Paper on the Costs and Benefits of Building Society

At the beginning of this century there were more than 2000 building societies, fiercely independent mutual organisations, formed in the spirit of Victorian self help. There are now just 71. Some of these that have disappeared were terminating societies with a fixed wind up date. The last â€Å"terminating† society was the Fist Salisbury which wound up in 1980. Other societies have been swallowed up in take-overs or converted into banks in the great 1997 demutualisation. This assignment will discuss this trend with particular reference to the potential costs and benefits in the short and long term. This assignment will examine the costs and benefits to the building societies as well as those to the members and staff. The Costs and Benefits to the Building Society Conversion to plc status is seen as having the major advantage that there would be freedom from the limitations imposed by the Building Societies Act 1986, 1997 the statutory framework for the Building Society industry. The restrictions the Act impose include the following: 1) 75% of all lending has to be secured against residential property This means that Building Societies are limited in their participation in the more risky, but more rewarding unsecured lending. At the moment, Societies can make unsecured personal loans up to a limit of  £15,000 per customer, whereas there is no ceiling for Banks. Building Societies with less than  £100m of assets are not permitted to make unsecured loans. 2) No more than 50% of funds may be raised on the wholesale markets This limit was previously 40% before the revised 1997 Building Societies Act. Building societies have eagerly taken the opportunity to raise money in the wholesale markets, which have frequently proved to be the cheapest source of wholesale funds (Wholesale funds are large deposits placed by companies and financial institutions, bearing an interest rate in line with the market rate rather than base rates). They have used these funds to even out any shortfall in the inflow of retail funds to meet the mortgage demand. Banks have no ceiling on raising wholesale funds, which are usually cheaper than retail funds. Building Societies may also find themselves at a disadvantage in access to wholesale funds at competitive rates. As only 50% of funds can be raised from the wholesale market only the very largest societies can maintain the necessary standing in the international capital markets which allows wholesale funds to be tapped on the finest terms. Equally, the capacity to cope with the volatility of the wholesale markets and the risks they pose, requires Treasury management teams on an increasing sophistication to which only the largest societies can aspire. 3) Before the 1997 Act, building societies could only offer temporary or occasional overdrafts to corporate customers. Now building societies can establish subsidiaries to lend to business customers, but have not yet become significant lenders to industry. This is in contrast to banks who are very much regarded as lenders to businesses. As a result of the Building Societies Act 1997, building societies are now also able to : a) make unsecured loans to incorporated businesses; b) to own a general insurance company which could write housing related policies (buildings, contents and mortgage payment protection insurance). Building Societies are limited in raising capital. Until 1991 building societies could only raise capital by means of retained profits. Now larger societies, to increase capital, can issue Permanent Interest Bearing Shares (PIBS). This is in contrast to plc†s who are free to raise capital in the market by issuing shares and bonds if they plan to expand. An example of this is Barclays 1987 rights issue to raise  £921m to finance â€Å"growth†. Building societies cannot in general engage in take-overs of, or mergers with other types of financial institutions in order to expand their breadth of operations, and retain their mutual status. Banks have this freedom and can finance mergers and acquisitions through the issue of new shares, whereas building societies can only finance acquisitions with cash. Efficiency is also an issue as a plc – profit making organisation is perceived as having greater efficiency than a mutual organisation. However ‘competition has proved a spur to efficiency at least as effective as the disciplinary effect of a public quotation† (PRIMA). As a result of the break up of the societies cartel arrangements for setting interest rates, the banks have made successful inroads into the mortgage and savings markets and hence competition is today very strong. There are many costs and disadvantages associated with building societies converting to banks including: The new plc will be regulated by the Bank of England, rather than the building societies commission. The plc will operate under the Banking Act 1987, compared to the Building Societies Act 1987, 1997. The plc may find it difficult and time consuming, at least initially, to deal with the new method of regulation. The Government†s planned new super regulatory body may also provided further legislation that has to be adhered to. 2) Need to pay out dividends and ability and pay competitive interest The plc will find itself under pressure to pay out growing dividends to shareholders. This reduces retained earnings, thereby reducing the plc†s ability to pay competitive interest rates. In the past building societies have been able to operate on a narrower margin than banks between their rates to the depositors and borrowers because: a) their low management cost (due to their less complicated specialist business); b) no requirements to pay dividends; c) low capital requirements due to the low risk nature of their assets; d) because the banks tended to subsidise their money transmission service by their deposit accounts, which lessens their ability to compete in the savings market. 3) The plc becomes open to possible take-over bids The change of status may have adverse effects on the institution†s image with customers. This may adversely affect its ability to compete with Building Societies. Building Societies are generally regarded as friendly institutions, concerned first and foremost with the customer. A comprehensive study of public perceptions of different financial institutions conducted in 1987 showed that building societies enjoy a positive rating of 85%, compared with only 51% for the high street banks (Personal Finance & The Future of the Financial High Street, Research Associates, March 1988). Building societies have traditionally been seen as a safe depository for the savings of working people. Building Societies are safe and a principal reason why is that mutuality has restricted them to safe, low risk activities. This safety and friendliness have strong customer appeals, which may be lost if conversion to plc status takes place. In general building societies have low levels of bad debt relative to banks. The lower levels of bad debt can be put down to the loaning restrictions set down by the Building Societies Act 1986, 1997 (e.g. 75% of loans must be secured against residential property). In 1997 a number of building societies decided to give up their mutual status in favour of plc status. These conversions and take-overs resulted in a number of windfall payments to society members. These windfalls were in the form of cash or free shares. The size of windfall varies from society to society, but investors due to receive windfalls from all the building societies that surrendered their mutual status during 1997 (Halifax, Northern Rock, Alliance & Leicester, Woolwich, Bristol & West) can expect shares worth an average total of about  £6,000 (IC vol. 120/1524 page 34). This is clearly a short term benefit to members but it is argued that as plc†s these former mutuals will in the long term not be able to offer such attractive interest rates for borrowers and savers. Christopher Rodrigues, Chief Executive of the Bradford & Bingley argues â€Å"The one off benefit of plc conversion is here today, gone tomorrow. The higher savings rates and lower loan rates of mutuality are for life not just for flotation day†. Mr Rodrigues points out mutuals don†t have to consider the demands of shareholders – particularly for high dividends or share price growth so profits can go to members – via better interest rates on savings accounts for example. Which?, the respected ‘Consumers† Association magazine has also criticised these conversions and claims the new banks will be forced to squeeze customers for maximum profitability. Which? Argues that mutuals offer better interest rates for savers and borrowers. This case of mutuals offering better rates is hard to prove in practice as there are so many financial intermediaries, products, min balances and interest rates available. For example, the Which? Report only examined two products over a narrow period of time. Most of their mortgage research is based only on the 12 months to March 1997, a period when the converting societies knew they could get away with charging windfall seeking customers more than their rivals. Over the longer term Money Facts, a savings rate specialist, claims mutuals record in savings rate best buy tables is poor. Each year Money Facts publishes details of how much money you would have if you had invested with each of the 90 or so Tessa providers 5 years previously. Just one of the five largest mutual building societies made it into the top 25 Tessa providers. The same was true last year. A quick look at the mortgage market tells a similar story. Research conducted by myself paints a similar picture. Investors Chronicle, a weekly investment magazine published by the Financial Times, carries a weekly updated table of highest deposit rates (Appendix 1). As at 29 January 1998 out of 36 financial intermediaries listed on this table offering the best deals on various products (e.g. Tessa, Instant Access up to  £2500) only 13 of them are mutual. In recent months, there has been a rush of new entrants to the banking arena that offer better deals than the mutuals and established high street banks. Insurer, Legal & General (60 Day Notice Minimum  £2500 7.65%) and supermarket, Safeway (Instant Access Minimum  £1000 7.3%) (Appendix 1), for example, both offer excellent interest rates on savings accounts. Equally, Scottish Widows† mortgage products are very cheap. Even if believed that mutuals offer better savings and mortgage rates it is a long wait for building societies to deliver the same return as there converting counterparts. One case that illustrates this point is a saver that had  £5,000 in an instant access account run by Nationwide – whose members rejected conversion this summer – would earn more money than he would at the Woolwich (see Appendix 2). However even if you were a non taxpayer, it would take more than 50 years to make  £1500 (Woolwich windfall approx.  £2000) extra in interest payments. The lure of the mutual building societies is not so compelling as it is often presented. Some building societies have recognised that they need some sort of scheme with which they can compete with the attractions of windfall bonuses. The Nationwide, Bradford & Bingley and Yorkshire have all announced cash back schemes where members will get a larger slice of the profits in the form of better interest rates. The Britannia has actually paid cash bonuses worth  £35m to members. However the average payout to members was  £35. Another aspect of consideration is the treatment the customer receives. Mutuals almost always beat banks in surveys on customer friendliness. Building societies staff are perceived by customers, according to market research, as more friendly, more pleasant and more interested in their jobs than those of banks and other financial institutions. (PRIMA). Many building societies have branches in estate agents in small communities. These branches are not usually prolifically profitable, but provide a valid service to the community. As plc†s are profit making organisations there is a trend that community branches are closed after conversion. The Abbey National, for example, closed 1000 community branches after conversion and all 200 of National & Provincial†s when it took it over. This is a great cost to those who live in these communities. Many are old people who are now faced with travelling long distances to get their money. Plc pay is generally higher than mutual pay for the senior managers of a building society. Peter Birch, Abbey National†s, Chief Executive, pay has increased from  £173,000 pa in 1987 to  £450,000 pa in 1996 and he now owns shares worth  £1.8m. This is in contrast to the Chief Executive of Halifax who†s pay did not increase by anywhere as much and was unable to receive share options. There is a clear benefit to the senior mangers of a converted building society, but in the long run they are also more open to being removed by discontented shareholders or a take-over. Share options are believed to produce more motivated and committed staff. In conclusion there are potentially more benefits to the Building Society than costs. The major benefit being the escaping from the limitations imposed by the BSA. The Building Societies Act 1986, 1997 excluded building societies from potentially more profitable, if riskier business. The regulatory constraints on a plc are less onerous than those on a mutual basis therefore although banks are subject to continuous Bank of England supervision, the basic limitations are the scope of company articles of association whereas building societies must comply with highly specific requirements of the Building Societies Act 1986, 1997 on such matters as the permitted proportions of wholesale funding, unsecured lending and advances by class of asset. In general, members also have potentially more benefits than costs. In the short-term members of converting societies have the benefit of windfall payments. In the long run it is claimed that members will lose out in less competitive interest rates, however this is very hard to prove. Even if it can be proved, the savings and mortgage rates offered by the mutuals will only be marginally better than those offered by the non-mutuals. It will take years to earn the equivalent of a windfall bonus from a mutual in the form of better interest. Some people urge others to think about the next generation and that one day there will be no mutuals left, but at present most of the best rates are offered by the new entrants to the banking arena (e.g. Safeway). Any member who retained their membership of a converted society through retaining their share allocation, at present would be benefiting even more. The reason for this is that the share prices are higher today than when the societies floated. Secondly as this is being written the Woolwich as part of it†s maiden full year results announced a â€Å"fresh  £100m windfall for Woolwich investors. A 6.5p special dividend added to the total year dividend of 9.5p will put  £105 in the pockets of hundreds of thousands of former Woolwich members who received the average windfall package of 657 shares. The Woolwich will also seek authority to return a further 100m to 200m of excess capital to share holders later this year in share buy backs. There is a clear cost to those members who relied on a community branch, however have these usually retired people examined the alternative technology available (e.g. telephone banking, cheques, debit cards etc.). Staff (particularly senior management) will benefit as a plc is able to offer share options which are believed to produce more motivated and committed staff. Senior management will also usually have greater increases in pay. These people are not ‘FAT CATS† they do a complex job and are paid the going market rate. In the long run senior managers of a plc are easier to remove from the company if their performance is poor. All in all the benefits of conversion outweigh the costs. This is true for all the interested parties, i.e. the building society, the members and the staff.

Liberated and society Essay

Some products portrayed women as the traditional housewife like ‘Shake ‘n’ vac’ does with their commercial. However the house used was fairly modern for the time as it had huge windows, which for the time were very modern and the furniture was better than the average shown in television programmes of the time, signifying a middle class house. However the woman in the advert is not middle class but she is portrayed as working class. The woman is portrayed as enjoying doing the housework and when the person purchases the product they too can enjoy doing the housework. During the period of the advert women were portrayed as being able to have a job but the majority were still in the house unemployed and cooking and cleaning. However throughout the large part of the twentieth century women were campaigning to be liberated and society did not agree with this at all. The liberation began in the early part of the twentieth century after the First World War between Christmas 1914 and 1918. The big push came in the nineteen sixties and women started to appear more in advertisements like in the Fairy Liquid advert in the mid-sixties. Women being liberated started a huge difference in the amount of advertising containing women. The graph below shows what happened to women in advertising and as you can see the amount of adverts which contain women steadily goes up.  From about the nineteen eighties onwards women were used as sex objects more unlike previously. For example Lucky Strike used a woman as an upperclass role model, something the men wanted to have and something the women wanted to be. However companies like Milk Tray use women in a more sensual and seductive way. For example when the lady walks out of the shower in a dressing gown whilst drying her hair and finds the box of Milk Tray on her dressing table. As opposed to the Oxo advert in the early nineteen eighties which showed the traditional Mother serving her husband and then later on feeding a whole family. Oxo’s adverts on television have always been long term campaigns, which started off with ‘Katie’ which lasted for eighteen years and then moved onto a family after surveys had been carried out. In the nineties women were used as sex objects to appeal to the male population for the majority of the time unless the product was obviously aimed at women. For example Wonder Bra used a woman to advertise their product however the advertisement may have also captured a small male audience because of the visual aspect of the advert. This is the same for the Round the clock panty hoses, which was unveiled in the late eighties. Many adverts made in the nineteen nineties recognised a niche in marketing when creating their adverts for their campaign, which was aimed at the male population. For example if an advertising campaign were to be aiming at men then they may appeal to their sexual weakness. This is what H(agen-Dazs has done, they have used a good-looking male to appeal to the women and they have used a good-looking female who happens not to be wearing much. The advert also has the hidden meaning of the product being a seductive ice cream. At present day there are many adverts on television usually aged between twenty to on average about thirty-five and also some adverts. Like the direct line car insurance advert for example, which used an over 40, middle class woman because it was the same age range as the advert was targeting. The majority of the adverts which use women without much on are normally found in magazines, which helps the producers to target their audience more effectively, also they have a fair idea of which age range may see them if in magazines instead of on the television. However this is not always the case because some companies may use channels on Sky or Digital which people have to pay for to watch, which again allows the advertisers much more accuracy in who they are targeting. Throughout the last century women in advertising has changed dramatically as well as the way in which advertising occurs through our daily routines. This is a change, which most probably will not stop. Women started off in the beginning of the century as being icons in which men aspired to have and who women aspired to be. Women then changed along with societies opinions and as wars were fought not just abroad but equality for women as well. This liberation led to women appearing more frequently in advertising and appearing more in the work place than they may have done twenty years before. I feel that women in advertising is a good thing because society is equal and therefore women are just as likely to purchase goods as much as men.

Belonging Speech Essay

Belonging? What does it mean to you? And what are you willing to sacrifice in order to achieve it? As the human need to belong often overtakes us and disregards morals and values in order to do what we crave so badly and connect with those around us. In Arthur Miller’s The Crucible the desire to belong has over-ridden every other thought the human mind could possibly have. As Miller examines the results when individuals neglect their beliefs and are pushed to the edges of absolute exclusion and disconnection. Whereas in Gabrielle Carey and Kathy Lette’s novel Puberty Blues it is clear that two best friends are willing to turn a blind eye to their own personal morals and beliefs in order to create a popular social status for themselves and conform to the â€Å"Greenhill Gang†. And again Will Hunting unearthed a new person beneath the mean, unlovable and lonely boy in Matt Damon and Ben Affleck’s Good Will Hunting, by simply making an unbreakable connection with Sean Macquire. The town of Salem is experiencing upheaval by the possible thought of witchcraft, characters are becoming so desperate that they are willing to give the â€Å"dogs the lie they want†. It is an instinct for self-survival that people will change their views on the world around them in order to connect and strengthen the power or position they hold in their society. Danforth is a character who does exactly this, and changes his mind to suit his own priorities of becoming a â€Å"Boston Judge†. He is a man capable of deciding ones fate by so called â€Å"ridding Salem of Satan†, and individually hanging those who refuse to give him the confession he wants such as Rebecca Nurse, Martha Corey and the Crucible himself John Proctor. These three particular people are greatly respected in the Salem community until the beautiful, attention seeking 17 year old known as Abigail Williams causes the uproar that the devil is in Salem. Young Abigail is an independent, free thinking woman who has had a troubled upbringing, as she was orphaned and belonged to no family in particular after she watched her parents get slaughtered. Both Abigail and Will Hunting have a connection, as they are both orphans, have had troubled upbringing and never felt like they have truly belonged anywhere. For a long while, Proctor strode around Salem as if his marriage was fine and he had never once committed a sin, a crime, though this was not true, as he had turned his head from his ill wife Elizabeth to the alpha female, Abigail. And he was frowned upon by Hale when he could recite only 9 of the 10 commandments, needing Elizabeth to correct him with just two words â€Å"Adultery, John†. Though he soon discovered that he did not belong to Abigail because â€Å"the promise a stallion gives a mare† is the promise he gave that girl. Between John and Abigail the only connection was lust, and it never lasted. John and Elizabeth were more than just a stallion and a mare; they were a true connection and promise. He became a better husband once committing adultery as he put it behind him and swore â€Å"I will cut off my hand before I will ever reach for you again. We never touched Abby†, which expresses that he would do anything to keep his marriage with Elizabeth alive. Abigail’s promiscuity is also apparent in Puberty Blues, as the two main characters Sue and Debbie are beginning to discover their own sexuality through their conformity with the â€Å"Greenhill Gang†. Belonging to the â€Å"Greenhill Gang’ means everything to the girls, because if they are not a part of it they are downgraded with comments such as â€Å"Rack off ya moll† but once they are accepted, they soon realise that their power has been taken from them and they no longer have opinions and must do exactly what the boys say. The girls must decide where the line is and how far they can step over it when it comes to their sexual relations with the boys, as this gives them the power they were looking for but also neglects their values and morals. Will Hunting however isn’t worried about his sexual relationships; he is worried about letting people into his life, after dealing with abusive foster parents his entire life. He is torn between his unintelligent work mates, the industrial wasteland and the university. Sean Macquire the physiatrist is a man that turns Will Hunting’s life upside down, the moment he first meets him. They make an unbreakable connection by sharing stories and opening up with each other. These sessions that Will spend with Sean, make him soon realise that he does belong and he is loveable though he still â€Å"has to go see about a girl†. Sean was a big part of Will’s life because if they hadn’t met, Will may have completely wasted his life and alienated himself from others. Both Will Hunting and John Proctor cross paths with their belonging issues, as they are unsure of themselves and who they truly belong to. But once their eyes have been opened they realise where it is they should belong. And that is to themselves, not their friends or wives, themselves. As Procter discovers his true meaning of his life, he yells with all his might â€Å"It is my name and I cannot have another in my life†¦.. Leave me my name! This is where he â€Å"has his goodness† and no one, not even Elizabeth could possibly take it from him. So yes, belonging is an instinct for self-survival and is triggered by a sense of alienation. In all my three texts, it is clear that John Proctor, Will Hunting, Sue and Debbie all experience a need to belong. And at first they all disregard their morals and values and are unable to order their priorities, but in the long run they discover that neglecting their personal morals and values is too much of a price to pay to just belong. So again I will ask you, what are you willing to sacrifice?

Anemia Essay Example | Topics and Well Written Essays - 250 words

Anemia - Essay Example clude fatigue, numbness and jaundice while the more severe symptoms include dizziness extremely high blood pressure, and heart attacks (Garrison 241). For successful diagnosis, it is crucial that the medical officer introspects into your medical history and family health records since anemia for instance sickle cell can be genetically acquired. They will then check for the aforementioned signs and carry out tests, which may include; complete blood count (CBC), measuring the levels of vitamin B12 and Folate on rare occasions, the doctor may take a sample of bone marrow. The doctor will then administer treatment depending on the cause including fluids and blood transfusions in most cases, anemia caused by loss of blood can be treated by treating the cause of blood loss. Today, advanced methods of treating anemia are being developed such as gene therapy and bone marrow transfer and while still in the early stages they portend consummate improvements in the field(Garrison 2009). Ultimately, the treatment and prognosis of Anemia are relative to the severity, when it caused by bleeding such as an ulcer, one is likely to recover. When treated in the early stages, it is more likely to be cured, however, in elderly people it is more difficult to remedy than with the younger

'Give an account of the main mosques of Samarra' and al-Fustat in the Essay

'Give an account of the main mosques of Samarra' and al-Fustat in the early 'Abbasid period.' - Essay Example Through a discussion that begins with first developing a basic understanding of the function and form of Mosques from the medieval period, then moving through a discussion of specific structures, an exploration of the Mosques from the Abbasid period can be made in order to better understand the importance of these great structures. Function In attempting to study the architecture of the Islamic world, Hillenbrand suggests that one of the primary difficulties lies in the terminology that is used. This is due to the multiplicity of purposes that each building would serve as a function within the culture. He states â€Å"Small wonder that one and the same building could be designated by a string of descriptive terms if each did in truth refer to some aspect of its regular function†.1 In examining the ways in which the buildings of the Islamic middle ages were used it is clear that that mosques were not only used for worship, madrasas were not only used for education, and neither were mausolea used just for burial. The many needs of the culture were fit into the buildings through multiple functionalities, thus the first understanding of such buildings must be made through the idea of function. In discussing function, the first problem that can be seen in studying Islamic buildings is that there is little in the way of written information on the building of these structures. Technical renderings and information about the circumstances of how these buildings came into being are few and far between, allowing for only the buildings themselves to serve as objects of study on their construction.2 Although there is suspicion that the Islamic religious aesthetics influenced the building of Mosques during the medieval period, there is no explicit reference known or accessible to Western cultures that suggest that this is the case. Therefore, in studying the function of such buildings, one must look at the building itself to try and access this aspect and the culture in order to understand the development of needs for which the building served as a solution for cultural needs. According to Meri and Bacharach, however, most Mosques of the medieval period were designed after the creation of house that was build for Mohamed in Medina, which is located in Saudi Arabia. Literary evidence of the form of this house is more relevant than the archaeological as it is described as having a â€Å"large walled courtyard with entrances on three sides and two covered porticos, the larger of which functions as a sanctuary for the faithful where they may find shelter from the sun during prayer†.3 The original orientation of the qibla wall, the wall of the larger portico, was originally facing towards Jerusalem, and then later towards Mecca, thus providing for the importance of orientation when building a Mosque. The small portico was used as a place of shelter for those who were poor, thus setting up the division of classes within the Mosque cultural usag e. The three basic elements developed from this original structure were the courtyard for the gathering of the followers of Islam, the sanctuary for prayer, and the qibla wall.4 Form Hillenbrand lists three distinct areas in which form can be discussed. The first is in hierarchy, the second is in

The Godfather by Mario Puzo, A Comparison of novel and film Essay

The Godfather by Mario Puzo, A Comparison of novel and film - Essay Example There are numerous schools of thought on what made this novel and film appeal to the American public. Some critics are of the view that it was all about the timing. Firstly, Barra (4 & 5) argues that the novel lacked the literary merit to warrant its popularity and goes on to base the novels success on the fact that it was produced at a period when easy-reading books, that he refers to as novelizations, were a hit. However, when it comes to the films, The Godfather  and  The Godfather Part II were realised in 1972 and 1974, which was a time that the US was experiencing much turmoil and change. Critics attribute the films’ leanings towards the New Left and its exposure of the hypocrisy of institutions of power, such as corruption in the police force and politicians, gave the public what they desired to see and hear. However, the theme that pundits agree on that may have contributed to the success of both the novel and the film was that the story was really about the exper iences of American immigrant families, specifically Sicilian-Americans, adapting to their new environment. Barra (6) states that if we take away the gambling and the murder, the story becomes a straightforward depiction of how Italian-American families were assimilated into American culture. This we believe superseded the notion that it was the film that made the novel famous because historical data shows that the book had already sold millions of copies before the first film was  ­released in 1972. This common theme therefore is what we believe to be bearing the underlying relevance of the both the novel and the films: assimilation of immigrant families into the American society and its resultant consequences. The original plot and the film adaptations The Godfather novel is set in the 1940s and revolves around the family of a Sicily-American immigrant. Don Vito Corleone, the head of the Corleone family is referred to as the Godfather because he embodies what every man aspires to be. He is strong, powerful, cunning and a loving family man. This is depicted where we see Amerigo Bonasera coming to him to seek justice for his daughter’s rape (Puzo 10) and also by Virgil Sollozo who seeks Vito’s partnership to engage in the lucrative drug peddling business. The Don refuses to take up Sollozo’s offer, which leads the â€Å"Turk† to send assassins to kill the Don. Vito Corleone survives, but needs to stay away from the direct running of the family business. Sonny, his hot-headed son, takes up leadership of the Corleone family, convinces Michael, his younger brother to kill Sollozo and Captain McCluskey in vengeance for his father’s failed assassination attempt. This act results in a full scale war between the five mafia families in New York. The all out mafia war leads to the death of Sonny and Michael’s ascension to the head of the family. Michael initially tries to legitimize the Corleone business empire, but fails. Michael who erstwhile wanted nothing to do with the family business changes into a ruthless Don, who eliminates all the heads of the other mafia families in New York. He later sells all the Corleone property in New York and moves the family to Lake Tahoe, Nevada. In contrast to the novel, the movie is made of three sequels. The Godfather, Part I is the film whose plot most closely resembles the novel’s bar the elimination of several character backstories

Micro Economics Master Essay Example | Topics and Well Written Essays - 1500 words

Micro Economics Master - Essay Example Short term shut down of a business concentrates on cutting the opportunity costs or variable costs. As long as the firm produces something, it will maximize its profits by producing "on the marginal cost curve. "The firm will have to shut down if it cannot cover its variable costs. As fixed costs are anyway going to be incurred, they are not opportunity costs in the short run -- so they are not relevant to the decision to shut down. Even if the company shuts down, it must pay the fixed costs. But the variable costs are avoidable -- they are opportunity costs! So the firm will shut down if it cannot meet the variable (short run opportunity) costs. But as long as it can pay the variable costs and still have something to apply toward the fixed costs, it is better off continuing to produce. When the firm's average total cost curve lies above its marginal revenue curve at the profit maximizing level of output, the firm is experiencing losses and will have to consider whether to shut down its operations. The decisions taken by a firm in such situations is termed as Short-run shut down decisions. Short run equilibrium of a firm can be derived based on the total revenue and total cost and marginal revenue and marginal cost. As firms are price-takers, each firm in an industry tries to maximize its profit by adjusting the output to a level where Marginal Cost (MC) =Marginal Revenue (MR). Profit is the difference between the total revenue obtained from sales and the total cost incurred by the firm. The long run is defined as "a period long enough to make the cost of all inputs variable." This includes, in particular, capital, plant, equipment, and other investments that represent long-term commitments. In the long-run the decisions taken would be only exit decisions. Exit decisions are decisions taken by a firm to leave the market. They are not called as Shut-down decisions. Shut-down is only in the short-run. Long run equilibrium plays a crucial role in deciding the existence of the firm. In the long run there are enough time periods for the firm to cover its losses and earn normal profits. This is because in the long run, all inputs are variable and the firm can have the most profitable level of output i.e. the profit maximization level of output. If firms are perfectly competitive, industry is making short term surplus (profits), more firms will enter the industry. In the long run this will increase the market supply of the product and reduces the market price as well as the profits until all firms in the industry make a normal profit (break even )In the long run equilibrium, the business will be operating at the minimum point on both long - run and short - run average cost curv es obtaining full economy of scale. A Walrasian or competitive equilibrium consists of a vector of prices and an allocation such that given the prices, each trader by