Crisis Intervention From A Biblical Perspective

Crisis Intervention From A Biblical Perspective A crisis is a situation which is unstable and of extreme difficulty or danger. According to mental health, a crisis is the reaction of a person towards an event. Different people react differently to events. One person can be affected deeply by a certain event while another may have little or no ill effects towards the same event. This is dependent on peoples behavior or skills, levels of maturity, personalities and the ability to cope. For some people, reaction to crisis may be coupled with behavior change such as over eating or insomnia. For other people reactions such as disbelief, inability to cope or denial may be evident. Others still may experience physiological changes such that they may start to sweat, faint or their heart rate may increase. Many people perceive crisis to be an unexpected sudden calamity such as a natural disaster or a car accident. However, crises range in how severe it is and also in type. Sometimes, crisis can be a predictable part of our lives, For instance, the mid life crisis. Some crises are situational and are abrupt and unexpected such as accidents. Other crises are existential which are conflicts within and are related to things as spirituality, direction and life purpose. It is very crucial to give victims of a crisis some counseling. This is to help the person experiencing it be able to confront the reality of the current happenings. Chronic crises can lead to trauma or stress which leads to mental illness. It is therefore, crucial that the counselors dealing with the crisis be very skilled and knowledgeable on how to handle these victims. Crisis counseling is an intervention on short term basis which is intended to offer assistance to the victims, give them support and resources and to make them stable and go beyond emotional trauma and pain towards opportunities for change and growth and to be strong. In this research paper we look at the Biblical perspective of crisis intervention. This is a very unique but effective way of dealing with crisis aftermath and especially when we compare it to the secular approaches. In order for the counselors to understand the spiritual needs of their clients, they have to understand and differentiate the characteristics that define the bible based therapy. When the Bible is relied upon for counseling and a crisis intervention, a client is likely to be returned to functioning safely and into coping levels, at the same time the client reestablishes a relationship with God. Crisis intervention and counseling in a Biblical manner should be accustomed by all who follow God. There is need to remind those suffering of the ever guidance and love of Jesus. Numerous crises occur every day and especially in the secular world that we are living in today and with the rise in technology hence Bible based guidance is much more needed. It is important to understand the benefits emanating from biblical crisis intervention. The crisis intervention and counseling through Bible helps an individual to go through a difficult state by relying on the bible and God. According to Phil Monroe, counseling from the Bible focuses on how to live in a faithful manner, to love mercy, to act in justly, and to walk in a humble manner in circumstances that we find ourselves in (MCP, 2007). There are two main needs in most of the clients: first, for one to be able to open up and speak of the unresolved pain. Second, for one to be given a surety that they are children of Gods love. These are apparent needs and which a counselor must attended. For a client who believes in God, it is paramount to be reminded of Gods love. It is very important for the faith of the client to be reestablished. If the client is not a believer, or no longer has faith in God, it would be a good opportunity to bring back the client to God when the crisis has been resolved. At the same time, it is important for the counselors not to take advantage of the individuals sufferings. The intervention and counseling for a crisis can as well be hectic and sporadic. As much as one has to understand the ground rules, it is always important to understand that when a situation heats up, it is a priority for the situation to be stabilized. The person doing the intervention must always be armed with scriptures or any spiritual and pastoral gifts in order to help the individual through the crisis (Read Mallet, 2003). The view of mankind as a sinner is also very important to consider in the biblical crisis counseling and intervention. We were all created in the likeness of God but we have fallen short of His glory hence making us all sinners in Gods eyes. This puts all clients and their counselors on the same ground in that none are righteous in the eyes of God since we have all sinned (Read Mallet, 2003). In giving out the counseling Biblically, it is important to note that one cannot minimize the crisis but can cope with the crisis. Many people experience the reality of suffering. According to Biblical counseling, suffering is an opportunity to explore our response to suffering and sickness and also gives us an opportunity to faithfully suffer. It is an honour to suffer in the name of Jesus. In second Corinthians chapter four, Apostle Paul speaks of suffering but he reminds believers not ever lose faith for our suffering has a purpose (crisis Intervention 2008). Why Biblical Crisis Intervention The Biblical crisis intervention is much needed in our world. We are a world of sin, which have fallen from the paradise and plan of God. Sin is rampant in the world but the Holy Spirit brings under control the full effects of sin. This is a reality that ensures that all people, those who believe and those who do not, suffer so as to experience the need for biblical crisis intervention (crisis Intervention 2008). Even if suffering is a reality, believers have hope of an eternity that is perfect after this life. The biblical counselor must know how to guide others as people live in a world of crisis. The counselor must know how to guide individuals in such a way that they return them to their original coping position before the crisis. The counselor then needs to guide the individual to a state of renewal or first conversion to Christianity. To save a persons soul should never be an afterthought, it is an important aspect in the biblical crisis intervention. When a person is reoriented back to Jesus, his or her faith is saved as well as attending to the worldly crisis (crisis Intervention 2008). Recent developments and defining characteristics The biblical crisis intervention is not static. Secular movements such as scientific psychology and postmodernism have been a big influence hence it would not make sense to ignore their influences. New techniques are continuously being developed thus the counselors add their perspectives which are unique hence it is important for counselors to be up to date with the disciplines recent developments (crisis Intervention 2008). Methodologies and sub disciplines for the biblical counseling intervention are being developed. It is a likely that a pastoral counselor will have to render help to the non believers in a post modern view point. It will often require the counselors to combine the science psychology with the postmodern view of the world (Schwartz Nicholas, 2007). Also therapy that is community based has grown significantly. This is a good realization that people do not cope or grow in vacuum instead they involve helpful interested parties. Since therapists in postmodern have given up their expert status, they have an interest to expand participants in therapy. They want to involve anyone undergoing therapy that has coalesced around a problem. Although this is a postmodern technique, it has as well been embraced by biblical counseling (Springerlink, 2005). Although these recent developments seem to merge the views of the postmodern, the secular science and the biblical therapy, it is still very obvious of the distinctive characters that will set apart biblical crisis intervention. One of the distinctive features of biblical intervention from the rest is that the counselors must relate with their clients as equal. This is because the counselor understands that the person whom he or she is relating with is created in Gods image hence worthy of respect and likable. At the same time, the client must also understand that mutual respect exists as well as a relationship between him or her and the counselor. Another distinctive feature in biblical counseling is that God is involved in every conversation or session. The pastoral counselors must help their clients enter into a conversation with God. With this unity the clients spiritual aspects are nurtured as well as addressed. Also when a client returns to God, he or she is in a better position to comprehend the meaning behind the suffering and to cope with it well. Benefits of pastoral therapy in comparison with secular therapy To a believer, biblical counseling has more benefits to him or her than the secular counseling. This is because of the spiritual experience. There is a high possibility of therapy succeeding when the counselor considers the clients cultural background. It is also important to evaluate the impact of the clients religion on the crisis at hand. This will facilitate total counseling of the client. This is a concept that is in contrast with the secular counseling. It had been assumed that there existed a universal scientific psychiatry that could address effectively all of the peoples emotional illnesses regardless of their cultural or social backgrounds. In the recent research, ethnic and cultural groups conceptualize mental illnesses variously based on their unique conceptualizations of both the cures and causes. Biblical counseling is better placed in helping out the client in many situations as it focuses on these unique cultural viewpoints. There is a high possibility that many people would not seek psychological help because of their personal religious views. Consequently, attitudes towards psychological disorders among religious groups will impact on a persons admission of a problem, and behavior to seek help. The writer of Hebrews explains that, we may receive mercy and find grace to help us in our time of need (Hebrews 4:13) when we approach God with our problems. Thus, these individuals must be made to understand that the pastoral counselors could be the vessels that God uses to help them approach Him. The pastoral counselors need to understand that human beings are either in a relationship or out of fellowship with God. If the client is out of fellowship it is up to the counselor to bring them back to and if the client is in a relationship with God, then it is the counselors responsibility to help the client understand on how to seek guidance and strength from God (Crisis Intervention, 2008). As much as the biblical crisis interventions have more benefits than those of secular, it does not mean that they should be mutually exclusive. Human beings have many dimensions and since there is a connection between emotional and spiritual dysfunction and health, both psychological and pastoral resources must be integrated in order for a holistic healing to be achieved. Human beings have been provided by God the understanding ability of the external natural world and the psychological world which is internal. Counseling is more likely to succeed when there is a combination of the counseling lessons with those of the biblical teachings. Secular theologists find this concept very difficult. They have acknowledged the religious aspect of man just recently although it has been the cornerstone of biblical crisis intervention from the beginning (crisis Intervention 2008). In most cases, early childhood occurrences can have a lasting effect which can easily distort our perception of love of God. These misconceptions of the love of God may have lasting effects on the coping capabilities of a person. The childhood events can imprison us in beliefs which are distorted and which may misshape our perception of self, others and God. The foundation of cognitive counseling is that the dysfunction in psychology emanates from false beliefs and to be healed emotionally, one requires replacing lies with the truth. However, thoughts which are faulty cannot occur at the cognitive level of logical knowledge. We may have the precise information about ourselves and God in our heads. Instead, the faulty beliefs that misshape us normally transpire at the effective level of knowledge experience. Only biblical orientation can break free of these distortions hence the secular crisis intervention is unable to reinstate an individuals coping abilities since they are unable to restore a persons relationship with God. Another benefit that the biblical crisis intervention has over the secular is that biblical counseling acknowledges the significance of religious application to a rapid event. This benefit helps the client to understand who they are and ways of functioning within their society (crisis Intervention 2008). Focus on the event and the solution The Biblical crisis intervention uses two approaches. The two approaches are not mutually exclusive and focus on two aspects that are different. The first approach focuses on the event and challenges to alter the views of the client on the original event. This approach is also called the traditional therapy. The other approach focuses on the solution and tries to use the client, God and the precipitating event as a change catalyst. It is also called the Brief therapy (ITHACA, 2010). No matter the approach, identification of the crisis cause is very important and the main goal for the counseling is to make the client return to a coping level before the crisis. At the same time the pastoral therapist may attempt to return the client to his or her original comfort zone or may even stretch their zones of comfort to existing conditions (crisis Intervention 2008). The main reason for the biblical crisis intervention in counseling is the impact that the crisis can have on an individual. Our perception of reality or what is not real can be distorted by our worries. The worries that are often the source of the crisis or relate to a possible future crisis do not help the biblical counseling process. In fact, thoughts full of fear are normally exaggerated and can even make the problem to worsen (Popovich, S. 2010). The most important thing is to restore the copying abilities of the individual because when they are not restored the results would be disastrous. When a person is unable to cope with a certain crisis, the impending dangers would be depression, taking out anger on others in insults or violence, abuse of substance or even suicide. This affects the persons future coping as he or she will be left with feelings of failure and guilt and this affects his or her future coping mechanisms. This renders the client to have a downward spiral which moves from one crisis to another which then accumulates future crises resulting to a degraded lifestyle of the client (MCP, 2007). There are many factors that increase crisis effects. Some of the factors are expectations that are unrealistic, personality traits which are negative, a sense of identity which is faulty, a belief system which is faulty, and isolation. This could lead also to an advanced isolation and a loss of support from the loved ones. The main goal, therefore, of biblical crisis intervention and counseling is to try reduce the impact of the original crisis and hence to reestablish the mechanisms for copying (CCEF, 2010). The first approach (the traditional therapy) for the pastoral counselor is to establish a rapport and a relationship with the client while determining the perceived impact of the precipitating event. Some of the precipitating events may be intensely dehumanizing hence it is important to first reestablish the individuals humanness. The interventionist will have the need to confront the realities of shame and sin when helping the client. It helps to remind the client that we are all sinners and we all have fallen short of Gods glory (Roman 3:23). When the crisis intervention undertaking focuses on the solution, it becomes more complicated. This is because some individuals have a rough time overcoming the event even if they are well reestablished with God. The same way when Peter the Apostle denied Jesus the night of His arrest, even after the event, he lived with the shame and guilt of his sin (Mark 14: 66- 72). On the other hand, some clients are able to confront the situation but still need to be reminded of Gods love. They need to be reminded that according to the writer of Hebrews, God says I will never leave you, never will I forsake you. (Hebrews 13:5). At the same time, believers are encouraged to say, The Lord is my helper, I will not be afraid. What can human beings do to me? (Hebrews 13: 16). The second approach (the brief therapy) that the counselor will focus on is the possible solutions to the crisis. The main goal is to help the client in the least period of time as possible. This approach does not minimize the precipitating event rather it focuses on the future. The crisis may have been caused by many and complicated causes, hence the therapy focuses on what can be done in order to change the situation in the present and in future rather spending a lot of time focusing on an event that may or may not be able to be changed (ITHACA, 2010). The distinguishing feature between the traditional therapy and the brief therapy is that they focus on a treatment that is specific, with measurable and short term goals. The client and the interventionist work hand in hand to set up measurable objectives that they record after every session. This use of smaller shorter objectives make the clients feel like they are accomplishing something and also feel in control of their lives. The counselor is also there to help the client if they go astray (ITHACA, 2010). There is a major difference between the roles played by both the traditional therapist and the brief therapist. In traditional therapy, the counselor is seen as an expert hence a bit distant with the client, whereas in brief therapy, the counselor works in collaboration with the client to understand and to solve the problem. In brief therapy, the counselor is seen as a sister or a brother in Christ whereas in traditional therapy, the relationship is that of an expert and a subordinate. The relationship in the brief therapy allows for a position to evangelize when one is needed or desired (ITHACA, 2010). Biblical counseling controversies There are disagreements and movements that occur in Biblical counseling and crisis intervention. There are two known main movements within biblical counseling. The first movement is to discard all the secular techniques and counsel with only the Bible. The second movement is a movement that seeks to reduce the Bible usage within the Biblical counseling. Some denominational seminaries are the ones who discussed the first movement that biblical counseling should move away completely from counseling using secular theories to use of biblical teachings only. They contend that scripture is enough to address psychological problems. This movement believes that by incorporating secular counseling in pastoral counseling, the biblical counseling has lost its way and focus on God (Goliath, 2008). To defend their position, they quote the Bible in Pauls words that, all Scripture is God- breathed and is useful for teaching, rebuking, correcting, and training in righteousness, so that all Gods people may be thoroughly equipped for every good work (2 Timothy 3: 16-17). The implication that pastoral counseling is not biblically based is either totally ignorant or totally arrogant. Pastoral counseling and care which is not based on the Bible or theological integrity is deficient. Again, Biblical counseling that does not include awareness of psychotherapy has a danger to be abusive. This danger is that those with problems that cannot be wholly solved through scripture may not seek the help they need and probably will never recover. According to David Winfrey, when biblical counseling rejects the behavioral sciences, its discarding an important source of information which has been made available by God (Koenig, 2005). According to Phillip Monroe, the Bible is not a text book in counseling yet it is more than a pointer to God. It does not provide an all-inclusive methodologies or theories for counseling. However, it is not just a book that discusses God. It also points out truths about the human nature and life hence should be used together with counseling methodologies that are not in the scripture (MCP, 2007). Biblical counseling is based on the notion that each and every believer performs like a counselor to other believers. Secret knowledge, professional credentials, or guild are not needed. Even if some people may have wisdom and Christian maturity that enables them to deal effectively with complex people and issues, we will all be treated the same. Seek the face of God, love God and others in the moment, trust God for things you cannot change and when things seem dark and dismal, repent and trust God all over again each day (HOLY Bible). The pastoral counselor hopes to help the person being counseled to respond in faith when in fear, when angry, when confused or grieving. When this happens, person being counseled may have the experience of peace and joy also the confusion within will be minimal (MCP, 2007). The opposing movement has minimized the use of the Bible and uses at a larger extent secular approaches and only supplements religious thoughts when necessary. This movement poses the problem of minimizing the personal responsibility to God. Instead of being responsible to God and living His will, these secular techniques allow people to only be accountable to no one else other than themselves. The best and the approved biblical counseling and crisis intervention methodology incorporate techniques from both the Bible and the secular disciplines. This will help in giving the counseling service to both the believers and the non believers and the pastoral counselors can even evangelize to the non believers (Koenig, 2005). It is important to understand that its not by simply talking about God whether in a professional or an academic manner that will reorient individuals back to Jesus. When we combine reintegration to the church community with psychological therapy it provides both the long term support and the immediate guidance an individual will require to cope with the crisis at hand (Koenig, 2005). Conclusion The challenge for biblical intervention methodology is providing a valuable crisis assistance and support within the earliest time possible following victimization, and to make the resources and services available in order to meet the victims needs by providing a direct assistance or referring to other agencies (crisis Intervention 2008). The Biblical crisis intervention and counseling does not imply the end of the required therapy. When an individual has been established in a church community, much support is thereafter needed. When the crisis counseling is over, many church ministries continue to offer the long term help that is much needed by their clients. Since there is a unique relationship between the client and the counselor, it should be very possible for the life counseling and guidance sessions to continue. Biblical guidance is a beautiful way since it is a demonstration of the love of God for His people. The love and affection that the pastoral counselor displays is just a small token in comparison with the love God gives to those who believe in Him. This is a reality that guides the pastoral counselors in getting their clients back to God. At the same time, when we rely on Gods word, it reminds us of Jesus importance in our lives. As the Hebrew writer explains, the word of God is alive and active. Sharper than any double edged sword, it penetrates even to dividing soul and spirit, joints and marrow, it judges the thoughts and attitudes of the heart (Hebrews, 4:12). Again, in the Gospel of John, Jesus tells all those who believe in Him that Then you will know the truth and the truth will set you free (John, 8: 32). Biblical therapy is counseling is not only focused on sin. It sees suffering as a given opportunity to suffer in faith as we discover how we respond to pains and sicknesses whether self inflicted or God oriented. How we respond to the difficulties that befall us reveals what we worship and seek in life whether its God, pleasure, comfort, perfection, and escape, to be safe or to be significant. The biblical crisis intervention and counseling is not focused on ending human suffering or teaching skills to end suffering, rather, it works with the broken and sinful people who live in sinful world and helps them live in a faithful manner and to trust in God the creator of all things. Biblical therapy strives to help people combine the worship of God and enjoy the blessings of being the chosen people of God. It also helps to reorient people in discipleship, mercy ministry and help them in sanctifying themselves. Biblical counseling works on the principle that the Bible has all the information we need to help us deal with our day to day problems. Most people believe that emotional and mental problems should only be dealt with the professional psychologists but this has been proved wrong since bible therapy has seen many people be able to cope to cope with their problems and even face others in future. Again, it has been proven that bible therapy is the best as it deals with the souls of human beings and pastoral counselors are well exposed to the wisdom of God.

Looking At Little Kids Halloween Costumes Religion Essay

Looking At Little Kids Halloween Costumes Religion Essay Kids Halloween Costumes are outfits worn on the end of the month of October, i.e. on a day known as the Halloween. Its a modern day holiday that originated in the  Celtic Pagan  holiday of  Samhain which is during the Christian times, the eve of all saints day. Costumes  are also worn on this festival in an attempt to appease the  Devil.  Dressing up in costumes was prevalent in Scotland and Ireland at Halloween in the nineteenth century and  Costuming became popular for Halloween parties in the US in the early nineteenths. The first mass-produced Halloween costumes appeared in stores in the nineteen thirties, when  trick or treating  became popular in North America. Kids Halloween Costumes are distinguished from costumes of other celebrations because they are often designed to imitate supernatural and scary beings such as those of monsters like ghosts, snakes, witches, skeletons and devils. There are also Kids Halloween Costumes of pop culture figures like presidents, athletes, and television, cartoon and celebrity characters. A popular trend is for the children to use Halloween dresses in order to appear unique and scary so they can draw attention of the people around them. According to the history, Halloween Costumes Parties generally fall on the thirty first of October yearly, particularly on the Friday or the Saturdays. Similarly this very costume is related to kids fun days, like for the birthdays, weddings, movies and so on, as these functions fall on weekends. The most popular Halloween costumes for kids in the year 2009 were Kate  and  Jon  Gosselin from the Jon and Kate plus 8. Today kids Halloween costumes are largely distributed by the JustkidCostumes.com. The company offers a variety of kids Halloween costumes such as kids birthday kits, Spiderman costumes, shoe and even lady bag Costumes. Pirate Costumes: Easiest way of becoming a pirate Pirate Costumes are among the hottest outfits for the kids around the globe. Kids can now dress just like one of their favorite television heroes. Halloween Pirate Costumes are all the rage with both girls and boys of all ages. This is due to the highly entertaining box office hits, such as the Master and Commander by Russell Crowe and the Caribbean by Johnny Depp. These costumes have also popularized due to the discovery of famous ship pirates, including the Whydah and the Queen Annes Revenge. Halloween Pirate Costumes hold a great appeal to all the children. Some Exciting Teen Costume Ideas Teenagers are particularly pretty when it comes to the choice of Halloween Costumes. They like unique, modern and distinguished costumes when compared to the rest. Most of them have come up with ideas for making their costumes. A great teen costume idea can be to design a gift; take a cardboard box, one that would fit the person nicely, it should be above the knees to enable the person to walk properly, make holes for arms and for the head. Then cover the box with the wrapping paper, and finally add bows to dress up the package. Add a bow on the top of the head along with a tag that says Gods gift to men, if the character is a woman. Red Tainted Teeth with Blood, Huge Scary Nails and a Children Halloween Costume Halloweens are generally people with supernatural powers who are generally personified with a film visual or a cartoon series. Children are easy targets and are easily swiped off their feet to look like these supernatural beings. One of the easiest ways to resemble them is by wearing children Halloween costumes which are identical to the ones that they are wearing on screen. A frightful smile, red teeth tainted with blood, the lightening in the eyes and the powers to possess beings are often some of the characters of Halloween. Black is mostly associated with these beings, it being the colour depicting dark and bad. Most of the Halloween costumes that you would probably find in the market are black in colour viz., the Dracula gown, the wolf, or the spirit with white bones painted all over the dress. Children Halloween Costumes are seen during night parties or fancy dress competitions. One of the upcoming costumes in this league is the costume of the joker; a violet colour suit accompanied with the make-up of an ephemeral smile on your face. If we say that only villains dresses could be categorised under this category then we would be making a big mistake. The dress of the batman or superman could also be called a Halloween costume and is much lovable amongst children. Reveal That Extra Skin You Cannot Otherwise with the Cosplay Costumes Cosplay as is indicative of the name means playing with the costumes. Children and playing can never be distinguished from each other. Dressing up like the favourite cartoon character, or another fiction hero from a fairy tale could be just another recreation activity famous amongst the young ones. Be it the costume of the powerful batman, superman or just another character from a movie or games, there are different occasions which ask for such preparations, where people have to be dressed up like others. One of the things that could be understood from such gatherings is that, people want to try and imitate people who are strong, and the other thing can be as all of us are dressed up like different people we dont have monopoly, since nobody is rich or poor, all the birds belong to the same flock. Often such costumes are worn to reveal that extra skin, which could be socially unacceptable otherwise in the real world. Cosplay costumes are not only the clothes but are also accompanied by another props which lend a different statement altogether. A whip, a sword, a gun, or a stick with a star on its further end; which depicts the wishing sticks of an angel. Props are as necessary as are the costumes; some would even use a wig to make an innately different appearance. Black, White or Purple Kids Look Vibrantly Exclusive in the Kids Costumes The utmost happiness that a person can derive is certainly by watching their kids prosper and flourish as ever. These days the happiness is worth the standard of living of the family, which are closely relative to the kids costumes they wear. Be it a costume of a gentleman with a tuxedo and a bow or a dress with a large tail and magic stick in hand depicting an angel, the fancy clothes have always been the kids favourite. Somehow kids try to look like their elders or some fictitious character they just came past by on the television. The birth day parties and the fancy dress competitions have given an impetus for the kids costume industry. We can see most of them dressed like a cartoon hero lets say Popeye; or a person who makes the headlines, for instance, a politician. Children are the building blocks of the future generation and watching them dressed up like grown woman/man gives an undefined pleasure to the heart of the parents. This might be the case of the effluent sector, where parents can afford to buy a costume for their children for every occasion; we must not forget that there are some children who are readily suspended from the bare clothing necessities. Little Devils Covered In Infant Halloween Costumes In the last few years we have seen that infant Halloween costumes have become so popular in our society. We see babies wearing different kind of fascinating costumes on different get-togethers, parties and on major events through out the year. It has even become a tradition that parents want to dress up their children as impressively as they can. Moreover, it has become a status symbol in the society these days. Considering different events, one of the popular events is Halloween. As all people dress up for that particular day, how could one forget their little babies for that day? The most popular way to dress up your baby for the Halloween is to follow the cartoons theme. And thats what the majority of the people do. Lion king, Superman, Cinderella, Snow White, Disney princess and Batman are the most famous costumes among this age. In dressing up their babies, parents do lookup at the fact that their babies feel comfortable and easy in that particular infant Halloween costume and it should be according to seasonal requirements. And it should be easy to open in case of needing to change a baby. Although it looks somewhat expensive but your baby can enjoy it throughout the year where as taking baby for amusement to somewhere only lasts for a limited time. Future Warriors with Katanas and Ninja Costumes Recently, we have noticed that people tend to care a lot about their costumes. People from all age groups have become conscious of their dressing. It has become a tradition to dress impressively for the events throughout the year. It has even become a status symbol in the society these days. One of the major events is the Halloween. Dressing for this event differs across different age groups. Ninja costumes are one of the most popular Halloween costumes every year during Halloween-time Basically ninjas are the staple of popular culture and its fun to dress up in ninja costume for the Halloween. It does throw a scary impact on the other people present. These costumes also differ according to the prices, from a cheaper one to the most expensive one however. Usually teenager boys end up wearing these types of costumes. It has its origin from Japanese culture, and thats what we can see it in cartoons and more specifically the videogames like Shinobi etc. So this event provides a good chance for these videogame fanatics to show their love for that particular character. This particular costume includes black costume, ninja tabbi socks rubber ninja stars. Rest it depends on a person how much he can afford. Desire of Every Child: A Teen Halloween Costume Teenage is that stage of the life when looking cool and gaining others attention is considered vital in ones life. This is more like the party of life. Everybody starts getting freedom from their parents and they do like to engage themselves in fascinating activities. From boys to girls, everybody likes to party hard and become the centre of attention. It is at this phase of life when one goes through different physical and emotional changes and develops special feelings for the opposite sex. So wearing teen Halloween costumes on fancy events seems to have gained momentum now. On Halloween, teenagers have a variety of options to choose from when looking for a teen Halloween costume that is hip and cool, many of which involve a favorite character from a movie, graphic novel or cartoon. They actually want to choose that costume which no one else could wear on a Halloween party. Being unique is the motive of teenagers for getting attention. Usually boys end up wearing scary costumes whereas girls prefer somewhat sexy costumes for that party. Keeping all things aside, one does keep in mind before wearing it that it should be comfortable and easy to wear.

The Creation Of The Compact Disc Essay -- Technology Descriptive Essay

The Creation Of The Compact Disc The creation of the compact disc, better known as the CD, can be traced back to the late 1960s. A Dutch scientist named Klass Compaan of Philips Research conceived the idea for the CD. He teamed with another scientist, Piet Kramer, who together introduced the first color videodisc prototype in 1972. Sony teamed up with Philips on the creation of the compact disc, and together they were able to develop a standard, universal compact disc to hold audio information. The two companies officially announced the Digital-Audio disc in 1980. In 1982, the compact disc was introduced to the public in Europe and Japan. Later, in 1983, it was introduced in the United States (Future). Compact Discs are flat and circular, with a diameter of 120 millimeters. The actual disc itself is made of hard plastic covered with aluminum or some other reflective metal. Information is stored on the compact disc in numeric form, also called digital form. The primary use for the compact disc is to store and play back music. However, they can also be used to store pictures, files of text, sounds, programs, video games, high quality images, or motion pictures. Many features of the compact disc are standardized, such as its size, minutes of sound, and data format. This allows a compact disc to be played on any compact disc player (Pohlmann, 901). The audio compact disc replaced earlier sound recording technology, such as the phonograph record and cassette tape, for a variety of reasons. First of all, they are longer lasting. Compact discs are read by a laser, or in other words, they are optically read (Feldman, 160). Therefore, there is no friction needed to play back the information on a CD, as opposed to th... ... . Chris’ Audio Debate Page. 27 March 2002 . Feldman, Leonard. â€Å"Compact Disc.† American Academic Encyclopedia. Danbury, CT: Grolier Incorporated, 1998. Fink, John. â€Å"Recording Sound and Sight.† New Book of Popular Science. Danbury, CT: Grolier Incorporated, 2002. â€Å"Future of Compact Discs Safe.† BBC News 31 January 2002. 27 March 2002 . Harris, Tom. â€Å"How CD Burners Work.† Howstuffworks. 1 April 2002 . Pohlmann, Ken C. â€Å"Compact Disc.† World Book Encyclopedia. Chicago, Illinois: Scott Fetzer Company, 2001. â€Å"Sound Recording.† Illustrated Science Encyclopedia. Austin, TX: Raintree Steck-Vaughn Publishers, 1997.

Preventing the export of conflict diamonds in the Democratic Republic o

Preventing the export of conflict diamonds in the Democratic Republic of the Congo The Democratic Republic of Congo (DRC) has large reserves of cobalt, gold, gems, copper, timber, and uranium. However, the most valuable resource that the DRC possess is its large reserve of diamonds. Diamonds essentially serve as a pillar to the DRC’s struggling economy. Plagued by civil unrest, the DRC is desperately trying to stabilize its economy. Their efforts have been met with stiff resistance due to the ongoing civil war and illegal diamond trade. Not only is the DRC losing potential revenue from the illegal mining of diamonds, but also these diamonds are being used to finance the rebel armies. In response, the U.N. has drafted several resolutions and imposed sanctions in order to try and curtail the illegal trade. The DRC has also agreed to follow the Kimberley Process in hopes of preventing the export of illegal diamonds. However, these efforts are not enough to stop the trafficking of diamonds. Several steps must be taken to strengthen the Kimberley Process and change government policies within the DRC in order to stabilize the economy and end the civil war. History of conflict in the Congo The DRC’s current unstable government can be attributed mainly to its turbulent history. Since the late 1800’s the Congo region has experienced relatively few periods of peace and economic stability. Colonization severely hindered the future development of the Congo region. In the late 1870’s, King Leopold II of Belgium colonized the Congo territory. Treaties were signed with several tribal rulers in the territory, giving the King Leopold sovereignty in their areas. In 1885, the territory formally became the Congo Free State, he... ...r 22, 2002. Dietrich, Christian. Hard currency: the criminalized diamond economy of the Democratic Republic of the Congo and its neighbours. Ottawa: Partnership Africa Canada, c2002. Muller, Emma. Diamonds Smuggling Through Congo Republic Makes Mockery of Kimberley Process. Polishedprices.com, July 10, 2003. Tamm, Ingrid J. Diamonds in peace and war: severing the conflict-diamond connection. Cambridge, Mass: World Peace Foundation, 2002. U.N. document. Report of the Panel of Experts on the Illegal Exploitations of Natural Resources and Other Forms of Wealth in the Democratic Republic of Congo. www.globalpolicy.org William Wallis. Comment and Analysis: Kimberley Process: Africa's conflict diamonds: is the UN-backed certification scheme failing to bring transparency to the trade?" Financial Times October 29, 2003. www.kimberleyprocess.com

“Mother Tongue” by Amy Tan Essay

In â€Å"Mother Tongue† by Amy Tan, Tan explores the connection between one’s language and their identity, she examines not only how language affects the development of ones identity, but also the role it has in the way one is perceived by society. Tan shares a few anecdotes illustrating the role language played in shaping her own personal identity. â€Å"I think my mother’s English almost had an affect on limiting my possibilities in life as well.† Tan goes on to explore the idea that the â€Å"broken English† she heard spoken by her mother at home ultimately led to her doing poorly in English, at least when compared to her science and math scores. This led her teachers to steer her away from writing and more towards math and science. In Tan’s case her â€Å"rebellious nature† led her to become an English major her first year of college. Many other Asian-American students are not as headstrong as Tan and therefore are often pushed int o careers in math and science, this undoubtedly affects one’s identity as careers are a major component of an individual’s life. Another way language can be seen affecting Tan’s identity in mother tongue is in the way tan uses, interprets, and thinks about words. â€Å"Her language, as I hear it, is vivid, direct, full of observation and imagery. That was the language that helped shape the way I saw things, expressed things, made sense of the world.† Here Tan was refering to the language of her mother, which obviously played a huge role in how Tan herself interpreted and used words. The final connection between language and identity that can be ascertained from this piece is how often the assumptions about one’s identity made based upon the way they speak are often false. This was very much the case for Tan’s mother, towards the beginning of the piece Tan makes it clear to the audience that while her mother’s English may be â€Å"limited† this in no way reflects how much English she comprehends. Tan also discusses how, when she was growing up, her mother’s â€Å"limited† English limited Tan’s perception of her, â€Å"†¦because she expressed them imperfectly her thoughts were imperfect.† was the logic behind Tan’s view of her mother when she was growing up. This was the view most people seemed to have of Tan’s mother, which is an incorrect perception of her mother’s actual intelligence and comprhension of the English language.

Engineering Ethics Violated and Upheld In the Fukushima Disaster Essay

Engineering Ethics Violated and Upheld In the Fukushima Disaster Introduction            On March 11, 2011 an earthquake took place in Tohuku District, in Japan. The earthquake triggered a massive tsunami that resulted to an outbreak of a nuclear power plant in Japan. The tsunami was about 14- metres in height and it struck the Fukushima Daiichi nuclear plant, that is located in Okuma and Futaba tons in the Fukushima Prefecture (Japan-earthquake, 2013). This caused the loss of power to the reactor that had units of 1, 2 and 3. Additionally, the outbreak caused failure of the cooling system and an explosion of hydrogen that caused a massive destruction of the entire nuclear plant. The damages came along with extensive release of radioactive reactors into Japanese atmosphere and the entire world. Great damages certainly happened to Japan and its dwellers.            There are many theories regarding this accident, but the disaster was majorly caused by either man-made disaster or a natural disaster (Ho, 2011). The implications of this disaster were tremendous in aspects of ecology, sociology, health and social hazards. The main goal of this research is to establish engineering ethic that were violated or upheld during the establishment of a nuclear plant. The paper will begin with definitions of engineering ethics, then, the research will establish the ethics that engineers violated during construction of the nuclear plant which later turned to be a disaster in Japan. Definition            Engineering ethics is a system of moral principles and field of applied ethics that are applied to the field and practice of engineering. Engineering ethics seeks to examine and set obligations for engineers to the society, customers and to the engineering profession. This discipline is closely related to other subjects such as ethics of technology, philosophy of engineering and philosophy of science. Responsibility of engineers            The code of ethics recognizes an engineer as a person who should work and pursue his or her profession with the greatest merit while committing his self interest to serving the community and pursuing the welfare and progress of the majority in the community. By changing the nature to benefit mankind, an engineer must be able to increase his or her awareness of the globe as the home of a man. Engineer’s interests to the universe should guarantee him power to overcome his spirit, skills and knowledge of reality to transform the earth into a fairer and happier place. An engineer should reject form of action that has a motive of causing general harm to the society so to prevent potential threats or hazards to the environment, health, life and the rights of human beings. Therefore, engineers are required to uphold the prestige of the engineering profession, ensure it is properly discharged and maintain a professional demeanour based on his or her ability, fortitu de, honesty, modesty, justice, magnanimity and temperance. These values should be upheld with proper consciousness of personal wellbeing and subordinated to the social good. An engineer should ensure that he acquires new skills, more in the engineering field and the same time disseminate his knowledge, share his or her experience and provide opportunities for training and education for his employees, provide credit, moral and material hold up to the college or university where he or she studied, therefore, returning the benefits and chances he and his bosses have received. An engineer should execute his duties with efficiency, that is, he must ensure compliance of standards required by law.            This knowledge is very important in understanding where things never worked in Fukushima nuclear power plant. The research majorly focused with the ethics behind setting a nuclear plants and presentation are as follows. Ethical concerns for nuclear power plant            As saying goes, â€Å"great power comes with responsibility.† This saying can be applied to a nuclear form of energy because of its additional power, but also to its volatile nature. Radioactive material is very hard to store and, therefore, presents a potential threat to the public health. The nuclear materials are also associated with the most powerful human weapons in the world. As an engineer contracted to set a nuclear plant, there are a number of controversial concerns that an engineer must address in order to uphold engineering ethics. Ethical issues that engineers could have addressed while setting Fukushima nuclear power plant include ramification of the location of the area that he plant was placed, this involved looking at the affects the plant could have to the people of Japan wellbeing and the people could have reacted to the idea of the plant. Global health safety is another concern that the engineers could have addressed (The Ethics behind a N uclear Phase-out and Replacement, 2014). Ethics involved in safety of nuclear reactors            The health and safety of nuclear reactors are the first consideration that engineers should have addressed during construction of Fukushima nuclear power plant. According to the National Society of professional engineers’ code of ethics, all engineers are expected to uphold the safety, welfare and health of the community. For instance, during construction, engineer should have used liquid sodium rather than water because sodium is much safe than versions of water. The engineers violated this code of ethics because the explosion of the Fukushima nuclear plant caused relocation of over 130000 people while 1,600 people were left dead (Bird, 2013). New times reported that more people around the place of incident were forced to relocate to other places much far from the area of accident due to radioactive materials that were released to the atmosphere. Japanese were quoted saying that, â€Å"this time we have nobody to blame for the mess that just occurred, we a re responsible for the polluted environment around us†¦.† (Bird, 2013).Public opinion ethics and global consequences            Fukushima nuclear power plant was against this code of ethics. The attitude of setting nuclear plant near public dwelling places was totally unethical. The results of the explosion were negative; many people were evacuated as others lost their lives. Therefore, according to this research, the public opinion ethics was not considered well by the engineers before setting the power plant at Fukushima a place that is surrounded by towns full of people. The engineers also never considered the safety of Japan’s and world’s environment. The radioactive materials released to the environment forced the government to relocate citizens who were living in the nearby towns. Conclusion            The choice Japan needs to consider: as discussed in the paper the downfalls of the nuclear power production in Japan should serve as major reassessment test of Japan’s principle source of energy. The American Society of Civil Engineers (ASCE) and National Society of Professional Engineers’ (NSPE) code of ethics should be used to decide which source of energy Japan should take full advantage of (Code of Ethics, 2013). For instance, Japan should set a massive sea-based wind power off the coastal region of Fukushima and become independent of using nuclear energy that proved to be hazardous. Taking advantage of wave energy could be another solution of making Japan free of nuclear source of energy. This because the wave source of energy is beneficial and does not violate the ASCE’S and NSPE’s codes of ethics. This research, therefore, support and suggests the implementation of wind and wave power farms in Japan so as to make the country indep endent of nuclear powers caused great damage to the country’s dwellers and its environment. References E. Ho. (2011, March 16). â€Å"Reactor Redux: What’s happening at Fukushima-Daiichi?† TIME. (Online article).http://newsfeed.time.com/2011/03/16/reactor-redux-whats-happening-at-fukushima-daiichi/(2013). â€Å"Code of Ethics.† ASCE. (Online).http://www.nspe.org/Ethics/CodeofEthics/index.html (2013, September 20). â€Å"Japan Earthquake – Tsunami Fast Facts.† CNN. (Onlinearticle).http://www.cnn.com/2013/07/17/world/asia/japan-earthquake—tsunami-fast-factsThe Ethics behind a Nuclear Phase out and Replacement. (2014, March 04). Retrieved May 20, 2014, from my future as a professional Engineer: http://www.pitt.edu/~jtz9/MyFuture.htmlW. Bird. (2013, March 10). â€Å"Two years on, Fukushima evacuees seek justice and a normal life.† The Japan Times. (Online article).http://www.japantimes.co.jp/life/2013/03/10/people/two-years-on-fukushima-evacuees-seek-justice-and-a-normal-life/#.Um7nXZR4Z9B Source document

Porter’s 5 Force Analysis

The Industry Handbook http://www. investopedia. com/features/industryhandbook/ Thanks very much for downloading the printable version of this tutorial. As always, we welcome any feedback or suggestions. http://www. investopedia. com/contact. spx Table of Contents 1) The Industry Handbook: Introduction 2) The Industry Handbook: Porter's 5 Forces Analysis 3) The Industry Handbook: The Airline Industry 4) The Industry Handbook: The Oil Services Industry 5) The Industry Handbook: Precious Metals 6) The Industry Handbook: Automobiles 7) The Industry Handbook: The Retailing Industry 8) The Industry Handbook: The Banking Industry 9) The Industry Handbook: Biotechnology 10) The Industry Handbook: The Semiconductor Industry 11) The Industry Handbook: The Insurance Industry 12) The Industry Handbook: The Telecommunications Industry 13) The Industry Handbook: The Utilities Industry 14) The Industry Handbook: The Internet Industry IntroductionIndustry analysis is a type of investment research th at begins by focusing on the status of an industry or an industrial sector. Why is this important? Each industry is different, and using one cookie-cutter approach to analysis is sure to create problems. Imagine, for example, comparing the P/E ratio of a tech company to that of a utility. Because you are, in effect, comparing apples to oranges, the analysis is next to useless. In each section we'll take an in-depth look at the different valuation techniques and buzz words used in a particular industry, complete a 5-forces analysis on the state of the market and point you in the direction of industry-specific resources. Page 1 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. Porter's 5 Forces Analysis If you are not familiar with the five competitive forces model, here is a brief background on who developed it, and why it is useful. The model originated from Michael E. Por ter's 1980 book â€Å"Competitive Strategy: Techniques for Analyzing Industries and Competitors. † Since then, it has become a frequently used tool for analyzing a company's industry structure and its corporate strategy. In his book, Porter identified five competitive forces that shape every single industry and market.These forces help us to analyze everything from the intensity of competition to the profitability and attractiveness of an industry. Figure 1 shows the relationship between the different competitive forces. Figure 1: Porter's five competitive forces This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 2 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. 1. Threat of New Entrants – The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include: o o o o o oExisting loyalty to major brands Incentives for using a particular buyer (such as frequent shopper programs) High fixed costs Scarcity of resources High costs of switching companies Government restrictions or legislation 2. Power of Suppliers – This is how much pressure suppliers can place on a business. If one supplier has a large enough impact to affect a company's margins and volumes, then it holds substantial power. Here are a few reasons that suppliers might have power: o o o There are very few suppliers of a particular product There are no substitutes Switching to another (competitive) product is very costly The product is extremely important to buyers – can't do without it The supplying industry has a higher profitability than the buying industry o o . Power of Buyers – This is how much pressure customers can place on a business. If one customer has a large enough impact to affect a company's margins and volumes, then the customer hold substantial power. Here are a few reasons that customers might have power: o o o o Small number of buyers Purchases large volumes Switching to another (competitive) product is simple The product is not extremely important to buyers; they can do without the product for a period of time This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 3 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. om – the resource for investing and personal finance education. o Customers are price sensitive 4. Availability of Substitutes – What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses a serious threat. Here are a few factors that can affect the threat of substitutes: o o The main issue is the similarity of substitutes. For example, if the price of coffee r ises substantially, a coffee drinker may switch over to a beverage like tea. If substitutes are similar, it can be viewed in the same light as a new entrant. 5. Competitive Rivalry – This describes the intensity of competition between existing firms in an industry.Highly competitive industries generally earn low returns because the cost of competition is high. A highly competitive market might result from: o o o Many players of about the same size; there is no dominant firm Little differentiation between competitors products and services A mature industry with very little growth; companies can only grow by stealing customers away from competitors The Airline Industry Few inventions have changed how people live and experience the world as much as the invention of the airplane. During both World Wars, government subsidies and demands for new airplanes vastly improved techniques for their design and construction.Following the World War II, the first commercial airplane routes we re set up in Europe. Over time, air travel has become so commonplace that it would be hard to imagine life without it. The airline industry, therefore, certainly has progressed. It has also altered the way in which people live and conduct This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 4 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. business by shortening travel time and altering our concept of distance, making it possible for us to visit and conduct business in places once considered remote. For more on the airline industry, read Is That Airline Ready For Lift-Off? ) The airline industry exists in an intensely competitive market. In recent years, there has been an industry-wide shakedown, which will have far-reaching effects on the industry's trend towards expanding domestic and international services. In the past, the air line industry was at least partly government owned. This is still true in many countries, but in the U. S. all major airlines have come to be privately held. The airline industry can be separated into four categories by the U. S. Department of Transportation (DOT): ? ? ? ? International – 130+ seat planes that have the ability to take passengers just about anywhere in the world.Companies in this category typically have annual revenue of $1 billion or more. National – Usually these airlines seat 100-150 people and have revenues between $100 million and $1 billion. Regional – Companies with revenues less than $100 million that focus on short-haul flights. Cargo – These are airlines generally transport goods. Airport capacity, route structures, technology and costs to lease or buy the physical aircraft are significant in the airline industry. Other large issues are: ? ? ? Weather – Weather is variable and unpredictable. Extreme heat, cold, fog and sno w can shut down airports and cancel flights, which costs an airline money.Fuel Cost – According to the Air Transportation Association (ATA), fuel is an airline's second largest expense. Fuel makes up a significant portion of an airline's total costs, although efficiency among different carriers can vary widely. Short haul airlines typically get lower fuel efficiency because take-offs and landings consume high amounts of jet fuel. Labor – According to the ATA, labor is the an airline's No. 1 cost; airlines must pay pilots, flight attendants, baggage handlers, dispatchers, customer service and others. Key Ratios/Terms Available Seat Mile = (total # of seats available for transporting passengers) X (# of miles flown during period) This tutorial can be found at: http://www. investopedia. om/features/industryhandbook/ (Page 5 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. Revenue Passenger Mile = flown during the period) (# of revenue-paying passengers) X (# of mile Revenue Per Available Seat Mile = (Revenue) (# of seats available) Air Traffic Liability (ATL): An estimate of the amount of money already received for passenger ticket sales and cargo transportation that is yet to be provided. It is important to find out this figure so you can remove it from quoted revenue figures (unless they specifically state that ATL was excluded).Load Factor: This indicator, compiled monthly by the Air Transport Association (ATA), measures the percentage of available seating capacity that is filled with passengers. Analysts state that once the airline load factor exceeds its breakeven point, then more and more revenue will trickle down to the bottom line. Keep in mind that during holidays and summer vacations load factor can be significantly higher, therefore, it is important to compare the figures against the same period from the previous year. Analyst Insight Airlines also earn revenue from transporting cargo, selling frequent flier miles to other companies and up-selling in flight services. But the largest proportion of revenue is derived from regular and business passengers.For this reason, it is important that you take consumer and business confidence into account on top of the regular factors that one should consider like earnings growth and debt load. (For more about the consumer confidence survey, see Economic Indicators: Consumer Confidence Index. ) Business travelers are important to airlines because they are more likely to travel several times throughout the year and they tend to purchase the upgraded services that have higher margins for the airline. On the other hand, leisure travelers are less likely to purchase these premium services and are typically very price sensitive. In times of economic uncertainty or sharp decline in consumer confidence, you can expect the number of leisure travelers to decline.It is also imp ortant to look at the geographic areas that an airline targets. Obviously, more market share is better for a particular market, but it is also important to stay diversified. Try to find out the destination to which the majority of an airline's flights are traveling. For example, an airline that sends a high number of flights to the Caribbean might see a dramatic drop in profits if the outlook for leisure travelers looks poor. A final key area to keep a close eye on is costs. The airline industry is extremely sensitive to costs such as fuel, labor and borrowing costs. If you notice a trend of This tutorial can be found at: http://www. investopedia. om/features/industryhandbook/ (Page 6 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. rising fuel costs, you should factor that into your analysis of a company. Fuel prices tend to fluctuate on a monthly basis, so paying close attention to these costs is crucial. Porter's 5 Forces Analysis 1. Threat of New Entrants. At first glance, you might think that the airline industry is pretty tough to break into, but don't be fooled. You'll need to look at whether there are substantial costs to access bank loans and credit. If borrowing is cheap, then the likelihood of more airliners entering the industry is higher.The more new airlines that enter the market, the more saturated it becomes for everyone. Brand name recognition and frequent fliers point also play a role in the airline industry. An airline with a strong brand name and incentives can often lure a customer even if its prices are higher. 2. Power of Suppliers. The airline supply business is mainly dominated by Boeing and Airbus. For this reason, there isn't a lot of cutthroat competition among suppliers. Also, the likelihood of a supplier integrating vertically isn't very likely. In other words, you probably won't see suppliers starting to offer flight s ervice on top of building airlines. 3. Power of Buyers.The bargaining power of buyers in the airline industry is quite low. Obviously, there are high costs involved with switching airplanes, but also take a look at the ability to compete on service. Is the seat in one airline more comfortable than another? Probably not unless you are analyzing a luxury liner like the Concord Jet. 4. Availability of Substitutes. What is the likelihood that someone will drive or take a train to his or her destination? For regional airlines, the threat might be a little higher than international carriers. When determining this you should consider time, money, personal preference and convenience in the air travel industry. 5. Competitive Rivalry.Highly competitive industries generally earn low returns because the cost of competition is high. This can spell disaster when times get tough in the economy. Key Links ? ? ? Federal Aviation Administration – Get the latest regulation news, airport delays , etc. AviationNow. com – Information and news on the airline/aerospace industry. AirWise. com – Airport and aviation news This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 7 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. The Oil Services Industry There is no doubt that the oil/energy industry is extremely large.According to the Department of Energy (DOE), fossil fuels (including coal, oil and natural gas) makes up more than 85% of the energy consumed in the U. S. as of 2008. Oil supplies 40% of U. S. energy needs. (Visit the U. S. Department of Energy's Energy Sources information page for more insight. ) Before petroleum can be used, it is sent to a refinery where it is physically, thermally and chemically separated into fractions and then converted into finished products. About 90% of these products are fuels s uch as gasoline, aviation fuels, distillate and residual oil, liquefied petroleum gas (LPG), coke (not the refreshment) and kerosene. Refineries also produce non-fuel products, including petrochemicals, asphalt, road oil, lubricants, solvents and wax.Petrochemicals (ethylene, propylene, benzene and others) are shipped to chemical plants, where they are used to manufacture chemicals and plastics. (For more insight, read Oil And Gas Industry Primer. ) There are two major sectors within the oil industry, upstream and downstream. For the purposes of this tutorial we will focus on upstream, which is the process of extracting the oil and refining it. Downstream is the commercial side of the business, such as gas stations or the delivery of oil for heat. Oil Drilling and Services Oil drilling and services is broken into two major areas: drilling and oilfield services. ? Drilling – Drilling companies physically drill and pump oil out of the ground. The drilling industry has always be en classified as highly skilled.The people with the skills and expertise to operate drilling equipment are in high demand, which means that for an oil company to have these people on staff all the time can cost a lot. For this reason, most drilling companies are simply contractors who are hired by oil and gas producers for a specified period of time. (For related reading, see Unearth Profits In Oil Exploration And Production. ) In the drilling industry, there are several different types of rigs, each with a specialized purpose. Some of these include: o Land Rigs – Drilling depths ranges from 5,000 to 30,000 feet. o Submersible Rigs – Used for ocean, lake and swamp drilling.The bottom part of these rigs are submerged to the sea's floor and the platform is on top of the water. o Jack-ups – this type of rig has three legs and a triangular platform which is jacked-up above the highest anticipated waves. This tutorial can be found at: http://www. investopedia. com/fe atures/industryhandbook/ (Page 8 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. o Drill Ships – These look like tankers/ships, but they travel the oceans in search of oil in extremely deep water. (For more information on the drilling industry, check out on the Rigzone website. ) ? Oilfield Services – Oilfield service companies assist the drilling companies n setting up oil and gas wells. In general these companies manufacture, repair and maintain equipment used in oil extraction and transport. More specifically, these services can include: o Seismic Testing – This involves mapping the geological structure beneath the surface. o Transport Services – Both land and water rigs need to be moved around at some point in time. o Directional Services – Believe it or not, all oil wells are not drilled straight down, some oil services companies s pecialize in drilling angled or horizontal holes. The energy industry is not any different than most commodity-based industries as it faces long periods of boom and bust.Drilling and other service firms are highly dependent on the price and demand for petroleum. These firms are some of the first to feel the effects of increased or decreased spending. If oil prices rise, it takes time for petroleum companies to size up land, setup rigs, take out the oil, transport it and refine it before the oil company sees any profit. On the other hand, oil services and drilling companies are the first on the scene when companies decide to start exploring. Oil Refining The refining business is not quite as fragmented as the drilling and services industry. This sector is dominated by a small handful of large players. In fact, much of the energy industry is ruled by large, integrated oil companies.Integrated refers to the fact that many of these companies look after all factors of production, refinin g and marketing. For the most part, refining is a slow and stable business. The large amounts of capital investment means that very few companies can afford to enter this business. This handbook will try to focus more on oil equipment and services such as drilling and support services. Key Ratios/Terms BTUs: Short for â€Å"British Thermal Units. † This is the amount of heat required to increase the temperature of one pound of water by one degree Fahrenheit. This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 9 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. om – the resource for investing and personal finance education. Different fuels have different heating values; by quoting the price per BTU it is easier to compare different types of energy. Dayrates: Oil and gas drillers usually charge oil producers on a daily work rate. These rates vary depending on the location, the type of rig a nd the market conditions. There are plenty of research firms that publish this information. Higher dayrates are great for drilling companies, but for refiners and distribution companies this means lower margins unless energy prices are rising at the same rate. Meterage: Another type of contract that differs from dayrates is one based on how deep the rig drills.These are called meterage, or footage, contracts. These are less desirable because the depth of the oil deposits are unpredictable; it's really a gamble on the driller's part. Downstream: Refers to oil and gas operations after the production phase and through to the point of sale, whether at the gas pump or the home heating oil truck Upstream: The grass roots of the oil business, upstream refers to the exploration and production of oil and gas. Many analysts look at upstream expenditures from previous quarters to estimate future industry trends. For example, a decline in upstream expenditures usually trickles down to other are as such as transportation and marketing.OPEC: The Organization of Petroleum Exporting Countries is an intergovernmental organization dedicated to the stability and prosperity of the petroleum market. OPEC membership is open to any country that is a substantial exporter of oil and that shares the ideals of the organization. OPEC has 11 member countries. Output quotas placed by OPEC can send huge shocks throughout the energy markets. Below is a chart of the world's top exporters of petroleum. OPEC members are denoted by â€Å"*†. Indonesia and Qatar are also members, but they don't make the top twelve. Top World Oil Net Exporters, 2006 Country 1) Saudi Arabia* 2) Russia Net Exports (million barrels per day) 8. 65 6. 57 This tutorial can be found at: http://www. investopedia. om/features/industryhandbook/ (Page 10 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. 3) No rway 4) Iran* 5) United Arab Emirates* 2. 54 2. 52 2. 52 2. 20 2. 15 2. 15 1. 85 1. 68 1. 52 6) Venezuela* 7) Kuwait* 8) Nigeria* 9) Algeria* 10) Mexico 11) Libya* 12) Iraq* 1. 43 Source: Energy Information Administration Analyst Insight Analysts and investors often disagree on specific investment decisions, but one thing that they do agree on is their approach to analyzing energy companies. A top down investment approach is almost always the best strategy. We will go through the top down steps below. For more insight, read A Top-Down Approach To Investing. ) Economics/Politics The oil industry is easily influenced by economic and political conditions. If a country is in a recession, fewer products are being manufactured, not as many people drive to work, take vacations, etc. All of these variables factor into less energy use. The best time to invest in an oil company is when the economy is firing on all cylinders and oil companies are making so much money that using excessive amoun ts of energy themselves has little effect on their bottom line. Some analysts believe that rather than analyzing energy companies, you should just predict the trend in energy prices.While more analysis is needed for a prudent investment than simply looking at price trends in oil, it's true that there is a strong correlation between the performance of energy companies and the commodity price for energy. Supply and Demand Oil and gas prices fluctuate on a minute by minute basis, taking a look at the historical price range is the first place you should look. Many factors determine the price of oil, but it really all comes down to supply and demand. Demand typically does not fluctuate too much (except in the case of recession), but supply shocks can occur for a number of reasons. When OPEC meets to determine oil supply for the coming months, the price of oil can fluctuate wildly.Day-to-day This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 11 o f 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. fluctuations should not influence your investment decision in a particular energy company, but long-term trends should be followed more closely. You can find the latest energy supply/demand statistics at the Energy Information Administration. Rig Utilization Rates Another factor that determines supply is the rig utilization rates; its close relationship to oil prices is not a coincidence. Higher utilization rates mean more revenue and profits.For drilling companies, it is important to take a close look at the company's rig fleet, because older rigs lack the ability to drill in remote locations or to bore deep holes. Some other factors to consider are the depth of water that the offshore rigs can drill in, hole depth and horsepower. Higher quality rigs will have higher utilization rates, especially during weak periods. This w ill lead to higher revenue growth. Sometimes this is a double-edged sword; while higher utilization is better, a company that is at its capacity will have difficulty increasing revenues further. Contracts The contracts through which an oil services company is paid also play a large role in supply. Pay close attention to the dayrates, as falling dayrates can dramatically decrease revenues.The opposite is true should dayrates rise. This is because many of the drillers' costs are fixed. Financial Statements After these wide scale factors have been considered, it's time to get down to the nitty gritty – the financials. And when it comes to the financials, the same old rules apply to oil services companies. Ideally, revenues and profits will be growing consistently, just as they do in any quality company. It's worth digging deeper to see if there are any one-time events that have dramatically increased revenues. Also, the P/E ratio and PEG ratios should be comparable to others wit hin the industry. On the balance sheet, investors should keep an eye on debt levels.High debt puts a strain on credit ratings, weakening their ability to purchase new equipment or finance other capital expenditures. Poor credit ratings also make it difficult to acquire new business. If customers have the choice of going with a company that is strong versus one that is having debt problems, which do you think they will choose? To do a test for financial leverage, take a look at the debt/equity ratio. The working capital also tells us whether the company has enough liquid assets to cover short term liabilities. Rating agencies like Moody's and S&P say 50% is a prudent debt/equity ratio. Companies in more stable markets can afford slightly higher debt/equity ratios.If profits are of the utmost importance, then the statement of cash flow is a close second. Oil companies are notorious for reporting non cash line items in the This tutorial can be found at: http://www. investopedia. com/fe atures/industryhandbook/ (Page 12 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. income statement. For this reason, you should try to decipher the cash EPS. By stripping away all the non-cash entities you will get a truer number because cash flow cannot be manipulated as easily as net income can. (For further reading, see Advanced Financial Statement Analysis. ) Porter's 5 Forces Analysis 1. Threat of New Entrants.There are thousands of oil and oil services companies throughout the world, but the barriers to enter this industry are enough to scare away all but the serious companies. Barriers can vary depending on the area of the market in which the company is situated. For example, some types of pumping trucks needed at well sites cost more than $1 million each. Other areas of the oil business require highly specialized workers to operate the equipment and to make key d rilling decisions. Companies in industries such as these have higher barriers to entry than ones that are simply offering drilling services or support services. Having ample cash is another barrier – a company had better have deep pockets to take on the existing oil companies. 2. Power of Suppliers.While there are plenty of oil companies in the world, much of the oil and gas business is dominated by a small handful of powerful companies. The large amounts of capital investment tend to weed out a lot of the suppliers of rigs, pipeline, refining, etc. There isn't a lot of cut-throat competition between them, but they do have significant power over smaller drilling and support companies. 3. Power of Buyers. The balance of power is shifting toward buyers. Oil is a commodity and one company's oil or oil drilling services are not that much different from another's. This leads buyers to seek lower prices and better contract terms. 4. Availability of Substitutes.Substitutes for the o il industry in general include alternative fuels such as coal, gas, solar power, wind power, hydroelectricity and even nuclear energy. Remember, oil is used for more than just running our vehicles, it is also used in plastics and other materials. When analyzing an energy company it is extremely important to take a close look at the specific area in which the company is operating. Also, companies offering more obscure or specialized services such as seismic drilling or directional drilling tools are much more likely to withstand the threat of substitutes. (For more on oil substitutes, see The Biofuels Debate Heats Up. ) 5. Competitive Rivalry. Slow industry growth rates and high exit barriers are a particularly troublesome situation facing some firms.Until quite recently, oil refineries were a particularly good example. For a period of almost 20 years, no new refineries were built in the U. S. Refinery capacity exceeded the product demands as a result of conservation efforts followin g the oil shocks of the 1970s. At the same time, exit barriers in the This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 13 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. refinery business are quite high. Besides the scrap value of the equipment, a refinery that does not operate has no value-adding capability.Almost every refinery can do one thing – produce the refined products they have been designed for. Key Links ? ? ? Department of Energy – Get the latest regulation news and statistics. You name it, this site has it. ODS-Petrodata – Both free and fee-based data on rig counts and other key figures in the oil services industry. Rigzone. com – News and statistics on the oil and gas industry. Precious Metals The precious metals industry is very capital intensive. Constructing mines and building produ ction facilities requires huge sums of capital. Long-term survival requires heavy expenditures to finance production and exploration. Technology has played a big role in the computer and internet industry, but t has also greatly changed the mining industry. Gold is the most popular precious metal for investors. As you may know, gold is a commodity, and, as such, the price for gold fluctuates on a daily basis in the commodity markets. While there is a lot of overlap between the basics of mining gold and silver, the primary focus of here is on the gold market. Silver is less valuable than gold, and, as such, it is usually discovered either by accident or as a byproduct of gold/lead/copper mining. Gold prices are influenced by numerous variables that include fabricator demand, expected inflation, return on assets and central bank demand. Gold is strongly pegged to supply-and-demand patterns.In general, low prices result in low production, and high prices result in high production. Mark et forces determine price. A company's attempt to control costs is critical to maintaining financial health and production levels in the face of declining gold prices. (For related reading, see Does It Still Pay To Invest In Gold? ) The metals industry is not vertically integrated like other industries such as oil and energy. In the metals industry, the companies that mine the gold typically do This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 14 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. ot refine it, and refiners rarely sell it directly to the public. The industry encompasses three types of firms: 1. Exploration. These companies have very little in the way of assets. They explore and prove that gold exists in a particular area. The only major assets owned by exploration firms are the rights to drill and a small amount of capital, which is needed to conduct drilling and trenching operations. 2. Development. Once a gold deposit is discovered by exploration companies, they either try to become development firms, or they sell their gold find to development firms. Development firms are those operating on explored areas that have prove to be mines.The only real difference between development and exploration is that, for development firms, their area has proved to be a gold deposit. 3. Production. Producer firms are full-fledged mining companies that extract and produce gold from existing mines; this production can range from a hundred thousand ounces to several million ounces of gold production per year. Each operator in the supply chain has its own strengths and weaknesses. Some companies do well at extracting the metal from the earth, some refine, while others smelt and transform the commodity into a finished product. Most gold that is mined today is used for jewelry, perhaps because of its beauty, or perhaps because it doesn't rust or corrode.Other uses for gold include tooth filings, electronics manufacturing and collectibles, but these make up a very small portion of overall demand. Unlike other industries, companies in the mining industry come in all shapes and sizes. Much of the production is done by large blue chip companies, but the exploration side of the industry is full of junior companies looking to hit a home run with a large gold find. The mining industry has plenty of opportunities for speculators and others for income investors. (To learn more, read Getting Into The Gold Market. ) Key Ratios/Terms Mine Production Rates: Serious gold investors follow the Gold Survey very closely, published by Gold Fields Mineral Services. Each year, it lists the worldwide mine production statistics.Increasing production rates means more supply, which ultimately means a lower price for gold – if demand remains stable. Scrap Recovery: Another statistic published in the Gold Sur vey, scrap This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 15 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. recovery refers to the worldwide supply of gold from sources other than mine production. This includes recovered old jewelry, industrial byproducts, etc. Throughout the 1990s, more than 15% of the world's gold supply came from scrap recovery. Futures Sales by Producers As you probably know, gold trades in the futures markets.Gold producers are constantly monitoring the prices in the futures markets because it determines the price at which they can sell their gold. The Gold Survey lists statistics on producer sales. If producers are selling an increasing amount in the futures market, it could mean that prices will fall very soon. By purchasing futures contracts the producer â€Å"locks-in† a price. Therefore, if the price of gold falls in future months, it won't affect the producer's bottom line. Conversely, if prices continue to rise after the producer locks in, they won't be able to capitalize on the higher prices. Bullion: This denotes gold and silver that is refined and officially recognized as high quality (at least 99. 5% pure). It is usually in the form of bars rather than coins.When you hear of investors or central banks holding gold reserves, it is usually in the form of bullion. Ore: This refers to mineralized rock that contains metal. Gold producers mine gold ore and then extract the gold from it using either chemicals, extreme heat, or some other method. There are different types of ores, of which the most common are oxide ores and sulphide ores. Analyst Insight The price of gold fluctuates on a minute-by-minute basis, so taking a look at the historical price range is the first place you should look. Many factors determine the price of gold, but it really all comes down to supp ly and demand. Demand typically does not fluctuate too much, but supply shocks can send prices either soaring or into the doldrums.The difference between production costs and the futures price for gold equals the gross profit margins for mining companies. Therefore, the second place you want to look is the cost of production. The main factors to look at are the following: ? ? Location – Where is the gold being mined? Political unrest in developing nations has ruined more than one mining company. Developing nations might have cheaper labor and mining costs, but the political risks are huge. If you are risk averse, then look for companies with mines in relatively stable areas of the world. The costs might be higher, but at least the company knows what it's getting into. Ore Quality – Ore is mineralized rock that contains metal.Higher quality ore will contain more gold, which is usually reported as ounces This tutorial can be found at: http://www. investopedia. com/featur es/industryhandbook/ (Page 16 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. ? of gold per ton of ore. Generally speaking, oxide ores are better because the rock is more porous, making it easier to remove the gold. Mine Type – The type of mine a company uses is a big factor in production costs. Most underground mines are more expensive than open pit mines. Cost of Production The cost of production is probably the most widely followed measure for analyzing a gold producer.The lower the costs, the greater the operating leverage, which means that earnings are more stable and less volatile to changes in the price of gold. For example, a company that has a cash cost around $175/ounce is, for obvious reasons, in a much better position than one whose cost is $275/ounce. The low-cost producer has much more staying power than the marginal producer. In fact, if the price o f gold declines below $275/ounce, the higher-cost producer would have to stop producing until the price goes back up. Producers usually publish their cost of production in their annual report; this cost includes everything from site preparation to milling and refining.It doesn't include exploration costs, financing, or any other administrative expenses the company might incur. Aside from looking at costs, investors should carefully look over revenue growth. Revenue is output times the selling price for gold, so it may fluctuate from year to year. Well-run companies will attempt to hedge against fluctuating gold prices through the futures markets. Take a look at the revenue fluctuations over the past several years. Ideally, the revenue growth should be smooth. Companies with revenues that fluctuate widely from year to year are very hard to analyze and aren't where the smart money goes. Debt Levels Investors should keep an eye on debt levels, which are on the balance sheet.High debt p uts a strain on credit ratings, weakening the company's ability to purchase new equipment or finance other capital expenditures. Poor credit ratings also make it difficult to acquire new businesses. (For related reading, see Debt Reckoning. ) P/E As a final caveat (beware), never analyze a precious-metals company based on the price-to-earnings ratio. In general, a high P/E means high projected earnings in the future, but all gold stocks have high P/E ratios. The P/E ratio for a gold stock doesn't really tell us anything because precious metals companies need to be compared by assets, not earnings. Unlike buildings and machinery, gold companies have large amounts of gold in their vaults and in mines throughout the world.Gold on the balance sheet is unlike other capital assets; gold is seen This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 17 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com â€⠀œ the resource for investing and personal finance education. as currency of last resort. Investors are therefore willing to pay more for a gold company because it is the next best thing to physically holding the gold themselves. There are a few valuation techniques that analysts use when comparing various precious metal companies. The most popular and widely used ratio is market capitalization per ounce of reserves (market cap divided by reserves).This indicates to investors what they are paying for each ounce of reserves. Obviously, a lower price is better. Porter's 5 Forces Analysis 1. Threat of New Entrants. Financing is a principal barrier to entry in the precious-metals industry, which is heavily capital intensive. Constructing mines, production facilities, exploration and development and mining equipment all require large sums of capital. This capital is required before the mine is in production. Therefore, favorable financing terms are extremely important. In short, long-ter m survival in the precious-metal market requires significant capital. 2. Power of Suppliers. The only supply-side issues that miners face deal with government regulations and rules.The supply of land is plentiful, but gaining approval and permits to mine the land can be difficult, especially if environmental risks are high. 3. Power of Buyers. Gold is a commodity-based business, so the gold from one company is not that much different from another's. This translates into buyers seeking lower prices and better contract terms. 4. Availability of Substitutes. Substitutes for the precious metals industry include other precious metals such as diamonds, silver, platinum, etc. These are worthy substitutes for gold, but they are not as widely accepted as gold. Gold has the advantage of being standard for a world currency, so a gold bar in the U. S. s worth the same as it is in Ecuador. As other forms of precious metals such as diamonds gain popularity, they may also become more threatening a s substitutes. 5. Competitive Rivalry. Gold companies don't compete on price, mainly because the prices are determined by market forces. But gold companies do compete for land. The backbone of a precious metals company is its reserves, and the only way to beef up reserves is to explore for good mining areas. Companies go to great lengths to discover gold deposits, and the discovery is on a first-come-first-serve basis. Key Links ? InfoMine. com – Get the latest news and statistics on mining companies. Mining USA – Here is more data and information on mining. This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 18 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. ? Mining Glossary – When you are analyzing a mining company you are bound to come across industry-specific terms you don't understand Automobiles Simila r to the invention of the airplane, the emergence of automobiles has had a profound effect on our everyday lives. The auto manufacturing industry is considered to be highly capital and labor intensive.The major osts for producing and selling automobiles include: ? ? ? Labor – While machines and robots are playing a greater role in manufacturing vehicles, there are still substantial labor costs in designing and engineering automobiles. Materials – Everything from steel, aluminum, dashboards, seats, tires, etc. are purchased from suppliers. Advertising – Each year automakers spend billions on print and broadcast advertising; furthermore, they spent large amounts of money on market research to anticipate consumer trends and preferences. The auto market is thought to be made primarily of automakers, but auto parts makes up another lucrative sector of the market.The major areas of auto parts manufacturing are: ? ? ? Original Equipment Manufacturers (OEMs) – Th e big auto manufacturers do produce some of their own parts, but they can't produce every part and component that goes into a new vehicle. Companies in this industry manufacture everything from door handles to seats. Replacement Parts Production and Distribution – These are the parts that are replaced after the purchase of a vehicle. Air filters, oil filers and replacement lights are examples of products from this area of the sector. Rubber Fabrication – This includes everything from tires, hoses, belts, etc. In the auto industry, a large proportion of revenue comes from selling automobiles.The parts market, however, is even more lucrative. For example, a new car might cost $18,000 to buy, but if you bought, from the automaker, all the parts needed to construct that car, it would cost 300-400% more. Over and above the labor and material costs we mentioned above, there are other developments in the automobile industry that you must consider when analyzing an automobile company. Globalization, the tendency of world investment and businesses to move from national and domestic markets to a This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 19 of 65) Copyright  © 2010, Investopedia. com – All rights reserved.Investopedia. com – the resource for investing and personal finance education. worldwide environment, is a huge factor affecting the auto market. More than ever, it is becoming easier for foreign automakers to enter the North American market. (To read more about this issue, see The Globalization Debate. ) Competition is the other factor that takes its toll on the auto industry; we will discuss this in more detail below under the Porter's 5 forces analysis Key Players In North America, the automobile production market is dominated by what's known as the Big Three: ? ? ? General Motors – Produces Chevrolet, Pontiac, Buick and Cadillac, among others.Chrysler – Chrysler, Jeep and Dodge. Ford Motor Co – Ford, Lincoln and Volvo. Two of the largest foreign car manufacturers are: ? ? Toyota Motor Co Honda Motor Co Key Ratios/Terms Fleet Sales: Traditionally, these are high-volume sales designated to come from large companies and government agencies. These sales are almost always at discount prices. In the past several years, auto makers have been extending fleet sales to small businesses and other associations. Seasonally Adjusted Annual Rate of Sales (SAAR): Most auto makers experience increased sales during the second quarter (April to June), and sales tend to be sluggish between November and January.For this reason, it is important to compare sales figures to the same period of the previous year. The adjustment factors are released each year by the U. S. Bureau of Economic Analysis. Sales Reports: Many of the large auto makers release their preliminary sales figures from the previous month on a monthly basis. This can give you an indication of the cur rent trends in the industry. Day Sales Inventory = Average Inventory Average Daily Sales The sales reports (discussed above) are released monthly. Most automakers try to make dealerships hold 60 days worth of inventory on their lots. Watch out This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 20 of 65) Copyright  © 2010, Investopedia. om – All rights reserved. Investopedia. com – the resource for investing and personal finance education. if sales inventory climbs significantly above 60 days worth. Sales fluctuate month-to-month, but you shouldn't see sustained periods of high inventory. Analyst Insight Automobiles depend heavily on consumer trends and tastes. While car companies do sell a large proportion of vehicles to businesses and car rental companies (fleet sales), consumer sales is the largest source of revenue. For this reason, taking consumer and business confidence into account should be a higher priority than cons idering the regular factors like earnings growth and debt load. For more about the Consumer Confidence Survey, see Economic Indicators: Consumer Confidence Index. ) Another caveat of analyzing an automaker is taking a look at whether a company is planning makeovers or complete redesigns. Every year, car companies update their cars. This is a part of normal operations, but there can be a problem when a company decides to significantly change the design of a car. These changes can cause massive delays and glitches, which result in increased costs and slower revenue growth. While a new design may pay off significantly in the long run, it's always a risky proposition. For parts suppliers, the life span of an automobile is very important.The longer a car stays operational, the greater the need for replacement parts. On the other hand, new parts are lasting longer, which is great for consumers, but is not such good news for parts makers. When, for example, most car makers moved from using rolled steel to stainless steel, the change extended the life of parts by several years. A significant portion of an automaker's revenue comes from the services it offers with the new vehicle. Offering lower financial rates than financial institutions, the car company makes a profit on financing. Extended warranties also factor into the bottom line. (To read more about this, see Extended Warranties: Should You Take The Bait? Greater emphasis on leasing has also helped increase revenues. The advantage of leasing is that it eases consumer fears about resale value, and it makes the car sound more affordable. From a maker's perspective, leasing is a great way to hide the true price of the vehicle through financing costs. Car companies, then, are able to push more cars through. Unfortunately, profiting on leasing is not as easy as it sounds. Leasing requires the automakers to accurately judge the value of their vehicles at the end of the lease, otherwise they may actually lose money. If you think about it, the automaker will lose money on the lease if they give the car a high salvage value.A car with a low salvage value at the end of the lease will simply be bought by the consumer and flipped for a profit. This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 21 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. Porter's 5 Forces Analysis 1. Threat of New Entrants. It's true that the average person can't come along and start manufacturing automobiles. Historically, it was thought that the American automobile industry and the Big Three were safe. But this did not hold true when Honda Motor Co. opened its first plant in Ohio.The emergence of foreign competitors with the capital, required technologies and management skills began to undermine the market share of North American companies. 2. Power of Suppliers. The autom obile supply business is quite fragmented (there are many firms). Many suppliers rely on one or two automakers to buy a majority of their products. If an automaker decided to switch suppliers, it could be devastating to the previous supplier's business. As a result, suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power. 3. Power of Buyers. Historically, the bargaining power of automakers went unchallenged.The American consumer, however, became disenchanted with many of the products being offered by certain automakers and began looking for alternatives, namely foreign cars. On the other hand, while consumers are very price sensitive, they don't have much buying power as they never purchase huge volumes of cars. 4. Availability of Substitutes. Be careful and thorough when analyzing this factor: we are not just talking about the threat of someone buying a different car. You need to also look at the likelihood of pe ople taking the bus, train or airplane to their destination. The higher the cost of operating a vehicle, the more likely people will seek alternative transportation options.The price of gasoline has a large effect on consumers' decisions to buy vehicles. Trucks and sport utility vehicles have higher profit margins, but they also guzzle gas compared to smaller sedans and light trucks. When determining the availability of substitutes you should also consider time, money, personal preference and convenience in the auto travel industry. Then decide if one car maker poses a big threat as a substitute. 5. Competitive Rivalry. Highly competitive industries generally earn low returns because the cost of competition is high. The auto industry is considered to be an oligopoly, which helps to minimize the effects of pricebased competition.The automakers understand that price-based competition does not necessarily lead to increases in the size of the marketplace; historically they have tried to avoid price-based competition, but more recently the competition has intensified – rebates, preferred financing and long-term warranties have helped to lure in customers, but they also put pressure on the profit margins for vehicle sales. This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 22 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. (For further reading, check out Analyzing Auto Stocks. ) Key Links ? ? ? ? Ward's Automotive Reports – A popular publisher of automotive data.The Alliance of Automobile Manufacturers – Get the latest industry facts, developments, and technological innovations. Automotive Industries – A magazine covering several areas of the auto industry. US Council for Automobile Research – The umbrella organization of Daimler Chrysler, Ford and General Motors created to str engthen the technology base of the domestic auto industry. The Retailing Industry All businesses that sell goods and services to consumers fall under the umbrella of retailing, but there are several directions we can take from here. For starters, there are department stores, discount stores, specialty stores and even seasonal retailers.Each of these might have their own little quirks; however, for the most part the analysis overlaps to all areas of retailing. This section of the industry handbook will try to focus more on general retailers and department stores. (For background reading, see Analyzing Retail Stocks. ) Over the past couple decades, there have been sweeping changes in the general retailing business. What was once strictly a made-to-order market for clothing has changed to a ready-to-wear market. Flipping through a catalog, picking the color, size and type of clothing a person wanted to purchase and then waiting to have it sewn and shipped was standard practice. At the turn of the century some retailers would have a storefront where people could browse.Meanwhile, new pieces were being sewn or customized in the back rooms. In some parts of the world, the retail business is dominated by smaller family-run or regionally-targeted stores, but this market is increasingly being taken over by billion-dollar multinational conglomerates like Wal-Mart and Sears. The larger retailers have managed to set up huge supply/distribution chains, inventory management systems, financing pacts and wide scale marketing plans. Without getting into specific product categories within the retailing industry, the overall segments can be divided into two categories: ? Hard – These types of goods include appliances, electronics, furniture, sporting goods, etc.Sometimes referred to as â€Å"hardline retailers. † This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 23 of 65) Copyright  © 2010, Investopedia. com – Al l rights reserved. Investopedia. com – the resource for investing and personal finance education. ? Soft – This category includes clothing, apparel, and other fabrics. Each retailer tries to differentiate itself from the competition, but the strategy that the company uses to sell its products is the most important factor. Here are some different types of retailers: ? ? ? Department Stores – Very large stores offering a huge assortment of goods and services.Discounters – These also tend to offer a wide array of products and services, but they compete mainly on price. Demographic – These are retailers that aim at one particular segment. High-end retailers focusing on wealthy individuals would be a good example. Each of these has its own distinct advantages, but it's important to know how these advantages play out. For example, during tough economic times, the discount retailers tend to outperform the others. The opposite is true when the economy is t hriving. The more successful retailers attempt to combine the characteristics of more than one type of retailer to differentiate themselves from the competition. Key Ratios/Terms Same Store Sales: Used when analyzing individual retailers.It compares sales in stores that have been open for a year or more. This allows investors to compare what proportion of new sales have come from sales growth compared to the opening of new stores. This is important because although new stores are good, there eventually comes a saturation point at which future sales growth comes at the expense of losses at other locations. Same store sales are also commonly referred to as â€Å"comps. † Sales per Square Foot: Sales Square Footage Store space is considered to be a productive asset and the key to profitability. Successful companies generate as much sales volume as possible out of each square foot of store space.More recently, analysts have created modifications of this concept by looking at a re tailers' gross margin per square foot. Inventory Turnover: This ratio shows how many times the inventory of a firm is This tutorial can be found at: http://www. investopedia. com/features/industryhandbook/ (Page 24 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com – the resource for investing and personal finance education. sold and replaced over a specific period. Generally calculated as: Sales Inventory Cost of Goods Sold Average Inventory But, may also be calculated as: Although the first calculation is more frequently used, COGS may be substituted because sales are recorded at market value while inventories are usually recorded at cost.Also, average inventory may be used instead of the ending inventory to help minimize seasonal factors. This ratio should be compared against similar retail companies or the industry average. A low turnover might imply poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying from suppliers. (For related reading, see Consumer Confidence: The Consumer Confidence Index (CCI) is put out by the Consumer Confidence Board around the middle of each month. The Consumer Confidence Survey is based on a sample of 5,000 U. S. households and is considered to be one of the most accurate indicators of confidence. Increasing confidence means more spending and borrowing for consumers – a positive for retailers. To learn more about this measure, see Economic Indicators To Know: Consumer Confidence Index. ) Personal Income & Disposable Income: Every quarter, the Bureau of Economic Analysis releases the latest income data for U. S. citizens. There is a high correlation between retail sales data and the changes in personal income. (For more insight, see Economic Indicators: Personal Income and Outlays. ) Analyst Insight As we mentioned earlier, the store type and the strategy that retailers use plays a big role in how well the company perfo rms. The first thing to take a look at is what segment of the retail industry the company is situated in. Is the company a discounter? Department store? Specialty retailer?The retail category to which the company belongs also helps determine the following details about the company: ? Competitors – The number and size of direct competitors is important. Ideally, you want the company to have as little competition as possible, but this rarely happens. Determine who the direct competitors are and how they are all positioned in the market. A smaller regional discount store might find it tough to compete with new Wal-mart stores opening up every month. Take a look at the big picture, find out what differentiates the company from its competitors. Do they have better prices, service, or offer This tutorial can be found at: http://www. investopedia. om/features/industryhandbook/ (Page 25 of 65) Copyright  © 2010, Investopedia. com – All rights reserved. Investopedia. com â₠¬â€œ the resource for investing and personal finance education. ? ? higher quality goods than their competition? Grocery stores might find it hard to differentiate themselves from competitors: after all, an apple is an apple. Higher-end retailers, however, may have an easier time as they try to compete on service or quality. Size of the Market – Determining the overall size of the market gives us an indication of the potential for the market. If you had the choice between a company with a 25% share of a $10 million market or a 25% share of a $1 billion market, which one would you chose?Other Factors – Some analysts even go as far as evaluating the retail strategy that the companies use. For example, does the company have a fresh look? Are their stores clean, bright and fun to shop in? Swedish retailer Ikea has done an excellent job of designing their stores for visual appeal, and quite possibly it has equated to very strong sales. Also, what are the store demographics? Does the retailer appeal more to younger people (who don't have the money), or does it appeal to the parents (who do have the money). The performance of the economy as a whole obviously has a great impact on the retailing industry. Retailer profits have a close correlation with the overall performance of the economy.Looking at the trends for growth in gross domestic product (GDP), inflation, consumer confidence, personal income and interest rates are extremely important when thinking about investing in the retail industry. You might not think that your shopping habits are sensitive to interest rate fluctuations, but they are. While a 50-basis-point drop in interest rates might not give you the sudden inkling to go drop $1,000 at Macy's, for the economy as a whole, it has a big effect on spending patterns. (For more insight on this effect, see How Interest Rates Affe