The Four Shipping Markets Economics Essay

Transporting industry ‘s resort area is a alone similar in some construction of other markets where trade goods are sold or purchased on one platform. Transporting market construction is distinguishable. The construction of the market is determined by its features like â€Å" the supply of service being offered, the type of the merchandise, the figure of operators, the barriers to entry or go out, the figure of consumers demanding the service. â€Å" ( Mc Conville 1999 ) . Some theories describe these market signifiers utilizing different theoretical accounts runing from perfect competition to Monoply. Transporting services is provided by four closely related markets, although trading in different trade goods. Even though the sections vary in character and intent, they still compete for lading and they all operate within the Four Markets of Shipping ( Stopford, 2009 ) . The alone mechanism of this market is that it is about unpredictable, nevertheless â€Å" the best commercial chances frequently arise when the markets behave inconsistently † . ( Stopford, 2009 )The four transportation marketsHarmonizing to Stopford ( 1997 ) the transportation industry can be divided into four markets, the: 1. Newbuilding market – where ships are being ordered 2. Cargo market – where they are being chartered ( used for transit ) 3. Sale and purchase market – where they are being sold to other ship-owners 4. Destruction market – where they are being sold to trash paces Key characteristics of transporting markets: –The Newbuilding marketThe new edifice market brings new ships into the transportation industry and sends hard currency out of the market as stuffs, labor and net income. The newbuilding market is merchandising ships that are non yet built in other words the ship ‘s keel may hold been laid. Hence, one time a ship is ordered, it will take up to four old ages to acquire ready for its sea tests. By this clip the full market conditions may hold been changed. It is hence of import to hold good anticipation of the hereafter before telling. Reasons for a purchaser to take to order a new vas alternatively of purchasing a pre-owned one can change, but in most instances it depends on the monetary values and besides depends on the proprietors design standards. The monetary values of the newbuilding market seems, harmonizing to stopford ( 2009 ) , to be merely every bit volatile as the sale and purchase market, hence at some occasions the newbuilding market can hold lower monetary values than the second-hand market.The cargo marketThe cargo market is seen as one individual international market divided into bomber markets for different types of ships. Harmonizing to Stopford ( 2009 ) , there are two different types of minutess in the cargo market, the: Freight contract where the shipper buys transit from ship-owners at a fixed monetary value per ton of lading. Time charter where the ship is hired on a daily footing Depending on which sector the shipowner and lading holder meet in, there are different types of contractual understandings used when â€Å" sealing the trade † . How the costs and duties are shared between the shipowner and shipper will settle the type of contact to be used ( Stopford, 2009 ) . i‚ ·iˆ Voyage charter: The shipowner transports the shippersaˆY lading from A to B for a fixed monetary value per ton. i‚ ·iˆ Contract of affreightment: The shipowner transports a series of lading packages for a fixed monetary value per ton. i‚ ·iˆ Time charter: The charterer is given operational control of the vas transporting his lading while the shipowner still has ownership and control over the direction of the ship. This can either be arranged for a individual trip or as a period charter. i‚ ·iˆ Bare boat charter: The charterer has full operational control of the vas, but does non ain it. This is normally arranged for longer periods ( 10-20 old ages ) . i‚ ·iˆ Freight derivative contract: The contract is arranged against an in agreement hereafter value of a cargo market index. The ship is fixed after all the formalities of type of contract and when the cargo rate is agreed between the two parties.The process is simple, a ship-owner has a vas for hire, a charterer has a lading to transport, and a agent puts the trade together. ( Stopford, 1997 )The Sale and purchase marketThe singular cardinal characteristic of this market is that the second-hand ships are traded like pokes of murphies at a state market. The participants are a mix of shippers, transporting companies and speculators and shipbrokers play an of import function in covering with minutess. Trade is between the ship proprietor and an investor who normally is another ship proprietor so the hard currency does non go forth this market and hence from the industry. The ships may be for sale because they are excessively old or make non follow with industry ‘s ordinances, or the proprietor may be hard currency strapped or has decided to alter company ‘s portfolio. Ship monetary values are really volatile, and the value depends on the cargo rates, age, rising prices and outlooks.The Destruction marketIt is the recycling market of the transportation industry. This market can be compared to the sale and purchase market, but the difference here is that the purchaser is a destruction pace and non a shipowner. When a ship-owner is no longer able to sell a ship S & A ; P, they will turn to the destruction market which is non, harmonizing to Stopford ( 2009 ) , a less glamourous market, nevertheless an indispensable portion of the full industry. This market can be compared to the sale and purchase market, but the difference here is that the purchaser is a destruction pace and non a ship proprietor, here every bit good ship agent plays an of import function. As the cargo market this market is besides a beginning for hard currency to the industry, here the purchasers of the disused ships are the scrap pace who demolish the ship and trade in the stell and other of import equipment and trim parts. This is particularly an of import beginning of hard currency in a recession and besides in order to maintain balance between supply and demand. These four markets are seen to be closely correlated, since the activities in each of these markets to a great extent affect all these four markets. These four markets work together linked by hard currency flow. ( Stopford,2009 ) Outside of these four markets are extra closely related markets, like the agents, funding, insurance, etc. This makes the full transportation industry composite where every party is of import for the full transportation industry, since they are impacting one and another so as to work closely to each other. Even though each market trade in a different trade good, we find the same shipowners trading in all 4, and their activities are closely correlated. They all respond to rhythms in trade, and as transporting companiesaˆY trade in all four markets, the hard currency flows in and out of the market is what drives the transporting market rhythm ( Stopford, 2009 ) .Transporting Market Model & A ; Shipping CycleThe maritime economic sciences is highly complex topic as Stopford asserts because of its â€Å" wavy nature † ( COSCO Summit 2007 ) , so one has to understand its theoretical account by foregrounding those factors that are most important.The economic sciences here is no different than others which take into history the demand and supply.Here It is the market mechanism which regulates supply and demand. The primary demand and supply driver in the transportation industry is freight rates, which determines the gross of transporting companies. Other drivers of the transportation industry are: Trade growing Geographic concentration of trade Menace of wars, buccaneering, storms and hurricanes Government countenances on cargo Entree to and suitableness of other manners of cargo The supply drivers of the industry include: Demand for oil and dry majority Climatic conditions ( rains, storms and tides ) Government limitations on cargo hypertext transfer protocol: //www.maersktankers.com/PublishingImages/Illustrations/tankermarket_illustration.gif Beginning: hypertext transfer protocol: //www.maersktankers.com/PublishingImages/Illustrations/tankermarket_illustration.gif Stopford ( 2009 ) nowadayss Ten variables in the transportation market modelfive each on the demand and supply side viz. DemandA A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A Supply 1. World EconomyA A A A A A A A A A A A A A A A A A A A A 1. World Fleet 2. Seaborne Commodity TradeA A 2. Fleet Productivity 3. Average HaulA A A A A A A A A A A A A A A A A A A A A A A A A 3. Shipbuilding Production 4. Political EventA A A A A A A A A A A A A A A A A A A A A A A A 4. Trashing and losingss 5. Transport CostA A A A A A A A A A A A A A A A A A A A A A 5. Freight rates Ten variables in the Transporting Market Model Beginning: Stopford, 2009 This Model, he breaks down into three constituents viz. Demand, Supply and Cargo market, Any instability provenders through into the 3rd portion of the theoretical account which links the other two through hard currency flows. Overview of the Dynamics ( As deduced from stopford 2009 ) When ships are in short supply, cargo rates ( ( i.e. , monetary value of sea conveyance ) are bid up and hard currency flows into the bank histories of ship owners.Eventually the increased hard currency flow starts to impact the behavior of both the shippers and shipowners. Although the cargo rate is non the lone factor that affects transportation, it is merely a benefit that the shipper additions from a combined conveyance operation ( Branch, 2007 ) . Other hard currency influxs come from the destruction market. The shipowners will likely get down telling new ships, while the shippers look for ways to cut theirA conveyance costs by detaining ladings, exchanging to closer providers or utilizing bigger ships. When there are excessively many ships, rates are bid down and shipowners have to pull on militias to pay fixed costs such as fixs and involvement on loans. As militias diminish some proprietors are forced to sell ships to raise hard currency. Monetary values of ships fall to a degree where shipbreakers offer the best monetary value for the older ships, cut downing supply.Changes in freight rates may besides trip a alteration in the public presentation of the fleet, through accommodations to rush and layup. This nexus between market balance and cargo rates is one of the most of import economic relationships in the theoretical account and it is controlled by shipowners who decide how to react. This theoretical account gives transporting market rhythms their characteristic form of irregular extremums and troughs. This is the market theoretical account lineation which controls transportation investing. The four mar-kets drive the transportation market rhythm. When the cargo rates in the beginning of the rhythm starts to raise the hard currency will flux into the transportation industry, taking to higher monetary values for second-hand ships. As monetary values continue to lift, this will take investors into the newbuilding market. When ship-owners have ordered sufficient of new ships, the rhythm is normally at its extremum, and finally the procedure will travel into contrary. When cargo rates start to worsen taking to less hard currency influxs, this will hold a negative impact on ship-owners, since in this phase they will get down to pay for their newbuilding ships. If ship-owners do non hold adequate liquidness this will coerce them to sell their ships on the 2nd manus market for garbages. If there are adequate new ships supplied in the 2nd manus market to low monetary values, the older ships will non acquire any offers and the proprietors are forced to direct them to the destruc tion market. As more ships are scrapped the supply of ships will travel down and freight rates will one time once more get down to lift and the whole market rhythm will get down from the beginning. ( Stopford, 1997 )Freight rate mechanismThe supply of sea conveyance is influenced by the cargo rate. This is a mechanism that the market uses to actuate determination shapers to set capacity in the short term and to happen ways to cut down costs in the long tally. Supply and demand are linked together through the cargo market and harmonizing to the balance of available ships and lading in the market, shipowners and shippers negotiate and seek to set up a cargo rate which best reflects this ; when there is a excess of ships the rates are low and when there is a deficit of ships the rates are high ( Stopford, 2009 ) . On the demand side, the demand map shows how shippers adjust to alterations in the cargo rate. For an single ship the supply map describes the sum of conveyance the proprietor can provide at each degree of cargo rates In response to freight rates the supply map plants by movingships in and out of service. There are three factors impacting the incline of the short-run supplycurve. First, the age of the vas, an older ship normally has higher operating costs, so lay-up will happen at a higher cargo rate than for newer ships. Second, the size of the ship ; larger ships have lower transit costs per ton of lading. Third, is the relationship between velocity and cargo rates, which can be defined from economic theory ; if the market is absolutely competitory, the ship will be operated at the velocity at which fringy cost peers the cargo rate ( Stopford, 2009 ) . Sellers and purchasers transact in the market and their supply and demand demands do the monetary value to travel. The â€Å" traveling monetary value † is an equilibrium value of the monetary value. This can be explained if we combine the demand and supply curve diagrams. The sea conveyance demand map shows the measure of sea conveyance shippers would buy at each degree of the cargo rate. The sea conveyance supply map shows the measure of sea conveyance bearers would offer at each degree of the cargo rate. The supply and demand curves intersect at the equilibrium monetary value in the transportation market, which determines the cargo rate at which the measure demanded by shippers for transportation services is equal to the measure supplied by bearers. At this point, both shippers and bearers reach a reciprocally acceptable cargo rate degree. Figure illustrates the cargo rate mechanism. In consequence the cargo rate mechanism is the ‘switch box ‘ which controls the sum of money paid by shippers to shipowners for the conveyance they supply. ( Stopford 2009 )Features of Transporting CyclesOverall, transportation is a cyclical, seasonal and volatile concern. Global economic conditions and political developments affect the demand side, while the size and handiness of the planetary fleet affect the supply side. Imbalances between demand and supply affect plus values, cargo rates and net incomes. The intent of transporting market rhythms is to take the weak histrions, go forthing merely the strong to last and turn. This will in the long-term create an efficient and competitory transportation concern ( Stopford, 2009 ) . Economists like Fayle ( 1933 ) , suggested that the transportation rhythm starts with a deficit of ships. The addition in the cargo rate stimulates overordering of new edifices. Finally, it leads to market prostration and a drawn-out slack. The transportation rhythm is a mechanism to equilibrate the supply of and demand for ships. If inordinate demand exists, the market rewards investors with high cargo rates until more ships are built. If there is inordinate supply, the market squeezes the gross with low cargo rates until ships are scrapped.What Causes the Transporting Cycle?The transportation market is driven by a competitory procedure in which supply and demand interact to find the cargo rate. Excessive demand leads to a deficit of ships, which in bend increases the cargo rate. On the other manus, inordinate supply of ships leads to a decrease in the cargo rate. In general, the transportation rhythm is alone, consisting the undermentioned features ( Stopford 2004 ) : The transportation rhythm is a mechanism to organize supply and demand in the transporting market. A complete transportation rhythm has the undermentioned phases: trough, recovery, extremum, and prostration. There are no set regulations about the length of each phase. There is no expression to foretell the form of the following transportation rhythm. Business rhythms are straight relative to transporting rhythms, these are the cause of fluctuations in seaborne trade and ship demand and these do non follow any set form therefore foretelling them becomes a really complex undertaking.

Credit Card and Paypal

In this report, we focus on all aspects of the PayPal business. PayPal Basics PayPal is quickly establishing itself as a global payment processor with scale, facilitating nearly $60B in Total Payment Volume in 2008. It remains the largest player focused solely on online payments; however when compared to the total volume of large global players, such as Visa and MasterCard, PayPal’s volume remains fairly small: its $60B TPV was just over 1% of the total volume of payments processed last year by Visa and MasterCard combined. Figure 1: PayPal’s Volume Dwarfed by Incumbents in billions 2,000 1,500 1,757 1,548 969 1,000 500 0 Visa (Credit) Visa (Debit) MasterCard (Credit) Source: Company reports, J. P. Morgan estimates. Note: Parts of PayPal volume may be processed using Visa or MasterCard’s network; Visa volume excludes Visa Europe 406 60 MasterCard (Debit) Pay Pal PayPal is an Established Payment Network and Brand – A Rare Commodity PayPal is in rare company , successfully creating itself into a formidable payment network and brand alongside dominant payment brands in Visa, MasterCard, American Express and Discover.Payment networks sit at the top of the value chain in payments, collecting high-margin fees for facilitating payments from participants seeking access to a network of trusted merchants and consumers. PayPal overcame the classic chicken-and-egg dilemma and now has a critical mass of users in its network, differentiated as a trusted brand for facilitating online payments with the potential to extend its presence into offline opportunities longer-term.One driver of PayPal’s growth is that, unlike traditional payment methods which developed in an offline world and have been overlaid onto eCommerce, PayPal’s platform was built with eCommerce in mind. As such, PayPal has developed tools and risk management measures to address the unique complexities of handling card not present payments over the web – one of th e fastest growth categories in payments. Moreover, PayPal is elegantly structured to simplify the web of connections required in a traditional payment system, making it well positioned to penetrate the small business payments market. Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 2: PayPal Simplifies the Payment Process Traditional payment structure Merchant Payment gateway provider Merchant bank Source: J. P. Morgan. PayPal payment structure Merchant Consumer Consumer Card issuer processor Card-issuing bank Merchant bank Consumer bank We think the online marketplace, and sellers in particular, benefit from this simplification in several ways: †¢ Ease of Use.PayPal gives virtually anyone the capacity to accept payments, enabling a merchant to operate even at an initial scale that would otherwise be uneconomical (i. e. , there are no minimum requirements for payment volume in order to use PayPal. ) Higher level of trust. The payments system is not very transparent, and not all aspects were intended for mass use. A trusted central clearinghouse like PayPal can encourage use of online payments by lowering users’ safety concerns and raising their willingness to send money online. †¢PayPal Is Differentiated beyond Just Online Commerce PayPal is different from other payment brands (e. g. MasterCard, Visa) in that it is a vertically integrated payment provider. In other words, PayPal is a single source provider of payment services. By contracting directly with PayPal Merchant Services, small merchants can get all of their payment needs, and do not necessarily need a separate merchant bank account or payment gateway services provider. PayPal is gradually expanding its presence off eBay by promoting itself as an integrated payment offering along side other payment brands (e. . MasterCard, Visa), supported by PayPal ’s own merchant services offering and alliances with payment vendors like CyberSource (payment gateway) and Chase Paymentech (largest merchant acquirer in the U. S. ). PayPal’s Product Offerings for Online Sellers PayPal offers several different products for payment acceptance, based on the size and needs of the merchant: †¢ Email product. This is the offering used largely by smaller eBay merchants, who receive payments entirely via e-mail, with no site of their own on which they need to integrate PayPal. Website Payments Standard.This product allows merchants to place a PayPal button on their site, and when a user is ready to check out, the user hits the button and is taken to the PayPal site where the actual checkout occurs. †¢ 4 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 †¢ Website Payments Pro. With an incremental $ 30 monthly fee, the Pro product is better integrated into a seller’s site. The product is intended for small- to medium-size sellers, and requires the seller to be using a compatible hopping cart vendor (most are compatible). Express Checkout. Intended for larger merchants (those already accepting include Dell and Barnes & Noble). Express Checkout is incremental to the payment acceptance service used by a vendor – it gives users an additional checkout option. When a shopper uses Express Checkout, s/he logs into PayPal, and PayPal then forwards address and other info to the merchant. This allows an existing PayPal user to bypass entering personal and shipping information again, even if it is the user’s first time using the specific merchant. †¢ Strong Growth in Active UsersBy continuing to add users across multiple platforms, PayPal has been able to post strong user growth in recent quarters, even despite the slowdown in on-eBay growth and low-single-digit u ser growth on the eBay site itself: Figure 3: PayPal Active User Growth Strong in Recent Quarters Users in Millions 150 100 50 26. 7% 23. 7% 20. 7% 19. 6% 18. 6% 19. 2% 17. 7% 16. 3% 16. 1% 16. 0% 17. 3% 22. 9% 21. 4% 30% 20% 10% 73 70 65 63 60 57 53 55 51 47 49 45 44 0 0% 1Q'06 2Q'06 3Q'06 4Q'06 1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 Pay Pal Activ e Accounts Y/Y Grow th Source: Company reports, J.P. Morgan Payment Business Basics For a primer on the payments industry, please see Payment Processing: Payments Market Share Handbook published on June 5, 2009 by J. P. Morgan's Computer Services & IT Consulting analyst, Tien-tsin Huang When a buyer hands cash to a seller, the transaction is self-contained. If a credit (or debit) card is involved, however, several other parties become involved in the transaction, which we describe below: †¢ Issuer (Cardholder’s Bank). Card transactions start with a card issued by an issuing bank (e. g. Bank of America, Chase, et c. ) to a consumer.In terms of economics, the bank that issued the consumer’s credit card takes the purchase price, collects its interchange fee (in the US, ~170 -225 bps depending on the type of card), and passes the remainder to the†¦ Acquirer (Commonly the Merchant’s Bank). The acquirer provides merchant services to the merchant, handling all the card and/or electronic payment acceptance needs of the merchant. The merchant’s acquiring bank 5 †¢ Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 ccepts the payment, collects a merchant discount (generally in the 30-50 bps range in the US), and forwards the balance to the seller/merchant. Both the Issuer and the Acquirer pay a small (~7-9 bps each) fee to the Payment Network (see next entry). Merchant acquirer functions include: †¢ †¢ †¢ †¢ †¢ †¢ Sign up merchants to enable them to accept card payments. Enable merchants to authorize card payments via the network. Pay all network and associated fees for a merchant’s transactions Facilitate clearing and settlement of card payments Provide incremental services, e. g. , sending out statements, etc. Payment network (e. g.Visa, MasterCard). As the backbone to the payments industry, networks connect various banks that need to process credit card payments with merchants and provide authorization, clearing and settlement services. Networks also set rules and interchange rates (earned by the issuing bank). Payment gateway. In the offline world, the payment gateway is the equivalent of a point-of-sale terminal that accepts the payment type (e. g. credit, debit card) and translates it into a format that can be accepted by the merchant acquirer. In the online world, the gateway generally connects an eCommerce site with the merchant acquirer.PayPal already functions as a Payment G ateway, largely as a result of its acquisition of VeriSign’s payment business, which had 144,000 customers when acquired in 4Q’05. †¢ 6 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 4: Example of a Credit Card Payment Processing Cycle Source: J. P. Morgan. How Does PayPal fit in? In most cases, when a PayPal user pays with a credit or debit card, PayPal functions as the Merchant (in Fig. 4).PayPal relies upon its merchant acquirer (usually Wells Fargo) to facilitate the transaction. PayPal the charges the merchant its fees, which on average represent a spread over what the acquirer charges PayPal. In addition, if merchants want, PayPal offers certain merchant acquiring services such as the means to authorize valid card transactions and facilitating the clearing and settlement of the transaction through the payment network. At this point, we estimate that PayPal’s merchant acquiring business comprises less than 5% of PayPal’s TPV. 7 Imran Khan (1-212) 622-6693 imran. t. [email  protected] om Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 PayPal Revenue Model Transactional Revenue PayPal’s business model involves collecting a percentage of revenue from each payment made on the system; this percentage has remained in the 3. 75%-4. 0% range since F’05. In F’08, PayPal collected 3. 86% of TPV as revenue. The following table summarizes the contributors to take rate: Table 1: Contributors to PayPal’s Transactional Revenue Take Rate Type Cross-border transactions (â€Å"CBT†) US sellers, non-CBT Int'l sellers, non-CBT Payment Gateway Website Payments Pro Source: J.P. Morgan estimates % of revenue ~35% ~33% ~25% ~3-5% ~2-5% Comment PayPal charges up to 100 bps higher rates for CB transactions; charges an additional 250 bps for currency conversion Sliding scale from 1. 9% based on volume Country-specific pricing; generally higher rates than US Acquired from Verisign in 4Q'05; limited growth since Monthly $30 fee for WPP product Figure 5: Our Estimates of Contributors to PayPal’s Transactional Revenue Int'l rev enue Pay ment Gatew ay Website Pay ments Pro Monthly Fees Cross-border rev enue US rev enue Source: J. P. Morgan estimatesMarketing Services and Other Revenue Several items are counted as a part of Marketing Services and Other revenue. These include: †¢ Interest earned on some customer balances. PayPal earns revenue as it receives interest on the balances of some non-US account holders. Note that US customer balances are held in FDIC-insured accounts or in a money market account; PayPal does not receive interest on these accounts. BillMeLater interest and fees. Interest and fees earned on existing BML client balances are classified as Marketing Services and Other revenue. †¢ Comparing PayPal Fees to Online CompetitorsPayPal’s fee structure is similar to those of its online-only competitors; both Google Checkout and Checkout by Amazon offer a similar package of fees depending on a merchant’s monthly sales volume; Amazon differs in charging a slightly different fee level for transactions under $10 as well as minimal cross-border support: both buyer and seller must have a US-based financial instrument to use the service. Both Google 8 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 nd PayPal charge roughly (in Google’s case, exactly) 1% more for cross-border transactions. See Table 2 for a summary. As a point of reference, we believe offline fees for accepting cards (aka merchant discount rate) average around 1. 9-2. 0% in the U. S. In March of 2009, Google announced that it woul d no longer offer a discount on payment processing on Google Checkout for Google AdWords advertisers. Table 2: Fees for PayPal, Google, Amazon Remain Similar Transaction Type/Volume Transactions under $10 Up to $3,000 / month Between $3K-$10K Between $10K-$100K $100K and above Cross-border PayPal Same as below 2. % of transaction + 30 cents 2. 5% of transaction + 30 cents 2. 2% of transaction + 30 cents 1. 9% of transaction + 30 cents Varies by currency but ~1% extra; payments with currency conversion add 2. 5% charge Google Checkout Same as below 2. 9% of transaction + 30 cents 2. 5% of transaction + 30 cents 2. 2% of transaction + 30 cents 1. 9% of transaction + 30 cents 1% of transaction Checkout by Amazon 5. 0% of transaction + 5 cents 2. 9% of transaction + 30 cents 2. 5% of transaction + 30 cents 2. 2% of transaction + 30 cents 1. 9% of transaction + 30 cents US only (seller and buyer must have US-based account)Source: Company websites PayPal’s Transaction Costs Set aga inst the ~3. 9% revenue take rate, the business faces two key expense lines that drive its transactional margins: transaction processing cost and fraud losses: Figure 6: F’08 Revenue and Expense Drivers for Aggregate PayPal Payment Volume % of Total Payment Volume, Aggregated across all TPV and Funding Methods 4% 3% 2% 1% 0% 100% of PP rev enue 30. 9% of rev enue 1. 19% 7. 4% of rev enue 0. 28% 61. 8% of rev enue 3. 86% 2. 67% 2. 38% 2. 38% Rev enue Take Rate – Processing Ex pense – Transaction Losses = Transaction ProfitSource: Company reports, J. P. Morgan estimates Processing expense is driven by funding mix PayPal’s profitability is driven in large part by the mix of sources from which customers draw funds in order to pay on PayPal. In particular, when customers pay using a credit card, PayPal incurs a significantly higher cost of funds than when customers fund a purchase using their PayPal balance or an ACH transfer. 9 Imran Khan (1-212) 622-6693 imr an. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009Specifically, PayPal, similar to any merchant that accepts credit cards, is charged a variety of fees (the largest of these is interchange, which is the fee charged by the cardholder’s bank). For PayPal, we believe these fees amount to ~220-250 bps of payments funded with a credit card, with the range representing different types of cards and different geographies (interchange fees are generally higher in the US than across parts of the world, including Europe and Australia). Fees are slightly lower, but still in the 150200 bps range, if users choose a debit card rather than a credit card.By comparison, a payment funded from money already in a user’s PayPal account carries virtually no cost to PayPal. A payment funded though ACH carries a flat processing fee, usually less than 25c; this represents less than 40 bps on an ave rage PayPal transaction of $62. Figure 7: PayPal’s Funding Mix Merchant PayPal collects take rate (~1. 9% to as much as 5%), based on merchant volume and location (significantly higher if currencies converted) PayPal If funded via If funded from user’s PayPal balance, cost to PayPal is negligible Credit card, cost to PayPal is ~220-250 bps; PayPal then functions as Merchant in Fig. above. If funded via If funded via ACH, cost to PayPal is ~$0. 10-$0. 25 Debit card, cost to PayPal is ~150-200 bps PayPal’s cost of funds becomes more favorable Source: J. P. Morgan 10 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Drivers of Funding Mix PayPal allows users to pay with both a credit/debit card and ACH; however, PayPal defaults to using an existing balance or ACH, and users must actively select to pay via a credit/debit card every time t hey use the service.The company has noted that customers generally shift toward a more favorable funding mix over time. Additionally, as PayPal adds new merchant sites, users of those sites begin with a heavier mix of credit card use. The mix for a merchant site begins to resemble that for PayPal overall as users’ familiarity with PayPal grows – generally, 12-18 months. Additionally, we believe BillMeLater, which is funded entirely through checks and ACH, can help improve funding mix for PayPal down the road. Other Margin Drivers PayPal margins have historically been in the 20% range, excluding corporate expenses.We believe several factors drive the variance between the 60%+ transaction margins and the high-teens overall profitability. Primary among these are: †¢ Customer service costs. Call centers as well as a variety of employees needed to manage any problems that arise in the payments process. We do not expect these expenses to show meaningful economies of sca le as the business continues to grow. Sales and Marketing. As PayPal has invested in growing its Merchant Services business, we believe that segment’s growth has been fueled by higher Sales spend. When the business matures, we believe there should be some scale economies in Sales. BillMeLater Basics PayPal acquired BillMeLater in 4Q’08. The service allows users to request transactional credit, rather than a revolving credit line as is the case with a credit card. BML offers consumers rapid credit decisioning on the basis of less detailed information (date of birth and last four digits of a Social Security Number) than necessary for more traditional financing. The majority of BML’s revenue is derived from consumer interest payments and fees, as shown below: 11 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 8: BillMeLater Econ omics as of Time of Acquisition % of TPV 12% 10% 8% 6% 4% 2% 0% 2. 4% Merchant Fees + 6. 5% 3. 6% 2. 9% 3. 4% 2. 1% 4. 1% Cust. Interest Cust. Fees – Acquisition ; Income + Credit ; Cost of Funds = Transaction Profit Serv icing – Fraud Loss – Source: Company presentation, J. P. Morgan estimates Note: Cost of funds includes an implied cost of financing consumer receivables; transaction expense for processing funds is minimal due to funds being sourced primarily via ACHAt this point, BillMeLater’s presence on the eBay site itself remains minimal; the company has placed a 3Q’09 target for better integration of the business with PayPal, and we believe that, after fuller integration, eBay may choose to drive higher BML penetration on the Marketplaces business through, e. g. , promotional or interest-free financing. Complete integration of BML into all aspects of the PayPal solution is expected in 1Q’10. Charge-offs BillMeLater reports its net cha rge-offs as a percentage of the average receivables balance over the course of the quarter; in Q1’09 net charge-offs rose to 8. 95%, compared to 8. 5% during the part of the fourth quarter after the acquisition. Due to the transactional nature of the business, we believe BML has the capacity to continue keeping loan losses at a reasonable level; additionally, the company has expressed that it plans to focus on being more conservative with offers of credit in the near term, even at the expense of TPV growth. Nevertheless, we expect charge-offs to continue rising somewhat. Historically, credit card charge-offs have been correlated with the unemployment rate, as seen below. 12 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 9: Historically, Credit Card Charge-offs Rise when Unemployment Rises 10% 8% 6% 4% 2% 0% Q1'95 Q1'96 Q1'97 Q1'98 Q1'99 Q 1'00 Q1'01 Q1'02 Q1'03 Q1'04 Q1'05 Q1'06 Q1'07 Q1'08 Q1'09 Unemploy ment Rate Source: Federal Reserve, J. P. Morgan Credit Card Net Charge-off Ratio While we believe charge-offs at BML can be managed better, due to the transactional nature of BML’s exposure, we think rising unemployment is unlikely to leave the business untouched. Thus, if unemployment keeps going up, we would expect continued upward drift in charge-offs.PayPal’s Growth Strategy PayPal’s original growth engine was the marriage between PayPal and eBay, and the ability to drive higher penetration on the eBay site. We believe the low-hanging fruit in this regard has largely been gathered, but room for growth still exists along several areas of opportunity. 1. Growth Opportunities for PayPal on eBay Continued Geographic Expansion Can Drive Growth One of the biggest factors driving higher PayPal penetration on eBay has been geographic expansion in territories where the business is less mature than in the US.PayPal has had approximately five years of operating history in much of continental Europe, compared to nearly a decade in the United States. Table 3: PayPal Penetration as % of Addressable TPV continues to Grow % of addressable TPV Country US Canada United Kingdom Australia France Spain Italy Germany 2004 64% 60% 49% 7% 8% 5% 7% 2% 2008 80% 79% 74% 47% 43% 37% 36% 15% 2011(E) 84% 82% 81% 72% 61% 57% 56% 39% Comment Could see add’l boost from BML Penetration already nearly 60%; see below In terms of online activity, much of continental Europe is following in the footsteps of the UK, but several years behind.Penetration nearly doubled in F’08 alone Source: eBay Presentation, J. P. Morgan estimates We believe the 2008 experience in Australia, where PayPal penetration went from under 40% to nearly 60% over the course of a year, is reflective of eBay’s capacity to grow penetration via rule changes: the company rolled out rules mandating most sellers to offer PayPal as an option in 2008, and penetration grew by more than half over the course of the year. 13 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009Figure 10: Australia Demonstrates PayPal’s Capacity to Quickly Boost Penetration 60% 50% 40% 30% Q1'08 Q2'08 Q3'08 Q4'08 Source: Company presentation, J. P. Morgan estimates Additionally, several continental European countries have seen growth roughly in parallel since the rollout of PayPal in much of continental Europe in summer 2004. We See Limited Opportunity for Domestic on-eBay Growth Having already achieved notable levels of penetration on established sites, we don’t think PayPal will see significant additional increases in on-eBay penetration from current levels, especially in the US.However, as eBay increases the amount of buyer protections and begins to offer credit through BML, we thi nk the percentage of GMV that is addressable by PayPal can rise. Figure 11: PayPal volume as a % of Addressable GMV, 2008 GMV in $B 30 20 $29B $24B 10 0 79% 41% US Source: Company reports, J. P. Morgan Pay Pal Non-Pay Pal International One additional way to increase penetration on the site is for the company to offer increased incentives for sellers and buyers to choose PayPal as the payment method.These incentives can take the form of carrots (coupons, higher levels of protection) or sticks (e. g. , rules making other forms of payment more difficult to accept). PayPal has continually increased buyer protections on eBay for uses who pay with PayPal, with the levels rising from $1,000 to $2,000 in January 2007 and going up again to offer unlimited coverage in June 2008. We think offering higher levels of buyer protection – but only when paying with PayPal – remains a useful lever for increasing the penetration of PayPal on the eBay site. 14Imran Khan (1-212) 622-6693 im ran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 PayPal on eBay: Challenges Weak Marketplaces Growth Will Negatively Impact TPV Growth In line with recent declines in GMV, the percentage of PayPal’s TPV that is driven by on-eBay activity has been steadily declining in recent quarters, with 3Q’08 having represented the first quarter in PayPal’s history that saw a majority of TPV come from the Merchant Services part of the Payments business.Figure 12: On-eBay TPV Continues to Decline as a Percentage of Total 70% 60% 50% 40% 30% 20% 10% 0% 62% 58% 56% 56% 54% 51% 49% 49% 46% Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Percentage of TPV deriv ed on eBay Source: Company reports, J. P. Morgan estimates As eBay has struggled to improve GMV growth and faced headwinds from FX, the on-eBay portion of TPV has seen nominal growth turn negative in recent quarters, a s shown in the chart below; adjusted for FX the last two quarters have seen on-eBay TPV grow 5% and 3%, respectively.Figure 13: On-eBay TPV Growth Continues to Lag Off-eBay TPV Y/Y change 80% 60% 40% 20% 0% -20% 1Q'07 50% 19% 57% 62% 66% 61% 57% 49% 35% 26% -7% 18% 18% 17% 17% 19% 12% -3% 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 On-eBay TPV, Y/Y Source: Company reports, J. P. Morgan estimates Off-eBay TPV, Y/Y We are currently modeling GMV to shrink by 14% in F’09, returning to slight growth in F’10 with a 1% rise. Even when looking only at non-Vehicles GMV, our model calls for an 11% decline this year, followed by a 1% growth in the next year.While we think eBay has taken many correct steps in improving the competitiveness of its Marketplaces segment, we remain concerned that the competitive environment 15 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 will make it difficult for eBay to reaccelerate growth and reclaim market share in future years. Additionally, we believe the shift to a frictionless eCommerce model is driving buyers to choose fixed-price formats over an auction approach.As this has the effect of moving from a space eBay controls into a much more competitive, multi-channel environment, we think it creates an additional headwind to growth. Cultural Headwinds in Some Geographies In addition to the above, two specific geographic regions have presented challenges for growing PayPal penetration: †¢ In Germany (and Austria, combined, estimated at ~15% of GMV), the majority of online payments are made using bank transfers, and PayPal has had limited success displacing this system. However, as Table 3 (above) indicates, PayPal’s penetration in Germany has been rising.In Korea (we estimate ~5% of GMV), where eBay recently announced plans to acquire GMarket and combine it with its current a uction. co. kr site, the predominant mode of payments is using escrow accounts. As in Germany, we believe penetration can rise over time as users become more comfortable with PayPal. †¢ Given the challenges in these two areas, which comprise approximately one fifth of eBay’s GMV, we believe it could be difficult for eBay to go significantly past the ~70% penetration threshold in the next five years. Bottom Line: We see ~$36B in F’11 on-eBay TPVBased on our current model of F’10 GMV (excluding Vehicles) of $43B, and an assumption of accelerating GMV growth to 10% Y/Y in F’11, we think PayPal’s oneBay TPV could hit $36B in F’11 (implying a 6% 3-year CAGR), with a range of $33B-$40B depending on more or less favorable assumptions. Figure 14: On current trends, on-eBay portion of PayPal would contribute ~$36B in F’11 TPV On-eBay TPV, $ in billions 40 35 30 25 2008 2009E Optimistic Current Model 2010E Pessimistic 2011E Source: Company reports, J. P. Morgan estimates 16 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 2. Growth Opportunities for PayPal off eBay PayPal’s growth through increasing penetration of off-eBay online commerce has been a key component of the business’s growth in recent years. We think the company retains significant runway to add customers. Historically, Focus on Smaller Sellers Due to its roots as a solution for payments on the eBay platform, PayPal has generally seen a higher penetration among smaller and mid-size sellers.This is partly due to the fact that PayPal has no fixed costs to a merchant, whereas accepting credit cards carries fixed costs. For a seller generating $100K in annual revenue, a $60$70/month cost for accepting credit cards amounts to nearly 1% of sales. Table 4: Economics of PayPal compelling for SMB market PayPal Setup fees Monthly Service Fee Monthly Gateway Fee Transaction fee Monthly Minimums $0 $0 $0 1. 9%-2. 9% + $0. 30 None Merchant Processor $0-$300 $20-$50 $10-$30 2. 0%-3. 0% + $0. 10-$0. 50/transaction $0-$30Source: Company reports, processor websites and J. P. Morgan estimates Figure 15: Payment Solutions P a y m e nt s o lu tion s †¢ †¢ †¢ D is a d va n ta ge s re la tiv e to P ay P al Buyer S eller C an n ot b e tra cked L im ite d p rote ction ag a in st lo ss/th eft R estricte d to virtu a l w orld †¢ †¢ L im ite d p ro te ction a g a in st lo ss/th eft R e stricte d to virtu a l w orld †¢ †¢ S lo w se ttle m en t/fu lfillm e n t tim e C ost/tim e of w ritin g che cks †¢ †¢ S lo w se ttle m en t tim e F ra ud riskC red it C ard Joh n Q Pu b lic 5012 345 6 7890 1234 †¢ †¢ †¢ †¢ †¢ †¢ S ecu rity unce rta in ty of sm a ll b usin e ss site C re d it lim its In te re st co sts †¢ †¢ †¢ †¢ †¢ H ig h tra n sa ctio n fee s – p ro hib itive fo r sm a ll m erch a n ts R e qu ire s m e rcha n t b ank a ccoun t F ra ud risk (card no t p rese n t) P ro ce ssin g tim e /co st S e tup co sts W ire (e . g. , W e ste rn U n io n ) F ee s U su a lly re qu ire s p h ysica l visit to ve n do r L im ite d a cce p ta n ce Source: J. P. MorganPenetration among Large Businesses Small, but Growing Whereas smaller sellers were PayPal’s bread-and-butter in the early days, the greater part of online commerce now occurs at larger sellers. This is especially true when one includes online travel, a category PayPal has pursued aggressively: whereas eCommerce has a fairly long tail of sites, the great majority of online travel is transacted at the large providers and OTAs. 17 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009Table 5: Penetration at top 50 onl ine merchants, by geography As of March 2009 Country USA UK Germany France Australia Penetration 42% 28% 16% 36% 60% Source: Company presentation and J. P. Morgan estimates Internet Retailer Data: PayPal’s Penetration Higher with Smaller Merchants Based on data from Internet Retailer, we estimate that 26% of the total sales volume on the top 50 online retailers in F’08 came on sites that accept PayPal. Consistent with PayPal’s past focus on smaller sellers, PayPal penetration among sites outside the top 50 is 39%, nearly 1. x the penetration among the top 50. Figure 16: Smaller Merchants More Likely to Accept PayPal % of internet retailers accepting PayPal, weighted by 2008 online sales Internet Retailer Top 50 I. R. Top 50, ex cluding Amazon Rest of I. R. Top 500 (##51-500) 0% Source: Internet Retailer, J. P. Morgan estimates 26% 33% 39% 10% 20% 30% 40% Note: Internet Retailer does not include travel sites in its rankings The following table summarizes PayPalâ €™s presence (including previously existing BillMeLater relationships) on the top 50 retail sites as ranked by Internet Retailer. 8 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Table 6: 26% of Revenue at top 50 US eCommerce Sites is Addressable by PayPal 2008 Sales in $ millions Site Amazon. com Inc. Staples Inc. Dell Inc. Office Depot Inc. Apple Inc. OfficeMax Inc. Sears Holdings Corp. CDW Corp. Newegg Inc. Best Buy Co. QVC Inc. SonyStyle. com Walmart. com Costco Wholesale Corp. J. C. Penney Co. Inc. HP Home & Home Office Store Circuit City Stores Inc.Netflix Inc. Victoria's Secret Target Corp. Systemax Inc. L. L. Bean Inc. Macy’s Inc. Williams-Sonoma Inc. Gap Inc. Direct HSN Inc. Zappos. com Inc. Amway Global Overstock. com Inc. Avon Products Inc. 1-800-Flowers. com Inc. Nordstrom Inc. Buy. com Inc. Redcats USA The Neiman Marcus Group In c. Musician's Friend Inc. Blockbuster Inc. PC Connection Inc. Toys ‘R' Us Inc. Cabela's Inc. BarnesandNoble. com Inc. Scholastic Inc. The Home Depot Inc. VistaPrint Ltd. Saks Direct Nutrisystem Inc. Peapod LLC drugstore. com Inc. Nike Inc. Kohl's Corp.Verticals Multiple Office Supplies Computers Office Supplies Computers, Digital Sales Office Supplies Department Store Computers Computers Electronics Multiple Electronics Multiple Multiple Department Store Electronics Electronics Video Rental Apparel Multiple Electronics Apparel Department Store Home Apparel Multiple Apparel Multiple Multiple Health & Beauty Flowers Apparel Multiple Multiple Department Store Musical Equipment Video Rental Computers Toys Sporting Goods Media Media Home Office Supplies Department Store Food Groceries Health & Beauty Apparel Department Store 2008 Online Sales $19,170 $7,700 $4,830 $4,800 $3,642 $3,084 $2,693 $2,600 $2,100 $2,015 $1,993 $1,828 $1,740 $1,700 $1,500 $1,497 $1,414 $1,365 $1,333 $1,209 $1,072 $1,044 $1,040 $1,033 $1,030 $1,016 $1,014 $904 $834 $754 $750 $686 $657 $617 $565 $531 $526 $516 $500 $497 $466 $455 $437 $401 $381 $376 $373 $367 $366 $356 PayPal? No No Yes No No Yes No No Yes No No Yes Yes No No Yes No No No No Yes No No No No No Yes Yes Yes Yes Yes No Yes No No Yes No No Yes No Yes No No No No No No Yes No No BML?No No No No Yes Yes No Yes Yes No Yes No Yes No No No No No No No Yes No No No No No Yes Yes Yes No Yes No Yes Yes No Yes No No Yes Yes No Yes No No No Yes No Yes No No Comment Ended BML relationship after PayPal Acquisition Could leverage BML relationship Could leverage BML relationship Site now owned by Systemax, a PayPal customer Could leverage BML relationship Could leverage BML relationship Could leverage BML relationship Could leverage BML relationship Source: Internet Retailer, J. P. Morgan estimates 19 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com N orth America Equity Research 26 June 2009 Off-eBay market share of 4. % in F’08 We estimate that PayPal’s $29. 5B Merchant Services TPV in F’08 (excluding BML) represented 4. 2% of the combined volume of eCommerce and Travel spend in that year. Our current estimates call for that number to rise to nearly 4. 9% of the total in F’09. Table 7: J. P. Morgan eCommerce and Travel Market estimates $ in billions Category Off-eBay eCommerce Travel Total off-eBay volume PayPal off-eBay TPV PayPal penetration F’07 311. 4 271. 9 583. 3 19. 9 3. 4% F’08 379. 0 329. 2 708. 2 29. 5 4. 2% F’09E 412. 0 342. 2 754. 2 37. 0 4. 9% F’10E 490. 8 405. 1 895. 9 50. 2 5. 6% F’11E 561. 4 458. 0 1019. 3 64. 2 6. 3% Source: Company reports and J. P.Morgan estimates We estimate that combined global online spend on eCommerce and Travel will exceed $1 trillion in F’11. By our estimate, PayPal’s Merchant services would need to access over 6. 0% of this volume in order to hit the low end of the target $4B-$5B PayPal revenue range indicated by the company. 3. Growth through BillMeLater We see several key effects on PayPal of the 4Q’08 acquisition of BillMeLater. In the near term, we think the addition could hurt profitability, while longer-term, we believe it can become a contributor to PayPal growth both on- and off-eBay. †¢ Minimal near-term TPV impact. BML accounted for 1. 2% of total 1Q’09 TPV.As such, we think it is important to note that the current impact of BML on PayPal results is likely to be somewhat small. Near-term growth likely slow. The company has stated that it intends to be very conservative in its approach to the tradeoff between growing BML volume and maintaining healthy credit metrics. Given the current environment, we believe this will significantly dampen growth in BML TPV through at least the end of F’09. Integration, portfolio losses to impact profits. PayPal’s segment margin in the last two quarters was 500 bps lower than in the same two quarters a year ago. The company has attributed this decline to the impact of integrating BML as well as charge-offs related to the unit’s loan portfolio.Medium-term, synergies become possible. Once consumer credit regains a measure of health, we think the company will begin to use BML as an additional tool to grow business, e. g. , by offering financing to incentivize users to pay with PayPal both on and off eBay. Target is convenience shoppers, not the underbanked. We believe eBay sees BML as an additional feature (or convenience) to attract higher-quality customers, rather than as a tool to expand its reach among customers who do not otherwise have access to credit. This approach appears consistent with the tradeoff noted above of slower growth in exchange for better credit metrics. †¢ †¢ †¢ †¢ 20Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 †¢ Auto financing unlikely to be priority. As noted above, Vehicles sold on eBay have been largely beyond PayPal’s reach up to now. We think eBay sees BML’s core expertise in transactional credit for smaller amounts than involved in a car purchase. A significant expansion of the business to include auto financing seems unlikely in the near to medium term. Impact on margins temporary. eBay expects segment margins to revert to historical trends as BML is incorporated into PayPal more completely (e. g. the company expects BML to be integrated into the PayPal wallet by 3Q; additionally sales teams for BML and for Merchant Services are being merged to give clients a single touch point). †¢ BillMeLater Can Improve Funding Mix We think the impact of BillMeLater in the longer term will be felt most strongly on PayPal’s funding mix: BML does not accept credit ca rds, and as such faces a lower transaction funding cost than the PayPal business as a whole. As such, any portion of TPV that shifts from the historical mix of funding sources to BML will help lower PayPal’s cost of funds. Assuming, conservatively, that PayPal manages the business to have a similar take to the rest of PayPal, we estimate that each 1% shift of TPV onto BillMeLater would drive ~2 bps improvement in funding cost.Thus, if BML were to grow to 4% penetration of our mid-point F’11 scenario of $100B in TPV, it would drive ~8 bps improvement in funding cost: an incremental $80M contribution to the bottom line, or 5c of EPS. Table 8: Sensitivity Analysis: EPS Boost from Lower Transaction Cost as BML Penetration Rises TPV in $B, BML as a % of TPV, EPS impact in $ TPV BML % 87. 1 100. 5 113. 8 Source: J. P. Morgan estimates 1% $0. 01 $0. 01 $0. 01 2% $0. 02 $0. 02 $0. 03 3% $0. 03 $0. 04 $0. 04 4% $0. 04 $0. 05 $0. 05 5% $0. 05 $0. 06 $0. 07 Credit Cards’ P ain Could Be PayPal’s Gain Recently, the House and Senate passed bills restricting certain practices in the credit card industry. We believe that such steps could have several points of impact on PayPal.Crucially, if these rule changes make credit card issuers less generous toward consumers (e. g. , lower profitability drives issuers to lower the levels of rewards for credit card use), PayPal could benefit from funding mix improvement, as the incentives for customers to fund their accounts with credit cards, vs. debit or ACH, would be reduced. Further, we believe that, should credit card issuers try to recapture profitability with less consumer-friendly rules as well as more frequent fees, the quality of the user experience for credit cards will erode, making consumers incrementally more likely to use PayPal. 21 Imran Khan (1-212) 622-6693 imran. t. [email  protected] om Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 4. Growth Opportunity: Expanding Merchant Acquiring Business We believe PayPal currently has two strategic growth opportunities going forward. The company can drive greater adoption of the PayPal solution by continuing to establish PayPal as a brand for online payment, alongside incumbent players such as Visa and MasterCard. Alternatively, PayPal can attempt to improve its payment economics by becoming a scale merchant acquirer. This would allow PayPal to capture the ~30 bps on card transactions that we estimate it currently gives up to its acquirer.Finally, PayPal may attempt to skate along the knife-edge between the two above strategies, maintaining relationships with large acquirers such as Chase Paymentech while at the same time functioning as an acquirer for its smaller client base. PayPal as a Brand Chase Paymentech, the largest merchant acquirer in the U. S. and the largest processor of e-Commerce transactions, offers PayPal as an integrated payment option alongs ide well known names like Visa and MasterCard. As such, Chase Paymentech clients have the option to advertise acceptance of PayPal as a payment type. According to Chase Paymentech, clients that accept PayPal (in addition to credit cards) commonly see an increase in sales. We view this as an important indication that PayPal has potential to be a powerful brand off eBay.We believe PayPal’s recent stated focus on larger merchants suggests this is the more likely strategic direction for the company, as PayPal may not want to jeopardize its status as a partner to the large acquirers, which make it easier for enterprise-scale businesses to include PayPal as one of several payment choices. Can PayPal Become a Scale Merchant Acquirer? In our view, PayPal also has the potential to become a scale merchant acquirer, which could enhance its off-eBay presence, especially among smaller and mid-size merchants. As a merchant acquirer, PayPal would handle all of the card processing needs of a merchant, including directly processing other brands like Visa and MasterCard.We believe PayPal can offer very competitive rates to small merchants (who often pay heavy miscellaneous fees to acquirers), given its scale, allowing it to deepen relationships with merchants and potentially handle offline transactions as well. Smaller merchants (especially the ~87% of US merchants with annual card acceptances under $100K) tend to pay a much higher spread to their acquirer. Whereas such merchants account for ~10% of credit card volume, we believe they represent as much as $2. 5B in merchant acquirer revenue: more than 1/3 of the total revenue in the US merchant acquirer business. We think PayPal’s historical strength among smaller sellers can be an advantage in accessing this market. Chase Paymentech offers PayPal as an integrated payment option for its clients.Chase Paymentech was the largest merchant acquirer in the U. S. in 2008 with 22. 5% market share 22 Imran Khan (1-212) 62 2-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Table 9: Top Ten US Merchant Acquirers, 2008 $ in billions Merchant Acquirer Chase Paymentech First Data BofA Merchant Svcs Elavon Fifth Third Processing Solutions Global Payments Wells Fargo Merchant Services Heartland Payment Systems First National Merchant Solutions RBS WorldPay Source: The Nilson Report. V/MA volume $567 $293 $283 $181 $165 $93 $91 $75 $51 $48 Market share 22. % 16. 9% 11. 2% 7. 2% 6. 5% 3. 7% 3. 6% 3. 0% 2. 0% 1. 9% As noted above, PayPal currently partners with Wells Fargo when it comes to handling non-PayPal branded transactions. One concern about a PayPal entry into the acquirer market would be whether it could successfully maintain its relationships with the other acquirers who currently offer PayPal as an option, and who would come to view PayPal as a more direct competitor. How Much is PayPal Worth? Combining the outlook outlined above, we believe PayPal TPV will reach $100. 5B in F’11; though somewhat more pessimistic or optimistic projections for the unit’s growth yield a range of $87B-$114B.At the midpoint, our estimate is for a 19% 3-year CAGR in Total Payment Volume. Figure 17: On current trends, TPV on pace for just over $100B in F’11 Total PayPal TPV, $ in billions 125 100 75 50 2008 2009E Optimistic New Model 2010E Pessimistic 2011E Source: Company reports, J. P. Morgan estimates Assuming the PayPal take rate remains just below 3. 9% (and assuming healthy growth in PayPal Marketing Services and Other revenue in F’11), our TPV estimate would result in $4. 1B in PayPal revenue. On the profitability side, we believe PayPal is likely to see segment margins shrink to 17. 2% for F’09 due to the continuing integration of BML; by comparison, segment 23 Imran Khan (1-212) 622-6693 imran. t. [email  protected] omTien-tsin Huang, CFA (1-212) 6 22-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 operating margin as reported by the company was 20. 0% in F’08. We think PayPal segment margins can expand back to above 18% by F’11. Figure 18: Segment income could reach $785M in F’11 PayPal segment operating income, $ in millions 1000 800 600 400 2008 2009E Optimistic New Model 2010E Pessimistic 2011E Source: Company reports, J. P. Morgan estimates Based on our scenarios for PayPal F’11 results, we believe the unit is likely to achieve approximately $450M in Net income. At a 20x multiple, this would yield a $9B valuation. Table 10: Scenario Analysis to Get to a PayPal Value in billions except where indicated On-eBay TPV Off-eBay TPV Total TPV Revenue Segment Margin [Unallocated Corporate Costs] Pro Forma Operating Income ($M) Tax Rate Net Income F'11 Earnings Multiple PayPal Value Source: Company reports, J. P. Morgan estimates Worse Case 33. 0 54. 2 87. 1 3. 57 17. 5% 4% 482 25% 361 16 5. 8 Average Case 36. 3 64. 2 100. 5 4. 09 18. 8% 4% 603 25% 452 20 9. 0 Better Case 39. 6 74. 3 113. 8 4. 61 20. 0% 4% 737 25% 553 24 13. 3 Comparative Valuation of PayPal Unit We believe it is instructive to look at several comparables when it comes to valuing PayPal. Specifically, Visa and MasterCard provide payment networks, while Global 24Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Payments is a pure-play merchant acquirer, functioning in much the same way as PayPal does by providing an on-ramp for merchants into the payment system. Table 11: Comparative Valuation for PayPal $ in billions PayPal $67B 11% 1% $2. 70B 13% 17. 2% Some credit risk due to BML Visa $2,702B -1% 60% $6. 94B 6% 52. 9% None 20. 8 17. 1 15. 4 MasterCard $1,759B -9% 34% $4. 97B 0% 43. 2% None 15. 7 13. 4 11. 7 Global Payments N/A ($93B in F’08) N /A 4% $1. 59B 10% 19. 2% None 18. 4 15. 8 12. 5 CyberSource N/A N/A

African American Experience Essay

African Americans lived differently than white men did during the turn of the century. They faced many problems within the society. Some of the issues they faced were out of their hands. Although things were not the greatest all the time, there were supporters and organizations that they could turn to. Along with these organizations they had leaders that tried to help the race. Many African Americans became successful in the late 1920’s, and still to this day there are many African Americans that are successful. During the time period around the late 1870’s through the 1920’s many African Americans did not have good jobs. The majority of African Americans lived in the southern states. Many were sharecroppers who worked the land and gave the land owners part of the profit from the crops. African Americans were cheated out of money through this process most of the time. The African Americans did receive the right to vote before white women. African Americans faced many issues throughout these years. A series of laws were passed in the South to keep the African Americans at the lowest point possible in society. These laws were known as the Jim Crow Laws. Shortly after these laws were established segregation became legalized, and black codes that were abolished during the Reconstruction resurfaced and were supported in Plessy vs. Ferguson. This lead to African Americans being looked down on and equality far from reach. African Americans were not allowed to go to the same schools or drink out of the same water fountains as whites; they were even told where they could and could not live. This put a strain on the race and the way they had to live. Many African Americans were also stripped of their voting rights. In 1890 a poll tax was enforced. This meant that poor people, of both races, were not able to vote simply because they could not afford to. They also instituted a literacy test where you had to show that you were able to read and write. Many times African American college graduates failed the test, yet illiterate whites were some how able to pass. The responses to these issues were not good. They did not understand why they should be treated any differently from the whites. This led to riots and outburst throughout the country. After this, African Americans became the center of violent and cruel attacks. Lynchings were on an all time high in the late 1800s with more than a hundred African Americans being lynched per year. Law enforcement usually did nothing to stop these terrible acts and sometimes even participated. African Americans fled to the North during this time in search of better jobs and home lives for their families. Many organizations were formed during this time in hopes of ceasing the violence and bringing America to equality. Two of the largest influences were Booker T. Washington and W. E. B. Du Bois. Both of these men had separate approaches with the end result being the same. Washington thought that equality would be achieved, but it would be a very slow and ongoing process. He wanted to concentrate on getting African Americans better paying jobs and a greater education. Du Bois believed that you should demand equality and stop at nothing to get it. He wanted better education, equal rights, and suffrage. Another well known advocate for African Americans was Ida B. Wells. She founded the anti-lynching movement that came into existence in the 1880s. This group set out to stop the violent acts aimed at African Americans. Wells’ goal was to make lynching a federal crime and keep the local law agencies from allowing and participating in hate crimes. White women from the North and some others supported this movement, but it wasn’t until the 1930’s that lynching became a federal crime. For a time, Wells published a newspaper, Free Speech. An angry mob of people burned down her office in Memphis, Tennessee and forced her to leave town. In 1891, Wells supported the strike of black cotton pickers. She was dismayed when fifteen of the cotton pickers were lynched. The whites sent a strong message that they were not going to conform to her desires and accept the equality of the African Americans for some time. With the end of the Civil War, the African Americans received freedom from slavery and gains some rights but lost many of those same rights a mere twenty years later . They had sacrificed much and did not give them up easily. Even though they were often defeated in court and often threatened with violence, a visionary group of leaders laid the foundation for the future successes of the civil rights movement. They founded important educational institutions and organizations to fight for civil rights and cultivated both a new generation of leaders and a growing number of writers, artists, and professionals who embodied Du Bois’s idea of a ‘talented tenth’ and who became increasingly active and effective in the 1920s. Almost a century later, African Americans are better accepted in society than ever before. There is less of a double standard and more equality thanks to the brave men and women who came before and strove to encourage, nurture, and raise their children to grow up in a more civil environment.

Kant - Critique of the Aesthetic Power of Judgment Essay - 1

Kant - Critique of the Aesthetic Power of Judgment - Essay Example According to Kant, an individual judges the taste of an object in line to the level of satisfaction that is achieved in the use of the object (Kant 118). This satisfaction is said to reside in the beauty of the object. The satisfaction that is achieved in the use of an object is normally accompanied with an individual’s assent. In this sense, it is assumed that the level of satisfaction which is achieved is objective. Kant illustrates that the satisfaction which is achieved through an object varies from one individual to another. This means that what is considered to be satisfying by one person may be unsatisfactory to another. It is due to the above claim that Kant says that an objective approach in the used of an object is valid in determining the level of satisfaction which is achieved by the user or consumer of the object. This implies that when an object is being consumed, the objective of the consumer in the use of the object plays a role in defining if it is satisfactor y or not. If an individual says that a given flower is very beautiful, it is a claim which implies that the flower will satisfy everybody. Kant critiques this argument by saying that the pleasantness of an object such as this flower is not likely to satisfy all people equally (Kant 119). If an individual is satisfied by a smell by considering it pleasant, the same smell may give another person a headache. According to these claims therefore, the beauty of a flower is just one of its properties and the manner in which it is received and experienced by different people varies in accordance to the perception which emanates from their senses. Therefore the satisfaction that is achieved by the smell of the flower is not accommodative of the different tastes among different people because of the following reasons. Firstly, the experiences of people vary which influences the manner

HRMD 665- MANAGING VIRTUAL AND GLOBAL TEAMS Research Paper

HRMD 665- MANAGING VIRTUAL AND GLOBAL TEAMS - Research Paper Example The start of video conferencing has marked an era wherein the virtual environment has been created, resulting in the converging of ideas and viewpoints of business people present at different points across the globe. The formation of such virtual teams has resulted in revolutionizing key business decision making and communication, very simple and effective. Thus virtual teams are the teams that have been formed by the HR department of the organization, with an aim to achieve the goals of the organization. (Eric 2010) In the case of the Human Resource wing of the organization, the creation of such virtual teams which has got a global reach will make it very effective and this indeed plays a very significant role in the speedy development of the strategies and plans, which can be communicated within seconds. Thus the evolution and creation of the virtual teams has resulted in the speedy exchange of ideas, time saving, increase in the commitment of the team members and the improvement o f trust. (Levi 2007) Though before the development of the internet the virtual teams were considered impossible, today they have been considered as a solid reality. Thus when compared to the other face to face teams present in the organization, the virtual teams are very well considered by most of the industrial and business experts, as the one that can add more value to the existing teams and its structures. The traditional structures found in common business and industrial firms have been the lightweight, tiger and heavyweight teams. Hence for any organization to develop a very good virtual team, the HR department has to play a very important role and take much effort for the formation of a very successful team. (Duarte & Snyder 2006) For the virtual team to become very highly successful, the presence of good teamwork is a primary requirement. Hence for the virtual team’s success the main ingredients that has been formulated by the HR team is the creation of a very good cul ture as well as infrastructure, which imparts very easily understandable guide for the knowledge and development of skills. Thus when compared to the face to face teams, the virtual team is gathering a very speedy acceptance and application to most of the industries and the academic institutions worldwide. (Duarte & Snyder 2006) Most of the countries are becoming technologically advanced and this has led to the virtual teams to become much stronger and also to be considered as the best means of communication and decision making network due to which it has become a norm for the organizations all over the world. The HR of the modern day organizations, find it very easy and useful to recruit the team members of the virtual teams, which results in the successful and speedy selection of the best and the highly talented individuals across the globe and also the retention of such virtual teams and the team members for a longer period of time. (Konradt & Hoch 2007) The HR of such organizati ons also takes the utmost care to develop such individuals over a period of time, with an idea of turning them into assets for the organization. Since most all the team members present in the virtual teams can be contacted almost at the same time through the global network, instantaneous interaction and views can be exchanged between them, which show the universality of the virtual te

Coal Industry in Wales between 1945 - 1985 Essay

Coal Industry in Wales between 1945 - 1985 - Essay Example Wales, as a nation, has largely been built around welsh language, and partly on collective identity by virtue of the coalfield communities. In the Wales, the labor party was held in reverence, owing to political and cultural references to coal. During the 1984-1985, the coal mine workers went on strike, following a change of government by Margaret Thatcher. The conservative party, unlike the labor party that was more concerned with the welfare of the mine workers and wealth distribution, was more concerned with free trade (Gildart 2001). This move was also not popular with both the national union of mineworkers (NUM) and the national coal board (NCB) that was recording losses. Market fluctuations, labor intensity, geographic concentration, distinctive structure and nature of the coal mining industry are some of the features that characterized this industry in the United Kingdom during the twentieth century (Davis 2006). The coalfields were so dependent on a limited economic activities range that once there was a decline in the market for coal, there occurred a widespread social distress, unemployment, and bitter disputes in industrial relations. As such, coal mining has served as an example to a number of social, economic and political issues in the history of modern Britain. State of the industry before 1945 During the industrial revolution, coal mining evolved into a large scale affair, as it was the primary source of energy for transportation and industries during the period between the eighteenth century and the 1950s. Compared to other sources of energy such as electricity, coal is steal abundant and of a lower cost. However, the discovery and mining of coal in other areas such as the United States led to a significant drop in the demand for coal from the Wales on a global scale. Additionally, oils and other associated fuels were now gaining popularity as an alternative source of energy (Davis 2006). By the late twentieth century, coal was rapidly being replaced as a source of energy in the transportation and industrial sectors, as well as at the domestic level. During the twentieth century, there was an increase in both output and manpower, and this ensured that Wales had its peak coal production. In 1913, Wales produced about 57 million tons of coal in 620 mines that employed 232,000 men. By 1913, Britain had over 2,500 mines. These were producing in excess of 290 million tones of coal (Davis 2006). Of these, 30 percent was meant for export. By 1938, just prior to the Second World War, the number of mines had reduced to 1,900, and the output plummeted to 230 million tones. Export was just over 50 million tones. This notwithstanding, the scale of the industry was still considered to be very large. By 1913, South Wales produced about 20 percent of all the coal in the United Kingdom (Gildart 2001). This came from coalfields in Durham/Northumberland, and Yorkshire and Scotland. The counties and towns where these mines were located became home to thousands of mines workers. By 1921, almost half of all the adult male workers found in Glamorgan happened to be coal miners. Following the end of the First World War

See the attachments Assignment Example | Topics and Well Written Essays - 2500 words

See the attachments - Assignment Example The incoming research will investigate workforce diversity in light with establishing parameters surrounding it. The report is defragmented into three key sections and a secondary section. The commencing secondary section- rationale of the study- will justify why it is important to engage in these studies. As well, the section will incorporate two key theories to support the study. The first primary section, Workforce Diversity will assess what is known about the discipline. The midsection will propose a Personal Development Plan. The last section will clarify on the learning outcomes of the PDP. There have been growing debates on the extent of diversity in organizations. Primarily, critical attention is accorded to whether organizations are affirming Corporate Social Responsibilities (CSR) in affirming to diversity. Diversity concerns stretch valiantly with gender, race, sexual orientation and physical abilities being the most visited roles. Rice (2015, p. 93) establishes that diversity might be identified as an important goal for the workforce by affirmative action, which might show positive results, but not everyone may benefit from the sometimes blunt methods applied to achieve it. Convincingly, although developing practices increase the relevance of the diversity in the organization, different groups seems to benefit more than others. The rationale for such studies is projected by the fact that not much has been done in the field of diversity. A crucial theory in these studies is Social Identity Theory. Social Identity Theory can be identified as a mixture of people with the different group identified within the same social system. Intergroup perspectives have been one of the major frameworks for understanding human interactions in a wider organizational context. The category of being perceived by others belonging to a given social category is nullified at this point. In relation to the theory, Guajardo (2014,

Indian Bronze Sculpture at the Art Institute Chicago Essay

Indian Bronze Sculpture at the Art Institute Chicago - Essay Example In that sense, Shiva is also the deity of reproduction. Because of the association with death and anger, Shiva is the most-feared god in Hindu religion and at the same time, is the epitome of love and salvation. Shiva is also the Mahayogi, the greatest ascetic who through his intense meditation breaks the barriers for the river Ganga to flow down to the plains from his abode in Mount Kailash in the Himalayas. His love for his consort, Parvati, is intense and depicts the tense relationship between man and woman (1stholic). The symbolism in Shiva's physical features depicts the earthly life cycle. The torrent of the Ganga river that Shiva brings about through his meditation flow as Shiva's locks of hair, thereafter transforming into the seven big rivers in the land. Among the physical attributes of Lord Shiva, other than the cobra (symbolizing worldly forces), a skull (implying Shiva as lord of finale) and the mermaid Ganga also find the falcate moon (the container of the holy nectar). Shiva wears two earrings - the right ear has a Linga or male earring and the left ear has a Yoni or female earring. The image, in other words, is androgynous and includes both male and female. Shiva has four arms and two feet, the body carrying strap and ornaments of the classical dancer. Rising out of Apasmara is the "circle of fire" (the Prabha Mandala), namely, the real circle of creation--this observed world where we are placed in. Lastly, the whole image sits on a lotus base, lotus being a symbol of cleanliness grow ing out of the dim waters of the mysterious (Objectives For Myths, indiana.edu). Shiva, the lord of the Lingam (or sexuality), the husband of Shakti-Devi (or Parvati), is also Nataraja, King of Dance, who transforms man into a higher level. In Hindu philosophy, dancing is considered as an art form in which the dancer is metamorphosed into a being gifted with extraordinary powers. The dance, like yoga, generates daze, elation, the experience of the celestial, the self- realization ("atmanam biddhi") and, lastly, uniting with the godly spirit. The dance, in Hindu societies, has grown along with the remarkable rigors of the meditation - fasting, breathing exercises, total withdrawal. To work magic upon others, one has to be fascinated oneself and dance is an act of creation, resulting in a new state and taking the dancer to a new and higher persona, stirring dormant energies to mold the world (Zimmer, Philosophies of India). The typical Nataraj is shown with four hands, two on either side, the upper left hand gripping a flame, the lower left hand indicating down to the devil Muyalaka, or dwarf (Apasmara) symbolizing unawareness, shown to be holding a cobra. The demon is trampled by Shiva's right foot and the other foot is lifted. The upper right hand clutches a drum, the lower one is in the abhaymudra ('be without fear'). The hair is plaited and jeweled, some of his locks reeling as he dances; inside the crinkles of his hair are a coiled cobra, a skull, and the form of Ganga, the Hindu holy river. The whole figure stands on a lotus plinth bordered by a ring of flames, touched by the hands gripping the drum and the fire (Coomaraswamy, 1957). The dance represents five activities: Shrishti (creation, progress); Sthiti (conservation, maintainence); Samhara (annihilation,

Social problem Essay Example | Topics and Well Written Essays - 2000 words

Social problem - Essay Example Clearly, there are a number of factors involved in making social change. Time does play a part but changes normally do not come of their own accord. There are several forces such as political influences, technological innovations, economic changes, legal demands and other catalysts which drive how a social problem can become a social issue that demands action from the people at large (Hill, 2003). An analysis of these forces therefore is very important for all students of sociology and human behaviour since an understanding of these forces can lead to an understanding of how the norms of society change. In many ways, these forces are also connected with each other and certain drivers of social change overlap amongst the factors mentioned above. For example, the media is one source of social awareness which overlaps with technology and with the economy since individuals which are socially better off may have access to various types of media such as the internet and foreign news sources while those in a lower stratum of society may not be aware of such avenues of getting of information (Baldock, 2004). Therefore, it is better if an analysis is made individually for these factors to show they can convert issues into social problem. Perhaps the easiest way today to make an issue a social problem is to bring it into politics and it can easily be used to distract the public from other issues which might be more pertinent or important. For example, the war on terrorism is a prime situation where the attention of the media, the newspapers, public opinion as well as private discussion were all diverted towards the topic and other problems like the genocide in Sudan, the rising poverty levels of the world and the problem of the environmental degradation of the planet due to human activity were all pushed under the carpet. This situation, If not permanently true, was at least very true for the time being. For example, the case of

Russia as a business destination Essay Example | Topics and Well Written Essays - 3000 words

Russia as a business destination - Essay Example Furthermore, foreigners would heighten their chances of success by working with local partners who would guide them there. Labor costs largely depend upon the region under consideration and western style hotels cost much more than they do in the US. Possible areas of business include oil related services or products, consumer products and the IT sector. There are a number of misconceptions about Russia as a business destination. Some people believe that conducting business in Russia is an all too easy process and that all it takes are some good connections or simply meeting with the right people. On the other hand, others believe that in Russia, it is almost impossible to do business and that enterprises are not governed by the basic principles of economics. While these latter assertions might have some validity in certain respects, it is essential to understand that they do not represent the business climate, market opportunities or entry strategies required to make it in Russia. Russia as a business destination requires its own set of rules. One needs to be ready to do business in an unconventional way. Additionally, one should be ready for the disparities that occur across various sectors and also across a number of geographical areas. In Russia, some areas are oversupplied while others are undersupplied. The latter could either act as rewarding business opportunities in certain instances or they could signify areas that need to be ignored because if the Russians themselves do not see any potential in it, then what makes a foreigner think that he/she can turn it around. (Fetsenko, 2008) Business in Russia is not for the feint hearted. It requires a great deal of imagination and resilience. But after exercising all the latter traits, it can then become easy to enjoy the rewards of investing in this country. Consequently, one should be well equipped with all the business environment information, market intelligence, import and export opportunities and market strategies required to succeed in Russia before venturing there. These are all aspects that will be covered in the report below. Market Intelligence Report (MIR) The Russian People There are a number of misconceptions held by westerners about the Russian people. Some of them believe that Russian cities are too susceptible to crime and that one would lose their property at any one time. However, compared to crime levels in the United States, Russian cities are safer. Other people believe that in Russia, organized crime overrules the basic principles of economics and that one cannot expect to find considerable profits without collaborating with these high profile criminals. However, this is another misconception; one can still conduct business in Russia without having to involve members of organized crime. While the latter issue may exist in certain sectors of the economy, others are not affected by it. Consequently, businessmen interested in doing business there need to familiarize themselves with the sectors that are untouched by such kinds of issues. (Donga, 2008) It should also be noted that not all Russian people are interested in taking bribes. The case of corruption has been a rising concern among business men from the US because most of them may not understand the dynamics of the Russian business environment. However, this is an issue that has been exaggerated by many individuals. In fact, this could simply be a result of the culture shock which one

Manifestation Music Essay Example for Free

Manifestation Music Essay Robert Allen Zimmerman, or Bob Dylan, was born to become a star. As a child he had dreamed of becoming a musical icon which he tried to achieve during his younger years. As part of his ambition to become a famous musician and icon, at age ten, Bob Dylan started to write poems and even taught himself to play the guitar and piano (Millar n. p). His musical style was primarily influenced by Elvis Presley, Little Richard, and Jerry Lee Lewis which became apparent in the progression of his career. The drive and passion of Bob Dylan in pursuing his musical career escalated when he went to the University of Minnesota where he began to consider the folk and rock songs of artists such as Hank Williams, Woody Guthrie and Robert Johnson (Millar n. p). During his college years, he had a hard time attending schools because of his preoccupation in music. He finally dropped out of college to pursue his dreams. When Bob finally had his break in 1961, he first played folk songs instead of his own desired genre. His first album was not how he expected it to be because he really wanted to do his own songs. However, Bob Dylan turned his situation around in the next albums that he made. His succeeding songs were basically inspired by the profound â€Å"political activism† of the young people during the 1960s (Lemieux 1). The people were very empowered to make a stand and respond to the pressing problems of the society like gender, class, and race. This escalating emotion ultimately paved the way for mass protests and movements for social change. These situations during the 60s also influenced the music of Bob Dylan which is distinctively political in nature. Although Bob would assert that he is more of a social commentator, the people listening to his music are actually receiving a different vibe or perspective (Lemieux 1). Bob Dylans Music One of Bob Dylans most famous songs, â€Å"Blowin in the Wind,† became an anthem in Americas 1960 counterculture. He wrote it during the Vietnam War era as a response to the eventualities and casualties of that period in American history (Mason n. p). The song greatly depicts Bob Dylans observation of the political and social status of the society and how the people tends to shrug-off the escalating problem in the Vietnam crisis which eventually worsened. This is perceived in the second stanza of the song stating: Yes, n how many ears must one man have Before he can hear people cry? Yes, n how many deaths will it take till he knows That too many people have died? The answer, my friend, is blowin in the wind, The answer is blowin in the wind. (Dylan n. p) Aside from the song â€Å"Blowin in the Wind,† Bob Dylan also created another politically inclined song entitled â€Å"The Times They Are A-Changin† (Mason n. p). The song, which was actually written after John F. Kennedy was assassinated also became significant as it expresses the confidence and the hope perceived in the political and social movements during the 60s. As observed in the song, the singer is inviting the people from different walks of life to come together and pursue the future with a glimmer of hope and unity. Moreover, in the latter part of the song, Bob Dylan gave a great amount of effort in creating a beautiful lyrical stanza which encourages the people never to give up and continue looking for the silver lining in their current social instability. Bob Dylan is indeed a great singer during his time. His passion for music and empowering lyrics really enabled the people to make a difference and stand firm for what they believe is right. It is also because of the socio-political awareness imparted by Bob Dylans songs that he was seen by the society as a great protest singer and an inspirational person as well. Works Cited Dylan, Bob. â€Å"Blowin in the Wind. † 1962. 16 May 2008 http://bobdylan. com/songs/blowin. html. Lemieux, Nicole. Bob Dylan and the Sixties: A Social Commentary Reflecting Politics and Existentialism. Diss. Pace University, 2006. Mason, Catharine. â€Å"Bob Dylan: A Biography. † March 2005. Bob Dylans Performance Artistry. 16 May 2008 http://www. unicaen. fr/musa/bob_dylan/bio. htm. Millar, BJ. â€Å"The Life of Bob Dylan. † n. d. 16 May 2008 http://www. angelfire. com/on/dylan/bio. html.

Patterns of Behaviour Essay Example for Free

Patterns of Behaviour Essay To form a reaction the particles must collide in high speed. The faster the particles collide the more kinetic energy is produced. This produces a bigger reaction. There are five key variables that affect the rate of a reaction (in this case with a solid and a solution): Change in temperature An increase in heat energy within the particles leads to more kinetic energy. Therefore there is more collision of particles and it increases the rate of the reaction. When we decrease the amount of heat energy, this will evidently slow down the reaction. For example we slow down the process of our food rotting by placing it in a fridge or a freezer. Change in concentration The concentrations of acids are classed in molars, so 2m would quite a strong concentrated acid, 0. 5m would be a very dilute weak acid and 1m would be in between the two. Also, the more concentrated the acid, the more particles it contains, so there is more of a chance for collisions.   Change of particle size Increasing the surface area of the particles would lead to more collision. We do this by making the particles smaller. For instance peeling a large potato would not take as long as peeling four small potatoes; this is because the smaller potatoes have a larger surface area for you to peel. Pressure (for gases only) Increasing the pressure would bring particles closer together so there would be more of a chance for collision.   Catalyst A catalyst lowers the activation of energy required, consequently there being a faster reaction. The three variables we are choosing to show which effect the rate of reaction in our experiments are: Particle size Concentration   Temperature Pressure was inappropriate to use as a variable, because we were not using two gases and a catalyst was unsuitable to use for small tests like these. I think that the tests in changing the temperature will have the fastest times, as the hotter a solution is the more the particles will move and collide, thus the rate of carbon dioxide being produce will be faster. I also think that the large particles test will take the slowest amount of time because of the lack of surface area and the reverse will occur with the test with powered calcium carbonate. Plan We will be running a various number of experiments to prove what effects the rate of reaction with calcium carbonate (marble chips) and hydrochloric acid. The balanced equation for these reactants along with the products: Calcium carbonate + hydrochloric acid calcium chloride + carbon dioxide + water Ca Co + 2 HCl Ca Cl + Co + H O When experimenting with the effects of the particle size we will use three sizes: large marble chips, small marble chips and powered calcium carbonate. For the tests in concentration of acid we will use 2m, 1m and 0. 5m. We will use 50cc of hydrochloric acid in each test to guarantee precise results. Finally for the experiments with the changes of temperature we will be heating the acid using a bunsen burner for two temperatures: 30i and 40i , then leaving the acid at room temperature (around 22i ). We will measure the temperature accurately using a thermometer. These will be the only three things that we are going to vary, to explain what affects the rate of reaction. We will also only be testing one variable at a time. For example, in the test for concentration we will obviously be varying the concentration of the acid (0. 5, 1 and 2m) but we will be keeping the temperature and the particle size the same (room temp. and small marble chips). To tell us what actually affects the rate of reaction we will monitoring how fast carbon dioxide is given off. To find this out we will have a plastic basin containing water. A test tube measuring 10cc filled with water will be held upside down in the basin of water and a delivery tube will be attached to the beaker holding the acid and calcium carbonate and the other end will be positioned in the test tube in the water. We will use all the same apparatus to ensure everything is fairly tested and is accurate to the equipment we are using. As the acid reacts with the calcium carbonate, carbon dioxide is released. This will travel through the delivery tube and into the test tube. The test tube will fill up with carbon dioxides and the water will pushed out. We will be timing this with a stop clock. As the water descends to 1cc we will record the time, then at 2cc, again at 3cc and so forth. At the end of each experiment we should have 10 times recorded. For each factor, instead of just performing the experiment once, we will repeat it three times to provide us with a more accurate end result. In total we will be doing 27 tests to show what effects the rate of reaction. Diagram To make certain that this method is good enough and to certify that it worked properly we will carried out a trail experiment. We used all the average variables for fair testing. So the temperature was at room (22i ) the concentration not to strong or weak (1m) and the small marble chips. Trial experiment results 1 molar room temperature small marble chips Min/sec 1cc 1:41 2cc 3:15 3cc 4:46 4cc 6:13 5cc 7:35 6cc 9:03 7cc 10:34 8cc 11:56 9cc 13:27 10cc 14:33 The carbon dioxide was released very slowly in this test. It took over fourteen and a half minutes for it to finish and this would not be practical because of the limited time been given to conduct all our experiments. It took so long, because we had only put one small marble chip in. There were no more calcium carbonate particles to react with the acid particles, so this had a dramatic effect on the time. On In each test we do we will always place more particles than the amount we need, so there is excess calcium carbonate at the end to make sure it does not run out during the test. Because this was the first time we were trying the tests out we were a bit slow placing the bung on and maybe some of the carbon dioxide had escaped. To improve our main experiments to achieve accurate results we had to place the bung on as soon as we dropped in the calcium carbonate to make sure no carbon dioxide escaped. Results Concentration 0. 5 molar room temperature small marble chips 1st 2nd 3rd Average Temperature Room temperature 1molar small marble chips 1st 2nd 3rd AverageAnalysis On the concentration graph the average of the 0. 5m results was looked very different compared to the 1m and 2m averages. Because it took the longest time to reach 10cc of carbon dioxide, the gradient of the line of best fit sloped very gently. The release of carbon dioxide started off very slow at the being. It took 1:30 minutes to reach 1cc, then the rate quickened and in 2 minutes 5cc of carbon dioxide had been given off. On the graph the gradient in those two minutes steepened. The rate slowed down after that and the release of carbon dioxide was gradual and steady.