Introduction to Stress Management

Introduction to Stress Management Contents (Jump to): What Is Stress? Categories of Stress Organizational Stress Managing Stress Organizational Stress Management Critical Incident Stress Management The Godrej Case Modern Organizational Stress Management Techniques Conclusion Bibliography EXECUTIVE SUMMARY ONLY recently has stress been seen as a contributory factor to the productivity and health costs of companies and countries. As studies of stress-related illnesses and deaths show, stress imposes a high cost on individual health and well-being as well as organizational productivity. There are books now, which review the sources and outcomes of job-related stress, the methods used to assess levels and consequences of occupational stress and strategies to confront stress and its associated problems. A visit to Godrej Consumer Products Ltd. (Vikhroli) was of great help in my project. Godrej is one of the companies that are using various Stress Management methods in their organization. Here I met Mr. Sameer Bharoik, The Leadership and Organization Effectiveness Staff Consultant, HR Department, Godrej, who is one of the committee members of their very effective stress management system. He told me about the stress management system they were using in Godrej. I was also told about their need to adopt the modern day Stress Management methods rather than the old one, what are the advantages the disadvantages etc. A very friendly and helpful man by nature, Mr. Sameer helped me a lot to understand how the Stress Management methods are meant to work, what are the practical difficulties in the implementation and how they have managed to overcome these difficulties successfully. What is Stress? Stress is a complex phenomenon. It has been defined in many ways, but simply put; it is the wear and tear of everyday life. In everydays life people are subjected to a wide range of pressures. Similarly there are also a wide range of resources and strategies for coping with pressure. Sometimes people cope well and will not feel that the pressure is having any adverse effect upon them. At other times they will have difficulty in dealing with the situation and that is when we may use the term stress. In reality, any situation that puts pressure is technically stressful. Stress is not necessarily unpleasant or harmful. When people are able to cope satisfactorily with the stress and find it to be positive in its effect, they tend to use other words such as stimulation or challenge. In this regard a simple but accurate definition of stress is: Stress occurs when the pressure upon us exceeds our resources to cope up with the pressure Categories of Stress Stress can be broadly classified in the following categories: Acute stress is what most people identify as stress. It makes itself felt through tension headaches, emotional upsets, gastrointestinal disturbances, feelings of agitation and pressure. Its easily treatable and can be brought under control in six to eight weeks. Episodic acute stress is more serious and can lead to migraines, hypertension, stroke, heart attack, anxiety, depression, serious gastrointestinal distress. Its quite treatable, but it takes general life style readjustments, four to six months, and often requires professional help. Chronic stress is the most serious of all. Its the stress that never ends. It grinds us down until our resistance is gone. Serious systemic illness such as diabetes, decreased immunocompetence, perhaps cancer is its hallmark. It can be treated, even reversed, but it takes time sometimes two to three years-and often requires professional help. Traumatic stress is the result of massive acute stress, the effects of which can reverberate through our systems for years. Post traumatic stress disorder is treatable and reversible and usually requires professional aid. Certain Statistics that support common belief about stress: Statistics from a recent global stress research study show that increased stress is felt worldwide, and stress affects women differently than men: A recent Roper Starch Worldwide survey of 30,000 people between the ages of 13 and 65 in 30 countries showed: Women who work full-time and have children under the age of 13 report the greatest stress worldwide Nearly one in four mothers who work full-time and have children under 13 feel stress almost every day Globally, 23% of women executives and professionals, and 19% of their male peers, say they feel super-stressed At work, the following may be stressors. Needs not met. These could be needs for power, for fulfillment, for use of knowledge Not being included by others as part of a group you want to belong to Not being recognized or valued for ones competence Feeling that one is not adequate for the task, particularly when compared to some one else Being denied what is due (rewards, work) Monotony or boredom Not having enough freedom at work, being closely supervised Inequity in rewards, assignments Very little opportunity for growth Too much of work, overload Too little work, boredom Inadequate resources to do the assigned work, creating possibilities of failures Conflict in values at work, being required to do what one does not like to do Too many and conflicting demands at work from the role set Responsibilities not clear, ambiguity on what is expected Understanding, unpredictable, temperamental boss New unfamiliar work Being blamed On close analysis, it will be found that all of the above situations are, in some way or other, causing perceptions of possible failure at work or non-recognition and consequent loss of self-esteem. The Healthy Pattern recognizes that we can help our bodies to cope with the stress adjustment process by applying a positive strategy, such as leisure, relaxation, a vacation/trip, exercise and others. This restores a healthy stress level. The Crisis Pattern develops when we fail to recognize the signals that the body sends and therefore we continue to stress ourselves until eventually we drop and enter a deep negative state (crisis) and then physical and/or psychological breakdown ORGANISATIONAL STRESS There is a considerable cost to people, in both human and financial terms, in working in an unhealthy stressful environment. It is therefore in the interest of all leaders and managers to create healthy workplaces. What is commonly referred to as organizational stress may be said to be caused by a dysfunctional culture. Where members of an organization share a negative view of that organization, they are not likely to be motivated to perform well. On the contrary, they may feel that work is not worthwhile and that there is little point in pursuing personal or organizational objectives or desires. The result may be a serious loss of self-esteem and when this condition prevails this will be experienced as stress. Some of the consequences of stress have been identified as: Reduced productivity Lack of creativity Job dissatisfaction Increased sick leave Premature retirement Absenteeism Accidents Organizational breakdown There are many ways in which organizational culture will manifest itself in a dysfunctional way. For example, the unhelpful and dysfunctional division between us and them, which may be perpetuated, by both senior managers and those at other levels of an organization in a collusive manner. A division, which results in a lack of proper communication and a sort of blaming culture. Addressing these matters is difficult work, work that cannot be adequately dealt with by managers or internal consultants because they are part of the culture; part of the hierarchy, and subject to the authority structure of the organization. However, this is not the total extent of the needs regarding organizational stress. There is also a need for a Stress Management Strategy that through various approaches will, in its entirety, provide for the needs of the organization. Such a strategy would address the following sort of issues: The first four actions are as essential as the last. Internal staff that has the knowledge, skills can develop all these and ability to ensure that what is provided is as good as anywhere else. There may be benefit from employing outside assistance to consult to the process but basically the experts in the field are in the organization. The real point is that this sort of strategy should be seen as a total package. Without addressing the issue of culture the organization will not achieve the desired effective activities in the areas identified at 1 4 above. Equally, it could be ensured that the organization had a wonderful culture but without the other activities there would be no service available to members of the organization. Short term stress Where stress is low, one may find that his/her performance is low because of boredom, lack concentration and motivation. Where stress is too high, the performance can suffer from all the symptoms of excessive short-term stress. In the middle, at a moderate level of stress, there is a zone of best performance. If one can keep oneself within this zone, then that person will be sufficiently aroused to perform well while not being over-stressed and unhappy. This graph, and this zone of optimum performance, is different shapes for different people. Some people may operate most effectively at a level of stress that would leave other people either bored or in pieces. It is possible that someone who functions superbly at a low level might experience difficulties at a high level. Alternatively someone who performs only moderately at low level might perform exceptionally under extreme pressure. The best way of finding your optimum level of stress is to keep a stress diary for a number of weeks. Long term stress The problems of long term, sustained stress are more associated with fatigue, morale and health than with short term adrenaline management. The graph shows stages that a person may go through in response to sustained levels of excessive stress: During the first phase a person will face challenges with plenty of energy. Ones response will probably be positive and effective. After a period of time one may begin to feel seriously tired. The person may start to feel anxious, frustrated and upset. The quality of ones work may begin to suffer. As high stress continues one may begin to feel a sense of failure and may be ill more frequently. A person may also begin to feel exploited by his/her organization. At this stage the person may start to distance himself/herself from the employer, perhaps starting to look for a new job. If high levels of stress continue without relief one may ultimately experience depression, burnout, nervous breakdown, or some other form of serious stress related illness. Managing Stress Stress cannot be avoided. It should not be avoided. Without stress, there will be no attempt to try the difficult. One will give up much too easily. One will not succeed in doing even what one is easily capable of, because even the normal faculties will not come into play like the goalkeeper, if he remained relaxed even at the last minute. There are two aspects to take care of in managing stress. One is that one should not develop stress to the point that one becomes non-functional like Arjuna laying down his arms. The second is to try to get back to normal as quickly as one can and not continue to be in a state of stress for too long. The former is achieved essentially by an attitude that is developed by rational thoughts. The first is to realize that ones perceptions often distort the reality. The situation may not be as bad as it may seem to be. The second is to understand that a failure is not an unmitigated disaster. It is not possible to succeed all the time. It is not even necessary to succeed all the time. One failed effort does not mean that the person is no good. Nobody has succeeded without many losses. Even World champions sometimes lose a first round match to an unseeded player. Marconi and Thomas Alva Edison succeeded in their inventions after many attempts that failed. They saw failures as opportunities to learn. The third is to recognize that worry and anxiety will not modify the situation, but will only disturb ones peace of mind and health. If one watches passengers at airports and railway stations, one will find how some of them remain quite relaxed and even sleeping while others are continuously making enquiries from officials about extent and causes of delays. Such constant enquiries only irritate, but do not expedite solutions. They add to stress of self and of others. As an organization as a whole Organizational Stress Auditing (organization) Before organizational stress is targeted, we need to know what is causing it. Workplace stressors should be identified and employees can guide with options to manage it. Stress Management Training (group or individual) Through a range of easily applied, practical courses underpinned by widely accepted Stress Management theory, groups and individuals can increase their understanding of the causes of stress and through this, learn techniques for reducing and dealing with stress. As the Manager As the boss, one can ensure that subordinates are not put to undue stress and also that they are helped to get out of stress situations as quickly as possible. The steps are Recognize the stress levels Show concern Encourage talking Listen Empathize Explain and show how it can be done Reassure Provide support Discuss and involve them in decisions Show respect to the individuals Avoid insult, denunciation, abuse, reprimand, particularly in public Avoid manipulation, coercion, blaming Avoid pressurizing too much Provide social support All the above, render support and help to reduce anxieties. It is not suggested that the demands on people should be lowered. People like challenges. They must be given challenging assignments. That is the only way to growth. But if there is a sensing of extreme stress, it should be managed through reassurance, not by withdrawing the assignment. Personality Types Studies on Stress have identified that Type A personalities tend to get stressed much faster than Type B personalities. The characteristics of a Type A personality are an intense urge to achieve, impatience and restlessness, always on the move, hurrying, doing more than one task at a time. He keeps a heavy and tight schedule and dislikes waiting and relaxing. The Type B is exactly the opposite, takes things easy, finds time to relax, is not impatient and is not obsessed with winning all the time. Instruments have been developed to identify the Type of any person. But no one is fully Type A or fully Type B. It is possible to move from one type to another. It is not as if Type B is the more desirable personality, because stress is not the only factor relevant for effectiveness. Achievement is equally important for effectiveness and there the Type A has a better chance to win. Time Management Inadequacy of resource is a common stressor. One needs resources to do a job and if the resource is not available, there could be stress. One important resource is Time. Many people find that they do not have enough time to do a job. Deadlines seem to be difficult to meet. This is true of individuals as well as of collectives. We read of committees asking for extension of time to do their jobs; of projects not being completed on time. Unfortunately, time is such a resource that nobody can give more or take away. Everybody has a definite amount of time available. Studies show that people are poor planners in terms of usage of time as a resource. Time is wasted in a number of ways. Therefore, if one learns ways to manage ones time better, there could be a better control on stress. Time is wasted because of Non-productive work like searching for files, papers and references. Available information being inadequate or incomplete Meetings and lengthy reports Indecisiveness, unable to make up ones mind Correcting errors in instructions, assignments Clarifying goals and roles Too much routine, paperwork Lack of prioritization Once the cause is known, the remedy should be obvious. The best way to know the cause is to keep a detailed log of how one is using his time over a period of a week or so. Some of the remedies will be in the nature of readjustments of personal habits, like planning on priorities, avoiding drift in meetings, not insisting on perfectionism etc. Some remedies will be in the nature of reorganizing work systems in the office so that search and corrections are made minimal. Some will be in the nature of training others for better work practices, so that supervision can be less. Indecisiveness has been mentioned as a time waster. This may happen because of lack of clarity on objectives or because of fatigue and the mind not being able to concentrate. Both are avoidable. Indecisiveness can also happen because of lack of knowledge on the subject. The time one takes to study a matter depends on ones skill. Experienced people run through a 100 page file, without reading every page, but picking up the important and relevant matter, while another may have to spend double the time reading every paper to determine its relevance. Thus, one way to manage time better is to improve ones skills at work Stress is the wear and tear our bodies experience as we adjust to our continually changing environment; it has physical and emotional effects on us and can create positive or negative feelings. As a positive influence, stress can help compel us to action; it can result in a new awareness and an exciting new perspective. As a negative influence, it can result in feelings of distrust, rejection, anger, and depression, which in turn can lead to health problems such as headaches, upset stomach, rashes, insomnia, ulcers, high blood pressure, heart disease, and stroke. With the death of a loved one, the birth of a child, a job promotion, or a new relationship, we experience stress as we readjust our lives. In so adjusting to different circumstances, stress will help or hinder us depending on how we react to it. Presentation Idea: Schedule a stress busting experiential activity to help deal with particularly stressful times in life. Examples could include bringing in a massage therapist to share techniques with the chapter, scheduling regular physical activities or having an individual lead the chapter through a meditation/imagery exercise. For exercise examples, feel free to contact the Coordinator of Resource Development at Executive Offices. More and more employees are experiencing stress at work. They may be coping with too much pressure, long hours or rapid change. The nature of employment has now changed and the idea of a job for life has been replaced by an emphasis on performance. Stress is now recognized as a valid health and safety issue at work. Litigation is on the increase and there have been successful claims for compensation for work-related stress. More and more employers are turning to Stress Management to tackle these problems. Stress Management can enable people to improve their own response to stress and enable the organization to reduce workplace stressors. Our Training Package addresses the problems of work-place stress with the twofold approach of Stress Auditing and Stress Management Training. The Stress Audit for the Organization We provide the information and materials to enable you to carry out a Stress Audit for your organization. The findings of the audit can be addressed in the Stress Management Training sessions. Master copies of all Stress Audit forms and questionnaires are provided in order for you to carry out regular audits. Organizational Stress Management Organizational Stress Management aims at preventing and reducing stress for both the individual employee and the organization or company. The Training Package offers you eight detailed sessions for stress management training groups in your workplace. These include eight relaxation exercises on audio cassette tapes, together with training in relaxation, breathing and cognitive-behavioral techniques. We also provide practical training in the management of many workplace stressors. The Stress Management sessions provide employees with the opportunity to tackle major stressors using techniques from Problem Solving Therapy. We also provide research notes with each session giving you in-depth background information on the problems of work-pace stress, together with step-by-step presentations of related therapies of particular value in the treatment of stress at work. Case studies Fortune 50 company installs Stress Navigator on corporate intranet as in-house stress control program; prior to program rollout, the site attracts 7,000 employees ready to reduce stress The Situation: This Fortune 50 Company, like many others, realized that stress was a significant problem, a major burden in both economic and human terms for company and employees alike. They had tried various stress management programs before, but with little success employees werent utilizing the programs. When they first saw the Stress Navigator Workshop, the company realized that this program was different. When used as a portal to the Human Resources, it could directly link employees to appropriate corporate benefits and programs. The Stress Navigator Workshop: This Company put the Workshop on their corporate intranet as part of a pilot program for executives. The executives had such a positive experience with it that they mentioned it to their co-workers and others. Word of mouth spread, and before they knew it, more than 10% percent of their 70,000 employees with access to the corporate intranet had taken the workshop online. And this was before it was general knowledge that the program was available. Stress Directions and the Stress Navigator Workshop answered a need the company knew they had, but didnt know how to resolve. Employees recognized the opportunity immediately and got the help they needed. The Resolution: When presented with a system that made sense, the organization and individuals chose to take action towards health. Its too soon to measure the impact of Stress Directions on their bottom-line, but after a year on their intranet, much of this companys workforce has gone through the online program. The company has settled on the Stress Navigator Workshop as their stress control strategy and plans to keep it available for their employees indefinitely. Personal products company struggles to maintain global market share, restructures product delivery protocol to increase health and productivity, and decrease costs The Situation: The Situation: The most recent product development cycle of this global manufacturing company provides a prime example of how stress can cost even the most successful organizations. In the rush to stay competitive, what had been a five-year development cycle was cut to three years. Because of the push to get the new product on the market, design and engineering specs were less firm than they should have been, and decision-makers continued to tinker with basic design after manufacturing machinery was under construction. The machinery had to be redesigned and rebuilt several times. Machinists were assigned back-breaking amounts of overtime to stay on schedule. The ripple effects of the overtime made the situation stressful for families as well as employees. With no time to rest, machinists made mistakes that had to be corrected, which called for more overtime. The entire development team felt tremendous stress and, sadly, three suicides occurred among them during a 13-month time period. The Organization Stress Profile: The 850-member development team took the Stress Navigator Workshop either online or in the paper and pencil format in a corporate effort to address wellness issues and retain the entire corporations competitive market position. In the workshops, employees cited overwork as their number one stress concern. The Resolution: The division head in charge of the development team implemented mandatory stress management programs and put a cap on overtime. In the end, the incidence of errors dropped significantly and employees were able to accomplish more work of higher quality in fewer hours. Federal agency cuts turnover rate from 40% to 15% in three years by identifying stress patterns and changing hiring philosophy The Situation: This 47-person government agency had a 40% turnover rate and was experiencing deep problems with employee moral and stress. A manufacturing section within the agency was particularly hard-hit and had fallen far behind schedule. Management was quickly reaching a dead-end in their search for solutions, and job security was on the line. The agency perceived high stress in the manufacturing section to be the likely cause of its problems. The Organization Stress Profile: All agency employees were administered the Stress Navigator Questionnaire to determine whether the turnover rate was indeed related to job stress. Grouped results did show the manufacturing group to be higher in susceptibility to stress, sources of stress, and symptoms of stress. But they also differed demographically from their peers in many significant respects. For example, their average age was five to ten years younger than workers in the other two sections of the agency, and this job typically represented their first foray into the labor market. Further analysis revealed that the workers in manufacturing had several likely causes for higher stress and job dissatisfaction. Compared to co-workers in nearby regulation and communication sections, they had less seniority (it was the entry-level section of the organization), earned lower pay, were more vulnerable to seasonal layoffs, were restricted to their work stations, and had no access to phones. In addition, they were isolated from the other sections by a wall with a single door that remained open so they were constantly aware of the contrast in working conditions between their section and the others. In other words, manufacturing still scored highest in all stress categories, but not for the reasons that had been assumed. In-depth analysis made it evident much of the workplace stress stemmed from the fact that the employees were young and financially insecure. The turnover had as much to do with conditions outside of the agency, such as career level, maturity and financial security, as it did with the conditions of the workplace. Resolution: Based on the information gleaned from the Stress Navigator Workshops and the advice of stress consultants, the agency corrected many of the internal conditions cited above, implemented appropriate stress management training for supervisors, and changed their hiring patterns to select stable, more mature workers who would not be looking at the job as a career opportunity. Turnover rates were cut from 40% to 15% in just under three years. Critical Incident Stress Management Critical incidents do occur In the workplace: Accidents on the work sight A sudden unexpected death of a coworker Workplace violence Critical Incident stress is a normal response to an abnormal situation. Left untreated, critical Incident stress could lead to lower production, increased absenteeism, Increased substance abuse, and increased use of health care benefits. The stress reactions experienced by those who have been exposed to a critical Incident may appear immediately or surface hours or days after the event: Survivor guilt, Flashbacks, Confusion Poor concentration, Distressing dreams Fatigue, Grief, Fear Anger, Chills, Diarrhoea, Nausea These are only a few examples of what individuals report after experiencing a critical Incident. Sometimes the critical Incident Is so painful professional assistance from a specially trained Individual becomes necessary. WORKPLACE RESOURCES has professionals with more than ten years experience in the area of critical Incident stress. We can provide: pre-planning: to help you design a plan of action to assist your company be better prepared If and when your workplace experiences a critical incident post-accident: We will provide a team to help assess the situation and guide you through the recovery phase. THE GODREJ CASE About Godrej Everyday, every Indian encounters the Godrej name sometime somewhere. A person may begin the day bathing with a Godrej soap, shaving with a Godrej shaving cream, storing clothes in a Godrej Storewell cupboard, cooking food in a Godrej cooking oil and preserving it in a Godrej refrigerator. Money and valuables are kept in a Godrej safe, work is done on a Godrej computer or typewriter while sitting on a Godrej chair and drinking a Godrej fruit drink. Yet few know about the indomitable spirit of the man responsible for making Godrej a household name Ardeshir Godrej., a pioneer who produced quality products and captured markets. Innovation has been the key. It is this spirit that has built Godrej and carried it for a hundred years. Taking it into diverse industries ranging from cupboards to soaps, hair dyes to edible oils, and packaged foods to refrigerators. In recent years several partnerships have been formed with international giants like General Electric, Pillsbury, Fiskars and Sara Lee, bringing Godrej membership in the Global village that will carry it forward into the 21st century. Godrej has always been a crusader for a better world with programs that benefit endangered forests, wild life and mangroves. Every year the Pirojsha Godrej Foundation dedicates funds towards promoting education, housing, social upliftment, conservation, population management and relief of natural calamities. Godrej Consumer Products Ltd.(GCPL) is a major player in the Indian FMCG market with leadership in personal, hair, household and fabric care segments. The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.) Guwahati (Assam) and Silvassa (U.T.). Their main focus is on providing their customers with innovative, value for money solutions for meeting their da

Managing Financial Resources Essay

SUMMARY RESULTS AND RECOMMENDATIONS The proposed refrigerator manufacturing and sales project for Tesca Works, Inc. is a financially complicated project which on the surface, given the increase in energy costs and customer demand may seem like a winning proposition. However, when we delve further into the details of the financial projections along with projections of the future of the refrigerator market we are able to make a confident recommendation to Mr. Burton and the executive staff at Tesca Works, Inc. Using the information provided by the Tesca team we were able to create a comprehensive capital budget and cash flow analysis for the proposed refrigerator project. Through our analysis we found that the cost of capital of the project to be 13.487% and a Weighted Average Cost of Capital (WACC) to be at a value of 9.70%. Factoring in the WACC into our projections we found that if the demand maintains at an average rate the project will be at a positive Net  Present Value of $5,997,505.31 with an IRR of 13.21%, a profitability index of 8.84, and an approximate payback period of 6.84 years. Please see Exhibits below for a snapshot of the capital budget and NPV values. This information seemed to be very promising for the project in general. However, our continued analysis showed the project to be very sensitive to the sales price per unit of the refrigerator. We used the average demand scenario to produce a sensitivity analysis and found that with just a 5% decrease in the sales price of the refrigerator the NPV quickly dipped into a negative value thus showing the project to be extremely sensitive to the sales price of the refrigerator. Our scenario analysis also exposed a strong probability of the project giving a negative Net Present Value and giving a probable low Internal Rate of Return of only 4.01%. This is mainly due to the projects sensitivity to the sales price of the refrigerator and the potentially lower sales in the event of weak demand for the product. Because of the high probability for a very low IRR and negative NPV we are recommending that the project be rejected. The information we have uncovered through detailed financial analysis showed that the project is far too sensitive to lower demand and lower sales prices per unit. This is especially true for a lower sales price for the refrigerator. We found that even a small decrease in the sales price of just over 1% would cause the project’s NPV to become negative, even with an average unit sales demand. There may be potential for an average or strong demand in the marketplace, however there is too much risk to recommend project acceptance. A decision to move forward with the project would be mainly based on a ‘gut-feeling’ rather than on sound financial reasoning. Thus it is our official recommendation that Tesca Works, Inc. reject the project. 1) IMPORTANCE OF ENERGY COST SITUATION The question of energy cost being a factor of the decision to move forward with this project is of critical importance. This is because whether or not consumers are inspired to purchase a new appliance may be spurred by  increases in energy costs as well as possible tax benefits or rebates from power generating companies. Some consumers may be aware of the benefits of energy efficient appliances which may cause an increase in the normal demand for refrigerators. Tesca is in a unique position to be able to offer high efficiency refrigerators to the United States public at a time when the public is looking to reduce their use of electricity and other utility costs. When we look at the graph above it can be seen that the cost of electricity has steadily increased over the last 10 years. The price per kilowatt hour has increased almost 50% in 10 years (EIA, 2014). Thus to the consumer the price of energy is a big concern and the costs will most likely continue into the future. There is potential for an increased demand to replace aging inefficient appliances that are causing increased electrical bills for consumers. The energy cost and potential benefits to the consumer are of importance when determining the future of this project. The project is forecast to be of a positive value if the demand for refrigerators is at an average or strong demand from consumers. However, the realization of a high or average demand is mainly based on ‘gut-feeling’ rather than on sound financial information. There are too many variables in the marketplace that could cause demand to be weaker than projected. Such variables as a weak economy or recession could cause sales to drop which in turn would cause the project to lose its value quickly. 2) What is the project’s cost of equity? What is the appropriate discount factor to use for evaluating the refrigerator project? As seen in Exhibit I below, the project’s cost of equity (COE) is calculated to be 13.487%. We found this value by using the Capital Asset Pricing Model (CAPM) formula by adding the treasury note yield with the beta value, then taking the market return rate and subtracting the treasury note yield. We then multiply those values together to attain the cost of equity value of 13.487%. This means there is a rate of return on investment of 13.487%. The Beta for Tesca Works, Inc. is fairly consistent with their competition. Tesca’s beta value is at 1.3 which means that Tesca’s value has been more volatile than the market. While this means there is more risk when investing in Tesca there is also a greater possibility for higher rates of  return. Exhibit I also shows the table used to calculate the Weighted Average Cost of Capital (WACC) or discount factor which we used to evaluate this particular project. We used the following formula to calculate the WACC for this project. We know that the higher the weighted average cost of capital the less likely it is that Tesca will be creating value for its investors. The WACC helps us to determine if a company is creating value and presents the minimum return to satisfy investors and creditors. 3) Which of the two compressors should be used in the refrigerator if you decide to go ahead with the project and why? As seen in Exhibit II we determined that the CM-004 compressor should be used for this particular project. We came to this conclusion by finding the present value of the five year compressor warranty and adding that to the cost of the compressor. We used the weighted average cost of capital as the rate in our present value calculations. While the TS-L12 has a less expensive purchase price it has a more expensive warranty cost for the five year warranty period thus making it a more expensive overall compressor. When we use the present value calculations on both compressors, factoring in the warranty, we found that the present value of the CM-004 is $18.21 less expensive than the TS-L12 compressor. This makes the CM-004 compressor 4% less expensive to purchase for the warranty life of the compressor. It was important to take calculate the present values of both compressors to get an accurate comparison of the costs of the two compressors for the five year warranty costs of each compressor. While on the surface the TS-L12 may have seemed less expensive the overall cost in present dollars was higher when we factored in the value of the five year warranty on both compressors. 4) Forecast the project’s cash flows for the next twenty years. What assumptions did you use? Once we selected the appropriate compressor to use we were able to plug in  certain input values into our equations to create a cash flow projection for the entire project lifetime. We used the weighted average cost of capital value found in our earlier calculations as one of our input values. We also found the present value of the refrigerator, see Exhibit IV, by using the input values given in the financial information from Tesca such as the labor, parts, and compressor costs. We found the cost of the refrigerator to be $1,269.36, see Exhibit III. ASSUMPTIONS MADE: Certain assumptions were made when calculating the projected cash flows for the refrigerator project. We assumed inflation would remain at 2.5% and used that value to increase the sales price, variable cost, and administrative fixed costs each year. Please see Exhibit IV for a breakdown of the inputs used for the cash flow projections. This allowed us to gain a more a more realistic forecast of the project’s potential cash flows for the entire project. We also used the average demand as our base projections for the project. This is because the average demand scenario has the highest probability of 45%. We used straight-line depreciation with regard to depreciating the investment in the project over time. We detailed the first three years of the project, years zero through two with the appropriate investment amounts during each of those years. Since production and sales did not begin until year three we were able to make an assumption of potential tax returns on the invested dollars for years one and two. We used the tax rate of 25% to calculate the tax returns along with the taxable amounts for all years. See the attached spreadsheet for the detailed cash flow projections. We also assumed that since the refrigerators could be produced for a total of 20 years the entire life of the project would span from year zero through year 22. This is because the production of the refrigerators could not begin until year three, thus making the projects timeline from year zero through year 22. With this information and assumptions we found that when the units are in production and being sold the project will yield a positive annual cash flow. The working capital was found by taking the 11% and carrying it over  for each year. We used the initial Net Operating Working Capital (NOWC) found in year two then calculated the difference using 11% of the difference of the sales each year and calculated that for the entire life of the production. 5) Use the appropriate capital budgeting techniques to evaluate the project. As seen in Exhibit V we used the appropriate capital budgeting and performance measures to evaluate the life of the project. Exhibit VI displays the results of the capital budgeting analysis. We found the NPV for the average demand scenario to be $5,997,505.31 which is a positive value for the project given the average demand inputs. The Internal Rate of Return was calculated as 13.21% which, again, is a positive value and could provide for a nice rate of return on the project since it is higher than the weighted average cost of capital and the market return rate. The profitability index was found to be at a value of 8.84. Because the profitability index is higher than 1.0 that shows that the project present value is greater than the initial investments in the project. We then calculated the number of years for a payback on the initial investments in the project. We found that the simple payback of the initial investments would take 6.48 years for the average demand scenario. In simple terms, and if we only used the average demand assumptions, this project would seem to provide positive net results for Tesca. Using the average demand inputs the NPV, IRR, Profitability Index, and Payback Years are at an acceptable level. However, as we will cover in later sections, when we include probability analysis of the other demand scenarios we find that the project is less than desirable. 6) Use the average demand scenario to evaluate the sensitivity of the project’s NPV with respect to sale price of the refrigerator and the cost of the compressor.  We used the average demand scenario to produce a comprehensive sensitivity analysis of the project. We utilized three variables when conducting our sensitivity analysis, the sale price of the refrigerator, the cost of the compressor, and the project’s weighted average cost of capital. We included the weighted average cost of capital as an extra variable to get further details on the sensitivity of the project. We used a scale of 5% increments from -25% to 25% which allowed us to produce a sensitivity analysis with adequate details. Please see Exhibits VIII and IX for the numerical details and sensitivity graph for the project. The sensitivity analysis uncovered the following critical information with respect to how sensitive the NPV of the project was to the given variables. Sales Price Sensitivity We found that even a small decrease in the sales price of the refrigerator of just over 1% caused the project’s NPV to become negative. The graph in Exhibit IX shows the steep sensitivity line with respect to the change in the sales price per unit. Even with an average sales demand, if the price dropped to 15% which is approximately the same sale price of our weak demand scenario the NPV was substantially below zero at a negative value of $-57,667,920. With each 5% increment the NPV values sometimes increased or decreased at a rate that doubled or more because of the projects extreme sensitivity to the sales price of the refrigerator. The profit margin on the refrigerator of 19.41% and markup of only 24% does not leave much room for a price reduction in the sales price of the refrigerator. The data also points to a wide range in NPV with respect to the sales price of the units. There was a total range of over $212 million for the sensitivity of the sales price per unit. This d ata leads to the discovery that the project is extremely sensitive to the sales price of the refrigerator. Compressor Cost Sensitivity The project was not as sensitive to the cost of the compressor, however, it did not take a large percentage increase in the cost of the compressor to throw the NPV of the project into a negative value, just over 5%. Exhibit IX’s graph shows the sensitivity lines for the project. The compressor sensitivity is not nearly as steep as the price sensitivity per unit. Because the cost of the compressor affects the profit margin on each refrigerator the lower the cost of the compressor the better the NPV because  of the increased profit margin per unit. 7) Based on the scenario and sensitivity analysis you performed above, comment on the overall riskiness of the project. Based on the scenario and sensitivity analysis we were able to determine that the project is of a high risk nature. There are several factors that make this project such a high risk which include the narrow profit margin per unit, the uncertainty of the future market, the high cost per unit, and the high administrative costs. Through a scenario analysis we analyzed the three potential demand scenarios for this project. We used the weak, strong, and average demand scenario variables to formulate the probabilities for the project. We found that the probability of the NPV is a significant negative value of $-6,300,213, see Exhibit VII for details of the scenario analysis. We also found that the probable IRR of the project was very low at 4.01%. Given the low IRR probability of 4.01% that means it is significantly lower than the S&P 500 market return of 11% and barely a point higher than the 10-year treasury note yield of 2.71%. The low probable internal rate of return is another red flag for the riskiness and viability of the refrigerator project for Tesca Works, Inc. The weak demand scenario produced significant negative values for the NPV and the internal rate of return (IRR). The weak scenario also produced a non-existent payback period within the 20 year production lifecycle of the project. With each scenario the selling price and unit sales were changed, however, the high cost of each unit and administrative costs remained the same, thus adding to the risk of the project since it is highly reliant on an average or strong demand and higher sales prices per unit. While the project has the potential of a very high NPV, IRR, and payback period with a strong demand, the projects sensitivity to price and market demand make this a very risky project to undertake at this time. If there were ways to increase the profit margin or decrease the fixed costs of the project that may help decrease the risky nature of this particular project. 8) Would you recommend that Tesca Works accept or reject the project? What is the basis for your recommendation? We would not recommend this project for Tesca Works, Inc. Our recommendation is for Tesca management to reject the project. Our analysis has shown this project to be too sensitive to market shift and too risky to undertake at this time. While there is excitement across the country for more energy efficient appliances, we feel that the project poses some significant risks for Tesca. The successful outcome of the project truly relies on the demand from consumers. Their demand will determine the selling price and sales volume of the refrigerator units. If this demand is barely below the average demand we will see a negative NPV for the project and thus a negative result for Tesca Works, Inc. Recent economic history in the United States has shown the economy to be unstable and may not provide an average or strong demand for the product. While we feel the energy costs across the country could be of significant importance for a project of this nature we do not feel that there is enough lee way in the profit margin of the project to be economically feasible should demand be lower than anticipated. Our analysis showed the project to be very sensitive to the sales price per unit value of the refrigerator. We used the average demand scenario to produce a sensitivity analysis and found that with just a 5% decrease in the sales price of the refrigerator the NPV quickly dipped into a negative value thus showing the project to be extremely sensitive to the sales price of the refrigerator. Our scenario analysis also exposed a strong probability of the project giving a negative Net Present Value and giving a probable low Internal Rate of Return of only 4.01%. This is mainly due to the projects sensitivity to the sales price of the refrigerator and the potentially lower sales in the event of weak demand for the product. The project’s profit margin is too close to allow for market demand fluctuations which would cause the project to have a negative net present  value. If Tesca were to offer the refrigerator at a higher sales price this would yield a stronger profit margin and may alter the recommended rejection of this project. As we discussed the project is far too sensitive to changes in the sales price of the refrigerators. Even with an average demand of sales volume, if we reduce the sales price we begin to see a negative NPV for the project. Thus, the project is too sensitive to minor changes in the profit margin of the refrigerators. Which is why we are recommending a rejection of this project for Tesca Works, Inc.

American Ethnic Literature Essay

American Literature has been an important part of American people for centuries. What makes this type of literature great is that the authors vision is objective and not one sided. Several of the American authors are still considered to be great writers. The books that were written by these authors are still read by people of all ages around the United States. These books are now considered classic literature. American literature is considered American because it was written by American people. Overall, â€Å"editors appear to use an inconsistent combination of citizenship, geographical location, language, and subject matter (that is, the subject of America and the United States) (Hames- Garcia, p. 1, 2003). Most of the American literature was written by white men. In order to be considered American literature it has to be about the United States. There have been many great authors that write about science fiction, but because it is unreal their literature is not considered American literature. Politics also played an important role in literature. It was of great importance to portray the American character as an â€Å"exceptional entity† (Hames-Garcia, p. 1, 2003). In the early twentieth century, writers who were not American white men were not allowed to publish their works. Women writers as well as Black, Latino, American Indian, and immigrant writers were left out altogether. This happened because other ethnic groups were considered to be inferior. It was until the 1970s that feminist began to speak out and rebel against the oppression they were faced with. It is thanks to this reform that the American literature holds diversity. It allows for men and women to have the same opportunity to express their feelings without having to worry about their race or sex. Another type of literature is ethnic literature. This type of literature is often read as an autobiography, even when making no such claims. This is written on a first person point of view. The author’s point of view is specific to their personal beliefs and life stories. It is difficult for this type of author to provide an objectionable story. They are blinded by anger because of what they had to live. The topics these authors write about covers racism and suppression. The definitions and topics will vary depending on the life experiences that each author or their families experienced. The storyline will also vary because each author lived different time periods, and of course things change over time. Ethnic Literature is great because it now holds different point of views. Every person has a different perspective on what happens around them. What allows for this to be great is that each person is entitled not only to have their own belief, but they are able to express their feelings with freedom. No person is afraid of what repercussion might come because they decided to write from their heart. The truth allows readers to realize that life has been harder for some people more than others. It is easy to forget what our ancestors had to experience in order for each individual to encounter freedom. It is now easy for men and women of all races to walk freely around their city. This however came at a price, and this type of literature allows human beings to read and experience in some small way what it was like to live in a world were the color of your skin as well as your sex had a lot to do with the quality of life you lived. American Literature will continue to play an important role in American people. The only way to enjoy this type of literature is to introduce our younger generations to it. This is theperfect   material needed to give to young readers so that they can value the lifestyle they are allowed to live today. It is up to us to keep this tradition alive so that our future generation can enjoy it as well. Reference Michael Hames-Garcia. (2003). Which America is ours? Marti’s â€Å"Truth† and the foundations of â€Å"American literature†. Modern Fiction Studies, 49(1), 19-53. Retrieved October 25, 2009, from Research Library. (Document ID: 328665241). Yonjae Jung. (2004). The New Americanist Intervention into the Canon. American Studies International, 42(2/3), 213-225. Retrieved October 26, 2009, from Research Library. (Document ID: 676208971).

Inappropriate Behavior Free Essay Example, 2500 words

Marwan was a senior performer in the Studio Five Theme Park and was bound by the contract of agreement for the role played by him in the character of a pirate (Achampongm 82). The provisions of the law led to the termination of the legal contract as a punishment to the act of the sexual harassment conducted by Marwan. Actions and steps against Marwan The act of sexual harassment of the junior female actor who was newly hired for performance in the plays of the Studio Five Theme Park was not welcomed by the victim. Apart from the sexual harassment which included offensive activities of sex discrimination, grabbing of breast of the junior female co-worker, Marwan also threatened to get the lady fired if she refused to go a date with him. The complaint made by the junior female actor against Marwan was viewed seriously by the management of the Studio Five Theme Park. The actions taken by the Studio Five Theme Park after receipt of the complaint against Marwan led to the termination of Marwan due to such punishable offence. We will write a custom essay sample on Inappropriate Behavior or any topic specifically for you Only $17.96 $11.86/pageorder now I agree with this action of the management of Studio Five Theme Park in firing Marwan which was in line with the provision of the Civil Rights Act of 1964. Apart from the action taken by the Studio Five Theme Park against the inappropriate behaviour of Marwan, I would also recommend some other actions that are supposed to be taken by the Studio Five Theme Park authority. Before the termination of Marwan, the authority of the Studio Five Theme Park should take action of exposing the actual image of Marwan to the public and the guests of the Theme Park. This would enable the guests to be cautious about Marwan in future and would establish a fair image of the Studio as they do not tolerate the activities of sexual harassment. Apart from this, the authority should take necessary action for imposing considerable monetary fines for the incident of sexual harassment. These actions would be exemplary in order to warn their actors in refraining from the acti vities of sexual harassment (Swift 53). The actions also establish fair and transparent policies of the studio against the offences related to sexual harassment. Marwan’s allegations and probable court proceedings Considering the case of sexual harassment of the junior female actor by Marwan, there has been allegation and counter allegation from both the parties. However, the positions of both the parties needed to be proved during the time of proceedings in the court. The complaint of sexual harassment by the junior female actor was contested by Marwan that it was a conspiracy of the studio authorities in connivance with the female actor in removing him from the role that was being played him over the years.