Merck vs Pfizer

Evaluating Merck & Co. , Inc vs. Pfizer, Inc. Amy Lan Lan Liu Connor Buestad Raghul Subramanian Natalia Cosa ACCT 831 March 16, 2011 Table of Contents: Part 1: History, Background and Core Business †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 2 a. Merck & Co. , Inc. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 2 b. Pfizer, Inc. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 2 c.Core Business †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 3 Value Chain †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 4 Porter’s Five Forces †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 6 SWOT Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 8 Part 2: Financial Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 5 a. Profitability Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 15 b. Liquidity Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 18 c. Solvency Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚ ¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 19 Part 3: Valuation Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. .. 20 a.Residual Income †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 20 b. Cost of Equity †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã ¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 21 c. Valuation †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 22 d. Sensitivity analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 23Part 4: Recommendations †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 23 Appendix: †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 25 Appendix A: Profitability Analysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 25 Appendix B: Liquidity Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 25 Appendix C: Solvency Analysis †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 6 Appendix D: Residual Income and Cost of Equity†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 26 Appendix E: Sensitivity Analysis†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 27 References †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 28 Part 1: History, Background and Core Business a. Merck & Co. , Inc. : History and Background Information Merck is headquartered in Whitehouse Station, New Jersey. According to its website, the company was originally established in 1891 as a US subsidiary of the Merck KGaA German company. Merck became an independent company in 1917.In 1963 Merck launch the first measles vaccine, and, in 1967 launched a mumps vaccine. In 2009, Merck acquired Schering-Plough and now represent the world’s third-largest pharmaceutical company by market share. Today, the company has over 94,000 employees worldwide (2012). Merck is the third largest global healthcare company in the world. The company specializes in prescription medicines, vaccines, animal health, and consumer care products, that are marketed directly and through its joint ventures. The company operates four segments namely Pharmaceutical, Animal Health, Consumer Care, and Alliance segments (merck. om, 2012). Starting 2011, in order to drive future growth, Merck started focusing on reducing costs, making strategic investments in new product launches, and improving its research and development pipeline. Merck’s sales worldwide reached $48 billion in 2011, which was a 4% increase from 2010. With two dr ugs under review with the FDA, the company has 19 other drugs in the Phase III of development. b. Pfizer Inc. : History And Background Information Found by Charles Pfizer and Charles Erhart in 1849 Pfizer, Inc. is the largest pharmaceutical company in the world.Their main goal was to discover new drugs that would help improve the healthcare around the world. Both Pfizer and Erhart were born and raised in Germany before descending upon Brooklyn, New York, where Pfizer first opened its doors as a fine-chemicals business. The first product launched by Pfizer was used to intestinal worms, a disease that was prevalent in mid-19th century America (Pfizer. com, 2012). According to their website, in 1880, Pfizer shifted its focus to manufacturing citric acid which was the raw material for soft drink products such as Coca-Cola, Dr. Pepper, and Pepsi-Cola.In 1944, Pfizer succeeded in producing penicillin with was also called â€Å"the miracle drug. † By 1980, Pfizer was manufacturing a n anti-inflammatory drug called Feldene (piroxicam), which was the first product to generate revenue of one billion dollars from sales around the world. Today, Pfizer is known for its creation of drugs such as Lipitor used for cholesterol, Viagra used for erectile dysfunction, and Celebrex used as an anti-inflammatory (2012). The range of products sold by Pfizer has many applications in the health industry that serves in wellness prevention and treatment of a wide variety of diseases.Some of its promises drugs that are under review are potential cures for Alzheimer’s disease and cancer. c. Core Business: Merck and Pfizer share the same core business model of researching, developing, and marketing pharmaceutical products. As with any business, Merck and Pfizer are facing increasing competition and challenges, not the least of which is the expiration of patent protections on key products. There are three tools that are increasingly useful in analyzing the core business and econ omic characteristics of an industry. These include the value chain analysis, Porter’s Five Forces Model, and the SWOT analysis.The Value Chain The first tool, the value chain analysis, represents the chain of activities involved in the development, manufacturing, and distribution of products and/or services of a company. The value chain of pharmaceutical companies usually consists of research and development of drugs, drug approval by government regulators, manufacturing of drugs, creation of demand for drugs, and marketing to consumers. The analysis of each stage of the value chain can reveal the central focus and competencies of the firm, and can point to the activities that drive profit.According to Fortune 500, the leading pharmaceutical firms in 2011 were Pfizer, Johnson & Johnson, Merck, and Abbott Laboratories (CNN. com, 2011). The two companies we discuss in this paper, Merck and Pfizer, have similar value chains. Merck and Pfizer position themselves as companies that provide innovative and effective drugs and medical solutions globally. Due to the increasing threat of patent expiration and generic drug competition, both pharmaceutical companies focus extensively on research and development and new drug approval value chain activities.Both companies devote considerable internal resources on R&D, and continue to expand through acquisitions or by entering into agreements with other companies that focus on the discovery and development of new drugs. In 2009, Pfizer acquired Wyeth for $68 billion, an acquisition that is considered the largest pharmaceutical merger in nearly a decade (Hoover's Company Records, 2012). In addition, Pfizer acquired Excaliard Pharmaceuticals in November 2011, and in September 2011 it gained 70% ownership of the outstanding shares of Icagen, Inc.Merck is also constantly seeking out collaborations, licensing, and outsourcing agreements in the area of Research and Development (Datamonitor, 2011). In November 2009, it acquir ed Schering-Plough for $41 billion (Hoover's Company Records, 2012), and in May 2011 it acquired Inspire Pharmaceuticals. Pfizer and Merck focus heavily on the new drug approval process. In 2011, Merck had 2 drugs under review by government regulators and 19 drugs in last trial phase, and it also planned to file 5 major products for approval between 2012 and 2013.Pfizer had 19 drugs submitted for FDA for approval, and 5 already approved for 2011. Both Merck and Pfizer benefit from using sophisticated and efficient manufacturing and supply chains. Both companies create, move and sell tremendous amounts of product each year and therefore must rely on a dependable manufacturing system. Their manufacturing network consists of numerous manufacturing sites and distribution networks around the world. In addition to their internal manufacturing, pharmaceutical firms work with networks of external partners to produce lines of product, packaging, and active ingredients.To create demand for th eir products, both companies market extensively in multiple media outlets and encourage consumers to ask their doctors about different drugs. Merck markets its products in over 140 countries through direct sales forces and international distributors. Its customers are drug wholesalers, retailers, government agencies, and healthcare providers (Hoover's Company Records, 2012). Pfizer sells its products through wholesale distributors like McKesson and Cardinal health and it markets its products directly to doctors, hospital, nurses, employer groups, and patients.Porter’s Five Forces The pharmaceutical industry is a highly dynamic with new technologies emerging in the market quite often. Michael Porter’s Five Forces model can be used to study and verify the factors affecting the market performance of Merck & Co and Pfizer. This model focuses on the external forces that the companies must pay attention to in order to maintain their profitability. The five forces of the phar maceutical industry are analyzed below. 1. Threat from new entrants is predicted to be low in this industry due to the following reasons.The pharmaceutical industry is a high-tech industry and involves high capital costs. Economy of scale is required to keep the costs down and the established firms (Merck & Co and Pfizer) are well known for excelling in this area. The existing drugs are safe-guarded by patents at least for a particular period of time before the generic drugs hit the market. This gives companies like Merck and Pfizer a considerable leg up on competitors. However, these patents do eventually expire, thus opening the door to more competition from generic drug makers. Product differentiation is necessary in order to attract new customers.In the field of pharmaceuticals, it is very hard to bring a differentiated product to market. New drugs undergo extensive testing by the FDA before entering the market. The drugs by the established firms get easily passed when compared to new entrants whose credibility is still uncertain. 2. Rivalry among established firms is high in the industry among players like Johnson & Johnson, Merck & Co, Pfizer, Abbott Laboratories etc. The pharmaceutical industry is high revenue industry and there is a tough competition to obtain more market share. No company owns more than 6-10 % of the market share.In addition, high costs of R and marketing are incurred by all the firms involved in this competition. 3. Buyer power would be classified as low to moderate in this industry due to the following reasons. The concentration of buyers relative to overall industry size is low. The demand for chronic and lifesaving drugs is high due to the ageing baby-boom population. The buyers have little knowledge about the industry cost structure and hence the pharmaceutical companies use this advantage to price their products higher. The patents protect the drugs from lower priced competitor drugs, but many patents are expiring. . Supplier po wer is considered medium to low in the industry. The supplier switching costs incurred by pharmaceutical companies like Merck and Pfizer is low. The threat of forward integration by suppliers is low due to lack of knowledge and expertise. Differentiation of the supplier products is low because they have a wide range of applications, with the biotech firms being one of them. 5. Substitute products always present a challenge to companies operating in the pharmaceutical industry. This can be attributed to the following factors.Biotech firms like Amgen are beginning to market their own products, unlike the traditional method of selling them to pharmaceutical companies like Merck and Pfizer. This presents a new segment of competitors that can provide substitutes. Increasingly, patients can use medical alternatives such as surgery, homeopathic remedies, acupuncture and herbal medicines. The overall healthcare industry is very dynamic and always changing. New products and healing methods a re constantly being developed, some of which could serve as substitutes to existing treatments offered by Merck and Pfizer.SWOT Analysis Merck & Co. SWOT Merck is the third largest healthcare company in the world. Over the years, a large investment in R has enhanced the company’s top-line growth. However, new competitors and large cost of drug development could affect their revenue growth. | Strengths |Weaknesses | |Leading market position; third largest healthcare company in |Generic brand competition | |the world. High litigation cost | |Successful launches of new products | | |Merger with Schering-Plough strengthens their industry | | |position | | |Opportunities |Threats | |Cost savings from internal restructure |US regulatory setbacks | |Expansion in emerging markets |Healthcare reform of US | |Strong pipeline | | Strengths Leading Market Position; Third Largest Healthcare Company in the World Merck is a well-known and respected company worldwide. One of their great est strengths is their leading market position. Merck’s worldwide sale totaled $48 billion in 2011, an increase of 4% compared to 2010.The increase of revenue is mainly due to the company’s signature products such as Singulair, Januvia, Remicade, Zetia, Vytorin, Janumet, Isentress, Nasonex, Gardasil, and Temodar (Datamonitor, 2011). Successful Launches of New Products Merck has a proven success record for launching new products. Since 2006, it has successfully launched 10 new therapeutics, including Victrelis, a treatment for chronic hepatitis C (2011), Elonva, a corifollitropin alpha injection (2010), Janumet, a treatment for diabetes, Isentress, an HIV integrase inhibitor (2007), Gardasil, a drug that could prevent diseases caused by HPV, and Januvia, a cure for type 2 diabetes (2006) (Datamonitor, 2011). Merger with Schering-Plough Strengthens Their Industry Position The merger with Schering-Plough has certainly strengthened Merck’s industry position.Schering -Plough owned many popular pharmaceutical drugs such as allergy drugs Claritin and Clarinex, anti-cholesterol drug Vytorin, and a brain tumor drug Temodar. Schering Plough had 1. 4% market share in the U. S. , 17th in the top 20 pharmaceutical corporation by sales (Datamonitor, 2011). Weaknesses Generic Brand Competition Merck pharmaceutical products have traditionally accounted for most of their total sales. One weakness is the competition Merck faces with generic brands. Due to the current economy, we tend to estimate people will shift to more inexpensive and generic brand products. This can cause sizable losses for Merck’s total revenue. High Litigation CostsMerck continues to face litigation related to their Vioxx recall, a drug that is used to cure arthritis and acute pain. In 2004, Merck withdrew Vioxx off the market because it cased potential cardiac attacks among the patients who took it regularly for a period of 18 months or longer. During 2010, Merck was forced to s pend around $140 million in legal defense costs (Datamonitor, 2011). Opportunities Cost Savings from Internal Restructure Merck has emphasized the idea of decreases costs in order to drive greater efficiencies within the company. According to Datamonitor’s SWOT analysis, Merck hopes to reduce costs by $3. 5 billion annually beyond 2011 (2011). Expansion in Emerging MarketsMerck has strengthened its international market share by signing exclusive agreements with other established companies to co-promote and distribute a number of products. For example, Merck and Johnson & Johnson agreed to govern the rights to distribution of Remicade and Simponi. Remicade is a treatment for nasal allergy and Simponi is an asthma treatment for patients above the age of three. According to the agreement with Johnson & Johnson, Merck is allowed to market Simponi and Remicade in Asia, Canada, Africa, The Middle East, and Central and South America as of July 1, 2011. In addition, Merck exclusively markets these products in Turkey, Russia, and Europe.These two products brought in 70% of Merck’s revenue from 2010 (Datamonitor, 2011). Strong Pipeline Datamonitor expects that Merck’s 20 new products will add combined annual sales of more than $7 billion to its top-line by 2015 (2011). â€Å"While Merck retains its internal focus on pipeline productivity, half of its new launches were obtained in the company’s merger with Schering-Plough. Recently Merck has had considerable success with a number of new launches since moving into its core portfolio. It will look to replicate this success with the pipeline programs it has inherited from Schering-Plough as well as with those it has been developing prior to the merger. † Threats US Regulatory SetbacksUS regulatory setbacks include terminations of Merck’s treatments such as for Tredaptive for atherosclerosis, and Taranabant for obesity. The potential for further setbacks and termination can be a conc ern for Merck’s brand image during the drug development stage. There could also be threats for the clinical and regulatory failures with developing Saphiris (schizophrenia), boceprivir (hepatitis C) and TRA (Datamonitor, 2011). Healthcare Reform of US The recently enacted US Healthcare Reform could decrease Merck’s profit margins. According to Datamonitor, Merck incurred additional expenses from increases in Medicaid rebates, which increased from 15. 1% to 23. 1% for the branded prescription drugs.Being in the Medicare Part D coverage gap, Merck was required to pay a 50% discount utilization required by law in 2011. In addition, Merck expects to Also, beginning in 2011, Merck expects that it will pay an additional annual health care reform fee, which will be calculated as a percentage of the industry’s total sales of branded prescription drugs to specified government programs. The fee was $2. 5billion for 2011 (2011). Pfizer Inc. SWOT Pfizer is the world's large st research-based pharmaceutical company and still remains the strongest industry player in terms of sales and marketing capability. However, Pfizer relies on a large-scale M&A structure and lacks some key aspects of an organic sales growth model. Strengths |Weaknesses | |M&A to gain economies of scale |Difficulty in gaining market share due to already | |Strong advertising capabilities |established position in the market | |Acquisition of Wyeth in 2009 |Heavy reliance on Lipitor franchise | |Opportunities |Threats | |Acquisition of King in 2010 |Difficulties in achieving organic sales growth | |Enhancing established products in emerging markets |Development setbacks of Sutent and Chantix/Champix | |Decreasing cost structure | | Strengths M&A to Gain Economies of Scale Pfizer has used large-scale acquisitions to establish and maintain its position as the biopharmaceutical industry's leading player. Since 2000, Pfizer acquired four big pharmaceutical companies: Warner-Lambert, Pharma cia, Wyeth, and King Pharmaceuticals. Pfizer acquired Wyeth in 2009. Wyeth was known for manufacturing over-the-counter drugs such as Robitussin and Advil, around $3 billion in sales annually. The acquisition of Wyeth enhanced Pfizer’s position as the industry's largest prescription pharmaceutical manufacturer.According to an article from MarketWatch, Pfizer’s large economies of scale growth also enhanced the company's ability to implement restructuring programs designed to reduce costs and drive profitability, while maintaining a steady increase in R expenditure (2012). Strong Advertising Capabilities According to MarketWatch, Pfizer has a strong marketing and sales infrastructure that helps grow sales for new products as well as mature product that face strong competition from generic competition. According to MarketWatch, â€Å"The most visible illustration of Pfizer's sales and marketing capability is the significant revenue stream recorded by Pfizer attributable to third party products marketed under-license in selected geographic markets. In short, Pfizer remains a marketing partner of choice for many medium and smaller sized prescription pharmaceutical players† (2012). Acquisition of WyethThe acquisition of Wyeth gives Pfizer an immediate access to many well-known biologic and vaccine products such as Enbrel, an anti-inflammatory product and Prevnar, a vaccine. Pfizer’s financial statement 2011 stated the worldwide revenues from biopharmaceutical products in 2010 were $58. 5 billion. This was increase of 29% from 2009, primarily attributed to the addition of operational revenues from Wyeth products of approximately $13. 7 billion (Datamonitor, 2011). Weaknesses Difficulty in Gaining Market Share Given Pfizer’s current market share (world’s largest research-based pharmaceutical company), it will be difficult for the company to continue to grow at the historical rate of sales without further use of large-scale M&A .According to MarketWatch, â€Å"Pfizer's 15 established blockbuster products in 2010, only a few products, including the neuropathic pain therapy Lyrica (pregabalin), are forecast to deliver a positive sales growth contribution through to 2015 (2012). All other products, including Lipitor, will deliver net negative sales growth, primarily due to generic exposure. † Heavy reliance on Lipitor franchise According to the analysis of MarketWatch, â€Å"Pfizer's blockbuster portfolio is dominated by the Lipitor franchise, which generated global sales of $10. 7 billion in 2010 (2012). However, Lipitor revenue growth slowed substantially since mid-2006 due to the ‘indirect generic impact' of therapeutic substitution via loss of patent exclusivity for Merck & Co. ‘s rival statin Zocor.With the Lipitor patent expiration set to occur in mid-2011, exposure of this one product to generic competition will have a significant impact on the overall performance of the company. â €  Opportunities Acquisition of King in 2010 Pfizer acquired King Pharmaceuticals on Oct 12, 2010, the world's 39th largest pharmaceutical company that focuses on pain management. Its product includes Altace for heart attack prevention, and Sonata, a sleeping aid. According to MarketWatch, â€Å"the acquisition of King represents the latest stage in a diversification strategy implemented by Pfizer over the past two years, as it seeks to prepare for the loss of patent exclusivity on its best-selling prescription pharmaceutical product Lipitor (atorvastatin) in late 2011.King is a leading developer of analgesics and its integration will broaden Pfizer's pain offering to include opioid drugs with anti-abuse technologies (2012). Datamonitor currently forecasts that King's total revenues will increase at a CAGR of 11. 3% during 2010-15, from $1. 2 billion to $2 billion† (2011). Enhancing Established Products in Emerging Markets Pfizer established two independent business units, one focused on established products and the other focused in emerging markets. The goal is to bridge emerging markets with established products. Pfizer, like Merck, plans to expand to the emerging markets by collaborating with local players to source branded generic products. Decreasing Cost StructurePfizer’s aim to grow profit will be depending on its continued use of a decreasing cost structure. According to MarketWatch, Pfizer forecasted the acquisition of Wyeth will save $3 billion by the end of 2012 (2012). Pfizer’s reason for the large-scale M&A is to cut cost substantially (by not having to invest in R&D and the development of new drugs) to drive increased profitability (by leveraging what other companies have developed). Threats Difficulties in achieving organic sales growth Pfizer success relies heavily on large-scale M&A and lacks organic sales growth. Datamonitor believes that further large-scale M&A activity will be undertaken by Pfizer because of growing competition of generics (2011).Pfizer's own R operations will find it difficult to keep up with the historical M for its organic growth. Development setbacks of Sutent and Chantix/Champix Sutent, a treatment of advanced renal cell carcinoma, experienced development setbacks. Sutent’s revenue growth depends partially on approval in additional tumor types; the termination of clinical trials in both colon cancer and breast cancer indicates that the product's performance in the marketplace could suffer. In addition, Pfizer also experienced setbacks in Chantix/Champix, smoking cessation therapy. Revenue declined mainly due to the updated labeling to warn of neuropsychiatric symptoms.As DataMonitor pointed out, â€Å"further failures in clinical trials of Sutent and other products could significantly affect Pfizer's sales growth† (2011). Part 2: Financial Analysis a. Profitability Analysis (Appendix A) Using return on assets (ROA), return on common equity (ROCE), and earning s per share (EPS), one can properly illustrate the profitability of Merck and Pfizer. Merck’s ROA decreased significantly from 2009 to 2010, dropping from 16. 8% to 1. 29%. This decrease was attributed to a decline in net income and profit margin. After their acquisition of Schering-Plough, Merck was left with higher costs, such as an 88% increase in R expense and a 55% increase in Marketing and Administrative Expenses. Total costs increased by 265%, while sales increased by only 67%.Net income also decreased in 2010 due to an increase in Other Expenses attributable to the Schering-Plough merger, an exchange loss of $200 million due to two Venezuelan currency valuations, and a $950 million charge for the Vioxx Liability Reserve. The disaggregated ROA showed a decrease in profit margin as well, from 48. 9% in 2009 to 3. 06% in 2010. A year after the merger, Merck’s ROA bounced back to 6. 7%, which is closer to the industry average of 11% (CNN. com, 2011) by decreasing s ome expenses (R, Materials & Production) and an increase of $2 million in sales. Pfizer’s ROA shows a similar decreasing trend for 2010. Its ROA decreased from 9. 03% in 2009 to 4. % in 2010 due to deductions related to asset impairment charges that were $1. 3 billion higher in 2010 than in 2011, due to the Wyeth acquisition in 2009 and litigation related to their subsidiary Quigley Company, Inc. The ROA has increased in 2011 to 5. 83% because the costs and expenses decreased by $3 million. The disaggregated ROA shows both the decrease of asset turnover and profit margin from 2009 to 2010, and the increase in both for 2011, showing that the operation profitability is getting stronger. However, we believe that both firms’ profit margins are healthy when compared to the industry average of 16. 7% (yahoofinance. com, 2012)After comparing the Asset Turnover, Profit Margin, and ROA for both companies, we can conclude that both are starting to improve in regards to profitabi lity, after their acquisitions in 2009. However, Merck seemed to be using its assets more efficiently to generate sales than Pfizer in 2011. Merck also had a higher ROA. However, both companies are below the industry average ROA of 11% and below the ROAs of competitors (Johnson & Johnson ROA is 8. 5% and Abbott is 7. 8%) (CNN. com). Return on common equity helps to explain how well a company uses its investment dollars to generate profits. ROCE can be very important to shareholders as it informs common stock investors how effectively their capital is being reinvested.Merck’s ROCE decreased significantly in 2010 due to the acquisition of Schering-Plough, which led to a decrease in Net Income due to the cost of acquisition (increase in R, and increase in marketing, administration, materials and production expenses), and an increase in Shareholders’ Equity. Pfizer’s ROCE declined marginally in 2010 as well, due to the acquisition of Wyeth. However, both companies w ere back to normal operations in 2011 and had similar ROCEs, around 11%, which is considered the average percent for publicly traded companies in the US. This means that both companies have healthy ROCEs and are generating healthy returns to shareholders.The desegregated return on common shareholders’ equity reveals a decrease in the financial leverage of Pfizer from 2. 29 in 2010 to 2. 25 in 2011. Merck’s financial leverage is constant, 1. 92 in 2010 and 1. 93 in 2011. We conclude that both companies are not heavily leveraged by short and long term debt, which shows that they are less risky financially. The disaggregated ROCE also reveals low asset turnover ratios for both companies and this is not uncommon for companies with high profit margins in the pharmaceutical industry. Finally, Earnings per Share is also used to assess a company’s profitability. EPS allow us to compare the companies’ power to make a profit. This means that Merck’s Price Ea rnings Ratio performs better than that of Pfizer’s.Whereas Pfizer’s EPS has been constant for the last three years (around 1), Merck experienced a significant decrease in 2010 to 0. 36 for diluted. The notes of their financial statements list the following reasons for the decrease: R impairment charges, restructuring and merger with Wyeth (had to recognize a full year of amortization of intangible assets and inventory set-up), legal reserve deductions related to Vioxx, and the US healthcare legislation reform. Non GAAP results were evaluated as well, and we believe these results give a better understanding of the performance of the company as they exclude the non-recurring costs mentioned above. b.Liquidity Analysis (Appendix B) The following section analyzes the short term liquidity risk of Merck and Pfizer. The Current Ratios for both companies are healthy, above 1, which means that they both have substantial cash and near-cash assets available on their Balance Sheet to repay their obligations within the next year. The Quick Ratios for both companies is also healthy, above 0. 5, which means that both companies have liquid assets on hand to repay their short term obligations. The Operating Cash Flow ratio is similar for both companies, above 0. 4, which means that both companies generate enough cash flow from operations after funding working capital needs.According to the notes of the financial statement, Pfizer’s lower rate in 2010 was attributed to certain tax payments made in connection with the increased tax costs associated with the Wyeth acquisition and therefore, the decrease in net cash flow from operations. From analyzing the Revenue to Cash and Days Revenue Held in Cash ratios, it is noticeable that Pfizer has less cash on hand. Pfizer has less cash because they are more focused on M. Pfizer spent 3. 3. billion on acquisitions in 2011, while Merck spent just 3. 7 million. Merck has a healthy ratio for accounts receivable turnove r. Merck’s accounts payable turnover is almost double that of Pfizer.These findings show that Merck is paying their supplier twice as fast as Pfizer. Pfizer’s lower ratio might be due to the fact that its creditors allow more time to pay off its debt. The Accounts Receivable and Inventory Turnover ratios are also pretty high and pretty similar for both companies. This means that both firms are selling inventory and turning accounts receivable into cash relatively quickly. However, it looks like Merck is collecting money from customers faster and turns inventory over quicker than Pfizer. Overall, we believe that both firms have healthy short term liquidity. c. Solvency Analysis (Appendix C) The following section analyzes the long term solvency risk of Merck and Pfizer.The Liabilities to Asset Ratio reveals that both Merck and Pfizer finance their companies with approximately 50% debt and 50% equity. However, Merck’s ratio is a little lower, with around 45% debt a nd 55% equity financing. As can be noticed in the table, the Liabilities to Shareholders’ Equity, Long Term Debt to Long Term Capital, and Long Term Debt to Shareholders’ Equity ratios are healthy, which means that both companies will have no problems meeting long term obligations and are not heavily financed by debt. The Interest Coverage ratios for 2011 reveal that both companies are able pay interest on outstanding debt and can carry additional debt as well.Therefore, their credit risk is considered low. The Operating Cash Flow to Total Liabilities ratios are around 20% or higher, which means that both firms generate enough cash flow from operations to service debt. Both firms experienced a lower ratio in 2010 due to increased tax costs for the acquisition of Wyeth for Pfizer and due to increased costs associated with the Schering Plough merger and the Vioxx impairment charges for Merck. The liquidity and solvency analysis revel that both firms are not experiencing any financial distress. However, we consider Merck less risky that Pfizer because Merck relies less on debt and more on equity financing. Part 3: Valuation AnalysisAs outlined above, profitability, liquidity, and solvency all go a long way in providing analysts with viable information used to measure the performance of a firm. In addition to these measures, residual income, cost of equity, and valuation can also be used when analyzing companies such as Merck and Pfizer. a. Residual Income (Appendix D) We started our valuation analysis by calculating the residual income for both Merck and Pfizer. In order to achieve this, we used the companies’ 10K reports from 2009-2011 to project the forecast for 2012-2016, a five-year time frame. The method we used for this forecast was the same method used to project the residual income. Pfizer’s residual income for 2012 was $82,621million while Merck’s was $54,517million.Please note that all numbers in our calculations are i n millions. Our valuation was based on the assumption that both companies will grow by an average rate in the following years. We took into consideration three factors: the current growth rate, past growth rate and macroeconomic factors. Both Merck and Pfizer are in the maturity phase of their growth cycles and show steady growth figures. Residual income growth for Merck was negative for 2010, however we believe this was due to Merck’s merger with Schering-Plough Corporation. In 2007 and 2008, Merck showed a positive double-digit growth. In 2011, residual income growth was virtually flat, at 0. %, however we believe this is also due to the Plough acquisition. For Pfizer, residual income growth figures for the previous three years averaged approximately 3%. Based on these values for residual income, we choose to be conservative and assume a 1% long-run growth rate for residual income for years 2012 to 2016 for both Merck and Pfizer. We chose this modest growth number because b oth companies are still adjusting to recent large-scale M activity. On a macroeconomic level, both Merck and Pfizer’s growth may be stunted by an overall down economy, the health care policy restructuring in the United States and the expiration of long-standing patents. b. Cost of Equity (Appendix D)After determining the 5 year forecast for each company, we next calculated the cost of equity. The capital asset pricing model was used to calculate the cost of equity. We used the yield on a ten-year Treasury Bill as the risk free rate which was 1. 98% (US Department of Treasury, 2012). The betas we used to calculate these numbers were retrieved from a financial website index (yahoofinance. com, 2012). The beta for Pfizer was 0. 71 and for Merck it was 0. 8342. The return on market was set at 14. 50% for both companies (NYSE, 2012). Using the Camp Model, the cost of equity for Pfizer was determined to be 10. 869%, while for Merck it was 12. 424%. Therefore, stockholders of Merck require a larger return than stockholders of Pfizer.Given that Pfizer is the number one pharmaceutical company in the world, it is implied that investors require more return from Merck than from Pfizer. c. Valuation (Appendix D) Using the growth rate of 1%, we forecasted 2012’s residual income by multiplying the growth rate by 2011 residual income. We performed the same calculation for the next five years until 2016, and then discounted it to get the present value. From 2016 on, we assumed a perpetuity growth rate, which means we assumed this company would grow forever. Therefore, we needed to calculate the current value for the company as if it were to grow at a rate of 1%, forever. We first calculated next year’s residual income by multiplying 2016’s residual income by 1%, then dividing by 2.The reason we divided by 2 was to account for the fact that the firm might not grow at a rate of 1% forever. In fact, in some cases, there might be negative growth, as Mer ck experienced from 2009 to 2010. Therefore, to be conservative, we divided the residual income in half, and then we discounted the value by the discount factor to get the present value. After we calculated the present values, we added all the values together and divided by the current number of shares outstanding to obtain the value per share. For Pfizer, the value per share was $79. 39 and for Merck $114. 93. The value we calculated is three times the amount of what the stock is currently trading at.We believe this number is high, but not unreasonable. Around the year 2000, Pfizer was trading near $50 and Merck was trading near $100. We think the current low share value is due to the overall weak economy and we believe that the share price will grow in the future. Please note that all the values of the calculations are in millions except for value per share and current share value. d. Sensitivity Analysis (Appendix E) We performed a sensitivity analysis based on changing horizon g rowth factors and discount rates (cost of equity) to show the value per share. This gives investors the value per share for a different discount rate or growth factor. Part 4. RecommendationsAfter a thorough analysis of both Merck and Pfizer based on profitability, liquidity, and solvency evaluations, we found that both companies are preforming well financially. We found that both companies use assets and investments effectively to generate profit and their profitability growth seems to be steady. The analysis of short term and long term liquidity of both firms shows no risk in their ability to generate cash to meet working capital needs, and satisfy short term and long term debt. From the valuation analysis, we can predict that the future share values of both Pfizer and Merck seem to grow at a steady rate, assuming that both companies grow at a rate of 1% each year.From an investor’s point of view, we consider that the earning per share, the price/earnings ratio, and the lev erage are important factors to consider before making an investment. |Company |EPS |Price/Earnings Ratio |Leverage | |Pfizer |2. 14 |10. 47 |2. 25 | |Merck |3. 25 |11. 95 |1. 93 | After analyzing both companies, on the basis on earning per share, the price/earnings ratio, and the leverage, we have the following recommendations for potential investors. Comparing these values for both companies (table above), we found that Merck outperforms Pfizer marginally.We believe that investment in both companies is safe, however, investment in Merck will bring a higher earnings return than a similar investment in Pfizer in the future. In addition, the financial leverage shows that the financial risk investment in Merck is lower than Pfizer’s, which makes it an even better choice for investment. However, the investor should keep in mind that the pharmaceutical industry involves high risk due expiring patents and threats from generic drugs and their profitability can be highly impacted by these events. According to a recent article on Dailyfinance. com, we found that the patents for major drugs like Pfizer’s Lipitor and Protonix, and Merck’s Singulair, which make up a large portion of the companies’ revenues, are about to expire(2011).These patent expirations cause uncertainty in the future growth of the companies and might have a substantial impact on their stock prices. Appendix A |ROA |Pfizer |Merck & Co | | |2009 |2010 |2011 |2009 |2010 |2011 | |Asset Turnover |0. 46 |0. 32 |0. 35 |0. 34 |0. 42 |0. 45 | |Profit margin |19. 50% |14. 60% |16. 50% |48. 90% |3. 06% |14. 70% | |ROA |9. 03% |4. 80% |5. 38% |16. 80% |1. 29% |6. 70% | ROCE |Pfizer |Merck & Co | | |2009 |2010 |2011 |2009 |2010 |2011 | | |10. 28% |9. 21% |11. 53% |33. 47% |1. 73% |11. 74% | |EPS |Pfizer |Merck & Co | | |2009 |2010 |2011 |2009 |2010 |2011 | |GAAP |$1. 24 |$1. 09 |$1. 10 |$5. 65 |$0. 36 |$2. 01 | |Non GAAP | | | |3. 77 |3. 42 |3. 25 | Appendix B Pfizer | |Merck | | |20 11 |2010 | |2011 |2010 | |Current Ratio |2. 0566461 |2. 1306398 | |2. 0425362 |1. 8581932 | |Quick Ratio |1. 438099 |1. 4454533 | |1. 4301631 |1. 2496004 | |Opr. CF to Current Liab. |0. 7210802 |0. 399986 | |0. 7622653 |0. 6918995 | |Revenue to Cash |19. 051992 |38. 649568 | |3. 5508832 |4. 2189908 | |Days Revenues Held in Cash |19. 158102 |9. 438314 | |102. 79133 |86. 51358 | |Accounts Payable Turnover |1. 67 |2. 11 | |3. 77 |3. 89 | |Days Accounts Payable |218 |173 | |97 |94 | |Outstanding | | | | | | |Accounts Receivable Turnover|5 |4. 79 | |6. 16 |6. 59 | |Days Receivable Outstanding |73 |76 | |59 |55 | |Inventory Turnover |1. 88 |1. 53 | |2. 78 |2. 4 | |Days Inventory Held |194 |238 | |131 |138 | Appendix C | Pfizer | |Merck | | |2011 |2010 | |2011 |2010 | |Liabilities to Asset Ratio |0. 560 |0. 540 | |0. 458 |0. 463 | |Liabilities to Shareholders'|0. 583 |0. 555 | |0. 300 |0. 290 | |Equity Ratio | | | | | | |Long Term Debt to Long-Term |0. 297 |0. 303 | |0. 220 |0. 220 | |Capi tal Ratios | | | | | | |Long Term Debt to |0. 422 |0. 435 | |0. 284 |0. 84 | |Shareholders' Equity Ratio | | | | | | |Interest Coverage Ratio |8. 600 |6. 180 | |10. 900 |3. 480 | |Operating Cash Flow to Total|0. 190 |0. 099 | |0. 300 |0. 120 | |Liabilities Ratio | | | | | | Appendix D | | |10 year |Merck's Beta|Merck's Rm | | | | | |Treasury Bill | | | | | | | |1. 98% |0. 8342 |14. 50% | | | | |CAPM |12. 2% | | | | | |Merck |2012 |2011 |2010 | | | | |Beginning SE |54,517 |54,376 |59,058 | | | | |Comprehensive Loss |3,132 |3,216 |2,767 | | | | |Income Available to Com. |57,649 |57,592 |61,825 | | | | |Shareholders | | | | | | | |Required Income |-222 |-222 |-221 | | | | |Residual Income |57,427 |57,370 |61,604 | | | | |Changed in Residual Income | |0. 10% |-6. 7% | | | | | | | | | | | | | |2012 |2013 |2014 |2015 |2016 |CV | |Projected Residual Income |57,427 |58,001 |58,581 |59,167 |59,759 |30,178 | |Discount Factor |1. 12424 |1. 2639156 |1. 420944 |1. 5974826 |1. 795954 |0. 2051731 | |Present Value |51,081 |45,890 |41,227 |37,038 |33,274 |147,086 | | | | | | | | | |Total Value |355,596 | | | | | | |# of Share Outstanding 3,094 | | | | | | |Value per Share |114. 93 | | | | | | |Current Share Value (5/4/12) |38. 84 | | | | | | | | |10 year Treasury|Pfizer's |Pfizer's Rm | | | | | |Bill |Beta | | | | | | |1. 98% |0. 71 |14. 50% | | | | |CAPM: |10. 7% | | | | | |Pfizer |2012 |2011 |2010 | | | | |Beginning SE |$82,621 |$87,813 |90,014 | | | | |Comprehensive Loss |-4,129 |-3,440 |552 | | | | |Preferred Dividends |45 |52 |62 | | | | |Income Available to Com. |$86,705 |$91,201 |89,400 | | | | |Shareholders | | | | | | | |Required Income |3,142 |4,520 |4,510 | | | | |Residual Income |$89,847 |$86,681 |84,890 | | | | |Changed in Residual Income | |3. 65% |2. 1% | | | | | | | | | | | | | |2012 |2013 |2014 |2015 | |CV | | | | | | |2016 | | |Projected Residual Income |89,847 |90,745 |91,653 |92,569 |93,495 |47,215 | |Discount Factor |1. 10869 |1. 22919352 |1. 3627 |1. 5109 |1. 6751 |0. 1653 | |Present Value |81,039 |73,825 |67,254 |61,267 |55,813

Success, challenges and future prospects of IS outsourcing in the UK: A case study of an UK company outsourcing most of its IS activities.

Outsourcing has become increasingly attractive for many organizations. In such relationship, a company contracts with a vendor that rents its skills, knowledge, technology, service and manpower for an agreed-upon price and period to perform functions the client no longer wants to do. Much attention has focused recently on the outsourcing of IS/IT services to countries such as India and the Philippines. Indeed outsourcing any business activity creates potential risks as well as benefits.Companies can find themselves overly dependent on suppliers, and they can lose strength in strategically core competencies. Interestingly, given the importance of the outsourcing decision and the amount of academic and practitioner literature on it, there is surprisingly little consensus about the topic, probably because of the multiplicity and complexity of the factors involved. In this section, the authors identified six key factors that companies should consider when making outsourcing decisions. Th e framework, which helps assess the pros and cons of outsourcing, can be applied specifically to IS/IT functions.Changes in the broader business environment are affecting nearly every aspect of how companies manage their human resources, altering the balance of pros and cons for outsourcing IS/IT business process. First, conflicting pressures in the labor market have brought the role of human resources to the fore. On the one hand, the 1990s bought the so-called war for talent for IT professionals. On the other hand, intensifying competitive pressures have forces companies to be more aggressive in cutting costs, often by reducing head count.Human resources have had to manage such downsizing, while also trying to be innovative in attracting and retaining valuable employees. Second, IS/IT themselves have become the target for belt-tightening efforts, and they must now find ways to provide more value at lower cost. Many have argued that the key is to focus on activities that are essent ial and outsource the rest. Third, the growing complexity and increasing regulatory changes in the legal environment for human resource management, in particular in the areas of health care, stock-related compensation, overtime-pay calculations, pension reform, and eligibility for contingent workers.This has driven demand for outsourced IS/IT activities from vendors that are subject-matter experts. Globalization poses a comparable challenge, requiring IS/IT departments to address the needs of the business and moving between different countries and markets. Lastly, mergers and acquisition have become increasingly frequent, creating huge IS/IT integration challenges. Often, IS/IT is charged with the simultaneous tasks of integrating and managing the technologies and business processes in the face of continuous change. Problem StatementThe primary objectives of this dissertation will be to investigate the issues involved in factors affecting the success or failure of outsourcing IS/IT activities. Before doing this however there will have to be a thorough examination of the current state of global IT outsourcing services. The main task of the research is to find out what actually makes outsourcing work for Welsh Water. Challenges of having multiple suppliers and the steps Welsh Water undertakes to make outsourcing success. The following is a list of objectives which the author aspires to accomplish in the dissertation:– To analyse the objectives for outsourced services, selecting outsourcing suppliers, benchmarking. – To research contractual aspects of ‘multiple suppliers’ outsourcing, problems and risks associated with it. Assessment of contracts/SLAs: structures, similarities and differences between contracts/SLAs – What steps Welsh Waters undertakes to make outsourcing success (outsourcing program management, contract management, building outsourcing relationships, partnership, mutual benefits, communications, change control, h ow performance is measured, what constitutes for success/failure, etc)– To investigate if any proven/best practices have been adopted by Welsh Waters to mitigate the risks and manage the suppliers effectively. – To look at the ‘uneasy’ relations between the Welsh Waters IT management and some of the suppliers – To research relations between suppliers themselves (possible hostile behavior towards each other, rivalry, hidden conflicts, etc). The Overview of the Study The remainder of this study is as following statement: Chapter 2, Literature Review, will provide first a concise concept and explanation of IT outsourcing.We will examine the competitive landscape within the IT outsourcing industry. We will also define critical success factors and key trends for IT companies operating in this market. We also look different related literature on supplier management and sourcing decision framework for clients. Chapter 3, Methodology, will describe the rese arch design of this study. The research design of this study is empirical research method using secondary data for quantitative analysis. The researchers administered a case study framework to understand the factors affecting the IT sourcing decisions of clients.Chapter 4, Results, will demonstrate the results of this study. The authors will provide a brief description of the company under study, highlighting IT sourcing decision of the company. The research also will employ statistical data such as frequency distribution, mean and standard deviation on the different factors that affect the success and failure of IS/IT outsourcing. These data will be tabulated and analyzed to examine the effect of the various variables. The findings will then be generated from these analyses will be presented and interpreted.Chapter 5, Summary, Conclusion and Recommendations, the â€Å"Summary† section will first provide a comprehensive summary of the major findings of this study. The â€Å" Conclusion† section will highlight the implications of the research findings. Finally, â€Å"Recommendations† will be proposed to help companies improve IT implementation with partner suppliers and avoid pitfalls and traps. In next chapter, we will discuss the environmental analysis on Global outsourcing highlighting process management services, IT management, and data processing. REVIEW OF RELATED LITERATUREThe literature review will first define nature of business process outsourcing. This section will offer a concise definition of IT outsourcing and its ability to thrive in a globalized economy. Then, the review will consist of three parts: (1) Environmental Analysis of the Outsourcing Industry and competitive landscape in the industry, (2) define the common IS/IT activities that are outsourced, (3) identify the key success factor of IT outsourcing and define the maturity stage of the company, and (4) the importance of customer-vendor relationship in providing innova tive solutions to the clients.Defining of Business Process Outsourcing Given the potential headaches of managing IT, it is tempting to hand the job over to someone else. Indeed, outsourcing once appeared to be a simple solution to management frustrations, and senior management teams at many companies negotiated contracts with large service providers to run their entire IT functions. At a minimum, these providers were often able to provide IT capabilities for a lower cost and with fewer hassles than the companies had been able to themselves.But many of these outsourcing arrangements resulted in dissatisfaction, particularly as a company's business needs changed. Service providers, with their standard offerings and detailed contracts, provided IT capabilities that were not flexible enough to meet changing requirements, and they often seemed slow to respond to problems. Furthermore, a relationship with a supplier often required substantial investments of money and time, which entrenche d that supplier in the company's strategic planning and business processes.The company then became particularly vulnerable if the supplier failed to meet its contractual obligations (Ross and Weill, 2002). Problems arose because senior managers, in choosing to outsource the IT function, were also outsourcing responsibility for one or more of the crucial decisions they should have been making themselves. Companies often hired outside providers because they were dissatisfied with the performance of their own IT departments—but that dissatisfaction was primarily the result of their own lack of involvement.In light of this track record, most larger companies, at least, are deciding to keep their main IT capabilities in-house. But many engage in selective outsourcing. Good candidates for this are commodity services, such as telecommunications, in which there are several competing suppliers and specifications are easy to set, and services involving technologies with which the compa ny lacks expertise. Unlike decisions to outsource the entire IT function, selective outsourcing decisions are usually best left to the IT unit, assuming that senior management has taken responsibility for overall strategy.Beaumont and Costa (2002) studied IT outsourcing in Australia. They found that almost 40% of Australian organizations outsource one or more IT applications. Large organizations tended to outsource more than small ones. The three most important reasons for outsourcing were access to skills, improved quality and focus on core business. Four factors contributed to successful outsourcing: a tight contract, a partnership, a change process, and the IT manager's role changing from managing projects and operations to acquiring and managing the internal and external resources required to do the organization's IT work.Successful IT outsourcing relationships enable participants to achieve organizational objectives and to build a competitive advantage that each organization co uld not easily attain by itself. Outsourcing success can be viewed as the level of fitness between the customer's requirements and the outsourcing outcomes. Outsourcing success can be measured in terms of both business and user perspectives. From a business perspective, outsourcing is motivated by the promise of strategic, economic, and technological benefits.The success of outsourcing, then, should be assessed in terms of attainment of these benefits. From a user perspective, outsourcing success is the quality level of services offered. A decision to outsource on the basis of saving costs without analysis of the quality of services frequently leads to higher costs and lower user satisfaction. Therefore, it is imperative to conduct a proper analysis of the service quality before building a relationship with a service provider for a successful outsourcing arrangement (Lee & Kim, 1999).In this paper, we define outsourcing as the process of turning over an organization's computer cente r operations, telecommunications networks, and/or applications development to external vendors is called outsourcing (Laudon & Laudon, 2005). Loh and Venkatraman (1992a) define IT outsourcing as the significant contribution by external vendors in the physical and/or human resources associated with the entire or specific components of the IT infrastructure in the user organization. Vendors may contribute computer assets for the user from outside the organization.Alternatively, the ownership of certain computer assets of the user may be transferred to the vendor. Similarly, vendors may utilize their personnel to provide the required services, or the vendor may employ existing staff of the user. In their research, they attempted to explain the degree of IT outsourcing by using cost structures and economic performance. They found that the degree of IT outsourcing is positively related to both business and IT cost structures, and negatively related to IT performance.IT outsourcing was fr amed as a make-versus-buy decision, where contractual modes differ in the domain of influence within the corporation (Loh & Venkatraman, 1992a, 1992b). Environmental Analysis of Outsourcing Market In the global front, the increasing trend towards outsourcing is evident from the high year-on-year growth of the global market for data processing and outsourcing, a sector, which consists of the provision of commercial electronic data processing and/or business process outsourcing services.Since 2001, the market has expanded by almost 50%. The global data processing and outsourced services market reached a value of $265. 5 billion in 2005, recording a compound annual growth rate (CAGR) of 9. 7% in the 2001-2005 period. The rise in credit card use and Internet banking/payment has created new types of problems for operators in this area; firms in this market are engaged in developing and refining data protection techniques to fight against money laundering and fraud.

Personal Dilemma Essay Example | Topics and Well Written Essays - 500 words

Personal Dilemma - Essay Example This put the workers at odds with her and people began to talk to each other at the office but no one seemed to be willing to talk to her about the situation. The environment became very toxic. I had a loyalty to the company but I also had a loyalty with her since she was not doing anything wrong according to the company policy. In fact, I sometimes found myself in agreement with her because there were times when the culture became too relaxed. However, other individuals within the company started talking about leaving and two people put in their notices mentioning that they were leaving because of their friction and incompatibility with the supervisor. The company executives took notice of the situation and called in a few people from our department to discuss what was happening. My supervisor had some inkling that this could happen and she had told all individually to not say anything which might cause trouble within the department. Essentially, I had to pick between being ethical by telling the truth or by going against her and putting her job at risk. I considered letting others take the lead when talking to the executives but I realized they might go too far in putting her down. Despite the situation I had been placed in, I told the executives about the real situation as honestly as I could. The result of our meeting with the company executives was that our supervisor was transferred to another section while we got a new boss. On a personal level, this incident made me realize that honesty is the best policy and it would be unethical to help our friends or even our superiors if it comes at the expense of others. Sometimes we have to make difficult decisions in order to make sure that the effect of the decision will have a net positive impact for the collective rather than a negative impact on the workings of the company. If that means that one

Learning experiences from the Management Process Study Essay

Learning experiences from the Management Process Study - Essay Example The main thing for which the employers are looking for is the meeting of the goals and the expectations that they have. It is the duty of the employers to give a constant feedback to their employees so that they are aware of actually what their employees are up to (WESKE, 2007). This also helps the organization decide how much they actually need to train or guide their employees towards a better form. Feedback also makes them figure out if the profession they are pursuing is something they really want to do or if there is something else for them in store (MACMILLAN and TAMPOE, 2000). The Tuck man model of growth development of the group is related to the formation of a group and how the members of the group continue to behave in the group. The group that I have chosen to discuss is the group from my Organizational Behavior class. Group Formation The group that was formed contained of people all unknown to each other, since they all belonged to the different sections. The tuck man mod el explains the process a group of individuals go through to achieve a synchronized group that has cohesiveness and integrity. There are four stages given by the Tuck man model which claims that each and every group has to go through these stages before either the group forms completely or is dispersed completely failing to achieve any sort of cohesiveness. The stages in the model are Forming, Storming, Norming, and Performing. Forming In this first stage, all the people are new to each other; they are usually at their best behavior trying to gain the impressions of the others around them and assess them. The people are usually focused on the task at hand and are goal oriented. In this stage of team, the supervisor should play the most active role by maintaining a cordial relationship between the members and making sure that no team member is left out. My group is past this stage, the process of forming went really well, where each of us realized the potential of each other and lear ned to respect each other for it. The forming process of our team was quite beneficial too as we learned about each other and were able to decide the tasks at hand in a good manner. Storming In the storming process of any group the members of the group openly begin giving their ideas and sharing with one another. At this point in time the group members also decide who their group leader will be and what type of leadership they prefer (POIRIER and WALKER, 2005). IN our case, the leader was predefined therefore the only that we had to decide was the type of leadership that we will have. There were a bit of issues as well because some of the members in our group were not agreeing to give-up their ideas. But thankfully we reached a common point and the whole process was decided then about how to carry on. We came out of this phase successfully as well. Norming In the norming stage the team members are all in harmony and happily working with each other in achieving the goal (PICKETT, 200 5). Our group is currently at this stage, we are all synchronized in our ideas and our working towards our goals. There is perfect harmony and no more clashes in ideas of the group members. Performing Performing stage is when the group starts to perform the tasks and behave like one unit. The things are all decided the task distributed and there is the smooth working of the group then. There are no internal or external conflicts. Our group is yet to reach this stage. LEARNING

Legal Aid Essay Example | Topics and Well Written Essays - 1500 words

Legal Aid - Essay Example The changes have singled out the reason for the introduction of a resident test as being the need to ensure the delivery of a justice system that is more credible and efficient to the UK citizens. However, when that provision is closely assessed, it presents more problems than anticipated. In fact, when this new change is assessed based on the provision of the above three laws, it may not pass the justification. The major reason for the introduction of the two-part residence test as a requirement for the qualification for accessing legal aid is to single out foreigner within UK and its overseas territories jurisdiction, and then deny them an opportunity to equal access to the justice system, similar to the UK citizens. The stability of the United Kingdom justice system is tempting to assume that it bears permanency, since it has been entrenched for long enough. Nevertheless, the recent changes introduced in LASPOA 2012 threaten this stability, through introducing legal measures that are contrary to the spirit and letter of the rule of law. When summed up together, the changes have introduced restrictions to the access of legal aid and increased the fees and the procedural hurdles for those who seek to use the courts to defend their interests (Bindman, 2013:6). In addition, the changes have introduced the use of secret evidence that precludes challenge, increased the surveillance to and access of personal and private information, and reduced the damages payable to people who have successfully defended their claims through the justice system (Bindman, 2013:6). Overall, the government has struck a major blow to those who seeks to uphold the rule of law. The definition of the rule of law requires that all individuals are granted an equal chance and opportunity to access the justice system. However, the introduction of the recent changes in the LASPOA 2012

Managing Across Cultures Essay Example | Topics and Well Written Essays - 500 words - 7

Managing Across Cultures - Essay Example In this case then the managing across the different cultures should be professional without any discrimination drawn on the lines of culture. It is then common to find many news articles and other published materials addressing advocating for the effective management across cultures in all business organizations or companies. Therefore, the implications of business management and other aspects of culture in business decision making are mostly outlined in such articles. I found such an article with the title â€Å"Build on Your Strengths Instead of Focusing on Flaws.† In this article, Harjit Gill who is the chief executive of an electronics company based in Singapore gives his experience on how to manage the company with a team of employees with different cultures in order to meet the company’s objectives. As explained in Kolesnikov-Jessop (2014), Gill explains that a good manager is a person that is very transparent to others and someone that other people are always free to talk to and seek help from in case of any challenges or problems at the workplace. He explains that all these draw the line between a team leader and a team manager. This means that when it comes to managing and organization, one needs to ensure that that the team he is managing get to learn and step up from the level they are in. when it is about delegation of duties, an employee should be able to understand that decision made by the manger and identify how the decision is good for them and the whole organization. Gill also gives his experience while managing across cultures in the company. He says that one should generalize issues without considering the composition of the workforce and instead get to know the people well and the different cultural aspects in them (Kolesnikov-Jessop, 2014). It is important them to pull the different people into one team that can learn from each other by leveraging the differences in cultural traits of the

Post-Partum Depression in Latin American Women in the South Bronx Research Paper

Post-Partum Depression in Latin American Women in the South Bronx (Ages 20-25) - Research Paper Example South Bronx is an area well known in United States that was heavily crashed by the Second World War. The war affected all sectors of life, economic, social, political, and cultural and employment. Due to the impact of the war, people in this area live in great poverty and under poor conditions (Sierra, 2008). Q. 2. Since many centuries back, there was a relationship between depression and childbirth. Nowadays, researches have been done and clear evidence that many depression and other mental conditions are as a result of pregnancy. This is in accordance with Latin American Researchers who found out that mood turmoil in women especially depression are related to pregnancy. South Bronx is the poorest district in the United States. Additionally, it is the district that reports many cases of women ailing postpartum depression. Of the total population, 256,544 which represent 38% live below the poverty line. This is in accordance with a report issued by US census Bureau (Sierra, 2008). Re ports show that approximately 61% of women experience anxiety after birth and later reduces during the fifth week after childbirth. An average of 13% of women experience PPD which may last for months after delivery Chances of a woman experiencing PPD vary depending with age, background, level of education, history of depression among others. ... Many people living in South America are Latin and black Americans. Majority of Latinos’ and black Americans live in South Bronx, a district known to be lived by people with no prospect of employment (Sierra, 2008). A large population of people has low income while the rest are unemployed. In 2005, 205,000 middle age women were treated with PPD in the United States. The cause of the high rise of postpartum depression in this area in young women is due to lack of financial support, unexpected pregnancies and abandonment (Sierra, 2008). Many young women in south Bronx engage in illegal activities like prostitution, drug trafficking, alcoholism and robbery to earn a living. These are some of the risk factors causing depression which is the cause of PPD. Additionally, poor health conditions is another factor leading to postpartum depression in Latin Americans living in south Bronx. Due to poverty, many women do not receive health assistance during pregnancy and after birth. For tho se who seek medical assistance, chances are that they receive low quality services due to lack of enough finances. It is normal that during the first few weeks many women experience moody feelings, lose appetite, hopelessness, difficulty in sleeping due to hormonal changes during pregnancy and after birth (Rosenfield, 2006). These feelings are called baby blues which are normal feeling to almost 80% of new mothers. In some cases, these feelings can be persistence leading to serious mental disorders like postpartum depression (PPD) or postpartum psychosis. This condition may affect women in their early years (20-30) of reproduction than during the late years. The main reason is unwanted pregnancies, poverty, abortion, complications during

The Lesson by Toni Cade Bambara Essay Example | Topics and Well Written Essays - 250 words

The Lesson by Toni Cade Bambara - Essay Example The story â€Å"The Lesson,† by Toni Cade Bambara elucidates the situations of trials and tribulations in the life of blacks. What a contrast of life in different parts of the same city! The type of hardships undergone by Sylvia and her friends in the slums of New York, the type of environment they were brought up and the glaring imbalance as compared to the ambience of the Fifth Avenue can lead to two types of reactions. One is the black children may be fired with ambition to excel in life, improve their economic prospectus and achieve the rewards comparable to life in the Fifth Avenue. The other could be one of jealously and revenge. Evaluate the reaction of Sugar, an innocent child who says, â€Å"You know, Miss Moore, I dont think all of us here put together eat in a year what that sailboat costs.†(cai.ucdavis.edu) This is the pointer to the standard of life of the black children. Bambara creates poignant story how a college educated black woman arrives at the slum neighborhood on weekends and takes the children to a sort of picnic to posh areas like Manhattan. From the time the children leave from their slums until they return home, what are their feelings after being exposed to richness and luxury? How disturbed could be their emotional world comparing own plight and the affluence they saw throughout the day? How disturbed could be their emotional world comparing own plight and the affluence they saw throughout the day? The plot of the story is simple, but the philosophy behind it is profound.

How effective has the World Health Organization performed its main Essay

How effective has the World Health Organization performed its main functions when dealing with international pandemics - Essay Example The threat to national security because of the advent of globalization is also global in scope. The role that the World Health Organization attends to is so vast that it will never be able to address the problem of international health security unless the member states of WHO help as well. Of all the countries around the world, 193 are members of the World Health Organization. These countries have vowed to prevent diseases (viral and bacterial alike) from growing and possibly transferring to neighboring states. The member countries of the WHO meet regularly to make sure that possible breakout of disease is prevented and people of the world are aware on what is going. The World Health Organization uses essential fields of academic discipline in assuring the safety of the world. Medicine, as the group’s primary thrust develops cures for different illnesses that might possibly break out. Given the situation of the world and the goals of the WHO, this essay aims to address whether or not the World Health Organization serves as the guiding group into promoting health on top of the chart of health awareness around the globe. Moreover, it is a must to assess the current forms of implementation of the effectiveness of such in a modern world perspective. Finally, it must be noted how the WHO provides information to member and non-member countries on how to prevent possible spread of diseases. The International Health Regulations (IHR) was revised in 2005 to make sure that the standards of the WHO in fighting spreading diseases are up to date. The current revision aims to empower individual countries so as they could fight the spread of diseases at their first sign. Furthermore, the IHR instructs member countries to be aware of possible ‘human biological attacks’ which might not be possible to be responded to by the World Health Organization. The

Lawsuite against Target- court cases Essay Example | Topics and Well Written Essays - 500 words

Lawsuite against Target- court cases - Essay Example unds that the charges against it could be dismissed because it was only a nominal defendant, exerting no significant control over the design and manufacture of a defective product. However Tabish filed a motion to remand the case to the Hannepin County District Court. The decision in this case was in support of the Plaintiff. The Court held that Target’s argument that it was a non-manufacturer defendant and therefore entitled to dismissal of the charges against it, would not hold good because Tabish had also filed for damages against implied warranties of fitness and mercantibility. Dismissal is required only in cases where the suit is filed on the basis of only strict liability claims. As a result, the ruling of the Court effectively held that the charges against Target would not be dismissed and Target remained a viable defendant rather than a nominal party and Tabish was entitled to seek relief from Target. Kenneth Tabish, Plaintiff, v. Target Corporation, Huffy Corporation, Impact Resource Group, Inc., National Product Services Acquisition Corporation, and John Does I-X, Defendants.Civ. No. 07-2303 (RHK/JSM) CORE TERMS: bicycle, removal, nominal, amount in controversy, manufacturer, strict-liability, in-state, defective product, subject to dismissal, non-manufacturer, implied-warranty, contravened, diversity, removable, diversity jurisdiction, principal place of business, front For Impact Resource Group, Inc., an Ohio Corporation, National Product Services Acquisition Corporation, a Delaware Corporation, Defendants: Jessica R Wymore , LEAD ATTORNEY, Stich, Angell, Kreidler & Dodge, P.A., Mpls, MN US. Plaintiff Kenneth Tabish commenced this personal-injury action in Minnesota state court   [*2]  against (among others) Huffy Corporation ("Huffy") and Target Corporation ("Target"), the manufacturer and distributor, respectively, of an allegedly defective bicycle. Target removed the action to this Court on May 15, 2007, asserting diversity jurisdiction.

Why to Kil a Mockingbird Was Banned Essay Example for Free

Why to Kil a Mockingbird Was Banned Essay To Kill a Mockingbird by Harper Lee was published on July 11, 1960 and was an immediate bestseller. It won the Pulitzer Prize for fiction in 1961 and was voted â€Å"best novel of the century† by the Library Journal. With more than thirty million copies in print, To Kill a Mockingbird remains a bestseller. Regardless of all the praise, this novel has been banned and challenged in many different areas due to profanity and racial slurs. To Kill a Mockingbird was challenged and temporarily banned in Eden Valley, Minnesota due to the use of words such as â€Å"damn† and â€Å"whore lady†. In some other areas, it was challenged with being a â€Å"filthy, trashy novel†. In Warren, Ind. Township schools this novel was challenged â€Å"because the book does psychological damage to the positive integration process and represents institutionalized racism under the guise of good literature†. This novel was also challenged and/or banned in many other school districts due to the use of the word â€Å"nigger†, profanity, and other racial slurs. Some districts also claimed that this novel is degrading to African Americans. When a letter to the editor was written by a Richmond, Virginia area school board in attempts to ban To Kill a Mockingbird as â€Å"immoral literature†, Lee responded by saying: â€Å"Recently I have received echoes down this way of the Hanover County School Boards activities, and what Ive heard makes me wonder if any of its members can read. Surely it is plain to the simplest intelligence that â€Å"To Kill a Mockingbird† spells out in words of seldom more than two syllables a code of honor and conduct, Christian in its ethic, that is the heritage of all Southerners. To hear that the novel is immoral has made me count the years between now and 1984, for I have yet to come across a better example of doublethink. I feel, however, that the problem is one of illiteracy, not Marxism. Therefore I enclose a small contribution to the Beadle Bumble Fund that I hope will be used to enroll the Hanover County School Board in any first grade of its choice.† Although To Kill a Mockingbird is her only published novel, Lee has been the recipient of many honorary degrees. However, she has always declined to make a speech. To this day, To Kill a Mockingbird is still challenged in many different areas.

Developing New Philosophies in Art

Developing New Philosophies in Art Introduction In the context of western art, many artists from the modern art movements shape their artistic approaches through the avant-garde ideals they are convinced of. These ideals are the beliefs that behave like doctrines in their practice against the political background where both war world one and two took place. The modern art period gave birth to artworks of revolutionary value [a] produced in rebellion against traditional art practices, models, methods consequently altering the long established perception on functions of art. [b]The change in artistic perceptions are considered being more suitable for the environment where the social, economic, and intellectual conditions have changed. [c] This research is propelled from the queries that arise in my practice as a visual artist where my interest revolves around questioning the identities of everyday objects. I question the reality of their existence, the absoluteness in their definitions and forms presented by the everyday conventional reality. Abstraction in the context of this writing refers to the absurd attempts of redefining existing accepted definitions framed by everyday conventional reality. As Theodor Adorno agrued modern art is as abstract as the real relations among men [f] (Adorno, Aesthetic Theory, 45) Therefore this writing takes the approach of looking at the radical efforts of selected artists from the modern art period who have demonstrated in their practice, added new dimensions to their investigated subjects. These artists that are selected in this study strive to provide alternate perspectives to the existing mundane definitions in each of their artistic domains. The definitions borne of the conventional reality taken into their investigation include the ideas on object, form, colour, time and space. Such subjects are continuously reinterpreted and given new definitions by the artists of this period. Research questions The research questions in this writing aims to contemplate and justify the practice of the selected artists who are unsatisfied with mundane representations of the conventional reality against the background of their political situation. What are the trajectories taken in their practise of these pursuits? How are their artistic beliefs justified in their practise? What are the truths in the definitions of these subjects defined by conventional reality if reinterpretations could be justified? What is the impact of these reinterpretations in the scene of visual arts during the modern art period? How are the Singapore contemporary artists influenced by these ideals? These redefinitions in and of visual arts lead to main research question in this paper; what constitutes and substantiates the meaning of real in conventional reality? Can these be a projection of psychological reality [g] as positioned by Erin G. Carlston of modern Methodology Proclamations of the artists beliefs in different aspects executed through diverse methodologies are imprinted in manifestos and documented in writings of artists and art critics. Artists with similar aims come together amongst others, which resulted in different and possibly co-related art movements. Within some of these selected co-related art movements is the sign of migration of the artists whose beliefs change or are said to echo more closely the credo of later movements. The momentum of this writing look into modernity as a continuity of movements (from late nineteenth century to 1970) through the study of interconnected artists. While artists have their subjective interpretations of what the subject matter could be, the core of my research is an attempt to rationalise the array of artistic definitions and trace the evolution of these new reinterpretations across the radar of different modern art movements to the present contemporary art scene. It will also be strived for in this research to compare the conventional and the artistically portrayed definitions of the studied subjects. Hence, this seeks to build the tempo to the main research question. However, it is not the purpose of this research to embrace or establish any reinterpretations as the epitomised explanation in the field of visual arts. Artist with similar research subjects will be compared and categorized together across modernity with their artistic journeys examined under an umbrella. Ideally, the conclusion to this research will be to piece and compare particles of similar reinterpretations across the selected different modern art in western art history in order to derive a relatively holistic depiction of each investigated subject. Therefore critical studies will be made on the artists thinking, works, style, writings, manifestos and critics responses. How does each artist re-define and justify their subjects in their art works? How do these reinterpretations affect the way we currently look at these investigated subjects? How are these ideas translated in contemporary art? Ultimately, what could be the main doubt behind all these reinterpretations; that the conventional reality is illusive? In the latter part of the writing, two cases studies of Singapore artists influenced by the modern art ideals in this writing will be included. As the study of this research will be carried out in the investigation of per-art-movement approach, I intend for this work to be documented and presented in the form of a journal (running account) where the recordings of critical findings and personal interpretations are written in a formal yet time-sensitive format. This approach is analogous to the chronological art movements that have taken place, such as a piece of time-based artwork. Modern art movements The majority of modern art artists selected for study in this research adopt new philosophies and ways of seeing. They were interested in promoting better fitting ideologies for the changing Western society during the late nineteenth to early twentieth century, where ideas on traditional forms of art amongst others, were deemed obsolete. It was then artists established an unofficial pledge of individualism in their practice. [d] Many modern art manifestos retort towards older conventional dogmas making modernism an era inherent of revolutionary responses especially towards what was aesthetically, morally or politically accepted.[e] Here, art movements where traditional ideologies were initiated from the art movements that took place before the early nineteenth century encompass Medieval Art, Renaissance, Neoclassicism and Romanticism. Although most of the artists are stylised according to the art movements where they are branded under, each of them practise according to their individual beliefs; where self consciousness remains a signatory feature of many modern art artists. Hence, discussions on what art encompasses includes the process of art making, discussion on the physicality of the materials used from the traditional viewpoint to the resultant work itself. Functions of art are largely debated and revamped during this timeframe. Although modernism does not support thoughts on enlightenment, it does however, reflects the questioning of the axioms in the practice of its artists. Discourse on abstraction in forms is often a response penetrating into this area of research. Majority of the artists included in this writing either produces abstract works or sort out solutions to their practice in an abstract and unconventional manner as opposed to abstraction per se. Areas of research: Reasons behind the selection of major modern art movements (arranged chronologically, in terms of association) Include artists and their ideals Cubism The ideas that rejected traditional perspective of stemmed strongly from the Cubism movement spearheaded by Pablo Picasso and George Braque. This movement brought about an avant garde positioning of the European paintings and sculptures by redefining the one-viewpoint perspective in these genres. First of its kind in creating multiple viewpoints on one surface of the canvas and assembly of sculptural forms, this movement reinvented what the view of an image could be from a traditional standpoint. The conceptual concerns also involve the elements of space and time. Der Blaue Reiter This art movement started because of the rejection of Wassily Kandinskys painting from an exhibition and naturally revolves around his artistic beliefs since there is no record of a core artistic manifesto. This group believed in expressing spiritual truths though their abstract works, in contrast to conveying the existence of spiritual truths by figurative depiction of biblical scenes.A study drawing the parallels and differences between Kandinsky and Paul Klee will be included. Futurism With the adoption of Cubism, Furturism developed its style of broken colours and divided short brush strokes that emphasised on the connection of movements, technology and speed amongst other elements contributing to industrialisation. Breaking away from the conventional idea of capturing a freezed moment on canvas or in sculptural form, this movement dwelled at the portrayal of moving motions in objects. This is universal dynamism was being read as the connection between objects and their surroundings, where none was a standalone element. Artists with distinctive styles include Umberto Boccioni and Giacomo Balla. Supermatism The originator of this movement is Kasimir Malevich who had been inspired by Cubism and Der Blaue Reiter. He wrote a book The Non-objective World which relates the interest of this movement, focusing on basic geometric forms especially the square and the circle. Introducing the idea of replacing regular images with geometric forms or coloured masses, Suprematism also integrated the spirit of Futurism into its philosophy with non-euclidian geometry where forms are imagined to be in movement. Another important thinking infused in the movement was the idea of the fourth dimension by P.D. Ouspensky. De Stijl This movement advocated the ideal of utopia. It pushed the spirit of Suprematism to new heights by its attempt to communicate the ideas of spiritual harmony and order through the manipulation of only primary colours including black and white, geometric forms of only the square and the rectangle, with straight horizontal and vertical lines. The underlying philosophy in its artistic direction was known as neoplasticism or the new plastic art, a new term and improvised methodology in the history of western modern art. Piet Mondrian, an important figure in art history, invented the term neoplasticism for his abstract paintings wrote in his essay Neo-Plasticism in Pictorial Art that As a pure representation of the human mind, art will express itself in an aesthetically purified, that is to say, abstract form []The new plastic idea cannot therefore, take the form of a natural or concrete representation []1 Dada The legacy that Dada has left and impacted on the contemporary art world of today, lies in its embrace of extraordinary materials, methods and strategies2 unthought-of in the history of art movements prior to it.Although Dada started out to assume a very definite political identity2 due to the war, it evolved to adopt the character of undermining expectations and shocking the viewer into questioning blindly accepted, fundamentally repressive conventions and structures of all kinds 4 in cities further from the catalyst of the Great War. Marcel Duchamp and Constantine Brancusi participated in the Dada movement. Both friends created works that transcend the conventional representation of reality where the meaning of form is reinterpreted in their practice. Fluxus is a 1960s attitude that is highly associated to Dadaism. It gained many insights from Marcel Duchamp and therefore their art performances are associated with the idea of perceived connection of the everyday objects. It is know that artworks produced under the influence of Fluxus are simple, handmade, humorous and small. Yoko Ono and Joseph Bueys are renowned artists linked to this style. Surrealism: Metaphysical art movement is the catalyst for the development for both Dada and Surrealism. Metaphysical art promoted illogical reality where objects are placed out of their explanatory context in conventional reality in paintings, to explore their inner conscious of being. This spirit is being continued in Surrealism where Andre Breton first became the leader of. He also supports Sigmund Freuds psychoanalytic methods and went on to develop automatism and explore the real function of thought. The group believed it was a better method to call for societal change compared to Dadas aggressive opposition on existing values. Abstract Expressionism: Spirituality This movement originated from America and this terms applied to the new abstract art of the 1940s and 50s. With similar aims from Surrealism, the movement believed in that art should come from the unconscious mind and also involving the spiritual, took steps to further refine this re-interpretation of art. There are two groupings in Abstract Expressionism; action painters and colour field painters. In action painting, artist like Jackson Pollock realised the process of making work is as vital as the work itself. The discussion on the physicality of the work and the journey in the gestural making of the work as the artwork itself was hence debated by the art critics then. On the other hand, Paul Klee and Barnett Newman experimented with the psychological use of form and colour, keeping their objectives to only the basics. Minimalism Often being put across as a movement in opposition to Abstract Expressionism in terms of their philosophies and discourse, Minimalism took an extreme reductive approach in the creation of works. Contrary to the complex surfaces of works under Abstract Expressionism, it was argued that the basics could represent the state of sublimation better, an attempt to re-decipher the spirit in art. These works are at their most fundamental essential, geometric forms, a feature analogous to works produced under De Stijil. Artists like Donald Judd, Sol Lewitt, and Tony Smith integrated these ideologies and took their works to the maximum with seemingly minimal complications. Robert Morris wrote in defining the framework of Minimalism to be very much about the idea of the gestalt hence re-defining the edge in visual arts. Consequently, Minimalism became a bridge to postmodern art practices. Op Art: forms and illusions Op Art is also known as optical art which is a painting method that gives the eyes optical illusions. It sets off perceptual experiences that stem from the interplay of the figure-ground relationship, patterns and colours. Although this form of art received positive responses from the public, art critics thought of it merely as trickery to the eyes. Optical art is also about seeing and understanding the seen. In Bridget Rileys works, one could experience movement with the changing patterns and colours. This is the perception illusion has given by a still object, and in this case a painting sparks off the thought of the illusions that arise from objects in the conventional reality. How does one define the real and unreal in conventional reality? Postmodern art and Contemporary art Although art works produced after World War II are considered as contemporary works in some literature texts, works produced after the 1970s to the present are considered as contemporary study. Postmodern artworks were created in response and some say in rejection to modern art movements. However, museums like Tate treated postmodern works to be a continuation of modern artworks. Ideals rejected by the modern art movements are re-established during postmodernism. Therefore utopian ideals are carefully scrutinised and examined to provide relatively up-to-date views on the investigated subjects. Exhibition component (non-theoretical/practical module) I am interested in the re-interpretation of objects in my practice. Works will be made to address similar research questions in this proposal to complement the theoretical component of the course. NOTES Neo-Plasticism. 2009. Tate. 04 Dec. 2009. . Leah Dickerman et al., Dada: Zurich, Berlin, Hannover, Cologne, New York, Paris. (Washington, D.C: National Gallery of Art, and New York, 2005) ix. Richard Huelsenbeck, En Avant Dada: A History of Dadaism, 1920. Theories of Modern Art: A Source Book by Artists and Critics. Eds. Herschel B. Chipp, Peter Selz and Joshua C. Taylor. (Berkeley: University of California Press, 1968) 378. Sarah Ganz Blythe and Edward D. Powers, Looking at Dada (New York: The Museum of Modern Art, 2006) 3. Art in theory, 1900-2000: an anthology of changing ideas By Charles Harrison, Paul Wood Page 360 http://www.britannica.com/EBchecked/topic/387137/modern-art http://www.britannica.com/EBchecked/topic/387137/modern-art http://books.google.com.sg/books?id=rsZ-fGso3gICpg=PA1dq=modern+artclient=firefox-acd=5#v=onepageq=f=false Modern art: a very short introduction By David Cottington pg 10 http://books.google.com.sg/books?id=rsZ-fGso3gICpg=PA1dq=modern+artclient=firefox-acd=5#v=onepageq=f=false Modern art: a very short introduction By David Cottington pg 6 theodor Adorno , aesthetic theory, p45) Extracted from:The Problems of modernity: Adorno and Benjamin By Andrew E. Benjamin Thinking Fascism: Sapphic Modernism and Fascist Modernity By Erin G. Carlston