of counter-trades must be included in the training package of international marketers, particularly on pricing methods because of the nature of countertrading and the marketing process itself is highly progressive and purposive. Since price and pricing is critical in marketing, it should always be decided appropriately. This is to ensure unique, direct and effective marketing process.     compared to more conventional pricing arrangements? Discuss.   Several global phenomena like substantial industrial competition, dynamic process of internationalization and globalization and fast-tracking of technological innovations are among the factors that affect the global marketing and its related operations. With these phenomena that create significantly great impacts in all economies, there is a need to identify the most suitable marketing solution in order to cope up with such emerging effects – beneficial or destructive – not only to the marketing process but to the international firms in general. Marketing can be considered as one of the most important element underpinning successful business creation ( 1994). Perhaps because of its complex applications, marketing have been defined in a variety of ways (1988). The marketing concept was first promulgated in the late 1950’s ( 1991; 1990). The importance of marketing concept incorporates oft-repeated elements such as the idea of customer orientation, integrated marketing efforts, and resultant profitability among others. Today, more and more people and organizations are trying to be recognized in the business arena by using marketing as their core competitive identity. With this objective, these organizations had been able to competently and effectively adapt to the situation in the market place by using different strategies that enhanced their competitiveness. But the case is different in the aspect of international marketing particularly among trading countries. The knowledge that every marketer holds is important in order to deliver satisfactory marketing results. In international marketing, understanding global marketing principles is not enough to survive the highly dangerous competition. On this case, the concept of counter-trade is illuminated.   Counter-trade             To quote  (1998), “Countertrade is a global phenomenon that involves interaction between parties in different countries and is driven by reciprocity.” There have been numerous definitions of counter-trade. In this paper, several authors are quoted to give an idea on the key descriptions of the term.  (1988,), in his marketing rationale of counter-trade describe it as “various forms of reciprocal international trade whereby a party selling a products) in turn commits itself to assist the buyer in moving his products.” The U.S. Department of Commerce defines it as a variety of trade arrangements in which a seller provides a buyer with products and agrees to a reciprocal purchasing obligation with that buyer (cited in 1997).  (2004) considers it as a generic term that refers to any transaction involving a partial or full payment of goods instead of money. One of the most interesting features of counter-trades is its unique ability to take place and initiate close connection among countries even in there are varying political and economic differences existing among them. The requirements of counter-trade are typically not intended for centrally planned economies but also on a large number of developing countries. The trend is very much enforced and encouraged. In counter-trades, the most important thing to consider is the overall economic consequence of the allied transaction (1988).             In the same manner, there are variables of counter-trade as identified by  (1998), which include size of transaction, products countertraded, groupings of countries involved, and type of countertrade. The size of transaction must be large enough or containing large value so that it is worthwhile. Countertrade negotiations are complex and time-consuming. It is also important to consider what types of products are to be countertraded. For the past decades, most products originate from highly industrialized nations in Europe and the Americas (North). Countertraded products are based on the nature of economies in each participating country (initiating and responding countries) and these products might be different. The grouping of countries involved is also important. For example, the former centrally planned economies of the Eastern bloc are considered to have the most frequent involvement in countertrade. However, there is an increased involvement of the low-income developing countries and a decline among developed countries due to their disapproval of the given practice. The types of countertrade are barter, counterpurchase, offset, and buy-back or compensation.  These are outlined and discussed on the next part of the paper.             It is then important that a detailed knowledge of counter-trades is included in the training package of international marketers particularly on pricing methods because this will help them device pricing strategies, anticipate changes in pricing patterns, and ensure a competitive position in the market based on pricing strategy. Being the most powerful tool in marketing, price is identified following the company’s established goals and objectives. These goals range from enhancing the market share of the products, improving the demands in the target markets, to extending the sales at an even rate for one whole day, week, month, or year. Pricing is utilized in several ways namely (1) to increase unit sales so that resources of the firm; (2) to restrict sales, or limit the quantities demanded per unit time;(3) to make the market less attractive to actual or potential competitors; and (4) to attract buyers so that they will buy other items once the transaction has begun (Hitt et al. 2003).             In this paper, it is advocated that the core marketing principles are not properly applied in the case of counter-trades. There is a difficulty of application on the case of marketing mix particularly on pricing. It also affects the strategic 3Cs concept including the company, the customer, and the competition as well as the process of formulating a standardized marketing strategy and plan. In relation to marketing plan, marketing mix includes both short term and long term strategies makes for a more profitable marketing mix. Long term strategies build brand/company awareness and give sales revenue a permanent, gradual boost. Short term strategies create a temporary, immediate revenue boost by giving buyers an incentive to purchase. By implementing both long and short term strategies, you can attend to immediate sales goals while building your business reputation and goodwill ( 2004). Furthermore, it is also a factor in effectively using limited marketing resources, identifying unique market niches, improving profitability and helping to retain consumer loyalty. In marketing, there is clear definition of the market. On the case of the strategic 3Cs, the company must be able to identify the type of business, product or service offering, and the customers. The customers’ or the target market’s wants and needs are the basis of marketing strategy and objectives ( 2000). In countertrade, customers are the traders from both parties involved. Also, the basis for the market categorizations of customers includes demographic characteristics, geographical location, consumer behavior, and psychographic characterizations (2001). In countertrading, the basis includes the variables – size of transaction, products countertraded, groupings of countries involved, and type of countertrade. According to  (2000), competition is important since it affects the success of a business venture and that competition is more than just producing and distributing products and services that matches the needs of the consumers. Through an effective and efficient competitive advantage strategy, the organization will be able to reach its prescribed objectives and continuously operate in the chosen field of industry and at the same time earning more profit and expanding its operations. In countertrade, competition is not actually realistic as compared to what is exists in the global marketplace but to some extent observable. The marketing stimuli often consist of the four Ps of marketing: product, price, place and promotion while the other stimuli may include economic, technological, political and cultural factors which exist in the marketing environment. This may also appear in countertrade. The marketing stimuli necessitate the most effective strategy and plan. Marketing strategy and plan is the fundamental groundwork of marketing plans designed to achieve measurable marketing objectives (2003). It is given that a good strategy in marketing encompasses the organization’s marketing goals, policies, and action cycle. With this fact, strategy is the foundation of the marketing activity. In countertrading, strategy and plan seems vague yet the participating parties may utilize any.             Meanwhile, the disadvantages of using counter-trades to the international marketing firm compared to more conventional pricing arrangements include a rigid, slower, and more costly way of marketing as compared to regular international business traditions; most offered products do not sell easily and may be considered for discarding; it neglects trade restrictions and tolerates the unfairness of its requirements; and many others (2004;1998;1988). To illustrate these disadvantages, some organizations involved in countertrading see it as a nuisance rather than opportunity. But then again, the purposes of countertrade in the perspective of marketing include the following: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is an instrument of economic policy development among governments. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It prevents or hedges in opposition to future risks.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is a way of establishing synergistic alliances.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is a mode for transferring marketing expertise.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> It is a unique way of direct marketing.</li> </ul> In the case of pricing, countertrading is an instrument for price discrimination. It is illustrated on the case that if only different markets can be successfully divided into several units and subsequent resale of commodities is prevented, then countertrade can conceal eventual discount to specific merchandisers as well as buyers ( 2004). With the given importance of some marketing features and since countertrade includes conditional arrangement (1994), it is highly recommended that a detailed knowledge of counter-trades must be included in the training package of international marketers particularly on pricing methods because the marketing process is highly progressive and purposive.       Part B. Outline and discuss four types of counter-trade agreement and demonstrate how each of them can be used by marketing management in a particular overseas "pricing” agreement.   These types of countertrade can often be used in larger or transnational firms as an avoidance mechanism to overcome trade barriers and national regulations that leads to the reduction of potential corporate profits. Whereas, it overcome trade barriers and leading to profit maximization through transfer pricing, evasion of antidumping rules, and tax minimization (1998) and offload poor quality goods, or push products in world excess supply (2004). The four (4) most common types of countertrade agreement are barter, offset, counterpurchase, and buy-back or compensation. ·        Barter, according to (2004), is the oldest form of transaction. It is the direct transfer of goods or services or both between parties without monetary exchange. This is also similar to equal or offsetting value. The most frequent problem encountered in this transaction is the waiting time to receive the goods, the possibility of receiving goods that are not of potential use by the other party or of lesser than the expected value. This is perfectly demonstrated during the earlier colonial years wherein galleon ships travels to exchange goods in other countries. In today’s application, barter is not much utilized. ·        Offset is commonly used in the military trading for the purpose of making major purchases of military goods. This is the best way to illustrate this type of countertrade. This is also similar to counterpurchase but some or 100% of the counterpurchase obligation can be offset by buying from any company in the foreign country ( 2004). Countries with centrally planned economies are the usual participants. In offset agreement, the pricing strategy is based on consensus whereby the supplier of a product is asked to assist the buyer in exporting it based on a specific price. This type fosters certain economic goals. Pricing is absolutely critical. ·        Counterpurchase is a perfect case of reciprocal buying agreement ( 2004) wherein an exchange of goods between two parties is based on the use of two contracts in an agreement to mutually supply goods or services and to purchase all goods in cash. The fulfillment of their mutual sales obligations is defined over specified time duration. In terms of pricing, both parties enter into a formal written agreement with each other relating to pricing policies. The pricing decisions are expected to have a direct impact on the volume of the profits. ·        Buy-back or compensation includes an agreement between a company that will provide a plant or supply technology, equipment, and any other technical advice to another company. In return, it takes a portion or percentage of the output from the provided aid as payment. This fosters long-term relations among participating bodies. In pricing, legal and regulatory environments are involved particularly in global companies. It is because prices of products or goods sold in foreign markets are considerably higher in contrast to the domestic markets. In here, pricing policy is governed by terms of sale like in other types of countertrade agreements. There are also some other types of countertrade agreements like tolling and switch trading. However, these are less used and specialized in nature. All in all, these types of countertrade agreement are based on the idea of reciprocal exchange of goods based on agreed conditions and requisites. In terms of pricing, it is used in pricing discrimination toward economic gains favorable to both parties involved. In conclusion, countertrade is global in nature. It is conducted in all or most countries and it features in trade involving numerous industries including oil, basic metals, armaments, vehicles, industrial machinery, computers, paper, chemicals, furniture, food, and clothing. But because of its complexity, reciprocity and government involvement, countertrades should be well-thought before initiating any of its types. On this paper, it is advocated that a detailed knowledge of counter-trades must be included in the training package of international marketers, particularly on pricing methods because of the nature of countertrading and the marketing process itself is highly progressive and purposive. Since price and pricing is critical in marketing, it should always be decided appropriately. This is to ensure unique, direct and effective marketing process.

Using counter-trades to the international marketing firm

Part A. Why should a detailed knowledge of counter-trades be part of international marketers training package on pricing methods? What a...

Influence of an Individual’s Perceptions and Interpretation In Decision-Making and Judgments

Every single day, people are faced with decisions whether be it as simple as what to do or what to wear for the day. Every single minute is characterized by choices, choices that people make, rationally or irrationally.  decision making is as essential process in the human nature. Much has been learned about the psychology of human decision making as well as decision making within organizations. This paper will examine and assess the extent by which people’s judgments and decisions are influenced by one’s perception and interpretation of the world.             There are many factors affecting our choices in life. The field of judgment and decision making is concerned on how people combine desires and beliefs to choose a course of action. There are three components in the conceptual design for a decision. It includes courses of action or choice options and alternatives; beliefs about objective states, processes and events in the world including outcome states and means to achieve them; and desires, values or utilities that describe the consequences associated with the outcomes of each action-event combination. Decision making is central to every human activity; thus, everybody is a decision-maker. It must be noted though that good decision making begins with a consecutive, purposeful, strategic-thinking process. In addition, good decisions are those that efficiently choose or select means that are available in a given circumstance or situation to attain the goals of the decision maker.             Defines a decision as “the act or process of deciding; a conclusion or resolution reached especially as to future action, after consideration; the settlement of a question; a formal judgment; tendency to decide firmly; resoluteness”. Many theories of decision making exist in disciplines for both scientific and social science paradigms. In statistics, decisional theory is a strategy of measuring the decision-making process, or making it into mathematical form to make the most efficient and effective choice. In early economic theories, there is also a decision-making model of economic utility wherein people choose the best option that provides the maximum positive utility. The aforementioned early theories are also referred to as classical decision-making which basically shows how decisions are made in ideal situations. In psychology, the highlight of the process of decision-making has been a primary area of focus and study. In Janis and Mann’s Conflict Model of Decision-making, the process of decision=making is viewed as a stressful process which involves an assessment of risk and an assessment of success and time availability to make a decision. This model hypothesize that people make a decision through a decision balance sheet wherein individuals evaluate the gains and losses of a decision on the basis of tangible gains or losses for oneself and for significant others and approval or disapproval from the self and from significant others as well.             Usually though, our decisions and judgments are primarily affected and influenced by how we perceive and interpret the world. In psychology, perception is a “neurological process of observation and interpretation; any neurological process of acquiring and mentally interpreting information from the senses”. It is the process by which individuals organize and interpret their sensory impressions in order to give meaning to what happens in their environment perceptions are essential because individuals act upon their interpretation of events and at other times fail to act because of perceptions. People are sometimes faces with the same events; however, there are different perceptions and views on such same events. Comments that perception is like beauty. It is in the eye of the beholder.             It must be noted that an individual’s behavior is based upon their perception of what reality, not on reality itself actually. The world as it is perceived or viewed is the world that is behaviorally important. Each one of use the five senses to experience our surroundings. They are the senses of sight, touch, smell, hearing and taste. Organizing all these information that we receive from these senses is called perception states that perception is a cognitive process. Perception actually helps individuals select, organize, store and interpret stimuli into a meaningful and rational picture of the world. As each person gives one meaning to stimuli, different individuals “see” the same things in different ways.  Obstacles in Making Accurate Perceptions             Sims has outlined some obstacles that hinder individuals from making accurate perceptions. They are stereotyping, first impression error, halo effect, contrast effect, selective perception and implicit personality theories. Each of these obstacles will be examined and discussed in the proceeding part of this paper. Stereotyping. Stereotypes are considered to be a group concept, actually held by one social group about another. They are often used in a negative or prejudicial sense and are usually used to justify certain discriminatory behavior . The basis for commonly held stereotypes may be associated to one’s sex, race, ethnic group and age. An example of stereotyping may be: the belief or perception that older workers are not capable of being trained for new tasks or younger workers cannot handle responsibility. Even though stereotyping may seem inaccurate and worthless, in some cases, there be “kernel of truth” in the basis of stereotyping; Stereotypes are sometimes based on actual group characteristics. It must be noted though that as stereotypes are some typical beliefs based on the element of truth wherein the beliefs are derived from observations that hold true for the entire group but do not hold much truth and accuracy for given individuals in the group. First Impression Error. As the saying goes, “first impressions last”. First impression errors mean that a person may observe a very brief bit about another person’s behavior in their first encounter and conclude that this behavior mirrors what the person is really like. Such impressions may be dangerous in interviews for work as these first impressions become the lasting impressions in the basis for their long-term employment relationships.    The Halo Effect. The halo effect is described as when a person good at something is assumed to be good at something else. This positive assumption creates a halo.  Gives two instances for this type of obstacle in making accurate perceptions. Example one: Let us say that you are a supervisor in a machine shop. An employee, let us call him John, has been one of the best drill operators in your section for the last ten years. A lathe operator is in need in another section. So, you recommend John, assuming that he will do superb at the lathe as he does in drill pressing. However, John fails; he may be very good in the other task but it doesn’t mean that he will definitely be great with the other task as well. He lacked the necessary skill and the training for the other task. Figuratively speaking, you have somehow placed a halo over John’s head. Another example may be when two people have a violent fistfight on the job. One is rather a personal friend of yours with whom you socialize off the job. There may be a tendency for you to place a halo over your friend’s head by assuming that the other person must have been the cause of the fight and conflict . Projection. Projection happens when an individual credit our own feelings and attributes to others. People engaging in projection have the tendency to perceive others according to what they themselves are like instead of according to what the person observed is really like. It must be noted that the observations may be accurate as they make observations of people who are actually like them; however, accuracy don’t always happen as they might have observations on people who are not like them. So, when engaging in projection, one must respond to individual differences. Contrast Effects.  Contrast effect can distort perceptions. A very common example is when illustrated in an old saying among entertainers that states never to follow an act which has kids or animals in it. There is a common belief that majority of the audience just love and adore kids and animals that the entertainer will look bad in comparison. This specific example portrays how contrast effects can affect and distort perceptions. States that people don’t assess a person in isolation. A person’s reaction to one person is influenced by other people we have just encountered. Selective Perception. Selective perception happens when perceptions arise from influences by one’s own interests. When individuals can longer take in all stimuli received, one has the tendency to select out certain elements. For instance, as one purchase a car, for some unknown reason you just begin to notice the same type of car every now and then on the streets compared to before purchasing the car . Implicit Personality Theories. As people have individual mini-theories on how people look and behave, this will result to inaccurate perceptions. These theories, helps each one of us to organize our perceptions and take shortcuts rather than incorporating new information all the time. Adds that people are cognitive misers. As the world becomes more complex and confusing and as people have only a limited mental capacity, people try to make sense of the world by grouping traits and appearances into clusters that may seem to go together. The discussion on what hinders making accurate perceptions have enlightened us on the issue of how much one’s perceptions and interpretation of the world can affect and influence decision-making as well as making judgments. We have seen how perceptions are distorted by stereotyping, first impression error, halo effect, contrast effect, selective perception and implicit personality theories. Researches on judgment and decision making have recognized important limitations in cognitive and emotional processing. It must be noted that errors in decisions occurring due to biases have widespread effects. Many scientists, economists and psychologists are driven to make behavioral assumptions in the market place as a result of real-world violations of the rational choice theory. In psychology, many examinations are made in the concept of rationality. Psychologists are further examining different and alternative frameworks and theories to explain ways of how people make decisions and what influences them upon making their decisions. The future of judgment and decision-making research within psychology lies in its capability and capacity to develop other theories and frameworks that make associations with research on emotions and cognition, in addition to social and institutional factors. Such associations will definitely influence and affect our views in decision making and adjustability and provide good foundations for research in many years ahead.

Influence of an Individual’s Perceptions and Interpretation In Decision-Making and Judgments

Every single day, people are faced with decisions whether be it as simple as what to do or what to wear for the day. Ev...

INSURANCE REPORT

May 21, 2007   Adrian CellTech Laboratories Ltd.     Dear Mr. :   Good day! I would like to ask for further information regarding the insurance report that you want made. There is just a few more information that I would wish to know.             Since you are the sole breadwinner of the family and that you still have a child at school, what type of insurance would you like to have made? I think it would be very wise to apply for disability insurance or life insurance since it is one may really not be certain of the future. This way, one can be certain that the dependents that are left behind would not have to carry the burden of living their life difficultly.   If you have any other concerns, please don’t hesitate to contact me.   Sincerely yours,   Agnes                     May 21, 2007   Bob, CellTech Laboratories Ltd.     Dear Bob,   Good day! I just have to confirm and add a few minor details regarding your insurance report request.   Since you are a regular employee of CellTech, I recommend that you demand for workers compensation. This way, you are assured that even though you may be sick or disabled as of the moment, you would still receive compensation as you regularly would. I also recommend that you sign up for life insurance, in case anything happens because as you mentioned in the interview, you have four schoolchildren with one being disabled.   If you have any further requests or questions, please don’t hesitate to contact me.   Sincerely yours,   Agnes                                         May 21, 2007       Claire, CellTech Laboratories Ltd,     Dear Claire:   Good Day! I just have little information that I would like to add before making your requested insurance report.   Since you only have one dependent, your husband, I recommend that you get for yourself life insurance. This is a very good investment because you are assured that the ones you leave be hind would not be left empty handed. Also, I recommend that you demand for worker’s compensation. I also recommend that you sign up for trauma insurance and total and permanent disability insurance. These types of insurances would be highly useful in case something happens which cannot be controlled or altered.   If you have any further questions of requests, please don’t hesitate to contact me.     Sincerely yours,   Agnes                     Insurance Report CellTech Laboratories Ltd.   Please find the following attached report regarding the insurance coverage of CellTech Laboratories Ltd. The following is a report regarding the risks taken, risk management strategies of CellTech and insurance reports. The paper is an analysis on the possible risks that may affect the company in the near future. The following is taken from the report. There are certain tools and techniques for Risk Identification in terms of: Ø      Recognize the value of understanding the tools and techniques and the outputs of risk identification Ø      Identify the steps to performing documentation reviews Ø      Apply the steps to prepare for a documentation review for a given project Ø      Sequence the steps of the interviewing technique used for risk identification Ø      Apply the interviewing technique to gather information about project risks, given a scenario   Insurance benefits and coverage of employees are also included in the paper. If any further issue regarding the report may arise, please contact me immediately. Agnes CellTech Laboratories Ltd. Business Insurance Report                             Executive Summary           CellTech Laboratories Ltd is a small biotech business providing lab services, pharmaceuticals, and specialized testing kits to vets, agribusinesses, and other laboratories. It is mainly run by Adrian Hall, the founder, three shareholders and the senior management staff.             The general objective of the paper is to provide detailed insurance coverage for the company, its employees and the shareholders as well. Risk management refers to keeping to the positive side of risks. Risks are not entirely negative. They allow positive sides that can work to the risk-taker’s advantage. Therefore, risk management are present in the development and implementation of a business’s risk-taking strategy and it is anticipated that most individuals offering such risks are likely to be acting from non-commercial motives and will encourage highly functional, value-added, access and the Individual IP owners will appreciate the benefits of making risks.             In the light of risk taking and management, it is also vital that one must take a step to insure the risks one might take. Insurance plays a great role in the advancement of a business. Whether the risk taken is successful or not, it is always good to have been insured, it is some sort of back-up plan. The myriad of risks that can cause a small or midsize company to crumple has increased its number throughout the years. In the words of  of , a Towers Perrin company, a number of small and midsize companies are facing the equal number of risks as those of large multinational ones (, 1992). Also , a number of small-scale companies who purchase insurance coverage have increased in number over the last few years. In addition to that, the same employee-compensation problems are occurring in small companies same as those in large companies.             In the context of this paper, the insurance coverage and the risks covered by the insurance will be discussed.                                 Table of contents   Executive Summary Introduction and Background Risk planning and identification Risk analysis, evaluation and treatment Conclusion Recommendations List of references                           Introduction The quality, risk and procurement management and insurance report will examine the risks taken by CellTech, the needs of the company and its shareholders; the need to establish the appropriate levels of quality and build quality into the project processes and deliverables; how to ensure that the appropriate quality is given to each and every one of involved in the company; planning for the level of risk in a project and identifying the risks and uncertainties that could impact on the company; analysis and evaluation of the identified risks; definition of risk treatment strategies so that appropriate plans are in place for anticipated events; planning an appropriate procurement strategy for the project; review of the various procurement strategies and their implications for stakeholders; procedures for procurement solicitation and source selection; monitoring and control of the procurement processes; and identifying coverable (insurable) aspects of the company  and its shareholders. In the report and interview conducted with CallTech’s shareholders, we have identified the factors that may play a major role in the business insurance report. The report would cover key person, debt and obligation and share purchase cover.           CallTech is a 15 year old company which has been run by the founder, , three shareholders and a senior management team. CellTech is financially sound. The latest books are not yet  complete, but Bob and the company accountant have advised you the company is likely to have made taxable profit of around like $400,000, valuing it at $2.4 million (based on a generally agreed EBIT times 6). CellTech pays out 50% of available surpluses after tax as tax paid dividends, and this expected to continue. Profit growth is expected to be strong over the next five years, mainly because of the rapid growth of several of their agribusiness customers. They conservatively believe its value will double during this time, and then level out.             As was mentioned in the interview, CellTech is leasing its purpose-built and ideally located premises for six years. It already used up the four years of its leasing term, and with a three-year right to renewal. An occupancy cost (lease and operating expenses) is $124,000 pa. The company is planning to purchase some high-tech equipment for $800,000 in two months. The purchase will be financed partly by using surplus cash, but will require additional borrowing of $450,000. The three shareholders, who are also company directors, will provide personal guarantees covering the full amount of all loans. Total current company debt is $350,000.             There have been talks about two companies interested in buying the company. These are two multinational suppliers. They are intent on purchasing the company whether it be available now or in the future.           Discussion Risk Planning and Identification The risk management planning will recognize the benefits of understanding risk management planning and identify the inputs used in planning risk management activities as well as identify the key components of a risk management plan. There are such inputs to risk identification like for instance, in dealing with the company’s risks; it is usually a must to have better understanding of the inputs to its risk identification of their business risks and of sources of information. There are certain tools and techniques for Risk Identification in terms of: Ø      Recognize the value of understanding the tools and techniques and the outputs of risk identification Ø      Identify the steps to performing documentation reviews Ø      Apply the steps to prepare for a documentation review for a given project Ø      Sequence the steps of the interviewing technique used for risk identification Ø      Apply the interviewing technique to gather information about project risks, given a scenario In addition to that, in insuring a company and its shareholders, certain risk planning is developing and documenting organized, comprehensive, and interactive strategies and methods for identifying risks.  It is also used for performing risk assessments to establish risk handling priorities, developing risk handling plans, monitoring the status of risk handling actions, determining and obtaining the resources to implement the risk management strategies.  Risk planning is used in the development and implementation of required training and communicating risk information up and down the project stakeholder organization.  There are several key elements in successfully implementing an effective risk management process and each is necessary for risk management planning. Risk Management is an ongoing process - it's "cradle to grave", starting on receipt of an invitation to tender, covering the bid period, the life of the project up to delivery then on through subsequent support phases. Furthermore, risk taking is essential to progress, and failure is often a key part of learning. On the other hand, the inevitability of risks does not imply the inability to recognize and manage risks to minimize potential negative consequences while retaining the opportunities for creating new and better opportunities for the company. The paradigm is represented as a circle to emphasize that risk management is a continuous process while the arrows show the logical and temporal flow of information between the activities in risk management. Communication is placed in the center of the paradigm because it is both the conduit through which information flows and, often, is the major obstacle to risk management and before risks can be managed, they must be identified. Identification surfaces risks before they become problems and adversely affect a company or its shareholders. There has to be developed techniques for surfacing risks by the application of a disciplined and systematic process that encourages project personnel to raise concerns and issues for subsequent analysis. Analysis is the conversion of risk data into risk decision-making information. Analysis provides the basis for the project manager to work on the “right” risks. The focus of the risk identification method described here is on risks that are known whether or not they have yet been communicated to project management, and on unknown risks. The risk identification method achieves the desired focus through the interdependence of the instrument, and its application process. Effective risk identification must cover all key development and support areas of the project. The risk identification process must create and sustain a non-judgmental and non-attributive risk elicitation environment so that tentative or controversial views are heard.   Potential Risk Treatments Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of these four major categories: Ø      Transfer Ø      Avoidance Ø      Reduction Ø      Acceptance   The ideal use of these strategies may not be possible. Some of them may involve trade offs that are not acceptable to the organization or person making the risk management decisions.   Conclusion               The insurance of the company and its shareholders is a must not only for large, multinational companies but for small-scale companies as well. Therefore, there has to develop the rule of basics from the procurement strategies, identify operational improvement plans and be able to define the organizational and system savings required to support the management of its respected procurement as well as providing clear access upon the recent infrastructure for procurement strategy systems and identify gaps in process support, information analysis and integration of development. ( and , 1994) There defines requirement for a more cohesive and integrated procurement platform in order to determine and decide a practical and rollout procurement strategic planning as useful as possible within the new functionality of the development realization as it focuses particularly on unifying strategic layers that the process have spend and by acting out on the desired information from the best strategy can be improved continuously from its   transactions and application drives for the process of procurement systems. ( and , 1994) Recommendations In order to consistently deliver the best possible services into the market for its business through effective procurement and partnerships as it essential to take into account whole life costing, innovation and continual improvement for the strategies used. (, 1994) Thus, the process of its procurement ways can be realized through providing leadership and building capacity for procurement though effective management, training and support. Aside, it is useful to have better process delivering excellent structures and procedures to facilitate effective procurement process and compliance. There has the environment stimulating the way it deals to the procurement matters working with the organizations both internal and external to execute and apply best practice of the procurement strategies involved. There should be certain guidelines as contained elements of strategy but the authority for the development of best practice and the utilization of procurement skills may possibly be an unclear notion. (, 1994)   There has to be a well developed strategy providing:   Ø      A clear description of its procurement arrangements Ø      Authority for the timely application of procurement expertise Ø      For its application to all non-payroll expenditure wherever it may potentially add value and give assurance on propriety and regularity Ø       strategy approved at Management Board and participation of procurement staff Ø      Development of supplier base and modern procurement practice Ø      Restriction of right to negotiate prices, enter into contracts and to amend or alter contracts to procurement staff trained to exercise the necessary skills Ø      Management and enforcement of contracts to completion Ø      Standards and behavior in connection with procurement Ø      Setting of targets & performance monitoring   List of references:

INSURANCE REPORT

May 21, 2007 Adrian CellTech Laboratories Ltd. Dear Mr. : Good day! I would like to ask for further information regardi...