Concept Of Service Quality in Call Centre Industry

Concept Of Service Quality in Call Centre Industry This chapter of dissertation consists of literature review, which is collected from several journals, articles and books. I have divided it into two parts. First part defines the concept of service quality, its importance and then will exemplify how different researchers have measured service quality by dividing it into different dimensions. This part further reviews role of call centers, how call centers are managed and what role call center employees play in delivering quality services. Second part of literature review considers theories from literature such as, Total quality management (TQM), six sigma, investor in People (IIP) and Continuous Performance Improvement, in order to measure quality management system of call centers. 1.2 Service Quality: According to Berry et al.(1988 cited in Amy and Amrik, 2003) service quality has become a significant differentiator and the most powerful competitive weapon which many leading service organizations possess. Further cronin and taylor, (1992 cited in Agens K,Y law, 2003) state that by improving service quality, service providing firm can differentiate itself from its rival firms and thus occupy strong positioning in the relevant market.. Lee et al. (2003) said, now days leading service firms consider service quality as the most sustainable basis for: Differentiation ( Zeithaml and Bitner, 1996); Leveraging customer satisfaction and value (parasuraman, 1997); Driving market share and profitability (Buzzel and Gale, 1987); and Developing strategy (gronroos, 2000). Service quality can be defined as the perceived judgment, which customer develop by comparing their expectation about services with the services they actually perceived to receive ( Gronroos, 1984 cited in Amy and Amrik , 2003). Bolton and Drew (1991a) and Parasuraman at el.(1988a) argued that although evaluation of service quality will help customers to form an attitude towards service provider, customer satisfaction is not obvious and satisfaction level is based on how well the delivered service meet customers expectation.(cited in Agnes K.Y, 2002). Service quality is dependent on two variables perceived services: service customer actually receives form organization and expected services: which comes from the customers previous experience or overall perception of the service( Gronroose, 1984cited in amy amirk, 2003) When expected service is higher than perceived service, service is said to be of low quality and when service expected is less than perceived service, overall service quality is considered to be high. Quality is s subjective concept and it is difficult for the customer to evaluate service quality than product quality (Parasuraman et al., 1985). Author further suggests that there are three main features of services: intangibility, Heterogeneity and Inseparability, which construct service quality an elusive and abstract concept. There are five main determinants that customer consider to evaluate service quality such as reliability, responsiveness, empathy, tangible and assurance. Customers perception and evaluation of quality can be different due to different needs and wants, it could be satisfactory for one customer while other may experience it in different way (Venetis and Ghauri, 2004) 1.2.1 Importance of service quality: In todays highly competitive business world- where customers needs and wants are highly influenced by global competition and where customer has large number of firms to satisfy their needs, organizations are forced to change their focus from profit maximization to maximize profit through customer satisfaction( nithin seth and S G deshmukh, 2004). Author further state that subject of service quality is of great importance; because it has strong impact on business performance, lower costs, profitability, customer satisfaction and customer loyalty. In other words service quality is the main driver of firms marketing and financial performance. An extensive research from services marketing, services management and organizational psychology has proved that an improved service quality can help organization in attracting, satisfying and retaining customers( Heskett et al., 1997; Schneider et al., 1998 cited in Alison M Dean, 2002). Firms that fail to provide quality services not only loose their customers to its competitors but it also resulted as declining of profit and finally firms withdraw from competition. In service marketing, terms service quality and customer satisfaction are used interchangeably. Rust and Oliver, (1994) said service quality is the one dimension on which customer satisfaction is based. In fact service quality is considered as antecedent to satisfaction (Agens K.y ). According to Iacobucci et al., (1995) Service quality is concerned with the firms service delivery, while satisfaction is the post consumption experience which reflects customers overall experience and perception with firms service (cited in Eugene sivadas,2000). Zeithaml at el. (1996, cited in Eugene sivadas, 2000) suggest that customers relationship with the firm is strengthened, when that customer has favourable attitude towards a firms service quality and relationship is weakened when customers attitude represent his dissatisfaction with firms services quality. He further argued that positive attitude towards firms service quality will lead customer to develop favourable behavioural intentions such as preferring company over its competitors, making repurchases and recommending firms service and product to others. According to Agens K.Y(), loyalty comes from customers repurchase behaviour. It is satisfaction with the services that construct brand loyalty and encourages customer for repeat purchases. Zeithaml,(1996, cited in Amy wong) suggests that loyalty is the main determinant that service organization are using to measure their long term success and by maintaining superior service quality, firms are retaining and expanding their loyal customer base. Johnston, (1995 cited in amy wong) further argued that firms service quality has strong impact on customer loyalty, therefore in order to measure, control, and improve service quality from customer perspective, management should identify what factors of service quality influence customer loyalty. Customers loyalty is important for firms profitability, as loyal customers are ready to pay premium price (Gronroose, 2000). Similar to satisfaction, loyalty is also comes from high service quality. Customer satisfaction is often viewed as mediator that link service quality with service loyalty (Agens.K.Y). 1.2.2 Measures and dimensions of service quality: Today, whether it is developed country or developing country their economic conditions are largely influenced by globalisation and liberalization. Due to rapid change in needs and wants, firms are forced to develop constant standards for measuring the quality of services offering. Measuring service quality on regular basis will help firm to evaluate and analyse the needs and requirements of customers. These measures will also facilitate firm to provide services quality that encounters customer expectations, by improving both aspect of service quality: WHAT (technical quality) service should be delivered and HOW (functional quality) service should be delivered. In order to measure service quality numerous researchers have suggested different models. GI, DU Kang, (2006) said, many of scholars agreed that service quality is based on multiple dimensions (Gronroos, 1982, 1990; Parasuraman et al., 1985), but there is no consensus on the exact nature and content of these dimensions (Brady and cronin, 2001). Lehtinen and Lehtinen, (1982) has given three dimensions of service quality. Physical quality- tangible aspect of services, Corporate quality- companys image by its current and potential customers and Interactive quality- two way interaction between customer and service provider. By ignoring physical features of product in the consumption of services, Gronoose (1982, cited in GI-DU Kang, 2006) decomposed service quality into two dimensions: Technical quality- what service is provided. Function quality- how service is provided. Technical (outcome) quality is concerned with what customer actually receives from service. Functional (process) quality is concerned with how the outcome of the process is delivered to the customer such as speed of service and behaviour of customer service staff. Gronoose model of service quality also recognises that customers perceived quality is largely influenced by the firms image customer already have in his mind. Gronroose further suggest that when customers evaluate expected services with the services experienced they bring their prior experiences and overall perception of service firm. Parasuraman et al., (1985), also considered service quality into two dimensions: outcome and process quality and state that evaluation of service quality can not be made solely on outcomes of services, it should also evaluate service delivery process( GI-DU Kang, 2006/). He further argued that these two dimensions (process and outcome quality) are Interco related therefore it is necessary to consider that when evaluation occurs. In case of process quality: evaluation of service occurs while it is being delivered; however in outcome quality, evaluation takes place after the delivery of service. Swart and brown (1989), by considering established work on the dimensions of service quality identified by gronroose(1982), lenthin(1982) and parasuramn(1985), suggested two dimensions of service quality: WHAT ( evaluation of service after its performance) and HOW( service evaluation during performance). Rust and Oliver, (1994) proposed three-component model of service quality, which evaluates customers perception of service quality by considering three dimensions: Customer-employee interaction (functional or process quality); The service environment; and The outcome (technical quality) Although there is no generalized model of measuring service quality, GAP model of (parasuraman et al., 1985) has received adequate support from the researchers of various field ( nitin seth and desh much, 2006). In 1988 this model was then proposed as SERVQUAL. Parasuraman et al. (1988) state that: The SERVQUAL provides a basic skeleton through its expectations/perceptions format encompassing statements for each of the five service quality dimensions. The skeleton, when necessary, can be adapted or supplemented to fit the characteristics or specific research needs of a particular organization. He further suggests that SERVQUAL is valid and reliable tool that service provider can use to understand the customers expectations and perceptions about service quality and thus improve services. The SERVQUAL is multiple item scale that consists of 22 statements which measures customer expectations and perceptions along five dimensions: Tangible, Responsiveness, Assurance, Empathy and Reliability. SERVQUAL instrument is the original formulation of parasuraman et al., (1985,1988,1994) which measured service quality by undertaking extensive investigation in four service areas: Bank, credit card company, long distance telephone company and a firm offering appliance repair and maintenance services. From exploratory investigation of 1985, parasuraman et al., conclude that there are ten main determinates which customer consider when evaluating service quality: Reliability: Responsiveness Competence Access Courtesy Communication Credibility Security Understanding the customer Tangible In later study of 1988, Parasuraman et al., found that some of determinates are correlated, therefore he refined the list of dimensions and presented five high order dimensions which subsume previous ten( Amy wong). Parsuraman et al., (1988) defined these dimensions as follows: Reliability: ability to deliver or perform the promised services dependably and accurately. Responsiveness: willingness to help customers and provide prompt services. Assurance: it is concerned with the knowledge and courtesy of employees and their ability to inspire trust and confidence. Empathy: caring and paying individualized attentions/services to each customer. Tangible: physical features of service as appearance of equipments, facilities, personnel and communication material. SERVAQUAL is conceptual model, which is based on the view that customers perception of service quality is the result of gap between expectations and perceptions ( parasuarman et al., 1985,1988 cited in Patrick). Parasuraman et al., (1985) developed Gap model of service quality to identify where gap exist and to what extent: GAP 1: Gap between customers expectations and managements perceptions about those expectations. GAP 2: Gap between customers expected standards and specifications of service and managements perceptions of customers expected service standards.( specification gap) GAP 3: Gap between service quality standards and actual service delivered to customer. (Service performance/delivery gap) GAP 4: Gap between actual service delivered and service quality organization promised to deliver. (Communication gap) GAP 5: Gap between customers expected and perceived services.( perception gap) Parasuramne et al.,( cited in dr Arash) state that gaps in service quality can help firm to identify the areas where performance is lacking. Author further state, a negative service gap would facilitate firms to prioritise the performance improvement of those service features where expectations are high. If any of service gaps is turning positive, indicating that expectations are exceeding the perceptions, firm can review service feature, which they are oversupplying and can, redeploys resources into those features, which are performing below the expectations. Gap five (Perception gap) given in the above model is main driver behind SERVQUAL methodology. Although SERVQUAL model has been widely used in service industry, it has received criticisms from many authors on both theoretical and operational grounds. Francis buttle,(1996) has criticised SERVQUAL on the following basis: SERVQUAL focuses only on the service delivery process and neglects outcome quality; no adequate evidence that consumer consider expectations and perceptions gaps when assess service quality and finally five dimensions of SERVQUAL are not universally accepted. Besides huge criticism, Parasuraman et al., (1991,1994) argued that SERVQUAL is the most valid tool for measuring service quality than any other method because it uses expectation/perception gaps and with little modification, SERVQUAL can be use across business services. 1.2 Role Of Call Centre. Intensive global competition and increased emphasis on customer satisfaction has enhanced the role of call centres in service industry. Today call centre is the main source that links the organization with its customers. Call centre, by serving high volume of customers at low cost and within less time span, has become the integral part of firms marketing and customer service strategies (olukemi O sawyer,2009). David Holman (2002) state that rapid growth of call centres in service industry is attributable to its capability of reducing the cost of existing functions; provide new means of generating revenues and improving customer service quality. According to Taylor and Bain (1999) call centre: is a dedicated operation in which computer utilising employees receive inbound, or make outbound, telephone calls, with those calls processed and controlled either by an Automatic call distribution(ACD) or predictive calling system. Taylor and Bain (1999 cited in Alison M. Dean, 2002) has further described call centre in three essential parts: first the call centre is dedicated operation where employees are focused entirely on customer service function, second those employees are using phones and computers simultaneously and third the calls are processed and controlled by an automatic distribution system. Environment of call centre is very complex in nature, as it requires smooth blend of technology, human talent and process in order to work efficiently. Like other business, work in call centre also involves interaction with the customers, yet it is unique in its features. Houlihan (2001) contend that Call centres by using modern technologies facilitate management to determine the speed and volume of work. Hutchinson et al., (2000) further suggests that this system will also help firm to improve employees performance by monitoring their work on regular basis. In Call centre employees are acting as representative of the firms services. Olukemi O. Sawyerr,(2009) state that it is a positive interaction between customers and call centre employees that helps firm to determine customers perception of firms services. Today call centres serve both business as well consumer clients and are accountable to perform various business functions such as taking order, handling client inquiries, resolving complaints, dispatching, telemarketing, pre-sale and post-sale services (Alan miciak, 2001). Besides rapid growth, call centre are embraced with the challenges of retaining and attracting employees. Lack of trained staff, high workload and high level of stress are main attributes of call centre environment, which foster high turn over (Olukemi O. Sawyerr, 2009). Recruitment of staff of the wrong personality type is also the endemic reason of high turn over in call centre industry (Barnes 2001, p. 3) Taylor and Bain, (1998) has resembled the working environment of call centre with the assembly line production. Call centre environment rarely encouraged team working among employees as performance of employees is measured on the basis of individual interaction with the customers (olukemi O sawyer ( 2009) . Varca (2001) further argued that, in call centre employees have less control over a job, as information delivered by employees to customers is previously scripted and interaction take place between them is not face to face 1.3 Call centre management: Complex nature of call centre environment poses great challenge for managers to control the operations of call centre. In call centre managers responsibility is two fold. In one hand they are responsible to take capital-intensive decisions and introduce latest technology to cope up with the technological development; on the other hand they are responsible for handling call centre employees who work on shift pattern (George Robinson, 2006). Call centre operations are equipped with advanced technological features such as ACD, ANI (automatic number identification) and DNIS (number identification service). ACD (Automatic call distribution) controls inbound calls traffic; place these calls in queue and then transferred them to call centre agents according to priorities. Moreover ANI and DNIS technology provide comprehensive database of customers and call handling statistics (Paul R. Prabhaker,) By using above technologies, managers can track: number of calls answered per agent, average speed to answer call, number of calls abandoned and time taken to abandon, occupancy rate of agent, number of calls answered within standard time frame, calls waiting longest in queue, agents sitting idle, agents on calls and agents on breaks or completing post call wrap up work (George Robinson, 2006). This information enables manager to set targets for call centre agents and achieve desired results. In call centre management, technology plays crucial role as it not only helps to determine the speed of work but at the same time it provides the means to measure quality of work and worker performance (Callaghan and Thompson, 2001). According to Bain et al., (2002), call centre management requires both hard and soft measures; hard measures includes number of calls answered, while soft measures consist of relationship between call centre employees and customers. Audrey Gilmore (2001) has described tangible and intangible dimensions of service quality offered by call centres employees. Tangible aspects are easy to measure and consist of number of calls answered, length of calls, average calls time and standardized response, while intangible dimensions are difficult to measure and include courtesy or empathy customer experiences from call centre service. Author further states that call centre management often consider tangible dimensions of service delivery to judge the employees performance that result employee frustration and stress. Retaining and attracting call centre employee having high performance calibre is the significant challenge in call centre management. It has been proved by research studies that selection criteria developed for hiring call centre staff is at the minimal attention of management. When hiring call centre staff, it is imperative for management to consider personality traits of the employees in order to make sure that they will be high performer and can deliver quality services in stressful environment (Olukemi O. Sawyerr, 2009). Author has presented FFM (five factor model) that illustrate the relationship between five dimensions of personality (conscientiousness, agreeableness, emotional stability, extraversion, and, openness to new experience) and performance of call centre employees. Performance could be service performance, turn over intension or absenteeism. It is often viewed that management of call centre is measuring what is easy to measure rather than what is important to measure (Call Centre Management, 2000, p. 5). Alan Miciak, (2001) state that firms are more interested in measuring customer satisfaction with the product and service offered by business rather than customer satisfaction with call centre performance. Author further argued that to assess call centre performance, manger often utilizes measures as: average talk time; abandon rates; calls per hour and occupancy rate that are based on telephone technology and may not be true indicators of performance measurement. Australian Council of Trade Unions (2002, p.30) claims that measurements used by call centre to evaluate performance are highly focused on productivity rather than quality. Research work of various author presented above has placed emphasis on soft than hard measures; tangible than intangible dimensions; quantitative than qualitative measures for evaluating call centre performance. These measures can only monitor and control efficiency of call centre in handling high number of calls, while measuring quality of service delivered by call centre agents is far away from these measures. 1.4 Role of call centre employees: What the business thinks it produces is not of first importance; what the customer thinks he is buying and considers value is decisive; it determines what a business is (Drucker, 1989). Customer satisfaction which usually comes at the cost of high service quality, is essential for organization success as it provides firm, profitable means to differentiate it self from others. Service quality is an important factor that, if delivered efficiently by firms front line employees, can be main driver of firms sustainability (Carlzon, 1987). In call centre, employees play very essential role in delivering high customer quality and thus facilitate management to establish large customer relationship base (Frenkel et al., 1998). Call centre employees are also recognized as front line employees, customer contact representative (CCR) or customer sales representative (CSR) as they are directly engaged in the process of service delivery and maintain high level of interaction with the customers. Service organizations are now developing high number of measures, for reducing employee turn over as well as improving employee satisfaction. Robinson and Morley (2006) state that high turn over bring significant cost impact for both firms and shareholders. This cost includes direct cost of recruiting, inducting and training new staff and indirect cost that comes in form of reduced customer service. Employee satisfaction is crucial for evaluating service quality from customer perceptions. Satisfied employees are highly motivated, perform job with efficiency, delivering high level of quality services (Prabha Ramseook-Munhurrun, 2009). Edvardsson et al., (1997) further suggest that employee satisfaction can reduce employee turn over, improve productivity and enhance commitment and creativity. Call centres are now being criticized for their inadequate staff management practices. Research on service environment has concluded that some times call centre environment itself restricts the ability of employees to deliver high quality customer services. In call centre employees are called emotional labour and are forced to achieve productivity goal while delivering quality customer services (Alison M. Dean, 2009). Audrey Gilmore (2001), state that call centre employees are under a continuous pressure of answering high number of calls as their performance is measured by how quickly they respond to customers inquiry rather than quality of the call. MacDonald, (1998a, 1998b) further argue that excessive emphasis on quantitative rather than qualitative measures for judging employees performance is the main cause of employee unproductive behaviour. 1.6 Quality Management System: Reevs and Bednar (1994) have defined the term quality as an excellence, value, conformity to specification, meeting customer expectation etc. Excellence in service industry involves providing customers a desired satisfied service by knowing the demands of the customers at first instance. Value involves gaining higher profit margins by maintaining quality as priority, which attracts customers to become the part of the system. Conformity to specification and meeting customer expectations involves developing such a system, which guarantee error-free operations and delivering the desired and satisfied operation output. A product is always valuable and acceptable if the quality standards set by customers are lined up with the product and this can be done by quality management system. Establishment of the quality management system in an organisation provides a priority control over the organisations activities with continues improvement in its performance. Quality management system are mainly implemented for enhancement of the organisations work force and its abilities in providing the product and services according to the customers expectations as well as optimising the resources in terms of value for money (VFM). According to (Dean and Bowen, 1994; Prajogo and McDermott, 2005; Sousa and Voss, 2002à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦.infrastracture) quality management system provides key assurance in achieving the goals and objectives of an organization listed in its policy and strategy. Quality management system provides reliability, diligence and satisfaction in terms of process, procedures, equipment, etc and interacts with all other activities starting from customers perceptions to customers expectation for satisfying their requirement. The term quality control and quality assurance are often mixed up in line discussion of quality management system but these two terms are exceptionally different in meaning. The word quality control is more over related to product and services which identifies the satisfactory of end result, where as quality assurance is process-oriented which identifies whether the process that was carried out is applicable to meet desired objective. 1.6.1 Quality control: Quality control is a commitment to quality; usually stressed more in organization to ensure that examination of quality is applicable to specified standards and can the current system follows the planned actions. Quality control not only includes material and process but also all those elements, which begins from raw material/service introduction to finished goods. 1.6.2 Quality Assurance: According to (James R. and William M. 1996) Quality assurance is the assurance of total efforts involved in planning, organizing, directing and controlling quality in production system with the objective of providing the consumer with product of appropriate quality. Quality assurance is a systematic approach to pursuit the quality (Collins, 1994) and it approaches through quality assurances of product/services that determines whether the expected demands of the customers are satisfied according to their expectation. Usually organizations follows innovations and value added techniques to their plans and strategies in order to implement such system, which must outfit to the customers satisfaction. According to (Moreno-Lonzo and Peris, 1998) purpose of quality assurance is the conformance of the product, service and process with given requirement and standards. 1.6.3 Costs of Quality According to (Norman .G and Greg .F 1999) all those costs, which are lined up for managing quality, customer satisfaction, market share, profit enhancement can be identified as quality costs. Quality cost can be source to the identification of the opportunities and creating funding priorities for quality improvement through Pareto analysis. Further more (Dale H. Basterfield 1994) stated that Pareto analysis focuses on the quality problematic areas and once the quality issues are being resolved then it measures the effectiveness of the actions taken against quality issues. Following are the components to the cost of quality. Design Costs Appraisal Costs Internal Failure Costs External Failure Costs 1.6.3.1 Design Costs: Design costs are those costs, which are specially designed to prevent the error, which leads to poor quality. Maintaining quality system and providing customers a desired service involves dealing with high prevention cost, which includes dealing with quality planning cost, maintaining process control cost, developing human skills by training cost etc. 1.6.3.2 Appraisal Costs: All those costs which are attached in assuring the quality of products or services, are known as appraisal costs. Purchasing appraisal cost, operation appraisal cost, miscellaneous costs are the examples of the appraisal costs. 1.6.3.3 Internal Failure cost: Before to deliver the product or service to the customer, the product is passed through various operation where quality is inspected many times, so at anytime if the quality is not proved to be satisfactory then the unfinished product or service is being used as scrapped item or in some case the product is again sent through the earlier process until product claims to be in desired quality. All those costs that are involved maintaining the product quality internally are headed under the internal failure cost this may includes product or service design failure costs, purchasing failure costs, operation failure costs etc. 1.6.3.4 External Failure Costs: External Failure costs are often considered as high cost of quality management. When the product or services are ready to be delivered to the customers there are often some uncertainties attached that might includes customer found defects or product was unsatisfactory to the customer expectations, so all those cost which are incurred to correct the product or services can be headed as external failure cost. The real life example includes Toyotas Lexus safety recall 2010. 1.7 Total Quality Management: Total qual

Eskimo Pie

Eskimo Pie Case Part 1 â€Å"As an advisor to Reynolds, would you recommend the sale to Nestle or the proposed IPO? † Subpoints: 1. The managers of Eskimo Pie wanted to find an alternative to Nestle’s acquisition offer for one main reason: Eskimo pie would lose its independence. If Nestle went through with the acquisition, Eskimo would not continue its tradition of being a stand-alone company in Richmond with this meaning that its headquarters and management staff would probably be replaced too.Fundamentally, Eskimo was reluctant to being acquired by Nestle because it felt it would be an aggressive takeover of the company. It would ruin a 70-year long business to take advantage of its tax conditions and it would probably transform the business similar to a traditional integrated manufacturing and marketing approach. 2. David Clark knew that Goldman Sachs had a long-standing relationship with both Reynolds and Nestle. This meant that GS had a conflict of interest in this acquisition.The solution that would best satisfy GS’s interests would be to sell Eskimo to Nestle but this might not be the best solution for Eskimo. So David Clark is dealing with Wheat First Securities instead of Goldman Sachs because he wanted to find an alternative to Nestle’s offer. Since Wheat First Securities had no long-standing relationship with neither Reynolds nor Nestle, it had no conflict of interest in this acquisition. It could see with more objectiveness which acquisition is the best for Eskimo.Furthermore David had personal interest in dealing with WFS because his own position could be put at risk by a Nestle acquisition. 3. IPO alternative: Bulls| Bears| * Good IPO market conditions, in terms of number of deals and value| * No exploitation of possible synergies with competitors, confirmed by Nestle as the major bidder| * Updated forecasts containing results (Sales, Net Income, Capex) better than expected| * Timing – an IPO offer would take a l onger time than a private sale| * Proceeds from the sale at least equal to Nestle’s offer in the worst hypothesis ($14 share rice)| * Uncertainty – related to price and future market conditions| * Less complications- no terms, provisions, negotiations, or compromises| * Lack of expertise of Wheat First Securities| * Social Benefits – saving a local company and jobs| | * Reynold would be able to get liquidity| | Part 2 1. Considering the DFCF model with the projections of Wheat First and growth of FCF of 5%, the equity value of the firm is $47. 286 million. Thus the offer from Nestle of $61 million is appealing for Reynolds, aiming to sell the company.Also the proceeds from the IPO proposed by the management and Wheat First Securities are able to adequately compensate Reynolds. Assuming a price range within $14 – $16, the net proceeds for Reynolds would be $51. 652 and $57. 230 respectively, still higher than the considered equity value. As a matter of fac t the private sale to Nestle is still the most convenient to Reynolds. 2. To value Eskimo Pie using multiples method we should decide whether to use the transaction multiple, available from the Drumstick deal, or business and market based multiples. The implied value on sales from Drumstick transaction can be used to assess the value of the company only if the two companies and deals are significantly comparable. In this case accurate information are not available and the peculiar business model of Eskimo Pie, based on licensing, makes this method not highly reliable. * Multiples based on business and market data imply the use of realized or projected values. The management of Eskimo Pie forecasts higher sales in the future years, thus using realized data to calculate the value of the company could lead to mispricing.Therefore the information of 1991 is used to implement the method. * Looking at comparable companies, two firms are operating in the same business, Empire of Carolina, Inc. and Steve's Homemade Ice Cream. Since multiples based on operating measures such as EBIT or EBITDA depend less on firm leverage and cash than those based on Earnings and we have relevant information available from those two companies, multiples like EV/EBITDA or Firm Value/EBIT seems to be most accurate. Considering the calculations in Exhibit 7 based on the Firm Value/EBIT multiple, Reynolds should sell Eskimo Pie for an amount not less than $56. 68 million. The offer from Nestle is consistent with this valuation of the company, whilst the proceeds from the IPO are sufficient to adequately compensate Reynolds only if the share price is higher than $15. 66. Notwithstanding, if we take into account the implied price using the P/E multiple or transaction multiple, the threshold to sell the company is even higher ($82. 891 and $73. 200 respectively). Thus, neither the IPO option nor the Nestle offer are appealing to Reynolds. 3. The theory says that multiples only work if the comp arison group is sufficiently comparable in all other respects.In order to know if we could use other companies’ multiples or the average of them we must see if they are sufficiently comparable to Eskimo, in other words we must see if the value drivers of the firms are approximately the same. The eligible companies in terms of business model and structure are Empire of Carolina, Inc. and Steve’s Homemade because they both market ice cream and license their formula. All the other companies having a different business model and structure will not be taken into consideration as comparable companies.As a first comparable driver we will use the operating profit margin. Eskimo has a 6,83% operating profit margin calculated on data of 1990 (exhibit 1). Carolina and Steve instead have respectively 15,38% and 11,11% operating profit margins. This tells us that†¦ The tax rate is the same for all companies therefore it is not a relevant driver in making a choice on which comp arable company to use. Since we don’t have the cost of capital and the cost of debt, we will compare the risk class and leverage among the considered companies.We can see that Carolina and Steve have very different risk classes, one is a C and the other is a BBB, Eskimo on the other hand is a BBB because to calculate the WACC we used a cost of debt correspondent to long-term bond in the BBB risk class. So this means that†¦ The leverage of the three companies are 0,07 (Eskimo), 0,08 (Steve) and 1,747 (Carolina). Carolina has a very high leverage because its debt is more than 1,5 times its equity, instead the other two have a debt which is inferior to their equity.So even if the two companies have similar business models, through a deeper analysis we found that Eskimo is effectively similar to Steve but very different respect to Carolina. Steve has a closer operating margin to Eskimo’s than Carolina. It also is in the same risk class, and its leverage is alligned wi th Eskimo’s. Carolina on the other hand has more than double of Eskimo’s operating margin. Its in a riskier class and its leverage is much higher than Eskimo’s. Therefore it was correct to use Steve’s Homemade Ice Cream as a comparable company.The only case in which we would use an average, instead, would be if the two companies were both very similar to Eskimo. 4. The fact that DFCF approach gives a lower value for the company than multiples-based approaches depends on market drivers. In particular, the case can be that the DFCF model implies a WACC that does not reflect the cost of capital and implied risk perceived by the market. As a matter of fact the market overvalues future growth opportunities, leading to high multiples on EBIT and Earnings.

Media Role in Everyday Life

Analyse the following quote: â€Å" it is because the media are central to our everyday lives that we must study them†¦ as social and cultural as well as political and economic dimensions of the modern world. † (Roger Silverstone, Why Study the Media? 1999. ) criteria understand respond to question construct logical argument key terms/concepts used accurately provide relevant examples where required Reading 1. 1 Why Media Studies is Worthwhile: Bazalgette ‘Media studies is controversial because it is still new and because it deals with things that are not only continuing to change but are also the focus of many anxieties. 2000:5 ‘Newspapers, film, radio, television and, increasingly, computer software and communications networks are generally considered to be immensely popular in ways that are not fully understood and about which there is little consensus. They are consequently blamed for all kinds of social ills, political problems and cultural degeneracy. Ea ch of these media has also, in its time, been seen as the harbinger of apocalyptic change – for better as well as for worse. Similar essay: Disagreement in Natural SciencesBut because the oldest of them – the mass circulation press – has only been in existence for little more than a century, the process of change has been too fast for anyone to arrive at definitive conclusions about what its social, political and cultural effects really are. ‘As much as everyone likes to think they rebel against their parents and teachers, and keep up to date with new ideas and technologies, we are all substantially formed through the frameworks of ideas and thought of earlier generations, and we all find change difficult. ‘ ‘Change almost always provokes strong feelings: excitement, anxiety, tension, fear, anger.The media, conspicuous and changing objects in a world that is itself changing, are a particularly public focus for these kinds of emotion and argument. There is therefore much disagreement about how the media should be understood, regulated and consumed. 2000:6 It is essential to r ecognise that media studies, even as we enter the twenty-first century is still new. ‘†¦. it is a subject still in the process of being formed. Full of disagreements and different claims as to what it is ‘really about'. It is also a hybrid subject: that is to say, the ideas and approaches that it draws upon come from many different sources. The mass circulation press, the cinema, radio, television, digital software and the internet each attracted comment, analysis and speculation from the start (2000:7) Everyone who spoke or wrote about these media was themselves already educated within existing academic disciplines and motivated by particular interests 2000:7 Nevertheless, hybrid disciplines do appear all the time: semiotics, structuralism, sociolinguistics, and many more. Media studies snaps them all up: there can never be too many different ways of analysing just what is really going on in those fleeting images. Those rapt audiences.Those smoke filled boardrooms of owners. Technology and theory 2000:8 – The media themselves change much faster than any theory. In fact it is often changes in the media – even basic technological changes – that impel changes in the academic construction of the subject. As I write this in the late 1990s we have moved into a period of what are profound changes brought about by digital technologies. Until the 1980s the term ‘media' meant what it said (although it was, and still is, widely misused as a singular noun). It refers to numbers of different ways of physically reproducing and carrying meanings.The whole point of a media text is that it moves and flows: the meaning is never ‘there' at a given moment, but in juxtaposition and sequence, in the tension between one moment and another. 2000:8 2000:9 Media studies is thus a catch-all title designating a wide variety of courses, and since these are all embroiled both in developing a coherent theoretical base and in keeping up with technological and institutional developments in the media themselves, does it even make sense to lump them all together? 2000:9 In media studies you are asked about the profit motive.In media studies you are asked this. You are asked to look at cinema and television as industries which employ large numbers of people and to understand how they work, how they are financed and why they produce what they do. 2000:10 In media studies you may be asked to think about films, television programmes or other ‘media texts' in the same way. But you will certainly also b asked to think about how they address you – or other people – as a member of a group: as British, say, or as a black person, or as a man, or even – but how often? – as all three.By asking you to think about texts in this way, and by making you investigate who made, say, a film or programme, and why, and in whose interests, media studies is essentially political. Every investigation of even quite short or trivial texts potentially leads into larger questions about power structures in society and how they are organised. 2000:10 – It is just as ‘political' to be asking questions about who owns this newspaper, who financed this film, and why; or perhaps more interestingly, who wouldn't finance that film and why, or how one kind of television programme is more likely to be made than another.The politics of the media affect our lives as much as the politics of Parliament or Congress, and can be more satisfying to investigate since the evidence is all around you every day. 2000:10 At the same time it is the inclusion of this political dimension that media students often find the most satisfying and worthwhile aspect of the subject. ‘You stop taking things at face value'. You should beware of media courses which render the subject down to a few handy maxims such as ‘the basic function of all media is to sell audiences to advertisers'.To object that this ca n hardly apply to public service broadcasting or a community video workshop is not to deny that these institutions will also have political roles to play and manipulative techniques to use. But it does reassert the principle that there is more than one way to look at any text. A political dimension to critical analysis should add complexity, not simplification 2000:10 So far, I have identified two basic principles that media studies courses are likely to have in common: using economic and political perspectives as key ways of understanding the media.These are the most characteristic differences between media studies and most other subjects. But no course will concentrate on these areas alone. 2000:11 One of the strengths – and also the challenges – of media studies is precisely that it asks you to consider texts from different and often sharply contrasting perspectives. What do you study in media studies? 2000:11 Just what – if anything – constitutes a va lid argument for studying one text, or one group of texts, rather than another? There are five main ways of answering this question? Popularity (2000:12) The emphasis might be on the phenomenon of mass audience pleasure and on understanding and legitimating the enjoyment people derive from these texts or in contrast, the aim of the analysis might be to reveal how audiences are manipulated and deluded by stereotypical or reactionary material Exemplification is an obvious ground for worthiness of study, especially when the aim is to illustrate an aspect of theory, such as genre or representation. Notoriety (2000:12)– is an interesting and useful reason for studying a text that can offer a way in to thinking about social, political and cultural contexts.Texts which are interesting to study in their own right, but whose notoriety reveals much about their conditions of production or consumption, include banned or controversial television documentaries etc ‘Such ‘case s tudies' form the starting point or central exemplar which can illuminate aspects of the media we don't normally think about or see. Turning points and groundbreaking texts could be included in the previous category, but texts can be significant without being notorious, especially in retrospect. Aesthetic value (2000:12-13) s a criterion that many media teachers would deny using as a way of selecting or judging texts. 2000:13 What is it all for? ‘It is also obvious that the media industries themselves are hard to get into and rely increasingly on freelancers, ‘2000:14: that a knowledge of history, politics, economics, accountancy, law – you name it – would be equally useful as a basis for working, as, say, a journalist or editor It is increasingly likely that, whatever job you do or whatever your domestic circumstances, there will be more opportunities for you to engage with the media, and not just as a consumer.Indeed, the field of ‘alternative' and s ubversive media production may be the one that grows fastest over the next few years (who knows? How could you tell? ) as access to technology and circulation systems widens Inside or outside the corporate producers, the new voices will come from the people who are already literate in the new media What media studies can really do is open up your understanding of how things work, how people become informed – or misinformed – and how the myths and ideologies that govern all our lives are created and sustained. Reading 1. Media and Communications: Theoretical traditions 2002:23 The field of Australian media and communications theory and research is in a unique position. On one hand, it is highly derivative†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. this is partly due to general globalisation of ideas today, but also to Australia's past as a British colony and in more recent decades, to its dependence on the United States. On the other hand, in Australia we are able to observe and compare the influences and models emanating from the metropolitan centres of the Northern Hemisphere and to selectively combine and modify them in accordance with our own national reality and place in the world -.. dentify the origins of the major paradigms or schools of thought which have arisen in European and American theory and research as they apply to media and communications; to trace the formative influence they have had on particular styles of work in Australia; and to show how they have become transformed in the process of being adapted to our experience here EUROPE VERSUS AMERICA 2002:23 .. ‘European means heavily interpretive and holistic in scope – that is, taking a macro perspective, looking down on society as a whole. Its sociopolitical stance is critical of society as it exists, and most often specifically Marxist.In its methods, it is deductive in that it applies general principles to the analysis of particular cases By contrast, the American approach is strongly empirical and micro in its scope – at its extreme, its form of knowledge relies on the direction observation of distinct phenomena, preferably controlled and measurable occurrences, like in a laboratory experiment. Its sociopolitical stance is said to be liberal or pluralistic – in other words, it is not aligned with any sector of society which has an interest in changing the world, but in that sense, it is really more conservative 002:24: However ideas do not belong to geographical territories and it is important to appreciate that, even if critical theory has traditionally been weak in the United States, Europe in fact has not only produced the characteristic critical and interpretive schools of thought, but also has a strong tradition of ‘positivism', which is much more aligned with ‘American' empiricism and functionalism (Giddens 1974). Positivism is basically the idea that the methods of natural science can and should be applied to understand and contr ol society and culture, which includes the media.Western Marxism and Ideological Critique 2002:24 In order to understand contemporary media studies, it is crucial to understand the significance of the Frankfurt School and its tradition A critique of the rise of the mass media (mainly the new media of cinema and radio in those days) which has defined one important direction for Marxist criticism ever since 2002:25 This is the ideological critique of the media Reading 1. 3 Self and Experience in a Mediated World Reading 1. 4 New Media and Technological Development A Beginner's Guide to Textual Analysis

The Future of Oxford English Dictionary

Oxford English Dictionary (OED) is probably one of the most ambitious enterprises in the world of linguistics. Started in 1858, its first edition was only completed seventy years later, with all the subsequent ones following suit – the third one is currently in the works, and although it was initially planned to be ready by 2005, current estimation is a little bit different – 2037. Thing of the Past? However, in our day and age, when the Internet gives you an easy access to dozens of referencing sources, the very necessity of such dictionary is doubted by many. Language has always been fluid and unstable, and all the more now, when new concepts are formed seemingly every day and need words to be coined in order to name them, while old concepts die out along with the words denoting them. Any unified attempt to describe and enumerate every single word in English language will be hopelessly outdated when or if it comes to fruition. But does it mean that OED is the thing of the past? People working on it now are not so sure. Although they agree that it should change its approach, format and general philosophy of work. It is certain that its current form leaves much to be desired: second 20-volume edition of OED in physical form costs a whopping $995 with a yearly online subscription being $295. Even taking into account its quality it is not the price a lot of people are ready to pay, especially when there are dozens of sources of comparable level available free on the Internet. What It Will Be Like New chief editor of OED, Michael Proffitt, is not only sure that they will be able to adapt, he thinks that we live in period when the time of dictionaries has actually come – people need filters much more than in the past. The main plans for the future are concentrated on these directions: Links to OED in digitized texts. Licensing OED’s data to third parties. Promotion of OED among students who seem to be more and more interested in the opportunities provided by web search as opposed to traditional dictionaries. Even though Mr. Proffitt says that he is going to keep to the traditions of OED and hopes that the third edition of famous dictionary will be available in printed form sometime later, he is not sure that such format has any future. He himself admits that nowadays he only uses a digital version of the dictionary – and from a person who curates the work on it, such a statement should mean something. Thus, in future we may expect something completely different, completely new, but still called OED.