Applications of Engineering Materials in Aerospace

Applications of Engineering Materials in Aerospace In this project I will discuss in details the applications of engineering materials in Engineering and its many application in the Aerospace and Formula 1. Materials are key in engineering because the correct materials are needed to meet the needed of the environment that they are meant for use in. In aerospace the materials that are generally used are thing such as: titanium, aluminium, carbon fibre. For example titanium and titanium alloys are used in aerospace engine combustion chamber which can be in the region of 2000C in some instances. Application of materials in Formula 1 Formula 1 is a motor racing category in which the cars can reach extremely high straight line speed and cornering speeds. For them to be able to reach to be able to reach such high speeds and operate in such conditions, the cars much be built from extremely light and strong materials such as carbon fibre and titanium. Carbon-fiber-reinforced polymer is used extensively in high-end automobile racing .The high cost of carbon fiber is mitigated by the materials unsurpassed strength-to-weight ratio, and low weight is essential for high-performance automobile racing. Race-car manufacturers have also developed methods to give carbon fiber pieces strength in a certain direction, making it strong in a load-bearing direction, but weak in directions where little or no load would be placed on the member. Materials such as titanium are also used a lot throughout a formula one engine because of the fact that it is extremely strong and light which allows it the engine to operate at extreme engine speeds such as 20000RPM for a sustained period of time without resulting in engine failure. A material called Inconel is used in the construction of the cars exhaust pipe because of its ability to hold its shape and continue to work as in intended at high temperatures in the region of 900-1000 C . Quite often in formula the rule makers often dictate what materials are permissible in the construction in various parts of the car and what materials are forbidden. This often due to trying to stop the teams from using very expensive materials in the development of the cars, which would send spending sky high. Materials such as beryllium alloys where banned in the use of the construction of the engine as a cost cutting measure. When with the FIA, the regulators of the sport, top teams with big budget s quite easily end up spending in the region of  £250 million a year on the development of the car. The chassis of the car also knows as the monocoque because of how it’s constructed as one piece. The chassis of the car is also sometime referred to as the â€Å"survival cell† because it has been designed to cocoon the driver in the event of crash and protect them from injury. The chassis also has to be very light as well so that it is possible to reach highest possible acceleration which gives the teams a possible advantage over their rivals. Another reason for a strong chassis in grand prix racing is that the chassis is also used as mounting point for the engine and the gearbox. The reason this is done again to save as much weight as possible whilst maximizing the structural integrity of the car. The material that can do all then things is carbon fiber which was first used in formula 1 when a British engineer called John Barnard built the McLaren MP4-1 chassis from carbon fiber. The material should just how strong it when McLaren driver John Watson had a heavy crash at the Italian grand prix at the Monza circuit , and managed to get out without any major injuries. The car did go to win 6 grand Prix because it was significantly ahead of its rivals in terms of the materials used in its construction which gave it huge advantage over the rest of the field considering that this versatile and super strong was introduced in 1983. Limitations and recyclability of the materials used in Formula 1 and that The limitations of many of the materials is that that most of it is very expensive because of the nature of the materials which puts allot of strain on the smaller teams with smaller budgets especially since 60% of the car is constructed from carbon fibre. Carbon fibre is a recyclable material but the problem with it is that the more it is recycled the more of its structural integrity it losses, like plastic, and therefore the quality of it goes down significantly which means that it can only be used for things such as road paving fillers. The metal parts of the car such as the cars such as the car’s engine and internal parts of the gearbox, such as the gear ratio, gear forks and the main shaft, can all be very easily recycled without the loss of the strength or quality of the material. Materials such as titanium and steel alloyed which are used for internal parts of the gearbox and also the engines major castings ( cylinder heads , crankshaft, engine block , camshafts) can be melted down and made back into gear ratio or many other things such as aerospace quality components which are found in aircraft fuselage or deep within the engines. Material applications in the Aerospace Industry Material research, development and application are absolutely vital in the aerospace industry because through the development of materials that planes are flying higher, faster and safer than ever before. Through the use of ultra light and ultra strong materials such as GLARE (Glass Laminate Aluminum Reinforced Epoxy). GLARE is a Glass Laminate Aluminum Reinforced Epoxy FML, composed of several very thin layers of metal (usually aluminum) interspersed with layers of glass-fiber pre-peg, bonded together with a matrix such as epoxy. The uni-directional pre-preg layers may be aligned in different directions to suit the predicted stress conditions. Although GLARE is a composite material, [1] its material properties and fabrication are very similar to bulk aluminum metal sheets. It has far less in common with composite structures when it comes to design, manufacture, inspection or maintenance. GLARE parts are constructed and repaired using mostly conventional metal material techniques. With the application of such materials in aerospace, it has allowed engineers to create bigger planes which are also very economical at the same time. the use of fatigue resistant materials such as GLARE and carbon fibre also reduce maintenance of aircraft because they don’t need to be checked for cracks as often as planes which are made from aluminium and aluminium alloys. Which are plane from aluminium are more prone to what is known as â€Å"metal fatigue†. Metal fatigue happens as a result of continuous loading from the years of pressurisation cycles that a plane goes when it increases and decreases in altitude. Many aerospace companies such Rolls Royce have an in-house material science research department which spend millions of pounds in research with the hope that it will lead to better quality materials which will be able to function correctly in extreme environments such within the core of a high bypass turbo fan engine, where the temperatures can be in excess of 2000C. The materials are used for this are usually titanium alloys because of its ability to stay in its original shape. If you look closely at the picture of the turbine blade bellow , it can be observed that many small holes have been very precisely drilled in and this is to aid the cooling of the blade and stop in from melting and ultimately causing an entire engine failure. Another reason why such ultra light materials are used is because, the engineers want to minimize the mass of the components as much as possible because this reduces the inertia of the part and this will result in better response time from the engine ,wh en the pilots engine increase power to the engine. Lighter components also reduce the fuel consumption of and the engine which is especially important considering the fuel prices as they continue to rise. This is something that airlines will pay extra close attention to because they are always looking to minimize their cost to increase their profits, this is especially important at the moment give the current state of the global economy. Materials in aerospace are also select for their ability to be able to absorb tremendous amounts of energy from unlikely event of an engine failure or an uncontrolled explosion of some sort. Aerospace engine manufacture such as Rolls Royce and General Electric also take the extra step of detonating a fan blade to see whether the engines fan case absorb and contain the impact and to stop parts of the engine escaping and causing further impact to the aircraft. Manufacturers often spend as much as $30 million on this test, at there on expense to prove to potential passengers and airline customers that the engine is truly safe and air worthy.

Management Of Financial Resource And Performance Commerce Essay

Management Of Financial Resource And Performance Commerce Essay Management of financial resources is crucial in any business. According to Harrison and Enz (2005, p.72), If financial resources are misused, they will not result in better human resources or superior physical assets and processes. Furthermore, strong financial resources are an even greater importance in the hospitality industry where it is a highly competitive environment and innovations are quickly imitated. If the financial resources are secured, the organization is able to invest in unique, valuable and difficult to imitate capabilities. Consequently, it can gain the competitive advantage. Intercontinental Hotels Group PLC (IHG) is the worlds largest hotel operator in respect of the number of rooms totaling 585,094 in a 2008 report. IHG mainly operates in the UK, the US, Asia Pacific, Europe, Africa and the Middle East. Moreover, this large hotel operator consists of seven hotel brands including InterContinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Stayb ridge Suites and Candlewood Suites. Intercontinental Hotels Group operates its hotels in three different ways- as a franchisor, an owner, and an operator. Since the biggest part of the business is franchising, IHGs focus lies on driving demands for its brands. On a global scale, the hotel operators distribution system includes global advertising, marketing campaigns, call centers, and local language websites (Jones, 2009). Despite having a competitive advantage with its strong brand awareness and diversified properties worldwide, IHG needs to constantly monitor its environment and identify both internal and external factors. In this manner, its national and international strategies can remain well suited to the developing environment and capabilities. While an audit of the business is necessary to analyze Intercontinental Hotels Groups current position, assessing the financial resources and performance carry a greater weight for decision making. 1. EXTERNAL AUDIT Macro (PESTLE) Analysis: Awareness of a changing environment is of central importance in developing and implementing a robust strategy. PESTLE analysis is a framework used for environmental scanning in strategic management and is comprised of political, economical, social, technological, legal, and environmental components. Political and legal factors can affect aspects of the UK hospitality industry. Tax regulations and employment laws can be altered due to the UK elections that recently took place. Hayman describes how the British Hospitality Association has asked the new coalition government to support the UK tourism industry by providing increased investment and reduced regulation (Anon., 2010). Another essential component in the external environment is the economical factor. The effects of recession have severely impacted the overall performance such as hotels occupancy rates and revenues of the UK hotel market. Amongst these effects is the drop in international and national corporate market segment. A third component in the PESTLE analysis is the social factor. UK consumers have decreased their number of trips, number of nights spent in accommodation, and their overall expenditure. Another element in the macro-scanning is the technological factor. The rise of the internet has allowed major hotel chains to invest in websites and direct booking systems allowing consumers to book, view, and review hotels. Finally, the environmental factor is also of importance when analyzing the environment. Corporate Social Responsibility has slowly become integrated in many organizations business objectives. For a hotel to be socially responsible, it must follow through many policies such as abiding by the Energy Consumption laws and engaging with the local community. Micro (Porters 5 Forces) Analysis The factors in the macro-environment analysis can be used to determine how the firms industry environment (micro audit) is affected. Porters five forces of competition framework can be used to analyze the intensity of competition and the level of profitability (Grant, 2005). These five forces include competition from substitutes, entrants, power of suppliers, power of buyers, and established rivals. The threat of substitutes for Intercontinental Hotels Group is high risk. During the recession, many customers were staying at budget hotels, which became increasingly popular amongst the leisure and corporate markets. Since the barriers to entry into the hotel industry are high, the threat of entry involved is low. The barriers included are high capital requirements or entry costs, high fixed costs, no economies of scale, and resistance from the existing market. The power of suppliers is considered medium-risk for IHG. Since furniture and fittings must be of a certain standard relevant t o a hotel, they are purchased in bulk from specialist contract suppliers. On the other hand, there are no switching costs for food manufacturers and processors. Another element of the five forces is the power of buyer, which is high in the case of Intercontinental Hotels Group. The buyers are sensitive to the prices charged by the hotels in the industry. Moreover, they can easily compare not only prices but also quality and ratings via Internet using various websites. Finally, the rivalry amongst established competitors is of high risk. The major competitors of IHG are Hilton Hotels Corporation, Starwood Hotels and Resorts Worldwide, Hyatt Corporation, and Accor. These large hotel chains offer similar products and services, which means customers are willing to substitute. 2. BUSINESS STRATEGY In order for an organization to compete within a particular industry, it must gain a competitive advantage over its competitors by establishing a business strategy (Grant, 2005). The main objective of a business strategy is to link an organizations internal capabilities and the external environment. IHG not only continuously monitors the environment, but also ensures that the strategy remains aligned with external factors. The core focus of Intercontinental Hotels Group is to create Great Hotels Guests Love. In 2009, despite economic hardships, IHG analyzed its operations and capabilities to focus on how to deliver Great Hotels Guests Love. This major hotel chains strategy concentrates on two key aspects: where it chooses to compete and how it will win in the competing market. There are five key priorities in support of IHGs overall strategy. Some of these priorities include financial returns, its people, responsible business, and guest experience. The progress of these priorities is measured to ensure the achievement of Great Hotels Guests Love. Intercontinental Hotels Groups strategy is also pertinent to regional objectives and priorities. 3. INTERNAL AUDIT 3.1 Human Resources: In order for a strategy to be carried out, human resource is required. According to Kaplan and Norton, human capital is the availability of skills, talent, and know-how required to support the organizations strategy (2004). Employees are not only critical to achieving sustainable competitive advantage, but also integral in an organizations business plans. One of IHGs key strategic priorities is to use its people to create a more efficient organization with strong core capabilities. Intercontinental Hotel Groups focus lies in developing skills to support its key goals for responsible business, guest experience and financial returns by managing employee engagement. Approximately 335,000 people are employed globally across IHGs brands including franchised and managed hotels. The business has been balancing cost reduction and restructuring programs while managing engagement for the people and guests during 2009. To achieve Great Hotels Guests Love this organization has developed a clear articulation of its values and the behaviors expected from all employees, as well as creating the right environment for employees so that they can deliver the core purpose 3.2 Mechanical Resources: Another type of organizational resource is non-human assets such as technology and reputation. IHGs central reservation system technology includes the operations of the HolidexPlus reservation system. This system electronically receives reservation requests entered on terminals located at most of its reservation centers, as well as from global distribution systems operated by a number of major corporations and travel agents. There are currently ten global reservation offices available to take hotel bookings from guests 24 hours a day in 26 different languages. IHG generates room sales globally through their branded websites. Kaplan and Norton state that an excellent reputation for performance along social dimensions not only attracts high quality employees, but also enhances the image with customers and socially conscious investors (2004). IHG believes that corporate responsibility (CR) is integral to the way it conducts business and also at the core of its strategy. Moreover, it ass ists in building competitive advantage. Intercontinental Hotel Groups CR strategy is focused in the environment and its communities in order to drive increased value for IHG, owners, employees, and guests. 3.3 Financial Resources: While human and mechanical resources are equally important, the financial component of the strategy is just as crucial in a highly competitive industry such as the hospitality one. The balancing act of both growth and productivity dimensions is the organizing framework for an organizations strategy map. According to Harrison and Enz, strong cash flow, low levels of debt, a strong credit rating, access to low-interest capital, and a reputation for creditworthiness are powerful strengths that can serve as a source of strategic flexibility, which means that firms can be more responsive to new opportunities and new threats (2005). 3.3.1 Analysis of Key Ratios Companies will often track trends of key ratios over several years to compare their numbers against industry averages from a major competitor to assess comparative financial strength (Harrison and Enz, 2005). The following are some key ratios using IHG financial information from its annual report: a. Liquidity ratios help an organization determine its ability to pay short-term obligations such as debts and payables (Bertoneeche and Knight, 2001). i) An example of this is Current Ratio, which can be formulated as follows: Current Ratio= Current Assets/ Current Liabilities 2008: Current Assets= $544m Current Liabilities= $1141m Current Ratio= 0.47 2009: Current Assets= $419m Current Liabilities= $1053m Current Ratio= 0.40 Because the Current Ratio is below 1 for both years, it suggests that IHG is unable to pay off its short-term obligations if they were due at that point. The decrease of current assets is probably due to the recession period. Although this implies that the organization is not in good financial health, it does not necessarily mean that it will go bankrupt. ii) Another example of a liquidity ratio is the quick ratio also known as the acid test and can be figured as shown below: Quick Ratio= (Current Assets- Inventories) / (Current Liabilities) 2008: Current Assets= $544m Inventories= $4m Current Liabilities= $1141m Quick Ratio= 0.47 2009: Current Assets= $419m Inventories-$4m Current Liabilities= $1053m Quick Ratio= 0.39 The difference between current ratio and quick ratio is inventories. Inventory is excluded in quick ratio since some companies have difficulty turning their inventory into cash. In the case of IHG, the quick ratios for both 2008 and 2009 are similar to the current ratios. Since the hotel industry is mostly service oriented, there are not much inventories to turn into cash. b. Profitability ratios are another key dimension to an organizations firm health. According to Harrison and Enz (2005, p.72), They are a common measure of overall financial success. i) One type of profitability ratios is net profit margin ratio can be calculated as follows: Net Profit Margin= (Net Profit/ Revenues)* 100 2008: Net Profit= $262m Revenues= $ 1897m Net Profit Margin= 0.14 or 13.81% 2009: Net Profit= $214m Revenues=$1538m Net Profit Margin= 0.14 or 13.91% For every $1 generated in revenue, IHG made a profit of 13.81% in 2008 and 13.91% in 2009. Even though the net profit and revenues for 2008 are higher than that of 2009, there was a slight increase in the net profit margin. ii) Another profitability ratio is gross profit margin which can be determined as follows: Gross Profit Margin= (Gross Profit/Revenues)* 100% 2008: Gross Profit= $1045m Revenues= $1897m Gross Profit Margin= 0.55 or 55.08% 2009: Gross Profit= $678m Revenues= $1538m Gross Profit Margin= 0.44 or 44.08% Gross profit margin discloses the profit an organization makes on its cost of sales. IHGs gross profit margin decreased in 2009 due to lower revenues and higher cost of sales compared to 2008. This simply shows that the efficiency of operations and product pricing subsided. iii) Return on capital employed ratio compares the profit made by an organization with the amount of money invested. The formula is as follows: ROCE= Net Profit/ Capital Employed Capital Employed= Shareholders Funds + Long Term Liabilities 2008: Net Profit= $262m Capital Employed= $1972m+$1= $1973m ROCE= 0.13 or 13.28% 2009: Net Profit= $214m Capital Employed= $1684m+$156m= $1840m ROCE= 0.11 or 11.63% According to the authors in Business Studies, the higher the ratio, the better indication of performance it is in terms of profit returned for the capital invested (Hall, Jones, and Raffo, 2004). Over the past two years, the ROCE has decreased from 13.28 per cent to 11.63 per cent. This means that less profit was made to cover the capital employed. c. A third key dimension to assessing an organizations financial standing is efficiency ratio, which evaluates how effectively capital is employed within the firm (Bertoneche Knight, 2001). i) Asset turnover ratio reflects how assets are being effectively used to generate revenues. The formula is the following: Asset Turnover Ratio= Revenues/ Total Assets 2008: Revenues= $1897m Total Assets= $3118m Asset Turnover Ratio= 0.61 2009: Revenues= $1538m Total Assets= $2893m Asset Turnover Ratio= 0.54 From this ratio analysis, IHG had a decrease in its asset turnover from 2008 to 2009. For every $1 of assets it owned, IHG generated $0.61 of sales in 2008 and $0.54 in 2009. Since the ratios for both years are relatively low compared to other industries, the organization might not be utilizing its assets to a full potential. However, the profit margin ratio is higher compared to another sector of the hotel industry such as budget hotels. d. Gearing ratios illustrate the long term financial position of an organization. They can assess whether or not a business is burdened by its loans (Hall, Jones, and Raffo, 2004). The formula for gearing is as follows: Gearing= Fixed Cost Capital/ Long Term Capital Long Term Capital= Shareholders Funds + Long Term loans 2008: Fixed Cost Capital= $1972m Long Term Capital= $1m + $1972m= $1973m Gearing= 0.99 or 99.95% 2009: Fixed Cost Capital= $1684m Long Term Capital= $156m + $1684m= $1840m Gearing= 0.92 or 91.52% Since the ratios for both years are higher than 50 per cent, IHG is considered a high geared company. This simply signifies that a much higher proportion of total capital is borrowed. Even though the gearing ratio decreased from 2008 to 2009, IHG is still considered as risky by creditors. After analyzing the key ratios previously formulated and comparing between 2008 and 2009, one can conclude that Intercontinental Hotel Group is not financially fit. Both liquidity ratios, current and quick, decreased from 2008 and 2009 signifying that assets cannot easily be turned into cash. Moreover, the decrease of profitability ratios including gross profit margin and ROCE indicate weakness of the business. The net profit margin, however, did slightly increase from 2008 to 2009. Furthermore, IHGS poor asset turnover ratio shows that the company is not using its assets effectively. Lastly, the organizations high gearing nature also contributes to the fact that IHG is reliant on borrowed business. Overall, it needs to make changes to improve its financial health. 4. RECOMMENDATIONS/ CONCLUSION The utilization of an organizations resources must not only be effective, but also efficient (Pettinger, 1997). While the strengths of IHG management for both financial and non-financial resources can be enhanced, the weaknesses must not be overlooked. In order for IHG to carry out their strategic objective of creating an efficient organization, its human resource management must be committed to several practices such as selective hiring, focus on training and development, communication and information sharing, good level of compensation, and team working (Porter, Smith, Fagg, 2006). In this manner, IHG will be able to achieve positive human resource outcomes, which can lead to quality and productivity. This in turn can heighten the organizational performance in terms of financial outcomes. Furthermore, IHG management can take general action to increase the stream of cash flows and drive value. Increasing business with current customers, expanding global presence, reducing expenses and pursuing complementary alliances can all promote growth. According to DeFranco and Lattin(2007, p.119), Rather than focus on expansion in a single city, some companies elect to expand to new markets. The benefit of this type of growth is that it spreads the risk of expansion over several markets. For example, concierge services can incorporate the usage of iPad to visually assist the guests common questions such as directions. Another example is diversifying related products such as vacation ownership and corporate housing. By doing this, Intercontinental Hotel Group will be able to enhance its product image. Margins can be improved if IHG focuses on restructuring, efficiency, productivity, and cost control. Moreover, increasing inventory turns and getting best conditions from suppliers can aid in lowering the companys working capital. The organization can also optimize asset utilization by either lowering capital expenditures or improving turnover ratios (Bertoneche Knight, 20 01). An example of a capital expenditure is restoring a property or adapting it to a new or different use. In the case of IHG, this can involve renovating or refurbishing one of its hotels. By lowering capital expenditures, the balance sheet can be affected positively. In conclusion, IHG has managed to successfully remain as one of the top hotel chains worldwide, it still needs to constantly be monitoring the external and internal environment to be able to compete in the hospitality industry. As more and more competitors are arising, IHG need to continuously revise and review its strategic objectives, which include human resources, mechanical resources, and financial resources. By evaluating financial ratios, IHG can monitor the performance of its operations and evaluate its efforts to meet a variety of goals. By tracking a selected set of ratios on a regular basis, the organization is able to maintain a fairly accurate perception of the effectiveness and efficiency of its operations (Andrew, Damitio Schmidgallm 2007). Even though the hospitality industry is dynamic and exciting, it poses many challenges such as low profitability, reliance on discretionary income, capital intensive, fluctuating sales volume and labor intensive. IHG has to ensure t hat it is able to overcome these challenges so that it can grow and increase its value. .

depletion of the ozone layer :: essays research papers fc

Our Radiant Planet: Depletion of the Ozone Layer Ozone is a relatively unstable form of molecular oxygen containing three oxygen atoms produced when upper-atmosphere oxygen molecules are split by ultra violet light. Stratospheric ozone is found in a broad band, extending generally from 15 to 35km above the earth. Although the ozone layer is surprisingly thin, it acts as a protective shield to the earth, as it filters out most of the harmful solar ultraviolet radiation (in particular UV-B) that would otherwise reach our planets surface. Humans have damaged the ozone layer by adding molecules containing chlorine and/or bromine that lead to ozone destruction. The largest group among these are chloroflurocarbons (CFC's). At ground level, these molecules are very stable and have many uses in industrial and domestic applications, such as in spray cans, industrial solvents, degreasing compounds, and cooling in fridges. However when released into the stratosphere, such molecules can be broken down by energetic light rays (UV-C radiation) in a reaction that liberates an atom of chlorine, which destroys ozone by oxidising with the Ozone molecules, forming Cl-O and Oxygen. One atom of chlorine can destroy 10,000 ozone molecules! Atoms containing bromine, nitrous oxide, and hydrogen oxide radicals are also primarily dangerous. As a result, the Ozone in the stratosphere has been reduced to such an extent that ozone holes are appearing around the globe, in particular one over Antarctica that in 1995 measured 8.2 million square m iles. This depletion has allowed more dangerous UV-B radiation to reach the earths surface. So what effects will ozone depletion have on us? Although, at present, the ozone layer blocks out most of the damaging UVB radiation received from the Sun, a small amount slips by, damaging out skin in the form of sunburns and suntans. UVB radiation is strongly absorbed in the skin and in the outer layers of the eye. Human skin has developed various defence mechanisms against the damaging effects of UV radiation. The skin adapts to increased UV exposure by thickening its outer layer and by developing pigmentation that serves to shade the more vulnerable and deeper residing dividing cells. Overly damaged cells will normally self destruct through a process called apoptosis, and if this fails, the immune system should get rid of any resulting aberrant cells. It is when these natural safeguards fail or are overcome by UVB that real trouble can ensue. The most depletion of the ozone layer :: essays research papers fc Our Radiant Planet: Depletion of the Ozone Layer Ozone is a relatively unstable form of molecular oxygen containing three oxygen atoms produced when upper-atmosphere oxygen molecules are split by ultra violet light. Stratospheric ozone is found in a broad band, extending generally from 15 to 35km above the earth. Although the ozone layer is surprisingly thin, it acts as a protective shield to the earth, as it filters out most of the harmful solar ultraviolet radiation (in particular UV-B) that would otherwise reach our planets surface. Humans have damaged the ozone layer by adding molecules containing chlorine and/or bromine that lead to ozone destruction. The largest group among these are chloroflurocarbons (CFC's). At ground level, these molecules are very stable and have many uses in industrial and domestic applications, such as in spray cans, industrial solvents, degreasing compounds, and cooling in fridges. However when released into the stratosphere, such molecules can be broken down by energetic light rays (UV-C radiation) in a reaction that liberates an atom of chlorine, which destroys ozone by oxidising with the Ozone molecules, forming Cl-O and Oxygen. One atom of chlorine can destroy 10,000 ozone molecules! Atoms containing bromine, nitrous oxide, and hydrogen oxide radicals are also primarily dangerous. As a result, the Ozone in the stratosphere has been reduced to such an extent that ozone holes are appearing around the globe, in particular one over Antarctica that in 1995 measured 8.2 million square m iles. This depletion has allowed more dangerous UV-B radiation to reach the earths surface. So what effects will ozone depletion have on us? Although, at present, the ozone layer blocks out most of the damaging UVB radiation received from the Sun, a small amount slips by, damaging out skin in the form of sunburns and suntans. UVB radiation is strongly absorbed in the skin and in the outer layers of the eye. Human skin has developed various defence mechanisms against the damaging effects of UV radiation. The skin adapts to increased UV exposure by thickening its outer layer and by developing pigmentation that serves to shade the more vulnerable and deeper residing dividing cells. Overly damaged cells will normally self destruct through a process called apoptosis, and if this fails, the immune system should get rid of any resulting aberrant cells. It is when these natural safeguards fail or are overcome by UVB that real trouble can ensue. The most

The Florida Everglades Essays -- Ecology of Everglades

Introduction Maintaining ecological diversity is necessary for the survival of a biological community. In the United States, American citizens are on the verge of irrevocably damaging one of the country's most unique and diverse treasures - the Florida Everglades. This national park is now the only remaining patch of a river that used to span 120 miles from Lake Okeechobee to the Florida Bay. Dikes and levees created by the Army Corps of Engineers in the late 1940's drained this river to reduce flooding and increase useable water for the development of the region. This major diversion of water lead to a trickle down effect causing the continual decline of the environmental state of the Everglades. Since then, debates over the Everglades' future have silently raged on for years about how, why, and when the restoration will begin. This ongoing, but virtually unproductive effort has cost taxpayers a great deal without any apparent benefits. Recently, this debate has been amplified by the voices of t he sugar industry in Florida, which was attacked for its major contribution to pollution of the Everglades. Now debates rage on with a new effort called the Restudy. Backed by the Army Corps of Engineers, this effort would change the flow of the Everglades, potentially restoring it into the viable community of life that it used to be. The question now is, will this latest attempt to restore the Everglades ever be realized (thus ending the cyclic Everglades debate) or will it simply add up to one more notch on the bedpost of inadequate and failed attempts to save this national treasure. The world is watching to see how the United States will handle this unprecedented cleanup. The Everglades Defined "Here are no lofty peaks seeking ... ...Science News, 155, 252-254. Lauber, P. (1973). Everglades Country. New York: The Viking Press. Levin, T. (1998, June/July). Listening to wildlife in the Everglades. National Wildlife, 36, 20- 31. McCally, D. (1999). The Everglades: An Environmental History. Gainsville: University Press of Florida. Myers, V. (1994, December). The Everglades: Researchers take a new approach to an old problem. Sea Frontiers, 40, 15-16. Regaldo, Nanciann. Planning for South Florida's future: The Central and Southern Florida Project. Online. National Park Service Homepage. Internet. 21 September 1999. Available: www.nps.gov Reichhardt, T. (1999, February). Everglades plan flawed, claim ecologists. Nature, 397, 462. Richey, W. (1997, August). Saving Everglades: Who should pay? Christian Science Monitor, 89, 3. Wasserman, H. (1996, December). Burnt Sugar. Nation, 263, 6.

Narrative- Amazon Woman Essay examples -- Personal Narrative Writing

Narrative- Amazon Woman I need to recover a rhythm in my heart that moves my body first and my mind second, that allows my soul to catch up with me. I need to take a sacred pause, as if I were a sun-warmed rock in the center of a rushing river. I am crouching still near a tree on a loamy ridge, my two hands spread around the trunk. I am feeling grateful for this tree that I remember because of its mossy smell and thick crevassed bark. It tells me that the beaver pond is near where one white pine shoots 100 feet up out of the tannic water, which means I am close to camp and food and sleep. I get to the pond’s edge, across from the point where my tent sits. There are no trails and the boreal forest is thick with scrub pine and dead-fall. Early afternoon sun brings out the wave of deer flies; I shake my head so that my two braids might hit the little buggers in mid-air. Undeterred, one begins to chew on my shoulder blade and prickers dig into my shins. I can see my tent across the pond, 100 yards as the crow flies, probably a mile walk around the edge. I decide to take off my clothes, leave them on this rock by the shore, swim across and come back for my things later in my canoe. Even though the whine of the deer flies’ wings beating around my head intensifies, I just stare at the water. It is only two feet deep here at the edge, but it is so dark that I cannot see the bottom. Darker shapes appear as I stare, including a large fallen pine tree which leads from the shore and disappears into the darkness. A fear takes hold of me, as it does every time I conte mplate diving into this dark water. I shake my head to loosen its grip, feel a deer fly land on the small of my back and I dive. I swim as hard as I can, my heart bang... ...Today I am smiling wide and proud of this body that carried boat and gear down to the water’s edge; that paddled against the wind across the bay to the foot of the wetland stream. The body that hoisted the laden canoe over five beaver damns, that carried boat and canoe up the trail for a mile to the secret pond; that sleeps comfortably in a tent alone out here listening to the hoot owl, and the loons and the cacophony of bullfrog music; the body that jerks upright at midnight with the sound of a buck’s snort and heavy stomp of his hoof; the body that gets up early and bushwhacks to the top of the mountain. I lie down on the warm rock at the edge of the pond and I close my eyes. My breath feels easy and light, my belly is soft and where a hard gnarled knot used to be under my sternum, a warmth spreads beyond my skin, around the blue sky and sun and back in again.

Living in Sin by Adrienne Rich: Of Simplicity and Brevity Essay

Poetry has turned off a lot of people Because of its confusing nature and interjection of difficult-to understand symbolisms, poems have been disregarded by many. Yet what most people do not know is that the landscape of poetry has changed tremendously in the past years. Contemporary poets have realized that their works should no longer include flowery words and deep allegories to be beautiful – that in fact, the poems that eventually become popular are those marked with simplicity and brevity and those that posses the ability to touch the readers’ hearts. If one is to get reacquainted with poetry, Adrienne Rich’s Living in Sin is a good place to start. This particular poem talks of something that is very common nowadays – domestic partnership without the grace of marriage. But the â€Å"sin† Rich referred to in the title does not point to the seemingly sinful relationship of living together but was more a tirade on how people can sometimes persuade themselves about staying in a relationship even when the ‘expectations’ on the particular relationship have not been met. Living in Sin tells how a woman has realized that living with the person she loves is not all â€Å"A plate of pears, / a piano with a Persian shawl, a cat / stalking the picturesque amusing mouse† and that there is indeed â€Å"dust upon the furniture of love†. In Living in Sin, Rich describes how a relationship is something that one needs to work at. This poem is the best one to pick up when trying to re-embrace poetry because it differs greatly from those written under the pens of 15th and 16th Century poets. Revolving around a present-day issue, Living in Sin is sure to be easily understood by new readers. Most of the people nowadays can surely relate to the fact that certain aspects of a relationship can be disillusioning. Almost anyone who enters a relationship do so armed with certain positive expectancies that are – sadly – not met as the relationship progresses. By painting images of boredom (â€Å"†¦he, with a yawn, / sounded a dozen notes upon the keyboard, / declared it out of tune†¦Ã¢â‚¬ ) and disappointment (â€Å"she, jeered by the minor demons, / pulled back the sheets and made the bed and found / a towel to dust the table-top, / and let the coffee-pot boil over on the stove.†), Rich successfully communicates her message. Rich’s successful telling of her message can be attributed to her ability of steering clear from highfalutin words and hard-to-imagine imagery. In fact, Living in Sin is marked by simple words and symbolisms that are common to everyone. The language that Rich used in this particular poem is something that we all understand. These are just more reasons to actually pick up and enjoy this particular poem. Yet the good points of Living in Sin do not end there. This particular poem is also armed with only a few lines. Rich employed just 26 lines and a mere 196 words in conveying her message yet those numbers have been enough to transfer Rich’s messages to the readers. Undeniably, no other literary piece can achieve such feat but poetry. Living in Sin – and poems in general – are lovable in that one need not go through lots of word tangles to feel exactly what the author wants him/her to feel. True enough, poems of old are pretty hard to understand, talking about things that most modern-day people can no longer relate to. Yet as with everything, poets have changed and have taken to voicing out topics that are close to today’s readers’ hearts. Adrienne Rich is but one of those poets who have successfully mastered combining relatable subjects with easy-to-grasp symbols and language in her poetry. And reading one of her more popular poems, Living in Sin, will surely convince this generation that poems should be given a chance because, contrary to popular belief, they are beautiful literary pieces that are worth reading.

Zara Fast Fashion

1. Features of Zara’s business model that affect its operating economics: †¢Zara owns much of its production and most of its stores, while competitors Gap and H&M own all of their stores but outsource all of their production. Benetton, on the other hand, owns all of its production but goes to market through licensing agreements. †¢Zara places more emphasis on backward vertical integration. Production runs are short and inventory is strictly controlled. This is in contrast to industry trends of high volume production. Zara's product cycle time from the design phase to the manufacturing phase is 4 to 5 weeks while the industry average is 6 to 9 months. The short cycle time enables Zara to commit to a bulk of its product much later than its competitors. 85% of Zara's in-house production occurs after the season has started in contrast to 20% in-house production of traditional retailers. †¢Zara's pricing is lower than its competitors, but profit margins are higher du e to direct efficiencies gained from a shortened, vertically integrated, supply chain. At Zara, a high inventory turnover rate results in minimal obsolescence costs, clearance sales or mark downs. Zara estimated 15%-20% of total sales as markdowns/close-outs vs. 30% to 40% for its competitors. This helps to preserve a strong profit margin and bolster market image as a â€Å"must buy now† destination. †¢Zara's advertising expenses are minimal (avg. 0. 3% of revenue) compared with 3% to 4% for other specialty retailers. These helps lower expenses and preserve strong profit margins. Zara, in turn, invests more money in renovating its storefronts and buying prime real estate for store locations. At Zara, 75% of display merchandise is turned every 3 to 4 weeks which corresponds to the average time between customer visits. The average Zara shopper visits the chain 17 times a year. In contrast, the competition records an average of 3 to 4 customer visits per year. Zara's image creates a â€Å"sense of urgency† and forces loyal customers to check in frequent ly for the latest fashions. 2. Zara’s Quick Response Capabilities – Upstream and Downstream activities: †¢Zara's quick-response capability is based on improving coordination between retail stores and product manufacturers. This coordination allows Zara to respond faster to fashion trends, thus creating a competitive advantage for Zara. Effectively utilizing information technology and vertically-integrated manufacturing facilitates Zara's quick response capability. Upstream Activities: †¢Design Teams continuously track customer preferences via data sent electronically from individual storefronts. Additionally, sales data is sent upstream from the stores to give instant feedback on Zara's new product lines generating replenishment orders for sold product. This instant upstream feedback, coupled with Zara's rapid product development gives Zara a compelling market advantage. †¢Zara sources fabric and finished products from external suppliers using purchasing offices in Europe and Hong Kong. 50% of the fabric remains undyed to facilitate in-season updating via Comditel, a subsidiary of Inditex that manages the dyeing and patterning of unfinished fabric. Delaying production of unfinished fabric allows information flowing upstream to influence Zara's production. 40% of all garments are manufactured internally or by subcontractors located near Zara's headquarters. This 40% represents the most fashionable, time-sensitive garments that Zara considers risky. Zara's local production network facilitates flexibility and risk-taking on fashion trends. Downstream Activities: †¢Zara owns its own distribution center in Arteixo. All merchandise from both internal and external suppliers passes through this distribution center. Shipments occur twice a week to each store. Items move through the center very quickly. For example, a vast majority of items are at the center only a few hours and no item stays at the center for more than three days. †¢On average, Zara spends 0. 3% of its revenue on media advertising, which is focused on opening season and end of season sales. †¢Product cycles through the stores rapidly, with new designs arriving every three weeks. This fast turnover results in a significant reduction of discounted merchandise. †¢Display shelves are sparsely stocked creating a sense of urgency (â€Å"buy now†) in the minds of shoppers, resulting in immediate sales. Location is critical for Zara to attract repeat customers. Stores are occasionally relocated in response to ever-shifting popularity of shopping districts and traffic patterns. 3. Why might Zara fail? Zara could fail due to falling into what is known as the â€Å"growth trap. † In the beginning, Zara established itself as selling medium-quality fashion clothing at affordable prices. Zara went on to gain a competitive advantage in the industry by developing a quick response capability while at the same time maintaining low customer pricing. As Zara begins to expand internationally, the potential to lose their competitive advantage increases. For example, in South America, Zara had to present a high-end rather than a mid-market image. This goes against the image of medium quality fashion at affordable prices that Zara had built and maintained since their inception. As Zara continues to grow, their stores may eventually be found on every street corner around the world. As a result, Zara runs the risk that their products may become less unique in the eyes of the consumer. According to the â€Å"growth trap,† efforts to grow can blur uniqueness, create compromises, reduce fit, and ultimately undermine competitive advantage. In the end, Zara runs the risk of becoming an ordinary retail chain as they lose sight of their competitive advantage and become more like every other retail player. In order to maintain their market share, Zara should remember their roots and focus on the excellence of their existing chain with very minimal increases in selling space. Zara Fast Fashion Inditex – Zara: Fast fashion Case analysis Company Structure and Goals Overview Zara’s vision on growth and global strategy -Building up fixed assets -Vertical integration -No advertising, creating premium stores -Fashion follower – QR to fashion trends -Strongly customer oriented -Stable growth -Markdowns half the average (15% as supposed to 30% ) -Pricing market based Business model: -Vertical operations and downstream activities -Multi-chain concept -Creative design team -Competitive advantage – Sustainable growth As attachment: Porter’s Five forces; Company structure; Financials) Problem Statement Growth challenge – 20% per annum expected, 76% of equity value implicit on Inditex’s stock price was based on expectations on future growth. Failure to deliver expected growth results might cause a serious offset in company’s market capitalization. Room for non-local growth – in average a retailer was present in 10 countries while e. g. a pharmaceutical company averaged operations in 125 countries. Problem statement is: In what geographical area(s) should further Zara expansion follow? Should there be another logistics-distribution centre created as increase of operations might cause dis-economies of scale? Should it acquire additional chains given the complexity of managing those and the risk of own-product-replacements? Preserve the margins; (visible threat to the sustainability of Index’s competitive advantage) Evaluation of the alternative solutions 1. Growth challenge: Notes: not much potential on the local market; -different markets require different positioning -though costs grow as distance grows, prices also change (margins are kept) -50% of all export is to developing countries -Zara shopper visits the store 17 times a year, average is 2-4 times -Creating a climate of scarcity and opportunity in stores Evaluate growth options in different markets: Spain Europe str4 – production in North Africa, turkey and East Europe. US – production in Mexico and the Caribbean subjected to retailing oercapacity, less fashion-forward than Europe, demands larger sizes and exhibits considerable internal variations Japan – no quotas to restrict imports, produced in China. – teenage market segment considered as the trendiest in the world Italy – fashionable, visit stores frequently and spend more on clothing 2. Change in marketing strategy Current: Three types of entering a market: company owned stores, joint ventures, franchising Strategy is standard across the countries -No adv -One big shop central city (capital) Followed by smaller ones (spreading around the country) -Shop windows used excessively -Products do not differ much from country to country -Model is downstream -No knowledge is shared -From design to stores within 4-5 weeks , industry average 9 months -Due to product testing, failure rate only 1% compared to industry average of 10% 3. Change in pricing strategy Current: Prices vary on the different markets, due to transport costs (all supplied from the base in Galicia) – this changes positioning Lower mark-down than industry average Zara: Fast Fashion The Spanish retail chain Zara has unique supply chain management practices that enable it to gain a competitive advantage over other fashion retailers in the industry. Zara’s rapid response time enables the firm to quickly respond to changing fashions while deliberately under producing products. This strategy, which is supported by competencies in logistic management, design and information systems, allows the company to maintain less inventory and higher profit margins and is a key factor to Zara’s success. The firm should continue to add value by seeking new opportunities to expand in the retail market and maintain their sustainable growth. Financial Analysis Being aware of a company’s financial health and profitability of its competitors is highly essential for everyone interested in engaging in business with Inditex. In this part of the paper, through analysis of 4 key ratios and return on invested capital, we are going to discover some of the company’s drivers of sustained competitive advantage. The 4 key ratios will focus mainly on company’s liquidity, activity, solvency and profitability, while ROIC will show how well the company manages the capital invested in operations of the business. In order to measure ability of Inditex to meet its short term obligations and to assess liquidity, it is important to calculate current ratio. As shown in exhibits section below, in 2001, Inditedx had 1. 02 million in current assets, while Gap and H&M had 1. 48 and 3. 4 million Euros in current assets for every Euro in short-term debt. This indicates that Inditex’s main competitors demonstrate greater ability to meet current payments of debt; therefore liquidity is not one of the company’s success drivers. When it comes to comparing company’s sales to various assets categories it is significant to take a look at the total assets turnover. This ratio indicates how efficiently assets are being used to support sale. From 1999-2001, this ratio increased by 1. 2%; however it was still below industry performance. Currently Inditex is industry leader with total assets turnover of 1. 8. This shows that company’s recourses are being well managed and that company is able to realize high level of sales from its investments in property, plant and equipment such as manufacturing facilities. Debt to equity ratio is used for solvency evaluation. The main purpose of this ratio is to show company’s ability to repay long-term creditors. As shown in exhibits section, this ratio decreased from 1999-2001, however, when compared to its rivals, Inditex confirmed to have the best leverage among them. When it comes to company’s financial flexibility and profitability it is highly essential to calculate Net Profit Margin ratio. This ratio measures how successful a company has been at the business of making profit for each euro earned. As presented in the exhibits section, Inditex was and still is an industry leader with Net Profit Margin ratio of 10. 6% in 2001 and 13. 10% in 2010 which means that company has currently â‚ ¬. 3 of net income for every dollar sale. In addition, according to Inditex’s income statement, we could see that company is delivering higher net income due to its ability to keep operating expenses and COGS much lower than competitors. Furthermore, the company is able to gain sustained competitive advantage by making its own products, efficiently covering lower advertising expenses and maintaining cost-effective number of employees per store. In order for Inditex to maintain continuous growth it is important to keep its profit margins at the high level. Last but not least ROIC (Return on Invested Capital) gives a good judgment on how well a company is using its money to generate returns. Inditex ROIC varied through past couple of years but is currently able to earn around 7% on each euro invested. From the exhibit table below, we could conclude that the company is making wiser investment decisions than its competitors. SCP Analysis Zara competes in a monopolistically competitive industry due to the number of players. No business in this type of industry has total control over the market price and there are no barriers to entry and exit. Because of its monopolistically competitive playing grounds, Zara’s conduct is to increase its market power by producing demand for its heterogeneous products. Through differentiation and cost leadership, Zara attempts to increase market demand by offering new items weekly while keeping a low inventory, thus making its products unique and attractive to consumers. Because of its backward vertical integration model, Zara creates a strong synergy throughout its production process. Zara has sustained a competitive advantage globally by expanding into new markets and becoming more efficient. In a onopolistically competitive industry, Zara is expected to make profits in the short run but will break even in the long run because demand will decrease as average total costs increase. This means in the long run, a monopolistically competitive firm, such as Zara, will make zero economic profit (AmosWEB, 2001). Porters Five Forces Barriers to Entry: Due to the recent recession and weak economic market, many new players have avoided entering the retail industry. Zara has taken advantage of this opportunity to be the first to enter into many markets across the world before its competitors. With the economic future improving, Zara will be facing more and more competition especially in the United States. Rather than implementing new strategies on how to differentiate itself even more, Zara will need to focus more on creating brand awareness and staying on top in the game. Zara has been the odd ball in the industry with its creative business model but with more and more retailers quickly catching on and critiquing their business model to match the economy changes, Zara faces intense competition. Unlike other retailers, for example Gap and H&M, Zara needs to fight threats around the globe. In the states, Zara competition is intensified with American retailers because many customers still do not know who Zara is or what it offers. In Europe, Zara is like a Macys for us in the states so the brand awareness is there but competition is still also high. Many retailers in Europe offer the same products as Zara, at the same or similar prices; therefore Zara needs to find ways to keep ahead of competition. Bargaining Power of Buyers: Zara is famous for its business model of just in time inventory. No other retailer can produce a garment from scratch and have it hanging in the stores within weeks than Zara. Zara also distributes large number of shipments to its stores around the world twice a week. All merchandise is shipped from Spain and all stores receive shipment on the same days, Monday and Thursday. Zara produces nearly 16,000 new designs a year which is much more than leading competitors. With the constant changing apparel Zara keeps its inventory levels extremely low. Zara customers know that if they see something in the store to buy it right then and there because tomorrow that garment will not be there. US customers are still adapting to this quick turnaround time. With their advanced technology, Zara knows what its customers want and will deliver that to them within 2 weeks’ time. Bargaining Power of Suppliers: Zara manufactures all its clothing in house. This way it has control of the entire process and can make changes more quickly and efficiently when needed. After the garments are cut and ready for assembly, Zara sends out the fabric to different sewing companies to assemble the pieces. There are many competitors that Zara can choose from when deciding where they want its clothes put together which makes the bargaining power weak. Zara also took control of this process by taking over Comditel. Comditel is in charge of nearly the entire garment process. Once the garments are ready and fully assembled they are then stored in Zara's own distribution centers. From the distribution centers they are then shipped around the globe to the thousands of Zara stores. Like many other aspects of Zara's business model, the distribution center moves even more quickly. Once the garments are in the distribution centers, they only stay there for a maximum of 3 days before be sent out to the appropriate destination. Substitutes: Some may describe Zara as a higher end replica of fashion forward items. The items featured on Prada, Chanel, and St. John runways will be replicated in 2 weeks in Zara stores at a much more affordable price but poorer quality. Therefore, there are not many substitutes that customers can use because a majority of the products are out of the price range of many customers. This is a huge benefit for Zara because its customers are willing to pay a much less price for a lesser quality replica. Competition: Zara's direct competitors include H&M, Gap, and Benetton. H&M offers nearly the same products as Zara to its customers, but a much lower quality and price. For those customers who are price sensitive, H&M would be their choice of retailer. The Gap possesses more competition in the states because it has been around longer and has its loyal customer base which is hesitant to shop elsewhere. Even though these retailers give Zara a run for its money, none of them can keep up with Zara’s business model. Other retailers do not have in house production like Zara and ship their production to other countries for the cheap labor costs. This does save money but it increases time. Time is money so while others are still in production stage, Zara is already selling out of the garment. VRIO Analysis We can use the VRIO framework to determine the competitive potential of Zara’s resources and capabilities. As we analyze Zara’s resources and capabilities, it is evident that Zara has built a highly effective, self-reinforcing business system. Three elements in particular – (1) extensive vertical integration, (2) the company’s flat management structure, and (3) exceptional communication and coordination throughout the business system – allow Zara to successfully execute its â€Å"Very Quick Fashion Follower† business model. Each of the three make the grade of being Valuable, Rare, costly for competitors to Imitate, and for which the company has Organized to take advantage. Extensive Vertical Integration: Zara prides itself in its vertical integration, with near full control over its value chain through to the end-user. The company owns or closely controls its manufacturing and distribution facilities, manages its own logistics and transportation, and wherever possible owns its own stores (except for in markets with high risk or barriers to entry). This integration brings value primarily through speed-to-market, as Zara has achieved significantly shorter cycle times than its peers. Full vertical integration is rare in the apparel industry, which typically sees companies foregoing direct involvement in elements of the value chain (e. g. , H&M outsourced all of its production, and Benetton sold the bulk of its production through licensees). It would be extremely costly for a competitor to imitate Zara’s vertical integration, and even if they were able to do so it is unclear how much or how soon they would profit from it, as much of Zara’s advantage comes from the degree to which it has developed its integrated organization over many years. Flat Management Structure: While the drive, insight, and guidance provided by founder Amancio Ortega and other top executives have obviously been crucial to the success of Inditex, it is the structure and incentives they have put in place that truly drive Zara’s exceptionality. Zara’s management structure is very flat, with autonomy and significant incentive-based compensation for store managers, thus closely aligning their interest with that of the company. This structure adds value to the company through diligent hands-on management at the local level, something so rare that Zara’s CEO noted that the availability of store managers capable of handling these responsibilities was â€Å"the single most important constraint on the rate of store additions. † The structure would be highly difficult for ompetitors to imitate, as it has been built into the culture and processes of the company over several decades. Zara has certainly proven that it is able to organize around the flat structure model – in fact many of the company’s business processes depend on the communication and input of enabled employees at the edges of the business system. Exceptional Communication and Coordination: From early on, Zara developed a focus on com municating and coordinating activities up and down the value chain and across functions. This capability focused on speeding important information on customer preferences and trends to the store network, and feedback on successful and unsuccessful products back up the line to headquarters. Exceptional communication and coordination are crucial to maximizing the value derived from Zara’s vertical integration and flat management structure. A look at the more disjointed businesses systems of peers such as The Gap and Benetton demonstrates how rare it is for all of a company’s capabilities to simultaneously reinforce each other, and how difficult it would be for them to imitate Zara. Zara has successfully organized to coordinate its activities around the fast communication of accurate information – about designs, customers, competitors, and micro- and macroeconomic factors – both up the line to top management and to the edges of the network where store managers and employees interact with its customers. Each of these three capabilities passes the VRIO test, indicating that they are indeed key competencies for Zara. Four Actions Framework In order to understand how Zara created a new value for both the buyer and the company, we utilize the Blue Ocean 4 Forces Analysis. Starting with what factors Zara raised above standard, we see what is also Zara’s key resource, the company’s application of vertical integration. While Zara is involved in both backward and forward integration, what sets it apart is precisely its backward integration into manufacturing. For instance, its competitors Gap and H&M are both practicing forward integration and unlike Zara, outsourcing their production. Zara is also constantly in communication with employees at the edges of its business system such as store managers in order to better identify and track customer preferences and trends. The company encourages increased frequency of customer visits with its short cycle times; customers flock to the stores in order to catch the current fashion trends and product lines. In addition, the company also raised responsibility and accountability for store managers by hiring experienced employees promoted within which the CEO believed was a necessary judgment especially for store additions. Zara increased market saturation leading to better economies of scale thus significantly cutting costs and raising higher awareness and increasing sales. On the other hand, Zara reduced several factors well below the industry standard in order to cut costs and increase customers’ willingness to pay. For instance, the company decreased the failure rate for new products with its intensified product testing program which included store-level personnel in the process. Zara also reduced its cycle time for design which enabled the company to offer the customer new designs in four to five weeks and existing products in two weeks; the industry standard for this process was six months for design and three months for manufacturing. A pioneer in its industry, Zara proudly enjoyed engendering revenues at full price with only 10%-15% of its sales generated at discount prices compared to its European industry at 30%-40%. Lastly, Zara reduced its ad spending below industry standard at 0. 3% of its revenue while its competitors advertised 3%-4%. Although it is relatively unlikely for an apparel company to create factors that its industry has never offered, Zara formed a distinct vision among its competitors. The company was the first within its main rivals to saturate international markets as fast as it did. Zara is a global apparel retailer with a truly international scope. While from 1980’s to 2011 H&M added eight countries to its international expansion, and Gap five, while Zara was at thirty two countries. In the competitive apparel industry, Zara managed to eliminate what its competitors continuously took for granted. The company focused on a flat management system which allowed capturing trend preferences directly from the customer and applying to mass markets. Eliminating the separation between merchandising and manufacturing was especially beneficial to a fast and productive design team. Strategic Vision Based on our analysis, Inditex has proven to be financially stable and can successfully manage its capital invested in its operations. Therefore, to maintain their sustainable growth and continue to add value, Inditex should use their commercial team’s micro/macro evaluations to seek new country market opportunities. They should to continue to use one of the three modes of entry; company-owned stores, joint ventures, and franchises, to open additional stores in European countries that have high apparel markets. Italy, Germany and United Kingdom are markets that show promise, especially Italy because of its high per capita spending on apparel. As discussed in our analysis, one of Zara’s core competencies is its extensive vertical integration, and because the case mentioned a second distribution hub already being built in Zaragoza, Spain, it can support additional European stores without being subject to diseconomies of scale. Increasing the density of Zara’s store locations in Europe will achieve logistic efficiencies. Zara keeps transportation costs low on the supply side, since most of the production takes place in Spain. Efficient distribution and inventory systems help Zara minimize costs. Demand based production means there is very little inventory in Zara’s supply chain, which results in lower working capital requirements and lower supplier opportunity costs. Another market that has potential is the United States. With changing consumer behaviors as a result of globalization, there are growth options available for specialty retailers like Zara. For example, Gap’s current ratio of 2. 18 is higher than Zara’s 1. 71; however Zara’s 13. 10% net profit margin is preferred over Gap’s 8. 21% (as illustrated in Exhibit A-1). Therefore, as long as Zara can maintain its low production and overhead costs, which are high for its competitors, they should be able to compete in the US market. Inditex should invest in prime locations in major cities such as New York, Chicago and Los Angeles to maintain its positioning strategy. Zara should most likely develop a second central distribution center in America. Zara can strategically locate its central distribution center in or near countries where manufacturing can be done with cheap labor cost, such as Mexico. The close proximity of the distribution center to the American market will decrease logistics and help maintain Zara’s model of fast fashion and economies of scale. Internet retailing is another market opportunity that Inditex should consider. Zara can reach consumers faster and easier in the countries they are trying to expand into. This method can also help gauge consumer preferences from country to country. The internet retailing market will increase sales revenues and has a very low business risk considering the products are already being produced for the retail stores. Zara’s online shop would complement its stores, adding an extra level of service for its customers. It would also expand its customer base to reach areas where stores are not located. Patrons can shop from anywhere in the world and at any time of day or night. This essentially means more shoppers and more sales for the business. Based on our analysis, the monopolistically competitive industry structure is not the key factor driving Zara’s significant performance. Zara has leveraged its key resources to combine low price with product differentiation to create value and succeed in this industry structure. Zara has been able to increase the customer’s willingness to pay by constantly rotating its merchandise and creating a climate of scarcity and opportunity for customers. In conclusion, Zara has the potential for sustainable growth due to its competitive advantage and its ability to increase customer’s willingness to pay while decreasing its opportunity cost. The company keeps its operating income high, has a solid business model with unrivaled synergy and has various opportunities for expansion in the retail industry. Zara must continue to re-invent their image in order to stay fresh in the apparel industry and as long as they maintain their core competencies, they will continue to succeed. Zara Fast Fashion Inditex – Zara: Fast fashion Case analysis Company Structure and Goals Overview Zara’s vision on growth and global strategy -Building up fixed assets -Vertical integration -No advertising, creating premium stores -Fashion follower – QR to fashion trends -Strongly customer oriented -Stable growth -Markdowns half the average (15% as supposed to 30% ) -Pricing market based Business model: -Vertical operations and downstream activities -Multi-chain concept -Creative design team -Competitive advantage – Sustainable growth As attachment: Porter’s Five forces; Company structure; Financials) Problem Statement Growth challenge – 20% per annum expected, 76% of equity value implicit on Inditex’s stock price was based on expectations on future growth. Failure to deliver expected growth results might cause a serious offset in company’s market capitalization. Room for non-local growth – in average a retailer was present in 10 countries while e. g. a pharmaceutical company averaged operations in 125 countries. Problem statement is: In what geographical area(s) should further Zara expansion follow? Should there be another logistics-distribution centre created as increase of operations might cause dis-economies of scale? Should it acquire additional chains given the complexity of managing those and the risk of own-product-replacements? Preserve the margins; (visible threat to the sustainability of Index’s competitive advantage) Evaluation of the alternative solutions 1. Growth challenge: Notes: not much potential on the local market; -different markets require different positioning -though costs grow as distance grows, prices also change (margins are kept) -50% of all export is to developing countries -Zara shopper visits the store 17 times a year, average is 2-4 times -Creating a climate of scarcity and opportunity in stores Evaluate growth options in different markets: Spain Europe str4 – production in North Africa, turkey and East Europe. US – production in Mexico and the Caribbean subjected to retailing oercapacity, less fashion-forward than Europe, demands larger sizes and exhibits considerable internal variations Japan – no quotas to restrict imports, produced in China. – teenage market segment considered as the trendiest in the world Italy – fashionable, visit stores frequently and spend more on clothing 2. Change in marketing strategy Current: Three types of entering a market: company owned stores, joint ventures, franchising Strategy is standard across the countries -No adv -One big shop central city (capital) Followed by smaller ones (spreading around the country) -Shop windows used excessively -Products do not differ much from country to country -Model is downstream -No knowledge is shared -From design to stores within 4-5 weeks , industry average 9 months -Due to product testing, failure rate only 1% compared to industry average of 10% 3. Change in pricing strategy Current: Prices vary on the different markets, due to transport costs (all supplied from the base in Galicia) – this changes positioning Lower mark-down than industry average