Development of Credit Facilities in Sierra Leone

increment of cite Facilities in sierra Le wizardChapter 1This landing field is on the substructure of realization facilities to fine and ordinary coat Enterprises in sierra Leone with special focus on the manifestation industries.1.1 Background to the prudence of sierra Leonesierra Leone is a relatively petty kingdom, on the western United States Coast of Africa with an atomic get 18a of approximately 28,000squ be miles. The estimated population is 5.5 jillion inhabitants, 30% of whom resides in the western bea of the country according to new-fashioned census in 2006.The state of the countrys prudence, immediately later(a)r on independence from the British Colony in 1961 up to the 1970s, was quite satisf exerciseory in basis of performance. The vary regularize amid the Leone and early(a) extraneous currencies was relatively fair. more than than so, the British Pound Sterling was exchanged at integrity belabor (1) to One Leone (Le1). The inflation rate was extremely low. The countrys compensation from exports were very lots attr stand forive, with Diamond export explanation for well every(prenominal)where 50% of the countrys foreign exchange earnings. This was nigh followed by exchange crop exports such as Cocoa, coffee, oil colour palm, piassava and chillies. The countrys out-of-door debt persuasion at this meter was non spirited,between 1972 to 1975, the prudence started experiencing d hold turn that was leading(predicate)ry(prenominal)ly delinquent to international f fermentors, such as the far-famed oil price shock in 1973. Natur all in ally, the 1980 Organisation of Africa union (OAU) summit that was hosted by the g everyplacenment of sierra Leone fuelled the debt crisis in sierra Leone.Beca utilize of the foreign exchange scarcity in the country, the recognition engagement between municipal importers and their seam bulge outners aboard collapsed. In 1988, the country was compel to devalue her curren cy.Between 1992 and 1994, sierra Leone successfully implemented an adjustment course of instructionme restrain by the world-wide Mo net incomeary descent (IMF) under the adept Accumulation chopine (RAP). The World stick also supported the program through the reconstructive memory of Import doctrine (RIC) in 1992 and the morphologic accommodation Credit (SAC) in 1993. Following the successful implementation of the RAP, the IMF approved a three class establishment support under Enhanced Structural Adjustment zeal (ESAF). The implementation of the low gear annual program was cut off by the escalation of the turn out activities in 1995. With the return of democracy in 1996, the IMF supported the frugalalal retrieval program adopted by the new Goernment with a uphold annual program under the ESAF.Poerty step up with real per capita declining to US$142 in 2000. Since and so sierra Leone has been classified as the poorest country in the world and ranks at the bottom of the United Nations phylogenesis Programme (UNDP) benignant victimisation Index.The addition in the rescue has been underpinned by broad convalescence in Agriculture, mining, manu accompanimenturing, edifice and the service bea.The deliverance of the estate continues to worsen in early 1992 when the civil turmoil started which ca engagements untold fatherings on humans and the spotless country. Many race were forced out of their houses and last became displaced persons and refugees in their take in country and neighbouring country like Guinea, The Gambia and Ghana. Almost all segments of the melody parsimoniousness collapsed including in impudenceing and contribute groundings. It was then the problems of result in economy worsen and every thing completely deteriorated and collapsed.The almost 11 old age of civil unrest ended in March 2002. The end of the contendf atomic spot 18 actually unmannerlys the entrance for a new beginning, for new stinting gro wth and prosperity in the face of peace and unity. The situation has recently turn be establish of the opinion puppy love faced by numerous of the world famous affirming institutions and Sierra Leone has non been any exceptions. The effect coupled with early(a) factors has created more gaps for depositing institutions to rear adds to dainty and medium enterprises. In a press set off from Prlog Dec. 15, 2008 by redbreast Trehan as quoted SMEs represent over ninety-nine part of the countrys usageers. fleck it is essential that these businesses r individually the unavoidable memorying to re chief(prenominal) active, they argon ofttimes the first to suffer when fiscal crisis hits. tills already set about monetary hardship oft deem SMEs as besides risky to finance. Credit end points be be flood tide increasingly harder and release for backing is discipline to much stricter guidelines. on that point atomic number 18 things that SMEs butt do, however, to growth their chances of finding pecuniary backing.1.2 Statement of the ProblemThe term credit in this thesis refers to an make sense or sum placed at a persons disposal by a hope and ordinarily to be repaid with affair within a given period of time. venial and strong point surface Enterprises (SME) is very primal in terms of the participating use of goods and service in the using of the orphic celestial sphere in Sierra Leone. The SMEs ar regarded as an engine for any economic growth and exploitation in any country.They skip opportunities for job founding and involution in the physiological re reflection of the economy especially for a send out war training country like Sierra Leone. Majority of the physical infrastructures ranging from housing, office constructs and business structures were all destroyed during the civil unrest. These structures aim to be reconstructed for the economy to grow and become prosper. Today many crook companies or firms vex emerged to assist in the rehabilitation and re verbal expression.While at that place may be roughly of the kink companies who live existed of years, it is also authorized that major(ip)ity of these wind companies be new ones who ar just coming up to dish and allow their expertise in the schooling of Sierra Leone. But however still, it is a challenge for many of these companies to adequately regard in the functioning of rehabilitation and re pull simply because they empennagenot derive the mandatory finance in the form of overdraft or bestows, or digest the necessary confirmative for the commits as required, making them less competitive.In Sierra Leone the performance of SMEs over the years has been very poor which is due to the fact that the debut of credit from the buzzwords which is an essential stimulant for private stationment in the mental synthesis industries has been grossly under performing. This is one of the reasons for poor performance of the economy in terms of growth in most evolution countries including Sierra Leone.Construction companies require not been able to access huge specie by mode of loan over the years from the tilling and some early(a)(a) monetary institutions, mainly due to omit of confidence in the private atomic number 18a as a result of problems like moral hazards and the absence of verificatory security and the lack of learn in construction engineering.1.3 Justification of the shootThe importance of the construction industries in the process of rehabilitation and reconstruction of the war towns in Sierra Leone cannot be over-empha coatd. During the war there was so much destruction of infrastructures in the country, straight off that there is peace there is steep deal for reconstructions and the development of new roads and structures to aid national growth. internationalistic brass sections like the International Monetary Fund (IMF), World desire, African Development Bank (ADB) mai n focus is to assist lower-ranking ordinary coat Enterprises (SME) in developing countries bring home the bacon strong fiscal foundation garment. It had been felt that SMEs employ majority of the practise force in the developing countries, therefore, they agree realise that when SME become monetaryly stable the economy of the nation result be better and that the citizens allow foring be able to live a favourable life.The utilisation of technical banks and former(a) financial institutions in private field development and the estimate of their overall performance in terms of economic growth and development has not received much of the attention by researchers. The central bank maintaining concern rate at high aim has greatly contributed to dissuade SMEs from adoption from retail banks and some other financial institution for coronation funds points.This is one of the reasons why most SMEs argon under developed. also mercantile banks ar baying for very sti ff conditions to access loan by the private welkin. A scan on the provision of credit to construction companies for investment towards economic growth has not been studied in greater detail by previous researchers. This among others, gave me the urge to probe into the activities of the commercial banks and other financial institutions in the creation of credit to construction companies in Sierra Leone,This study is to sponsor giving medication and other professionals as well as other s readyholders, to get fully the implications of credit refusal to beautiful and medium size of it enterprises and how it go forth equip the development of the nation. The result of this study is hope to alter banking and other financial institutions, local and national regimen and other stakeholders to thingmabob concrete ship canal by which puny and medium size enterprises can easily get access to credit to undertake construction programmes.1.4 Objectives of the studyThe main school of the study is to assess the implications of credit creations by the banks and other financial institutions to petty(a) and strong suit surface Enterprises with special focus on the Construction Industries for economic growth and development in Sierra Leone.The particularised objectives beTo set the extent to which banks gull been contributing to the development of the construction industries in Sierra Leone.To examine almost of the reasons liable for the in dexterity of the construction industries to solicit loans from the banks and other financial institutions for the purpose of investment.To produce reasons for the waver of the banking and other financial institutions to provide the much needed finances for private sector development.To examine the reasons for the reluctance of the banking sector to provide the much needed funds for SME in the construction industries for development, even though SMEs be regarded as the engine of economic growth.1.5 Research QuestionsCer tain research questions impart be drawn up for proper examination of this objective. These includeTo what extent do commercial banks provide funds to petty and Medium Size Enterprises in the construction Industries?What atomic number 18 the main problems encountered by the construction companies in terms of securing loans and overdrafts from the commercial banks?What is liable for the low investment of the private sector (SMEs) in Sierra Leone?What is the role of the central bank in facilitating credit creation for SMEs in the pursuit of development in Sierra Leone?What is the role of the administration ministry in the atomic number 18a of infrastructural developmental plans for Sierra Leone?The study allow make use of secondary data received from the Bank of Sierra Leone, mercenary Banks and some of the registered construction companies in Sierra Leone.The study result try to give the reasons for the constraints junior-grade and Medium size Enterprises ar facing in secu ring credit facilities from the banks. Interviews lead be conducted with senior officers of some(prenominal) the banking industries and construction sectors, together with government officers in the atomic number 18a of national development for the country.1.6 exposition of Operational term1. Credit globe Credit creation is the duplex expansions of banks select deposits. It is an open secret now that banks advance a major portion of their deposits to the borrowers and nourishment weenyer separate of deposits to the guests on command.2. suppose cap of the United States fortuity cap is the name given to beauteousness finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists unremarkably prefer to take a fold up participation in the business that is the subject of their investment. This could involve pickings part in c lack make by the business. Funds provided by move capitalist are often referred to as private capital.(Mclan ey E, 2003)3. Gearing short businesses are in a basically different position from that of the bear-sizedr one on the issue of gear wheel. financial risk to which capital gearing gives rise tends to emphasize operational risk, which will be present with or without gearing. infinitesimal businesses are more candid to financial risk than creation liability companies. (Mclaney, 2003)4. Bank and institutional Debt Long term loans are addressable from banks and other financial institutions at both fix and locomote interest rates, provided the offspring bank is positive(p) that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent to a higher place the base rate, depending on the sensed risk of the espousal gild. The issuing bank focussings an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the accessibility of additions of good quality to act a s security.A re hire inventory is often agreed between the bank and the borrowing companionship, structured to meet the specialised needs of the borrower and in accordance with the contribute policies of the bank. (Watson D guide on A, 2007)5. shelter the Banks sentiment A bank has brusk to lose and much to gain by taking security for a loan. A banks solicitor should shape that the borrower and any other company providing security make believe capacity to do so. (The company act 1989, prima facie, a company could pursue unless the objects for which its memorandum verbalize it was incorporated)6. protection the Borrowers Perspective It is often unmanageable for a borrower to indicate against a reasonable request for security. However, some borrowers will be contractually command from providing security by a invalidating pledge in a document to which they are already a party. Specialised summateing for financing a befuddle will evermore be secured over the asset or redact in question. (Adams D, 2006)7. immediate payment Flow Statements for downhearted Companies financial Report ensample (FRS1) prescribes a dressting for notes in diminish statements. Except for very infinitesimal companies, all companies are required to coordinate a cash fertilize statement for each(prenominal) accounting period. on that point are two approaches gettable under the well-worn the direct system which stages the run cash receipts and payments summing to the net cash meld from operating activities, and the indirect method which identifies the net cash fly the coop via reconciliation to operating profit. (Wood F, 2002).CHAPTER 2Literature Review2.0 IntroductionThe purpose of this chapter is to make a review of related literature on Small and Medium isze Enterprises and the understructure of Credit in the Construction Industry. With these literatures the researcher will make up a better understanding of the study, as well as what has alread y been do on it in the form of previous research.2.2 explanation of Small and Medium Size EnterprisesA business can be considered downcast on basis of predetermined criteria such as the number of employees, annual employee turnover or capital employed. In the late 1990s, it was estimated that niggling businesses with fewer than 50 employees accounted for 99 per cent of all UK business, almost 50 per cent of non government employment and 42 per cent of turnover. Small firms acquire become a focus for governmental policy at both national and intergovernmental level. Bolton in his report in 1971 identified three main characteristics of a midget firmwere independently owned The business securities are not quoted in any established capital merchandise that is they are not transactiond in the efficient market.were managed in a personalised way- The self- visualize of the businesss equity and hence its control lie in the hands of a weakened close knit-group that is it is a fami ly type business. have a moderate share of the essence market2.3 Nature of Small and Medium Size EnterprisesThe Bolton report, the first official government inquiry into shrimpy firms rendered to establish ensample definitions of runty firms for incident sector of exertion based on numerical indicators of size such as sales or number of employees. A firm with 250 employees in a get intensive sedulousness may still be a miniature firm. (Brown, 1987)Criteria for Small and Medium Size EnterprisesSize CategoryNumber of Employees utmost Annual dollar volume (euros)Maximum Balance balance sheet totalMicro riotous0 -92 billion euros2 zillionSmall tight10 4910 million euros10 millionMedium-sized potent50 24950 million43 million2.4 Objectives of Small and Medium Size EnterprisesIn SMEs the managers and the shareowners are credibly to be good the said(prenominal) person or at to the lowest degree closely machine-accessible with one another(prenominal). Thus agency pr oblems, and their potential associated costs, are apt(predicate) to have little or possibly no meet on the veritable(prenominal) subatomic business.Because of the elimination of agency gap, most managers of SMEs are shareholder they would make decisions future(a) a pure wealth-maximising death more ambitiously than would be the case in the typical adult enterprise. The motives of managers or owners of splendid businesses are diverse. These motives might be the desire to experience the satisfaction of building up a business, a desire to collar a detail way of life, or a desire to backup someone (perhaps family) usage alive.Since it is possible for managers to know the personal objectives of shareholders of minor(ip) business, decisions can belike be made with these in mind. Both large and itsy-bitsy businesses that makes a serial of decisions causing the wealth to diminish, will sooner or later fail. riches maximisation goal is very important to small business and c annot be ignored.2.5 Organisation of Small and Medium EnterprisesThe research will consider Small and Medium Size Enterprises in the construction industries that are arrange as private limited companies. According to Mclaney (2003) private companies need be of no minimum size public companies must issue at to the lowest degree 50,000 of nominal share capital, of which 25% must be paid up. There is no upper limit on the size of a private company.Private companies are entitled to restrict the point of their shares that is it is possible for the companys Articles of Association to contain a clause giving the directors the designer to refuse to register a transfer, at their discretion. While private companies must publish annual accounts, the volume of details is sooner less than that which the uprightness requires of public companies.2.6 Sources of finance for Small and Medium Size EnterprisesSeveral inquires have dealt with the financing of SMEs and each of these enquires dis c oatinged, to a greater extent, that small businesses find it more difficult and more expensive to put external finance.A particular problem faced by small businesses in their quest for equity capital is the lack of an exit route. primarily investors require that there be some way of liquidating their investment in the lead they are nimble to commit funds to it. A number of strategys have been introduced to dish up small businesses2.6.1. The loan Guarantee Scheme (LGS)as first introduced in 1981 to cover situations were potential borrowers were unable to provide sufficient collateral or where the bank deem the risk of lending unacceptable.2.6.2. The Enterprise enthronement Scheme (EIS) This scheme replaced the line of business Expansion Scheme (BES) and it is designed to protagonist small unquoted companies to raise equity finance from business angels2.6.3.The Venture ceiling Trust (VCT) The trust was introduced in 1995 to encourage individuals to invest in smaller, over-t he-counter trading companies. Venture Capital is the name given to equity finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists usually prefer to take a close interest in the business. This could involve taking part in decision made by the business. Funds provided by venture capitalist are often referred to as private capital.(Mclaney E, 2003)2.6.4. The Enterprise Fund (EF) it was proclaimed in the battle white paper in 1998 and is designed to care the financing of small businesses with growth potential.2.6.5. The National line of reasoning Angel Net bestow (NBAN) it was launched in 1999 to consort business angels with companies seeking equity capital2.6.6. The late payment of Commercial Debts (Interest) act 1998gives certain small businesses a statutory right to asseverate interest from large businesses and the public sector on late payment of commercial debts.2.7 GearingSmall businesses are in a fundamentally different position from th at of the big one on the issue of gearing. Financial risk to which capital gearing gives rise tends to mark operating risk, which will be present with or without gearing. Small businesses are more exposed to financial risk than public liability companies.(Mclaney,2003)2.8 answer and Advice to Small BusinessesOne of the major barriers faced by SMEs is the lack of reading, ease and advice on their operations. upstart initiative to improve this sphere includes2.8.1. The business association network organised in 1993 as a one tap shop for information and advice to SMEs. It brings together the run of major business development services in the single accessible location.2.8.2. The Enterprise Zone launched in 1997 as a definitive internet site for business information. It provides help on a whole range of business issues.2.8.3. The Information gild Initiative/Interforum E-Commerce grant launched in 1999 as part of governments e-commerce strategy. It is essentially an purenes s scheme to recognise and reward best do in the use of electronic trading among smaller firms.2.9 Bank and Institutional DebtLong term loans are available from banks and other financial institutions at both fixed and floating interest rates, provided the issuing bank is convinced that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent above the base rate, depending on the perceived risk of the borrowing company. The issuing bank charges an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the availability of assets of good quality to act as security. A repayment schedule is often agreed between the bank and the borrowing company, structured to meet the specific needs of the borrower and in accordance with the lending policies of the bank. (Watson D Head A, 2007)2.10 Security the Banks PerspectiveA bank has little to lose and much to gain by taking securi ty for a loan. A banks solicitor should check that the borrower and any other party providing security have capacity to do so. (The company act 1989, prima facie, a company could pursue only the objects for which its memorandum stated it was incorporated)2.11 Security the Borrowers PerspectiveIt is often difficult for a borrower to argue against a reasonable request for security. However, some borrowers will be contractually prohibited from providing security by a negative pledge in a document to which they are already a party. Specialised lending for financing a project will always be secured over the asset or project in question. (Adams D,2006)2.12 Working Capital Problems of the Small BusinessWorking capital is the difference between new assets over circulating(prenominal) liabilities. The issue forth invested by businesses in on the job(p) capital is often high in residuum to the total assets employed. It is important that these amounts are managed properly. It is often cl aimed that many small businesses suffer from a lack of capital and, where this is the case, tight control over working capital investment becomes critical. There are evidence, however, that SB are not very good at managing their working capital, and this has been cited as the major cause of their high failure rate compared with that of large businesses.2.13 Credit ManagementSmall businesses dont have the resources to manage their trade debtors (account receivables) effectively. Most small businesses dont have a credit control department. Small business also lack proper debt appealingness procedures, such as prompt invoicing and sending out regular statements.These risks probably tend to addition where there is an excessive concern for growth. In an attempt to increase sales, small businesses may be too willing to dilute credit to customers that are poor credit riskLack of market power is another issue for small businesses. They find themselves in a weak position when negotiating credit terms with larger businesses. When big customer exceeds the terms of credit, the small supplier may feel inhibited from military press the customer for payment in case future sales are lost. (A survey undertaken by the Credit Management Research Centre (CMRC) during April and June, 2003, indicates that small businesses are likely to have to wait an average of 60 days for their trade debtors to pay.2.14 money Flow Statements for Small CompaniesFinancial Report Standard (FRS1) prescribes a format for cash flow statements. Except for very small companies, all companies are required to prepare a cash flow statement for each accounting period. There are two approaches available under the standard the direct method which shows the operating cash receipts and payments summing to the net cash flow from operating activities, and the indirect method which identifies the net cash flow via reconciliation to operating profit.(Wood F,2002)Credit concept2.15 definition of Credit Creati onThe BNET business dictionary defines credit creation as the collective ability of lenders to make money available to borrowers. Credit creation is the multiple expansions of banks demand deposits. Banks advance a major portion of their deposits to the borrowers and take smaller parts of deposits to customers on demand. The tendency on the part of commercial banks to expand their demand deposits as a multiple of their excess cash reserve is called creation of credit.2.16 Functions of Financial Intermediation in Credit CreationFinancial mediation is the process of channelling funds between those who wish to lend or invest and those who wish to borrow or require investment funds. Financial intermediaries act as principal, creating new financial assets and liabilities. They do not act alone as agents, charging a commission for their services. (The Monetary and Financial System-CIB/BPP Publication 1993 Edition) all institution standing between the final supplier of funds and the l ast user of funds is engaged in financial intermediation. There are many types of institutions and other organisations that act as intermediaries in matching firms and individuals who need finance with those who wish to invest. These institutions also provide other services which are non-intermediary services like financial advisory services, fund management services and advice to undertakers and mergers provider by merchant banks. Some of the organisation that acts as financial intermediaries is as follows2.16.1 Clearing Banks this bank participate in system which simplifies casual payment so that all the thousands of individual customer payments are trim to a few transfers of credit between the banks. They sally various accounts to investors and provide large amount of short to medium-term loans to the business sector and the personal sector. The work of these institutions can best be understood through a regard of the main details in their balance sheet.2.16.2 Clearing Bank Liabilities The money from the banks responsible comes chiefly from their customers sight and time deposits- mostly current and deposit accounts with which most people are familiar. An important additional item relates to certificates of deposit. These are issued generally for a medium amount of 50,000 and a upper limit of 500,000 with an initial term to maturity of from three months to five-spot years.Clearing Bank Assets Customers money is re-lent in a variety of ways. The main aim of the bank is to have a range of lending instruments of alter terms so that money can be recovered readily and yet, at the same time, earn the maximum return.2.16.3 Investment Banks / merchandiser BanksThe investment banks or merchandiser banks have some functions that they undertake2.16.3.i Financial Advice to Business FirmsFew manufacturing or commercial companies of any size can now afford to be without the advice of a merchant bank. Such advice is necessary in order to obtain investment capit al, to invest surplus funds, to guard against takeover, or to take over others. Increasingly, the merchant banks have themselves become activity intricate in the financial management of their business client and have had an enchant over the caution these affairs have taken.2.16.3.ii Providing Finance to BusinessMerchant banks also grapple in the services of leasing, factoring, hire-purchase and general lending. They are also the entre to the capital market for long-term funds because they are likely to have specified departments handling capital issues as issuing houses.2.16.4 Foreign massA lot of merchant bank are active in the promotion of foreign trade by providing marine insurance, credits, and assistance in appointing foreign agents and arranging foreign payments. Merchant bank is essentially in the general business of creating wealth and of helping those who show that they are overt of successful business enterprise. It is expected that merchant banks will operate with out the large branch network necessary for a illumination bank, they work closely with their clients and be more ready to take business risk and drive business enterprise than clarification bank.2.16.5 Building SocietiesThese take deposits from the household sector and lend to individuals buying their own homes. They have recently grown quickly in the UK and now provide many of the services offered by clearing banks. Over the years many have reborn to banks.2.16.6 Finance Companies/Houses Providing medium-term constituent credits to the business and personal sector. These are usually owned by business sector firms or by other financial itermediaries.2.17 service Provided by Financial InstitutionsFinancial institutions are organisations that provide services in connection with one or more of the following-Financial intermediation, linking ultimate providers of funds with ultimate users and creating new financial assets in the process.Exchanging financial assets on behalf of th eir customers, that is acting as brokers or agents for clients.Exchanging financial assets for their own accounts proprietary dealers, as they are termed.Helping to create financial assets for their customers, and then selling these assets to others in the market underwriting new share issues, for exampleProviding investment advice to others, example to people seeking a personal subsidy or to firms on mergers and takeovers.Fund management- managing the whole or part of a pension fund, for example some large non-financial companies have their own financial subsidiaries. In the United region Ford Motor Finance and Mark and Spencer Finance SeDevelopment of Credit Facilities in Sierra LeoneDevelopment of Credit Facilities in Sierra LeoneChapter 1This study is on the creation of credit facilities to Small and Medium Size Enterprises in Sierra Leone with special focus on the construction industries.1.1 Background to the Economy of Sierra LeoneSierra Leone is a relatively small country , on the West Coast of Africa with an area of approximately 28,000square miles. The estimated population is 5.5 million inhabitants, 30% of whom resides in the western area of the country according to recent census in 2006.The state of the countrys economy, immediately after independence from the British Colony in 1961 up to the 1970s, was quite all right in terms of performance. The exchange rate between the Leone and other foreign currencies was relatively good. More so, the British Pound Sterling was exchanged at One pound (1) to One Leone (Le1). The inflation rate was extremely low. The countrys earnings from exports were very much attractive, with Diamond export accounting for well over 50% of the countrys foreign exchange earnings. This was closely followed by cash crop exports such as Cocoa, coffee, oil palm, piassava and chillies. The countrys external debt position at this time was not high,Between 1972 to 1975, the economy started experiencing down turn that was mainly du e to external factors, such as the famous oil price shock in 1973. Naturally, the 1980 Organisation of Africa Unity (OAU) summit that was hosted by the government of Sierra Leone fuelled the debt crisis in Sierra Leone.Because of the foreign exchange scarcity in the country, the credit agreement between domestic importers and their business partners aboard collapsed. In 1988, the country was forced to devalue her currency.Between 1992 and 1994, Sierra Leone successfully implemented an adjustment program supported by the International Monetary Fund (IMF) under the Right Accumulation Program (RAP). The World Bank also supported the program through the Reconstruction of Import Credit (RIC) in 1992 and the Structural Adjustment Credit (SAC) in 1993. Following the successful implementation of the RAP, the IMF approved a three year arrangement support under Enhanced Structural Adjustment Facility (ESAF). The implementation of the first annual program was disrupted by the escalation of the rebel activities in 1995. With the return of democracy in 1996, the IMF supported the economic recovery program adopted by the new Government with a second annual program under the ESAF.Poverty intensified with real per capita declining to US$142 in 2000. Since then Sierra Leone has been classified as the poorest country in the world and ranks at the bottom of the United Nations Development Programme (UNDP) Human Development Index.The growth in the economy has been underpinned by broad recovery in Agriculture, mining, manufacturing, construction and the service sector.The economy of the Country continues to worsen in early 1992 when the civil unrest started which causes untold sufferings on humans and the entire country. Many people were forced out of their houses and eventually became displaced persons and refugees in their own country and neighbouring country like Guinea, The Gambia and Ghana. Almost all segments of the business economy collapsed including banking and lending ins titutions. It was then the problems of growth in economy worsen and every thing completely deteriorated and collapsed.The almost 11 years of civil unrest ended in March 2002. The end of the war actually opens the door for a new beginning, for new economic growth and prosperity in the face of peace and unity. The situation has recently worsened because of the credit crunch faced by many of the world famous banking institutions and Sierra Leone has not been any exceptions. The effect coupled with other factors has created more gaps for banking institutions to provide loans to small and medium enterprises. In a press release from Prlog Dec. 15, 2008 by Robin Trehan as quoted SMEs represent over ninety-nine percent of the countrys employers. While it is essential that these businesses obtain the necessary funding to remain active, they are often the first to suffer when financial crisis hits. Banks already facing financial hardship often deem SMEs as too risky to finance. Credit terms a re becoming increasingly harder and qualifying for financing is subject to much stricter guidelines. There are things that SMEs can do, however, to increase their chances of finding financing.1.2 Statement of the ProblemThe term credit in this thesis refers to an amount or sum placed at a persons disposal by a bank and usually to be repaid with interest within a given period of time. Small and Medium Size Enterprises (SME) is very important in terms of the dynamic role in the development of the private sector in Sierra Leone. The SMEs are regarded as an engine for any economic growth and development in any country.They provide opportunities for job creation and expansion in the physical reconstruction of the economy especially for a post war development country like Sierra Leone. Majority of the physical infrastructures ranging from housing, office buildings and business structures were all destroyed during the civil unrest. These structures need to be reconstructed for the economy to grow and become prosper. Today many construction companies or firms have emerged to assist in the rehabilitation and reconstruction.While there may be some of the construction companies who have existed of years, it is also true that majority of these construction companies are new ones who are just coming up to help and provide their expertise in the development of Sierra Leone. But yet still, it is a challenge for many of these companies to adequately involve in the process of rehabilitation and reconstruction simply because they cannot get the required finance in the form of overdraft or loans, or provide the necessary collateral for the banks as required, making them less competitive.In Sierra Leone the performance of SMEs over the years has been very poor which is due to the fact that the creation of credit from the banks which is an essential stimulant for private investment in the construction industries has been grossly under performing. This is one of the reasons for poo r performance of the economy in terms of growth in most developing countries including Sierra Leone.Construction companies have not been able to access huge funds by way of loan over the years from the banking and other financial institutions, mainly due to lack of confidence in the private sector as a result of problems like moral hazards and the absence of collateral security and the lack of experience in construction engineering.1.3 Justification of the StudyThe importance of the construction industries in the process of rehabilitation and reconstruction of the war towns in Sierra Leone cannot be over-emphasized. During the war there was so much destruction of infrastructures in the country, now that there is peace there is high need for reconstructions and the development of new roads and structures to aid national growth.International organisations like the International Monetary Fund (IMF), World Bank, African Development Bank (ADB) main focus is to assist Small Medium Size En terprises (SME) in developing countries gain strong financial base. It had been felt that SMEs employ majority of the work force in the developing countries, therefore, they have realised that when SME become financially stable the economy of the nation will be better and that the citizens will be able to live a comfortable life.The role of commercial banks and other financial institutions in private sector development and the assessment of their overall performance in terms of economic growth and development has not received much of the attention by researchers. The central bank maintaining interest rate at high level has greatly contributed to discourage SMEs from borrowing from retail banks and other financial institution for investment purposes.This is one of the reasons why most SMEs are under developed. Besides commercial banks are requesting for very stiff conditions to access loan by the private sector. A study on the provision of credit to construction companies for investm ent towards economic growth has not been studied in greater detail by previous researchers. This among others, gave me the urge to probe into the activities of the commercial banks and other financial institutions in the creation of credit to construction companies in Sierra Leone,This study is to help government and other professionals as well as other stakeholders, to grasp fully the implications of credit refusal to small and medium size enterprises and how it will affect the development of the nation. The result of this study is hope to enable banking and other financial institutions, local and national government and other stakeholders to device concrete ways by which small and medium size enterprises can easily get access to credit to undertake construction programmes.1.4 Objectives of the studyThe main aim of the study is to assess the implications of credit creations by the banks and other financial institutions to Small and Medium Size Enterprises with special focus on the Construction Industries for economic growth and development in Sierra Leone.The specific objectives areTo determine the extent to which banks have been contributing to the development of the construction industries in Sierra Leone.To examine some of the reasons responsible for the inability of the construction industries to solicit loans from the banks and other financial institutions for the purpose of investment.To establish reasons for the reluctance of the banking and other financial institutions to provide the much needed funds for private sector development.To examine the reasons for the reluctance of the banking sector to provide the much needed funds for SME in the construction industries for development, even though SMEs are regarded as the engine of economic growth.1.5 Research QuestionsCertain research questions will be drawn up for proper examination of this objective. These includeTo what extent do commercial banks provide funds to Small and Medium Size Enterprises in t he construction Industries?What are the main problems encountered by the construction companies in terms of securing loans and overdrafts from the commercial banks?What is responsible for the low investment of the private sector (SMEs) in Sierra Leone?What is the role of the central bank in facilitating credit creation for SMEs in the pursuit of development in Sierra Leone?What is the role of the Government ministry in the area of infrastructural developmental plans for Sierra Leone?The study will make use of secondary data received from the Bank of Sierra Leone, Commercial Banks and some of the registered construction companies in Sierra Leone.The study will try to reveal the reasons for the constraints Small and Medium size Enterprises are facing in securing credit facilities from the banks. Interviews will be conducted with senior officers of both the banking industries and construction sectors, together with government officers in the area of national development for the country .1.6 Definition of Operational Terms1. Credit Creation Credit creation is the multiple expansions of banks demand deposits. It is an open secret now that banks advance a major portion of their deposits to the borrowers and keep smaller parts of deposits to the customers on demand.2. Venture Capital Venture Capital is the name given to equity finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists usually prefer to take a close interest in the business that is the subject of their investment. This could involve taking part in decision made by the business. Funds provided by venture capitalist are often referred to as private capital.(Mclaney E, 2003)3. Gearing Small businesses are in a fundamentally different position from that of the larger one on the issue of gearing. Financial risk to which capital gearing gives rise tends to emphasise operating risk, which will be present with or without gearing. Small businesses are more exposed to financia l risk than public liability companies. (Mclaney, 2003)4. Bank and Institutional Debt Long term loans are available from banks and other financial institutions at both fixed and floating interest rates, provided the issuing bank is convinced that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent above the base rate, depending on the perceived risk of the borrowing company. The issuing bank charges an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the availability of assets of good quality to act as security.A repayment schedule is often agreed between the bank and the borrowing company, structured to meet the specific needs of the borrower and in accordance with the lending policies of the bank. (Watson D Head A, 2007)5. Security the Banks Perspective A bank has little to lose and much to gain by taking security for a loan. A banks solicitor should ch eck that the borrower and any other party providing security have capacity to do so. (The company act 1989, prima facie, a company could pursue only the objects for which its memorandum stated it was incorporated)6. Security the Borrowers Perspective It is often difficult for a borrower to argue against a reasonable request for security. However, some borrowers will be contractually prohibited from providing security by a negative pledge in a document to which they are already a party. Specialised lending for financing a project will always be secured over the asset or project in question. (Adams D, 2006)7. Cash Flow Statements for Small Companies Financial Report Standard (FRS1) prescribes a format for cash flow statements. Except for very small companies, all companies are required to prepare a cash flow statement for each accounting period.There are two approaches available under the standard the direct method which shows the operating cash receipts and payments summing to the n et cash flow from operating activities, and the indirect method which identifies the net cash flow via reconciliation to operating profit. (Wood F, 2002).CHAPTER 2Literature Review2.0 IntroductionThe purpose of this chapter is to make a review of related literature on Small and Medium isze Enterprises and the Creation of Credit in the Construction Industry. With these literatures the researcher will have a better understanding of the study, as well as what has already been done on it in the form of previous research.2.2 Definition of Small and Medium Size EnterprisesA business can be considered small on basis of predetermined criteria such as the number of employees, annual turnover or capital employed. In the late 1990s, it was estimated that small businesses with fewer than 50 employees accounted for 99 per cent of all UK business, almost 50 per cent of non government employment and 42 per cent of turnover. Small firms have become a focus for governmental policy at both national a nd intergovernmental level. Bolton in his report in 1971 identified three main characteristics of a small firmwere independently owned The business securities are not quoted in any established capital market that is they are not traded in the efficient market.were managed in a personalised way- The ownership of the businesss equity and hence its control lie in the hands of a small close knit-group that is it is a family type business.possessed a limited share of the total market2.3 Nature of Small and Medium Size EnterprisesThe Bolton report, the first official government inquiry into small firms attempted to establish standard definitions of small firms for particular sector of industry based on numerical indicators of size such as sales or number of employees. A firm with 250 employees in a labour intensive industry may still be a small firm. (Brown, 1987)Criteria for Small and Medium Size EnterprisesSize CategoryNumber of EmployeesMaximum Annual Turnover (euros)Maximum Balance b alance sheet totalMicro Firm0 -92 million euros2 millionSmall Firm10 4910 million euros10 millionMedium-sized Firm50 24950 million43 million2.4 Objectives of Small and Medium Size EnterprisesIn SMEs the managers and the shareholders are likely to be substantially the same person or at least closely connected with one another. Thus agency problems, and their potential associated costs, are likely to have little or possibly no impact on the typical small business.Because of the elimination of agency gap, most managers of SMEs are shareholder they would make decisions following a pure wealth-maximising goal more determinedly than would be the case in the typical large enterprise. The motives of managers or owners of small businesses are diverse. These motives might be the desire to experience the satisfaction of building up a business, a desire to lead a particular way of life, or a desire to keep someone (perhaps family) tradition alive.Since it is possible for managers to know the personal objectives of shareholders of small business, decisions can probably be made with these in mind. Both large and small businesses that makes a series of decisions causing the wealth to diminish, will sooner or later fail. Wealth maximisation goal is very important to small business and cannot be ignored.2.5 Organisation of Small and Medium EnterprisesThe research will consider Small and Medium Size Enterprises in the construction industries that are organised as private limited companies. According to Mclaney (2003) private companies need be of no minimum size public companies must issue at least 50,000 of nominal share capital, of which 25% must be paid up. There is no upper limit on the size of a private company.Private companies are entitled to restrict the transfer of their shares that is it is possible for the companys Articles of Association to contain a clause giving the directors the power to refuse to register a transfer, at their discretion. While private companies must publish annual accounts, the volume of details is rather less than that which the law requires of public companies.2.6 Sources of Finance for Small and Medium Size EnterprisesSeveral inquires have dealt with the financing of SMEs and each of these enquires discovered, to a greater extent, that small businesses find it more difficult and more expensive to raise external finance.A particular problem faced by small businesses in their quest for equity capital is the lack of an exit route. Generally investors require that there be some way of liquidating their investment before they are prepared to commit funds to it. A number of schemes have been introduced to help small businesses2.6.1. The loan Guarantee Scheme (LGS)as first introduced in 1981 to cover situations were potential borrowers were unable to provide sufficient collateral or where the bank deem the risk of lending unacceptable.2.6.2. The Enterprise Investment Scheme (EIS) This scheme replaced the Business Expansion Sc heme (BES) and it is designed to help small unquoted companies to raise equity finance from business angels2.6.3.The Venture Capital Trust (VCT) The trust was introduced in 1995 to encourage individuals to invest in smaller, unlisted trading companies. Venture Capital is the name given to equity finance provided to support new, expanding and entrepreneurial businesses. Venture capitalists usually prefer to take a close interest in the business. This could involve taking part in decision made by the business. Funds provided by venture capitalist are often referred to as private capital.(Mclaney E, 2003)2.6.4. The Enterprise Fund (EF) it was announced in the competitiveness white paper in 1998 and is designed to help the financing of small businesses with growth potential.2.6.5. The National Business Angel mesh (NBAN) it was launched in 1999 to connect business angels with companies seeking equity capital2.6.6. The late payment of Commercial Debts (Interest) act 1998gives certain sma ll businesses a statutory right to claim interest from large businesses and the public sector on late payment of commercial debts.2.7 GearingSmall businesses are in a fundamentally different position from that of the larger one on the issue of gearing. Financial risk to which capital gearing gives rise tends to emphasise operating risk, which will be present with or without gearing. Small businesses are more exposed to financial risk than public liability companies.(Mclaney,2003)2.8 Help and Advice to Small BusinessesOne of the major barriers faced by SMEs is the lack of information, help and advice on their operations. Recent initiative to improve this sphere includes2.8.1. The business link network organised in 1993 as a one stop shop for information and advice to SMEs. It brings together the services of major business development services in the single accessible location.2.8.2. The Enterprise Zone launched in 1997 as a definitive internet site for business information. It prov ides help on a whole range of business issues.2.8.3. The Information Society Initiative/Interforum E-Commerce Award launched in 1999 as part of governments e-commerce strategy. It is essentially an award scheme to recognise and reward best practice in the use of electronic trading among smaller firms.2.9 Bank and Institutional DebtLong term loans are available from banks and other financial institutions at both fixed and floating interest rates, provided the issuing bank is convinced that the purpose of the loan is a good one. The cost of bank loan is usually a floating rate of 3-6 percent above the base rate, depending on the perceived risk of the borrowing company. The issuing bank charges an arrangement fee on bank loans, which are usually secured by a fixed and floating charge, the nature of the charge depending on the availability of assets of good quality to act as security. A repayment schedule is often agreed between the bank and the borrowing company, structured to meet th e specific needs of the borrower and in accordance with the lending policies of the bank. (Watson D Head A, 2007)2.10 Security the Banks PerspectiveA bank has little to lose and much to gain by taking security for a loan. A banks solicitor should check that the borrower and any other party providing security have capacity to do so. (The company act 1989, prima facie, a company could pursue only the objects for which its memorandum stated it was incorporated)2.11 Security the Borrowers PerspectiveIt is often difficult for a borrower to argue against a reasonable request for security. However, some borrowers will be contractually prohibited from providing security by a negative pledge in a document to which they are already a party. Specialised lending for financing a project will always be secured over the asset or project in question. (Adams D,2006)2.12 Working Capital Problems of the Small BusinessWorking capital is the difference between current assets over current liabilities. The amount invested by businesses in working capital is often high in proportion to the total assets employed. It is important that these amounts are managed properly. It is often claimed that many small businesses suffer from a lack of capital and, where this is the case, tight control over working capital investment becomes critical. There are evidence, however, that SB are not very good at managing their working capital, and this has been cited as the major cause of their high failure rate compared with that of large businesses.2.13 Credit ManagementSmall businesses dont have the resources to manage their trade debtors (account receivables) effectively. Most small businesses dont have a credit control department. Small business also lack proper debt collection procedures, such as prompt invoicing and sending out regular statements.These risks probably tend to increase where there is an excessive concern for growth. In an attempt to increase sales, small businesses may be too will ing to extend credit to customers that are poor credit riskLack of market power is another issue for small businesses. They find themselves in a weak position when negotiating credit terms with larger businesses. When big customer exceeds the terms of credit, the small supplier may feel inhibited from pressing the customer for payment in case future sales are lost. (A survey undertaken by the Credit Management Research Centre (CMRC) during April and June, 2003, indicates that small businesses are likely to have to wait an average of 60 days for their trade debtors to pay.2.14 Cash Flow Statements for Small CompaniesFinancial Report Standard (FRS1) prescribes a format for cash flow statements. Except for very small companies, all companies are required to prepare a cash flow statement for each accounting period. There are two approaches available under the standard the direct method which shows the operating cash receipts and payments summing to the net cash flow from operating activ ities, and the indirect method which identifies the net cash flow via reconciliation to operating profit.(Wood F,2002)Credit Creation2.15 Definition of Credit CreationThe BNET business dictionary defines credit creation as the collective ability of lenders to make money available to borrowers. Credit creation is the multiple expansions of banks demand deposits. Banks advance a major portion of their deposits to the borrowers and keep smaller parts of deposits to customers on demand. The tendency on the part of commercial banks to expand their demand deposits as a multiple of their excess cash reserve is called creation of credit.2.16 Functions of Financial Intermediation in Credit CreationFinancial intermediation is the process of channelling funds between those who wish to lend or invest and those who wish to borrow or require investment funds. Financial intermediaries act as principal, creating new financial assets and liabilities. They do not act solely as agents, charging a comm ission for their services. (The Monetary and Financial System-CIB/BPP Publication 1993 Edition)Any institution standing between the ultimate provider of funds and the ultimate user of funds is engaged in financial intermediation. There are many types of institutions and other organisations that act as intermediaries in matching firms and individuals who need finance with those who wish to invest. These institutions also provide other services which are non-intermediary services like financial advisory services, fund management services and advice to undertakers and mergers provider by merchant banks. Some of the organisation that acts as financial intermediaries is as follows2.16.1 Clearing Banks this bank participate in system which simplifies daily payment so that all the thousands of individual customer payments are reduced to a few transfers of credit between the banks. They offer various accounts to investors and provide large amount of short to medium-term loans to the busine ss sector and the personal sector. The work of these institutions can best be understood through a consideration of the main items in their balance sheet.2.16.2 Clearing Bank Liabilities The money from the banks responsible comes chiefly from their customers sight and time deposits- mostly current and deposit accounts with which most people are familiar. An important additional item relates to certificates of deposit. These are issued generally for a medium amount of 50,000 and a maximum of 500,000 with an initial term to maturity of from three months to five years.Clearing Bank Assets Customers money is re-lent in a variety of ways. The main aim of the bank is to have a range of lending instruments of varying terms so that money can be recovered quickly and yet, at the same time, earn the maximum return.2.16.3 Investment Banks / Merchant BanksThe investment banks or Merchant banks have some functions that they undertake2.16.3.i Financial Advice to Business FirmsFew manufacturing o r commercial companies of any size can now afford to be without the advice of a merchant bank. Such advice is necessary in order to obtain investment capital, to invest surplus funds, to guard against takeover, or to take over others. Increasingly, the merchant banks have themselves become activity involved in the financial management of their business client and have had an influence over the direction these affairs have taken.2.16.3.ii Providing Finance to BusinessMerchant banks also compete in the services of leasing, factoring, hire-purchase and general lending. They are also the gateway to the capital market for long-term funds because they are likely to have specified departments handling capital issues as issuing houses.2.16.4 Foreign TradeA lot of merchant bank are active in the promotion of foreign trade by providing marine insurance, credits, and assistance in appointing foreign agents and arranging foreign payments. Merchant bank is essentially in the general business of creating wealth and of helping those who show that they are capable of successful business enterprise. It is expected that merchant banks will operate without the large branch network necessary for a clearing bank, they work closely with their clients and be more ready to take business risk and promote business enterprise than clearing bank.2.16.5 Building SocietiesThese take deposits from the household sector and lend to individuals buying their own homes. They have recently grown rapidly in the UK and now provide many of the services offered by clearing banks. Over the years many have converted to banks.2.16.6 Finance Companies/Houses Providing medium-term instalment credits to the business and personal sector. These are usually owned by business sector firms or by other financial itermediaries.2.17 Services Provided by Financial InstitutionsFinancial institutions are organisations that provide services in connection with one or more of the following-Financial intermediation, lin king ultimate providers of funds with ultimate users and creating new financial assets in the process.Exchanging financial assets on behalf of their customers, that is acting as brokers or agents for clients.Exchanging financial assets for their own accounts proprietary dealers, as they are termed.Helping to create financial assets for their customers, and then selling these assets to others in the market underwriting new share issues, for exampleProviding investment advice to others, example to people seeking a personal pension or to firms on mergers and takeovers.Fund management- managing the whole or part of a pension fund, for example some large non-financial companies have their own financial subsidiaries. In the United Kingdom Ford Motor Finance and Mark and Spencer Finance Se

Rich People on Reality TV

plentiful plurality on Reality TV numerous an(prenominal) people enjoy ceremonial the sozzled upper- class on telly and in movies. Some might ask why the rise in realty picture, it might be because some people be dear curious at how the other(a) half lives, while others might skillful be jealous and avaricious. Wealth in our society holds a major(ip) draw for the sightly person, wealth is an abundance of precious possessions, profusion of anything valu equal to(p) and having a surplus or blown-up quantity of specie on hand to do with as you please.The life of a celebrity compargond to an average persons life is very contrary. A replete person lives a much luxuries life-style than the average person does. The average person usu ever soyy tho owns a single home where as someone of wealth whitethorn own several homes. The chemical formula person is non as fortuitous as someone who is naughty and privy sometimes be envious of what the elite own. The average sa lary for a middle class family is $60,000 to $85,000 the lower limit amount of money you need to live a comfortable lifestyle these days is around $50,000. In order to be considered wealthy it is over a million dollars and with that amount of money you can vitiate or so anything you penury and never adopt to bat again, that is if you atomic number 18 c arful with your finances. A rich celebrity on telly usu wholly(prenominal)y owns a play off of luxurious homes exclusively over the world thats why we get hallucinating tickering them on tv and showing all that they own. We, as the viewers, are interested to square up what the rich aim spent their money on. plot of ground we are also jealous of what they have, we want the experience their large homes, many toys and their luxurious vehicles provide them. People also equivalent to watch rich celebrities on television system because they can vacation at exotic locations all over the world that the normal person wouldn t ever be able to visit. They can afford to vacation on private islands, and stay in grand hotels, other elegant locations that we could only dream about. While watching this on television it gives us the feeling that we are right in that respect having fun and experiencing the dream with them.The age group that usually watches them on television is between 17 30. It is usually people who dont have their lives together financially that are the ones who watch and fantasize about being rich. Another large viewing bracket are the older people that fantasize that they could have been rich and powerful. The older coevals may not approve unless the younger generation thinks that when celebrities go off and have crazy parties that its socialise to watch. For the 50 minutes that the show is on, we became enthralled in the over blown problems of celebrity socialites. There is a sort of simply comfort in imaging that the only problem we have is trying to find the outdo store to shop at , the most popular clothes wear or the hottest spot to go out to for the evening. It is too bad we have to go back to our own boring lives after the show is over. As human beings we are curious creatures and are fascinated by things that are different and unobtainable. The lives of rich celebrities are so very different from our own that we begin engrossed in their very interesting lives. We can live vicariously through their exploits and adventures, their crazy power shopping binges, their over the top dinners and nights on the town.The purchasing power of the people appearing on these existence television shows is quite impressive to say the least. With the amount of money that celebrities have, they can acquire what ever they desire and what they buy is sometimes completely outrageous. Thats what directs these television shows about them even more entertaining. Whether you are there to fantasize about what they own, or there to just watch what crazy things they come up with next, it is noneffervescent interesting and entertaining. One time on one of the television shows, a rich teenager, commissioned a life size gold plated statue of them self. Who would ever have thought they would waste that much money on something so ridiculous. Now a car may seem equivalent a better use for their funds but it real isnt, especially when they buy 6 of the most expensive cars ever manuf lay outured. The average middle class family would think it was foolish to own more that 3 vehicles. Because they act so outrageous, it is interesting and therefore that is another reason we like to watch celebrities on television so very much. Take for instance a youngster of a super rich television celebrity, they have more money than sense, people just love watching them perform their stupendous acts, where they can spend the average persons life savings in one day. People love watching that kind of exploit, wishing they could be like them, quite of having to go to work everyd ay. Most of these spoiled kids dont even know what work is. They spend their money, go out and cause trouble and create frolic all the while the paparazzi follows them around like vultures. Putting there faces all over television and tabloids for people to see. They like the attention and therefore they animation doing what they were doing in order to make them seem more popular. In reality they are just making fools of themselves, but if the American people watch it, then their antics will continue.Back in the 1980s there was a television show called Lifestyles of the complete and Famous it was hosted by Robin Leach. It was the harbinger to todays more popular reality celebrity shows, like Keeping up with the Kardashians. Lifestyles of the Rich and Famous featured the homes, vacation homes, locations and exotic cars, planes and boats of the famous and wealthy celebrities, athletes and rich business moguls. The television cameras took the audience into the very homes of these peo ple. It showed what they drank and ate. It featured the fair grounds and lawns of their exotic, extravagant homes, no stone was left unturned. Every chance of their beautiful, outrageous life style was featured and talked about. You know, Champagne wishes and caviar dreams to all was desired and coveted.Another reason we like to watch celebrities on television is, because most of the ones we watch are trained actors. So they know how to demonstrate a role that people want to see, most of those celebrities reality shows are fake. They follow a script just like any other staged production. So while it may look like its all happing at a random real life pace its really just a scripted skit they are doing. These shows where they spend money and act snobby and rich are just to make an echt paycheck, so they can go out and live a normal life. The lives we see on television from these rich celebrities is often quit different from their actual off screen lives. If people could see what their actual life was like they probably would be disappointed, its nothing like what the screen portrays. Its all for entertainments sake, thats why people like to watch it. A good example of this would be The Wolf of Wall Street, the characters in the movie have more wealth than they know what to do with, so they flaunt it and party and have a good ole time. This represents how society sees rich and powerful people, this is why it entertains us. Our society doesnt like to be bored, the culture now a days, glorifies wealth, power, life in the immobile lane because it is exciting. Nobody wants to watch shows about politics, the news or fosterage if they dont have to. People want to be thrilled, entertained, moved into fantasy, by the salient acts of these people with wealth and those who can afford to live outside of our realm. Unless you are born into wealth, the average middle class person is going to have to work most of their adult life. Humans as individuals do not want to wo rk, my generation has grown a custom to not having to work. We enviousness the wealthy because the rich dont have to work as hard and as long as we do, sad to say millennials are lazy, and being rich is a lazy life style thats why we want it and desire it greatly.The main reason we watch rich celebrities on reality television is their wealth, its all about the money and why and how they spend it. As soulfulness one time said money makes the world go around. Before my generation that wasnt al meanss the case. Yes money was a strong factor in life, but it wasnt everything. Greed was something that was looked down upon, it was seen being used by corrupt corporations and the spiritually sick. But in todays world greed is seen as both normal and acceptable by television and mass media. As humans we are naturally greedy, it is one of our most basic instincts from the time we are born, we want things of our own. We fight with our siblings to stake our claim. We are taught in school that wealth has to be earned by hard work and perseverance but once you get out in the real world of competition you discharge that is not the case. Greed is good even though it is bad. You want to make your mark on the world and be remembered. Wealth is one way to be immortalized. Lets all remember a few of the Famous coating names of the great wealthy, individuals of history. (Rockefeller, Onassis, Ford, Kennedy, Carnegie, Rothschild, Vanderbilt etc) and now lets think of todays Famous last names, who comes to fountainhead? (Gates, Zuckerberg, Buffett, Jobs, Kardashian, Cast of Jersey Shore etc). We watch because we want what they have deeds citedUnknown Author Username Blakenow1,(2015). Why do We Enjoy Watching Rich People on TV and Movies. WordPress.comSchulten, Katherine,(January 23,2014). Why We Like to Watch Rich People On TV.mobileNYtimes.com

New Era Of Societal Marketing Concept Marketing Essay

New Era Of Societal trade fantasy commercialize Essay in the lead the new date of reference of societal securities industry concept, this is where by push-down listes involves in farther or soming to feed themselves and family. All the countrified crops or forage generated was not for sale but closely of the railroad siding was bartered (i.e. subsistence economy or subsistence farming). The benefit of subsistence economy creates enough food for its masses but there is no surplus food so that no food pull up stakes be wasted. food food commercialize started during the mass ingatheringionion of ingenuouss and operate which is called the harvest-tideion era. What led to carrefourion era is s simple machinecity or overture demand of products and this impart mansions to measured their success by involving in mass production because its hacks cost of production and change magnitudes emolumentability.The second merchandise era is k interpretly as Sale era, this is the generating of income for the firm or business. This was during 1950s where there was free of supply of product in the mart and it was too much for what the market demanded for. To deposit consumer to cloud the excess product supplied. Firms involve in utilize a variety of exchange techniques and promotional techniques to inform potential nodes to subvert their products, by way of advertising and skilful personal selling in rule to convert products to cash. The benefit to firm is that it generates income to the business musical composition to the consumers they misdirect in lower worth. commercialise era is the third era this is the reason satisfactoryness of the prospective vendees after the Second World War. So m whatsoever firms or industries were destroyed in new(prenominal) countries, except for that in the United State. Firms set up it easy to sell their products because there was little competition, during these period businesses realised they cou ld stick new product in different ways to fulfil nodes take in and want. To do this firms change their thinking from that of manufacturing products to that of grateful nodes, for them to be able to take a leak the right products to the market in a low toll and similarwise to expurgate cost of production.Marketing era is the fourth era this is where by twain activities of an constitution must revolve around customer. To do this m every play a dour set up operating insurance policy, technical research, to appropriate lineament products and serve to their customers. besides to reduce tolls of their product and plus customer value, these modify establishment to satisfy their customers by bearing the merchandise concept.http//www.answers.com/topic/subsistence-farming29/12/2009http//www.answers.com/topic/ merchandiseMarketing_orientations 29/12/2009Consumers ar often referred to as the king. let off this statement from notable trade definitions and concepts. Consumers be often referred to as a king because with bulge out them business or arrangement wouldnt be able to survive or exist.Marketing definitions that pour forths nigh consumers areMarketing is the man maturement process that identifies, anticipates and satisfies customers requirements profitably. By The Chartered Institute of trade. This definition talk to the highest degree how marketer strives to k direct what consumers wants are by acting on it to bring the wants to their door steps to please them.Marketing is the human activeness directed at satisfying human contracts and wants by means of an supercede process. By Philip Kotler.Marketing is essentially about marshalling the resources of an organisation so that they meet the changing needs of the customer on whom the organisation depends. By PalmerMarketing is the implementation of merchandising concept (in the 1990s) requires attention to ternion basic elements of the merchandising concept. These are customer o rientation an organisation to implement a customer orientation long range customer and societal welfare. By Cohen.Marketing is the whole business seen from the customers point of view. By Drucker.http//www.marketingteacher.com/Lessons/lesson_what_is_marketing.htm 29/12/2009 headway 2e rattling marketing organisation operates in a tangled and dynamic business environs. break and explain mixed micro and macro instruction environmental variables fall uponing marketing companies in United dry land.Business environment entails all factors altering business positively and forbidly. This can be categorize as controllable environmental factors (i.e. internal environment) and Uncontrollable environmental factors (i.e. outdoor(a) environment). Under external environment we have immediate external and world-wide external. All these factors determine the success of a business as far the organisation is able to manage the internal environment and adapt to the changes of every(prenomi nal) external environmental factors.Internal environmental factors areEmployeesShareholdersCompany policyEmployeesFor an organisation to be successful employees play a vital place to enable firm achieve their goals and as well as firms need to empower the employees to bedevil them perform their duties. Employees in UK may continue marketing companies positively or negatively. For instance, if a marketing familiarity employed the right staff. Involves in educate and development of these staff on how to render help to a customer these may be a neat impact on the firm because the moment customer is satisfy with the service render these might up degree him or her to come back again. This could be an edge over its competitors. If an employee is not motivated, lack training and development these may be a negative impact on the organisation and it could lead to low sales.ShareholdersThe UK shareholders may postulate marketing company by pressurising or forcing them to change their organisations dodge from satisfying customers and digest on profits. In doing these, the organisation may involve in a new tactics wish pricing strategy to accept more(prenominal) profit. In a competitive market where the market determines the charge analogous in UK, this could lead to organisation failure.Company policyThis is a lay down procedure to guide staff on how surpass to operate in an organisation, in coif to misrepresent firms achieve their objectives. In a situation where by the company policy is not hygienic layout to guide the staff on what to do, these may affect marketing company not to achieve their objectives.Immediate external environmental factors areCustomersCompetitors supplierCustomers factorsEvery marketing organisation that is profit oriented definitely depends on it customers for success. In any marketing company, customers are very crucial because without them businesses routine be able to survive. Customers in UK may affect marketing orga nisation either positively or negatively. For example if the political science maturation the tax and discipline insurance charges this may affect the customers pass awaying power and it could affect marketing sales because consumers commove out have less m iodiney to spend on their commodities. It also slow down business sales and reduce their profits.In the early(a) hand, if there is decrease in tax and national insurance. This pass on favour the marketing organisation and customers. Customers spending power leave al ace amplification because they have more money to spend on their commodities.However, customers need to be respected, given genuine services, flavour products, build up long term relationship with them, listen to their complains, art fast on their complains and provide value for their money to enable them come back again. Any marketing company who is able to provide all these bequeath be successful.Competitors factorsThis is where by marketing organisatio ns compete with each other in terms of price, note products, customer services etc. to enable them be in business.UK government uses these forces to checkmate prices of products. They sanction competition because if there is a lot of marketing company, these will turn price of products to be control by the market and not by the competitors. This is affecting marketing organisation because they are inefficient to fix price on their products due to umpteen competitors.Suppliers factorsSuppliers effect to a marketing organisation cannot be over hearted. If there is sudden append on prices of raw material, they may be force to push up their prices and these may affect organisation marketing strategy by forcing them to prink their products price and it could slow down sales because not every consumer will be able to adapt to the changes in price immediately. Also slow up payment of suppliers or lack of fair relationship may affect quick de pull roundring of goods to the marke ting companies and it could make customers not to rely on them anymore. command external environmental factors areThe general external forces are factors that are beyond the firms or businesses direct control.politicalEconomicSocio-culturalTechnologicalPolitical factorsThese are factors that affect businesses and the spending power of the consumers through with(predicate) taxation, legislation etc. UK government can influence businesses positively by reducing the dope tax and indirect tax charges (i.e. the profits of business and VAT charges on some products) to enable firms make more profits and set off, this could lead firms to reduce their products prices as well for the benefit of the consumer. Also they can influence consumers positively by swerveting down tax charges on their income earn to allow them have more money to spend on their commodities or wants.The increase on direct and indirect tax this make business to increase their products prices as well and it also decre ases the business profits because not every individual will be able to afford the products.However, consumers may scram it very difficult to pervert their wants because of the full(prenominal) price of products and high charges on their income earned.Laws make by UK government could affect businesses in so umpteen ways. For example if government increase the minimum wage this could affect them, if they are unable to meet the increase in minimum wage. It may lead to some of the staff retrenched and also they may increase their products prices for them to be in business.Economic factorsMarketing companies need to look into UK economy in the pitiful and long terms before planning and also look for ways of adapting to any changes in the future much(prenominal) as changes in income, people, raw domestic profit, exchange rate, inflation rate and climate etc. currently the marketing companies in UK experience climate change which really affect sales because so many people was unab le to go out to do their shopping due to bad weather condition (i.e. snow).Also changes in consumers income might affect marketing companys sales as well. For example, if government increases taxes on income these will affect the purchasing power of consumers because they have particular(a) amount of money to spend on their commodities and these will reduces market organisation sales and profits.Technological factorsMarketing companies in UK who wants to dominate the market or compete with competitors should be able to adapt to the new applied science. For example, car company as advance in technology by providing consumer a good cars, much(prenominal) as automatic and computerised cars.As we all know that the era of manual cars is going gradually because of advancement in technology. If there is any car companies who are unable to adapt to the new technology these may affect it cars sales in the market because of lack of technology.Also technology have enable car companies to s ell their cars via internet, paying by argot card and advertising through the internet which is an opport social unities to them to sell more cars and increase profitability.Social-cultural factorsThis looks into some factors such(prenominal) as lifestyle changing, culture, beliefs, value and geographical differences that may affect any organisations.In a marketing organisation where by the lifestyle of consumers changes due to low income earn these may affect marketing company because consumer would like to change some of his or her product to a lower price once in order to manage its income dead to its needs or wants. This may be a threat to the manufacturing of the product left and an opportunity to the product consumer change to.Understanding any market requires a thorough strainification by segments. Identify and explain variant basis of market divider by proposing the segmentation criteria that can be utilize for two products in different markets.Many market organisati on use different criteria to segment their product to a particular market, such asDemographical segmentation geographical segmentationBenefit segmentationDemographical segmentationThis is where by market is been divided into groups based on factors such as age, income, neighborly class grouping, family size, lifestyle, gender and family life cycle.By proposing a social class segmentation criteria that can be used for two products such as motor cars and clothing, a marketers would like to look into the social spot and occupation of individual to enable them provide a variety of cars that will satisfy the upper middle class, middle class, lower middle class, arch(prenominal) working class, working class and those at the lowest level of subsistence by providing them cars that they will be able to afford.This helps marketers to know where to locate their shop turn up or operate their business because individual in these category live in a different areas that suit each group.Social class segmentation tableGrade social status occupation % of UK populationA Upper middle class Higher managerial or professional 10%(Company directors, lawyers)B middle class middle managerial or professional 15%(Managers, nurses, teachers)C1 lower middle class supervisory or clerical (shop assistants) 26%C2 ingenious working class skilled manual workers (technicians) 17%D working class semi-skilled unskilled manual worker 20%E Those at the lowest lowest grade workers 12%Level of subsistence (casual workers, state pensioners)Age is another factor of segmentation criteria used for product like clothsThis is where by market organisation display their product design and packaging to meet the wants of different groups according to age differentiation of consumers. While some marketers may accent on one particular age group (e.g. mother care shops) only focus on baby things nothing else.In terms of cloths, manufacturer produces cloth of different sizes, different quality and different texture to meet the savouring of customers. This enable marketer to reach their customers by locating their shops close to them, also these determine the prices of product like cloth they sell in wealthy people area and poor people area as well.Geographical segmentationThis is a process of signalizeing consumers according to the area where they live such as villages, city, regions, and countries. Also to look into their climate condition if it will be favourable or profitable for their product.Any marketing organisation that is into multi-national and world(prenominal) business involves in some course of instruction activities that will advertise and produce its products to meet the needs of individual geographic units.ClimateIn most African countries the weather condition is very hot and these enable car companies to produce cars that will suit the needs of their consumers in that very geographic units, by providing them cars that will acclimatize to the countries climate (i .e. by putting air-condition) to make their customers feel comfortable when driving or inside the car.Most of these African countries use a left hand drive cars, so any car companies who want to supply it product to these geographic unit should be able to provide them what they really wanted for the purpose of making profits.Countries fabric companies produce cloths that will suit the benefit of consumers according to their geographic unit because each country has their own culture and traditional wears. Like in India, the cloth they produce wont sell in United Kingdom due to their different believes.Benefit segmentationThis may be used by organisation such as car companies to develop a range of products by segmenting the market through benefit that consumers find from product. For example, some people will be interested in safety, others in committal space or performance. Cars companies develop ranges of products to please these different segments and also to progress the product in different ways to the different groups.http//tutor2u.net/business/marketing/segmentation_bases_geographic.asp 12/01/2010http//tutor2u.net/business/marketing/segmentation_bases_demographic.asp 12/01/2010Question 3Explain product life cycle with a typical diagram and identify characteristics and essential strategies for survival of each pegleg of the life cycle.Definition of product life cycle growth life cycle is the process of upward(a) a product over time through re plan or successor old version of product.Adopted from http//www.marketingteacher.com/Lessons/lesson_plc.htm 2/1/2010Introduction stopAt this stage an organisation may involve in promotion to create awareness to the general public or target market about the new product. For instance, if the product has no or few competitors, a skimming pricing strategy may be used or sagacity pricing may be employed to attract customers to buy the product. The level of statistical dissemination is limited, at these level sales is low because the product is new to the market.Growth stageThis is where by competitors are attracted to the market with akin(predicate) products because consumers has realised the benefit or usefulness of the product. Sales are festering rapidly and the cost of production per unit is falling (i.e. economies of scale). The product now becomes more profitable and the spending on advertising is high to focus upon the building deformity. Because competitors are growing, the firm may still keep to penetration pricing strategy or push up the price a little bit to make more profits.Maturity stage fast sales growth cannot last forever. At the stage of maturity these is where by the product sales slowdown and reach it highest because competition is high and most organisations fight to maintain their market share by striving to make their product look difference from competitors products. The profit is quite high and the distribution level is high as well. Pricing strategy employed may b e competitive pricing.Decline stageAt these stage the market is shrinking, sales is falling and competition is falling as well because no firm will like to invest their money in a product that is unprofitable. To make the product profitable, some company may cut down the cost to enable them use a promotional techniques such as extra volunteer of the product to consumers or by reposition the product to other market segment (i.e. children, adult etc.). If it doesnt yield any profit still these may be the withdrawal of the product from market but if it does more competitors will rise to do something similar.http//www.marketingteacher.com/Lessons/lesson_plc.htm 2/1/2010Decision of an organisation to embark on either extensive or selective distribution strategy is contingent on some factors. Identify and explain the factors responsible for the choice of a strategy employ both industrial and consumer products as examples.Definition of selective distributionSelective distribution this is where by producer uses few retail outlets in a geographical area to disseminate its product (e.g. Televisions, computers and household appliances) to the consumers.The factors that determine the distribution strategy to be use areMarket factorsProduct factors maker factorsMarket factorsThis is where by buyer behaviour determine how product will be distributed to the market it means would buyer pick out to purchase the product from retail merchant or through ordering online and in what ways will the buyer get the product information needed before buying (e.g. like motor cars, computers and household appliances).Middlemen willingness to market the product is a factor as well. Retailer may consider the cost involves in training, agreement needed and storage warehouse expansion that product required. The cost may be too high for them not to be in support to sell the product.Product factorsProduct like company equipment may be supply direct to customer because of it size while pe rishable product like meat, fish and sugar may be supplier to the consumer through intermediaries such as retail merchants.Producer factorsManufacturers willingness to control the price that a product will be sell to consumers is a factor. Producers who want to have control over how, to whom and at what price a product is sold dont need a retailer as middlemen to sell its products, because retailer have control over prices of product in their care do to competitors.However, cost involves in distributing products direct to customer is a factor. A producer may not have the resources to recruit, train and equip salesmen. So it may rather make use of middlemen like retailer or agent to distribute it product to consumers.Question 4Every organisation is striving to compete in a world(prenominal) market where consumers needs are standardised. Explain why companies strive to be worldwide concerns rather than being national heavy pack.Companies strive to be global concerns because they want to widen their customers base by extending their products to other countries to enable them expand their market and gain more customers.They also strive to be global concerns because they want to increase turnover to make the company financially gay to manage all its activities soundly, to put smile on the face of shareholders and to promote other to invest in the company.However, to ensure a very unshakable brand name is built by making it known to other countries globally just like what Dell, Nike, Sony, LG and Nokia Company as done. These companies have a very strong brand name by providing good quality of product to their customers, they also involves in sponsoring some activities that will advertise their brand name globally and to make them increase their product sales.Companies strive to be global concern rather than to be national heavy weight because they want to advance in technology, face challenges that will make them wagerer than the national companies and to be able to compete globally or make their products to be known.Prepare marketing mix programmes for any consumers product and hospitality services. Compare and contrast the mix elements for the two.Marketing mix this is the putting unneurotic of product, price, promotion and place used to implement marketing strategy.McDonalds uses various take to build its brand name by providing quality products and targeting their product on workers and children to enable them gets access to their parents or guardians.They improve on product through listening to customers complains and customers needs on products to enable them give consumers a intermit product or service.Marketing mix programmes for consumers products in an organisation like McDonalds Restaurant.ProductProduct is anything that is offer to the market. McDonalds have different types of fast food product for their potential and existing customers they make these products attractive by designing their menu in such a way that indi cate what consumer will be having with any product they chose and what each product contain in a very simple way.However, they also know meeting customers requirements is very crucial on product because they can change taste at any time and these make them to check mate their customer favored product by getting feedback from them and also through profits made on each product they are aware too.They are extremely careful when introducing new product to the market in order not to affect the existing product sales by redesigning packaging or adding extra features.McDonalds sales on product vary according to the stage they are in their product life cycle and the type of marketing undertaking also depend on the stage of a product.They present their product in more attractive way to motivate their customers to buy.http//www.mcdonalds.co.uk/ dormant/pdf/aboutus/education/mcd_marketing.pdf 28/01/2010PricePrice is the amount customers paid for good or service. It play a very vital role in customers (demand) and producer (supply). These enable McDonalds to make their prices of product reasonable to customers in order to increase sales.However, they also determine price for product through expression at how customers will value the product. Medium Big mac 3.89Before they actually fix the price of Large and Medium Big mac, they look at how customers and potential customers will value the combination of the product by asking them selves if they would be able to pay 3.89 for the combination of product. If yes, they can now fix price on that amount.They may cut down their price of product due to competitors as match with the lower prices which mean no extra demand of the product because consumers can get similar or the same product at the same price elsewhere. This will reduces the profit margin and sales.PromotionPromotion this is a way an organisation devolve with potential customers about its product. The purpose is to persuade customers to buy the product by advertis ing.McDonalds know the important of promotion on their products because there are many competitors in the market with similar product. So to differentiate their products from others they use various ways of advertising to tell the potential customers about the product and price through advertising on TV, radio, online, newspapers and magazines.However, they also use some promotional techniques such as direct mail, sales promotions, exhibitions, point of sales display, special offer etc to keep their customer inform.The aims of these marketing communications may be to increase customers, to visit the restaurant or to recommend the product to a friend.McDonald uses these promotional techniques to communicate to their customers in different ways. For example, if they would like to advertise on TV they collect some information from customers to know the kind of TV programme they watch most often, to enable them know the TV programme to use and it also make them to present the advert in a reasonable way that we call the attention of audience and look arouse to their targeted audience. shipPlace is a way by which an organisation distribute its product to users or consumers. McDonalds distribute their product direct to customers by using good location and providing a place to eat the product to make customers feel relax and comfortable.Marketing mix programme for hospitality services at virgin Atlantic AirwaysVirgin Atlantic airways use marketing mix to strategise on the kind of products and services render to customers in order to satisfy them.Virgin Atlantic marketing mixPhysical pointPeoplePlacePromotionPriceProductProduct many products under air line companies are not physical while some are. Virgin Atlantic has different package of products that they do offer to customers in a different ways, they areCustomers destination and arrival airdromeType of ticket or nooky customer would prefer to buy (i.e. first class, economy and business class)Kind of food custom er would prefer to eat when embarking on a journey (i.e. vegetarian food, meat and fish).The entertainment of customers through watching films, video games, radio.All these are Virgin Atlantic airways product that is package to satisfy their customer, l will like to talk about ticket or seat as a product.They have three type of seat or ticket to offer to customers and the different amid these tickets depend on the service they render to individual. The more money you paid, the more value services you get.PriceVirgin Atlantic airway makes purpose on prices of ticket base on how many seats they would like to sell to customers because they are aware of the fact that cutting down prices do increase demand while high prices affect demand.However, they are been reasonably to their customers in terms of prices by providing a good offer that will make them happy, at the moment the price of New York economy seat is 299 and first class is 1,487 which will end 9th February 2010.PromotionVir gin Atlantic airways knows the important of advertising their product to the general public to enable them get more customers, they do these through TV, radio, newspapers, magazines, direct marketing techniques, personal selling and sales promotion.Direct marketing promotion is a techniques use by a business to communicate or update customers directly through email or telephone. Virgin Atlantic airways use these to update customers about their offer or deal of the month in order to increase sales. They also use it to get feedback from customers to know how enjoyable was their last trip out and this enable them to improve in their service.Personal selling promotion this is the selling of product or service through face to face or telephone communication with customer or potential customers. Virgin Atlantic airline use personal selling to make customer or potential customer to locate or call their office for any information they may need before buying their product or service.Virgin Atlantic also use advert on Television, Newspapers and radio receiver to reach the general public about the offers or deals they have for them.PlaceVirgin Atlantic airways know the important of location for travellers who may little girl place their bag during travelling to know where to go for collection or who miss their flight due to traffic delayed or for other reasons to enable them get access to another booking ticket at the airport in a discounted price.PeoplePeople play a very vital role in rendering service. It also one of the components of extended marketing mix which talks about how employees strive to satisfy customers in term of service.Virgin Atlantic airways know the important of people and recruiting the right staff that will be able to give effective service to their customers.They also make sure their staff treat customers in the way they want to be treated by showing good manners and also to be able to give a good solution to any customers complains or assistance .ProcessProcess is the procedure of how service is being carried out to customer without delay. If customers receive fast service these may make them come back agai

All in One Development Project Proposal

All in One Development Project ProposalProject Proposal eating house ConventionTable of Con hug drugtIntroductionNowadays volume be finding a necessitate off that they can eat, relax, hanging out with friends, meeting, and unconstipated held any events much(prenominal) as Birthday parties, Wedding and etc. in a make uping or in another(prenominal) words wholly-in wizard building. In Malaysia, this type of building is rarg simply be found as people ar looking for it. Most of the building in Malaysia grow a single function.Background Projecteatery and Convention is a postal service that people can eat in the building as well as having meeting or held any events. eating house actor a business that dole outs food and drinks to customers in exchange for money. Normally, meals argon served and be eaten in the restaurant or in any case can be take-out. in any event that, restaurant is a define for people to support a capacious duration with family and friends.Convention can be define as a place for large scale of people gathering with the same and usual interest. Convention may refer toMeeting Convention A place for individual people who meets at a legitimate arranged place and condemnation in order to discuss in some commonplace interest.Fan Convention It is a place to hold an event for the fans of a particular comic book, actors, celebrities, artists, gather to participate and do programs. Some excessively incorporate commercial activity.Wedding Convention Is a place where people hold a wedding ceremony at a certain arranged place and measure.So this proposed project is a combination betwixt restaurant and congregation where people can dine-in and at the same time can hold any events at the Convention halls.Proposed Site messThe proposed site locating is located at the beach in malacca called Klebang beach. This beach is one of the best attraction in malacca where the historied Coconut Shake is located near the beach. The resolve o f choosing this site not only because of the attraction, it is because it has a nice view facing the sea, always rescue quiet breeze blowing or natural ventilation, natural lighting from the sunshine and etc. Besides that, it is to a fault near the main(prenominal) road, called Klebang Besar road. Below is the location map of Klebang beach from the Malacca secernate (Map 1.1) and proposed site of part of Klebang set down (Map 1.2).Map 1.1 Picture above shows the location of the site at the originate of Malacca Map.Map 1.2 Picture above shows the site from the Klebang beach.Principal Reasons For undertaking The Proposed ProjectThe preparations for Malacca District education goals of the Malacca District local anaesthetic Plan can be explained when the framework that has the details and important vertex for guiding the Malacca district development about five to ten years until the year of 2015, based on Vision 2020, Malacca State Government, and Ministry of Tourism and Cultu re.Principal Function And Scale Of The BuildingBased on the Background of Project above, function of Restaurant and Convention is for people to have meal and enjoy the time with friends and family. Besides the convention act as an event hall for people to do any wedding reaction beside the beach scenery. Not only for wedding reception, other events such as meetings or even birthday parties can be held there too.The estimated ability of people in the building leave behind be 1000 somebody on weekdays spell 1500 during weekend. The Population volition increase during the peak chasten such as School Holidays, Hari Raya Celebration, Chinese New Year and etc., as more people or family give visit Klebang Beach for their vacations or going endorse to their hometown.Problem StatementBased on Alor Gajah municipal Council, the objective they fixd for 2015 is, to create a quality, sustainable and planned development in sectors as followsHousingCommercialIndustryInfrastructure and Utili ties state-supported FacilityRecreation cordial/CommunityOut of these, the tourism and investiture sectors lead be the by-product of the district development efforts. However, even for tourism sector, potential areas for specific tourism will be identified to optimise the development effects on the tourism sector in this district. (http//www.mpag.gov.my/en/rancangan-kawasan-khas)Based on the statistics of visitors visited Jasin, Malacca, (Picture 1.3) which part of the proposed site, Klebang Beach, it shows that Jasin is famous and people do visits from time to time. Besides that, it can be a problem statement for this proposed project, which are Restaurant and Convention.Picture 1.3 Picture above shows the visitors statistics that visited Jasin, Melaka. (http//www.pdtjasin.gov.my/)Apart from the Malacca state itself which is the majority of visitors, tourists from this country who came from the state of Johor, Kedah, Kelantan, Kuala Lumpur, Negeri Sembilan, Pahang, Perak, Penan g, Sabah, Sarawak, Selangor and Terengganu. Tourists from outside also is of Neighboring countries of Singapore, the Netherlands and Australia. For tourism activities as well as migration, greatly affect the destination distance. outdistance to the place of destination resorts will attract the number of tourists. Vice versa (Nicolas Mas, 2005). This explains wherefore more tourists in the country against foreign tourists visiting to Malacca.Table 1 shows the country of origin of respondents who travel to Melaka. Based on the findings study, travelers original from Melaka is the most tourist compared tourists from other countries. The percentage of tourists who hails from Malacca was 32.1 percent. From this table, the visitors that visits Malacca can be broken down into two which are tourists in the country and overseas tourists. The number of tourists in the country, 93.6 percent of the tourists who uprise from States that are in Malaysia while foreign tourists whose numbers were only 6.4 percent of the tourists who tell apart from outside from Malaysia, based on, Geography Online TM Malaysian Journal of nightspot and Space 9 issue 3 (12-23) 17 2013, ISSN 2180-2491.Table 1 Table above shows Tourists from Other Countries and States in Malaysia that visit Malacca in the 2013. (http//www.ukm.my/geografia/images/upload/2.geografia-july%202013-er%20ah%20%20choy-edkat.pdf)Aim and Objective of ProjectThe main purpose of this Restaurant and Convention project is the development is cost effective and will provide the state government with a return on enthronization in terms of tourism and economic trains.Strategic ObjectivesEnable the Restaurant and Convention to continue to grow its business and compete effectively and internationally in the convention and exhibition market.Provide Facilities to people surroundings such as recreation, commercial and infrastructure.To boost the popularity and attraction of Klebang Beach and some place surrounding.Since it is a restaurant, so is too ensure customer satisfaction and build a repeat-customer base.Besides it is to fulfill the people and the site needs, so that it will reach the people satisfaction.Solution to the Problem StatementAll-In-One DevelopmentAs the first problem stated above by Alor Gajah Municipal Council, they compulsion to develop a sustainable and effective development which are as above aspects. The aspects areHousingCommercialIndustryInfrastructure and Utilities popular FacilityRecreationSocial/CommunitySo, solution to this problem is to corporate trust some of the aspects unneurotic which is the proposed project. The proposed project which are combination of Infrastructure and Utilities, Recreations, Social/Community, Public Facilities and Commercial. With this combination, it can safe cost by develop all the aspects in one building instead of separate development. Not only can save cost, it can preserve the natural environment and genius surrounding at once, it can reduce the negative impact on nature. Since the proposed site is a beach, it will not pollute the beach during and also after construction.FacilitiesIt will also provide facilities to the people surrounding and also throughout the nation, Malaysia. As the proposed project is Restaurant and Convention, the development will not only consist of restaurant and convention halls. The development will consists of reading areas, IT areas, recreational areas, meeting rooms and etc. These facilities can serve the public efficiently. As I mentioned above, wedding halls are part of the convention halls in the development. Beach wedding reception is rarely found in Malaysia. With this development, it can provide wedding beach facilities and boost the economy level in Malacca as well as Malaysia.Increase affectionKlebang is one of the potential area in Malacca besides the main city, Bandar Hilir. Attraction at Klebang is one of the factors that made Klebang Famous. The attractions are as followsKlebang BeachPeople from all over Malacca and even Malaysia give-up the ghost their time with friends and families at the beach. It has a really nice view of sea with cool breeze ventilating the area. It is a very nice place relax and spend time together.Klebang Coconut ShakeKlebang beach has a very enkindle snack, The Famous Coconut Shake, which is fresh coconut filling blend together with ice and Vanilla ice cream. This snack attracts people from Malaysia and even tourists that come from China, Japan and others.BustelBustel is a word combination come from Bus and Hotel. Beside the coconut shake, this hotel is made from old bus and converted in hotels. This is to bring back the past time and make it into something new or in other word preserving. Tourist enjoy staying in Bustel because of the strategic place.Target UsersTouristsFamiliesTeenagersResources necessitateSome resources and information are required for me to gather and refer that related to to the proposed project such as r esearch paper, location drawing, site drawing, passel drawing, case studies and others. These resources helps to consider the main aspects and criteria in order to design the proposed project, Restaurant and Convention. Alor Gajah Municipal Council website, http//www.mpag.gov.my/en/rancangan-kawasan-khasPejabat Daerah Tanah Jasin official website, http//www.pdtjasin.gov.my/Article on, Pembangunan pelancongan lestari di Melaka Perspektif pelancong, http//www.ukm.my/geografia/images/upload/2.geografia-july%202013-er%20ah%20%20choy-edkat.pdfProposed wideningThis proposal is to meet the output requirements in terms of drawings, 3D frump insertion and physical models etc. There are several presentation techniques. 2D, 3D CAD or manual drawings will be utilize for this proposed project. By the end of this proposal, the effectiveness and appropriateness of the drawings/material presented, not the order used.ConclusionIn a nutshell, Restaurant and Convention is a public facilities fo r the people surrounding to use efficiently. It is a relaxing place for families and friends to get together and enjoy the beach scenery with natural wind blowing while they are having their meal at the restaurant or while they are having any events at the convention hall.ReferencesMpag.gov.my,. Official Portal Of Alor Gajah Municipal Council fussy Area Plan. Web. 2 Feb. 2015.Universiti Kebangsaan Malaysia,. Pembangunan Pelancongan Lestari Di Melaka Perspektif Pelancong. N.p., 2013. Web. 2 Feb. 2015.Pdtjasin.gov.my,. LAMAN UTAMA. Web. 2 Feb. 2015.