Evaluating The Strategical Paradox In International Businesses Commerce Essay

Evaluating The Strategical Paradox In International Businesses Commerce Essay In order to evaluate the strategies paradox in current international business this document provides case study on pizza hut in which all strategies being analysed and challenges including the history of pizza hut. Thats really hard for an entrepreneur and for a management team to run a business. They have to face lot difficulties and hardships which some times involves high risk to control the business. Particularly if the business has extended internationally. In the food industry pizza hut is very well know and famous company. As company is famous the food pizza is also have become essential part of our food and in this world almost every person have tasted pizza so the demand of the product is high now a days so many companies have come in the market which are making pizzas. But pizza hut take away and restaurants are oldest in this industry they are serving people for more than 50 years. Pizza hut is still continue to polish and flourish their business and making more and more chains in all over the world. (Feedburner 2009) Now have a look on suitable techniques which helps the strategic analysis of the business of pizza hut to study and deal with the new trends and problems in the organization. At the start of this assignment the concise history of pizza hut will be given. Various methods will be used for the strategic analysis of the pizza hut. To analyse, how external environment effects pizza hut company PEST analysis is used for that very purpose. Strategic group analysis is used to examine the mobility barriers. In order to examine the competitive advantage in organization Porters Five Forces Analysis is used. Competitor analysis is also used to know how strong their competitors what abilities they have this is essential to measure the threats and opportunities in the specific food industry. (Feedburner 2009) HISTORY OF PIZZA HUT   Ã‚  Pizza hut was started on 15/06/1958 by tow brothers named Wichita and Kansas. Their main purpose was to open a pizza parlour that was quite new concept in 1950s but these tow brothers have sense the potential of this business. They started the business by borrowing 600$ from their mother and purchased used tools and equipments. They also rent a small shop to begin their business. So in that situation pizza hut established but in the 2nd year they open their 2nd store in Topeka then after ten years the pizza hut was owned 310 pizza shops at several points they were serving around millions of people. The year 1970 is very important in pizza hut organization because on that date pizza hut was listed in New York Stock Exchange and the symbol of pizza hut was PLZ. In 1986 pizza hut owned 5025 stores. All these branches was in United States and half of these stores was franchised. In the same year pizza hut started the idea of delivery service so in this year the total amount of sa le of the company was 2 billion dollars. In 1990 the total amount of sales of company all over the world becomes 4 billion dollars. In 1996 the company has the largest shares of the market and that was 46.4% in the same year the sales of the company in home markets that was United States has become 5 million dollars. In 1998 they started their promotion The Best Pizzas under one Roof they celebrate the 40th anniversary of pizza hut in 2007. (Reade, 2008) Mission statement of pizza hut We take pride in making a perfect pizza and providing courteous and helpful service on time, all the time. Every customer says, Ill be back!   (Frank,Carney 1958) Pizza hut has bit different approach regarding their restaurants like pizza hut restaurant look different from other restaurants because in all restaurants they have very prominent red roofs and specific design. In every restaurant they have facility to serve from 60 to 90 peoples to eat-in. For last some decades pizza hut is not dominate on this industry because lot of new restaurants have opened and the competition has become more challenging. So in order to remain prominent and successful in the pizza industry and to compete their rivals they have to be very careful regarding the new trends and approaches, which have become popular in this industry to examine these new trends. They have to use appropriate methods, tools and techniques. (Candis 2008) IMPACT ANALYSIS In business zone external environment is truly very important it plays leading role to affect a business. In 2005 pizza hut used PEST analysis to determine and identify the external factors that have great impact on business at that time. In fact PEST analysis was a supporting tool for pizza hut at that time to become prominent in the business region in all over the world. Thats the best tool which can be used to assess the external environmental factors which was affecting the pizza hut. That was really essential to recognise and understand these external factor to over come the business problems. PEST analysis proved very useful for this purpose. PEST analysis is the abbreviation of Political, Economic, Social, and Technological Factors. Pest analysis is that tool or framework which can classify the environmental pressures as a political, economic, social and technological forces. In the pest analysis some time we need to add tow more factors to make better analysis these factors a re environment and legal issues. The pest analysis observes the force or impact of each factor how does they affect the business and how they interplay with each other as well. By observing these factors we got some results, which we use to make instant strategic business plans. So in that way pest analysis helps us to make strategic plans and improves business growth. (Byars 1991). POLITICAL FACTORS It means the rules and strategies of the government where pizza hut is situated either because of the local state affects how the business should be conduct or world wide factors involves. The environment created by political and officially authorise, for the business is supportive or not these things affects the business very much for example if the policies are supportive then pizza hut can open more and more restaurants in this kind of state where the government is business friendly but if the government is not business friendly then pizza hut can move to that area where government policies are favourable for the business. In the favourable business environment policies should be like that which protects the business. (Cooper 2000). ECONOMIC FACTORS These factors are totally concerned with the general prospective of the economy. The over all economy of the state always has a large impact on the business like Pizza hut. The factors concerned with economy are inflation rate, unemployment, the gross domestic commodities and the foreign buy and sell deficit and surplus. If as a whole the economy of the state is not encouraging or favourable these there is very less chance that people will prepare to take pizza hut franchises because there is chance of losing money instead of profit. (Cooper 2000). SOCIAL FACTORS   Thats really difficult to understand and enumerate the thoughts, believe and feelings of people so thats why it is considered that this factor is most difficult to deal. In the analysis of social factors the life expectation of people and population is also very important we need to figure out these tow things as well to get the true result of analysis. These thoughts, attitude and believes have string impact on the pizza hut business. The big example of this is that in all Muslim countries, the pizza hut prepares a food without including pork because Muslims do not eat pork so all food recipes in Muslim countries are without pork. Similarly in India people do not eat beef because of their religious believes so in pizza hut they prepare food, which do not have beef. All recipes are without beef. In the same way changing trend in the taste of buyer is also very important, with the passage of time their taste is change so in order to be successful in the food industry that external ana lysis is really essential. Like nowadays Thai and Japanese food is really in people like these kind of food so pizza hut can start Thai soup to retain their customers similarly can add more Thai and Japanese dishes. In today life society is becoming more and more health conscious so people want healthy food and it varies to region to region as well in some countries people don not bother these kind to care so as a whole company should provide the product according to the customer needs. That will be helpful to increase and expand business. Companies each policy should be like encouraging for customer demand that will obviously have positive impact on pizza hut business. (Cooper 2000). TECHNOLOGICAL FACTORS   The technology is becoming more and more advance day by day that have huge impact on the business. The factors which affect the business are internet and ecommerce, and research and development, and new skill, equipments and tools. By the research and development companies are introducing new products in the market so in order to compete them pizza hut should be prepared and should have their R D unit. Through internet and ecommerce people have easy access to the market and they can check several offers and promotion by sitting home only by clicking one button so business is become very challenging. People can give feedback for new products as well through internet. So all these new technologies are really affecting business. If pizza hut want to be successful in the market and be prominent then company must be update regarding new technologies and developments. If pizza hut is good enough in internet and ecommerce then company is serving customers very well so pizza hut can take fe edback from customers regarding their new products which would be very helpful for R D unit as well so all these new technologies are inter liked. Company can take completive advantage by analysing and introducing new technologies. (Cooper 2000). STRATEGIC GROUP ANALYSIS Strategic group analysis can be explained as its a systematic technique which gives us detailed overview of different approaches used by rivals in the market by analysing these approaches to suggest indicator for the performance of company. Strategic group analysis can be functional in five steps in the organization.(Bensoussan, Babette 2003) ANALYSE INDUSTRY STRUCTURE For the industry structure analysis of pizza hut market, Porters five forces industry analysis is appropriate and that may be used for this analysis. THREATS OF NEW ENTRANTS In Portes five forces one force is new entrance in the business in every industry. In every industry there is big trouble for companies to face new entrance similarly there is big threat for pizza hut as well for new entrance as food business is becoming more and more popular so there is good profit margin as well so many people like this industry and there are various new faces have been seen in the food market. These new companies use different approaches to attract the customers like they might offer cheap rates as compared to the well reputed brands for the same standard of product to break their customers and to increase their sales. If it will happen in food industry then there is possibility that pizza hut may lose their customers and they may move to wards new entrance so for the self-defence of pizza hut from new entrance, it is essential that company should be prepared and should make measures to oppose these kind of approach utilised by new companies in the food industry. By doing these plannings they can be safe from new entrance. (Grundy 2006) BARGAINING POWER OF SUPPLIERS So 2nd force, in Porters five forces model is bargaining power of the supplier. We can explain it like that in every business the persons who are supplying raw material can control the prices of goods. Or it is the ability of the supplier to manage the cost of the raw materials and supply of raw material, which they are providing to the organizations. Like other companies pizza hut is also using raw material and there are bundle of suppliers who are supplying products. So pizza hut can have lots of options in order to reduce that power from supplied to company like they can use alternatives products that are lower price or they can purchase raw material in large volume so that the supplier can not change their prices. Or the third option is that if they are thinking that their supplier are not providing goods on appropriate price. they can change the supplier and can choose that supplier which is offering them cheaper prices so in that way they can control suppliers hold on the raw m aterial and can provide good quality product in reasonable price to customer. (Wylie 2009) THREATS OF SUBSTITUTION The third force in the Porters five forces is threats of substitute products the explanation of that factor is that in the market some products can come which can perform patter and available on cheaper price than the actual product so by these products the demand of actual products decreases and ultimately the relevant business company will get trouble. But in the case of pizza hut there is very little chance to come substitution product but there is chance like nowadays lot of sandwiches have come in the market which have almost same place in the market as pizzas so these sandwiches even have pizza taste and flavours. So that substitution threat can be dangerous for pizza hut, company must plane to oppose this king of threats. (Wylie 2009) BARGAINING POWER OF THE BUYERS Forth force in Porters five forces is bargaining power of buyer, there are tow possibilities in this factor either the consumer power should be high or low. If the consumer bargaining power is low then its very easy for the industry to penetrate in the market infect, can be explained as the market environment is positive and it allows the company to enter and expand their business. But if the buyer bargaining power is high then its very difficult for a company to enter in the market so in the case of pizza hut the customer bargaining power is very low because every person like pizzas and there are very few players who are providing services to the people so its very easy for pizza hut to enter and penetrate in the market in any part of the world because this product is famous all over the world. (Wylie 2009) DEGREE OF INTERNAL RIVALRY The fifth factor in the Porters five forces model is degree of internal rivals. In the factor there is also tow possibilities one is the relevant company have strong competition and have high-level of rivals and the second possibility is that the relevant company have very less competition and low-level of rivals in the market. Pizza hut have very strong completion in the market and its rivals are in very strong position like Dominos pizza have very tough competition with pizza hut as pizza hut is international company its market is very wide so there is more competitors for pizza hut. So in order to dominant on the market pizza hut have to offer high quality product on cheaper price so that there rivals can not move pizza huts customers. Pizza hut should be active regarding advertising and promotions to hold on the food market other wise they will lose their customers. There process and promotions should be attractive for the customers so that they can retain their customers. There promotion should be favourable than dominos and other pizza companies with the high quality of product. (Wylie 2009) MAP THE STRATEGIC GROUPS In order to plane the strategic group, Pizza hut have to list the related and important contestant into the strategic group. After listing these competitors the senior management of the pizza hut should always see the following. MOBILITY BARRIERS There are very small hurdles into the pizza parlours due to these low barriers in this industry, it is not essential that the workers should be highly experienced. BARGAINING POWER In the case of pizza hut the bargaining power of suppler is very low so thats why threats are also low in the same way bargaining power of customer is very little so due to this less bargaining power of consumer there is less chance of threat. But pizza hut should always be alert to the changing environment of the business. (Feedburner 2009) THREAT OF SUBSTITUTION As explained in mobility barriers and in bargaining power of buyer and supplier, the threats to the substitute product is also low but there is chance of substitute product like nowadays sandwiches have the same pizza flavours but its very weak threat for pizza hut because till now these sandwiches does not take the place of pizza but pizza hut should be updated with the new substitutions and should always be prepare to oppose them. (Feedburner 2009) RIVALRY FROM OTHER STRATEGIC GROUPS As mentioned in the Porters five forces analysis in the food industry there are very strong rivals and thats really difficult to compete these rivals. In the case of pizza hut Dominoes is the main competitor company. So in order to compete Dominoes and other pizza companies, its essential that pizza hut should updated their menus and they provide good customer service and serve the customer in a good way like they should provide good quality product on cheap rate as compared to the rivals. If pizza hut will care about these techniques then it would be on the top in the market of food industry. (Feedburner 2009) GAUGE THE STRENGTH OF BARRIERS BETWEEN GROUPS In order to measure the potency of the hurdle and difficulties, pizza hut must follow the five steps. The first step is to settle on the factors which are caused to prevent organizations in the strategic group to fight with other companies in another group. Second step is that pizza hut must recognise the force of bargaining power among the suppliers and consumers and also be aware of the strength of strategic groups and industry. Third step is to recognise the threats of alternative products among the strategic group. Fourth step is to study the power or strength of the competitors among the strategic groups and the last step is to make use of Portals five forces analysis on the strategic groups. (Feedburner 2009) UNDERSTAND THE STRATEGY OF THE FIRM VIS A VIS STRATEGIC GROUPS INTERACTION In order to understand the strategy of the pizza hut select the pizza hut as a member in the main strategic group. And analyse the strength and weaknesses of the pizza hut by using porters five forces analysis model of the strategic group. Decide the strategic group which can offer the best opportunity to use the power of the company and can reduce the weaknesses of pizza hut. (Byars 1991) IDENTIFY THE APPROPRIATE STRATEGIC RESPONSES In order to recognise the correct response in the development of the foodstuff industry. It is essential for pizza hut to analyse the threats and opportunities which occurs with the changes in the business. there could be tow type of strategic response which can be utilised in order to compete the challenges these two are named as intensely proactive and mildly proactive. So from the above analysis of pizza hut there are some positive scenario and some negative aspects have been seen in the Pizza hut company. First have a look on positive aspect of Pizza hut which is based on the deep analysis. According to analysis pizza hut will enter in the different food markets in all over the world and there business will grow and business will expand it may increase its market shares as well. There are very bright chances for pizza hut to penetrate in different markets as a result business growth will increase. Now have a look on negative aspects of pizza hut, in negative scenario there are po ssibilities of alternative products which can reduce the sale of pizza hut. There would be more competition in the food market for future and there is possibilities of new entrance in the food industry because there is very good potential and bright chances for business of new comers. Due to these new entries pizza hut business may affect so they have to be planned to compete these challenges then competition with rivals would be stronger in future so they have to make their policies good to fulfil the market requirements. They might need to expand their research and development units and they may need to invest more on new technologies in order to facilitates the customer By doing this they can may able to oppose the rivals otherwise there is chance that they may lose there customers. (Byars 1991) CONCLUSION Change is very important thing in business and in every business changes take place these changes bring various trends and flavours in the surroundings or in environment. In order to deal with changes in a better way managers and owners of business use different strategies. These strategies helps to make better decisions regarding these changes. Pizza hut is very huge food company and its well know almost in every country of the world there is one or two or more restaurants of pizza hut. For last 48 years pizza hut is serving peoples and considered one of the leading organizations in food industry. For last few years pizza hut is facing lots of challenges one of the big challenge was new entrance in this particular field. These new companies have become big threat for pizza hut as these organizations tried to change the taste of pizza hut customers. But pizza hut made very good strategies to compete these challenges and get dominant on these companies. (Feedburner 2009)   REFERENCES: BOOKS Kimberly Wylie (2009).  Smurfit-Stone Container Corporation : GRIN Verlag. 7-10. Bensoussan, Babette (2003).  Strategic and Competitive Analysis. Upper Sadlle River, NJ: Prentice Hall . 22-30. Byars, L. (1991)  Strategic Management, Formulation and Implementation Concepts and Cases, New York: HarperCollins. ARTICLES Cooper, L. (2000) Strategic  marketing planning  for radically new products, Journal of Marketing, Vol. 64 Issue 1, pp.1-15. Tony Grundy. (26 Oct 2006). Rethinking and reinventing Michael Porters five forces model.  . 15 , 5. Candis Reade. (14/10/2008). History of Pizza Hut, 3. WED SITES Frank and Dan Carney. (1958).  Mission statement.  Available: http://www.pizzahuthawaii.com/about/mission.html. Last accessed 20th Nov 2010.   Feedburner. (September 30, 2009).  International business of pizza hut.Available: http://ivythesis.typepad.com/term_paper_topics/2009/09/international-business-of-pizza-hut.html. Last accessed 20th Nov 2010.  

Euphemisms: Nineteen Eighty-four and Politically Correct Language Essay

Euphemisms are everywhere in today’s society. They are a daily accessory used in today’s language and are such a normalcy that one does not notice them as strange. For hundreds of years people have used language to persuade people or even nations. With the more advanced society gets so does the language and thus this persuasion gets even more convincing. Many novels show examples of euphemisms. Among those novels includes 1984 by George Orwell. Euphemisms can range from being used in politics to media campaigns to one’s own home. Also, they can be used for multiple purposes such as good or evil. Euphemisms usually distort the truth and mislead although some are motivated by kindness (â€Å"Making Murder Respectable†). â€Å"Euphemisms are coded expressions that we use when whatever we are referring to is considered inappropriate for the circumstances or when we are embarrassed or uncomfortable with the literal version. As one might expect, many euphemisms relate to sex or death† (â€Å"Euphemisms†). There have been multiple arguments that euphemisms help make people more sensitive and politically correct while others say it hinders and clouds the language, diverting people’s true meaning. Euphemisms can either be bad or good but it is important to know when and also where to draw the line in using this language. In Orwell’s novel 1984 euphemisms is so prevalent and the language used in that book is so distorted, at first, from what today’s society uses. Then, as a longer look is taken there are connections made between the language of today and the language that the government in book created. In 1984, there are two languages; Oldspeak and Newspeak. Newspeak is the language that the government wants to be the only source of communication. They have altered Oldspeak into this new language and made it very simple and small. This helps guarantee that people will not b e able to communicate any elaborate ideas that could hurt the government. Along with shortening the language they have eliminated words that have a bad connotation and replaced them with words that sound â€Å"happier† just with rules of usage to imply they are bad (Orwell). This is a prime example of euphemisms are how it can be taken to extremes. Within the book there are specific examples such as The Ministry of Truth, which is a section of the government that makes sure that no truth is actually revealed and is based upon lies (Orwell). All of the euphemisms in the book are used to control people without them being aware what is actually happening. In today’s society euphemisms are used but they do not always have an underlying goal of evil. This language technique is so commonly used that is does not seem strange or manipulative. People who believe euphemisms or politically correct language are good tend think that they provide many virtues. Two of them are that they help reduce the social acceptability of using offensive terms and that they discourage the reflexive use of words that import a negative stereotype, thereby promoting conscious thinking about how to describe others fairly on their merits (O’Neill). Although this seems like a pleasant idea eventually the words chosen to soften the subject will still mean the same thing and eventually become just as offensive. A bully who used to call a kid retarded is still going to hurt his feelings when he calls him differently abled with a harsh tone (O’Neill). Just as calling a woman big boned opposed to fat will still make her upset if seemed to be used in a negative connotation. Not only are euphemisms used in America but also around the world included China, Japan, Egypt and Russia. Oral sex is referred to as â€Å"playing the bamboo flute† in Japanese. A prostitute accosting a client on the streets of Cairo will ask â€Å"Fi hadd bitaghsal hudoumak† which literally means, â€Å"Do you have someone to wash your clothes† (Making Murder Respectable). This proves that euphemisms have been around a long time and are not something new.Orwell did mention that euphemisms can be sneaky and coercive while cloaking a decision’s unpleasant results. This is exampled in news about war when soldiers or just civilians have died and it is referred to as â€Å"collateral damage† (Making Murder Respectable). It has been argued if euphemisms are good or bad but it mostly depends on the extent of use and the situation in which is it veiling. There is no doubt that euphemisms will continue to be used in today’s society and for future generations to come. Works Citied â€Å"Euphemisms.† Euphemisms. N.p., n.d. Web. 06 Nov. 2012. â€Å"Making Murder Respectable.† The Economist. The Economist Newspaper, 17 Dec. 2011. Web. 06 Nov. 2012. O’Neill, Ben. â€Å"A critique of politically correct language† The Free Library 22 September 2011. 06 November 2012 Orwell, George. 1984: a novel. New York, N.Y.: Published by Signet Classic :, 1977. Print.

ACCOUNTS RECEIVABLES MANAGEMENT Essay

Chapter-V Accounts Receivable Management †¢ Introduction †¢ Goals of Receivable Management †¢ Credit Management †¢ Optimum Credit Policy †¢ Credit of Account Receivable 155 Introduction Accounts receivable represent the amount due form  customers (book debts) or debtors as a result of selling goods on credit. â€Å"The term debtors is defined as ‘debt’ owned to the firm by customers arising from sale of goods or services in the ordinary course of business.† The three characteristics of receivables the element of risk, economic value and futurity explain the basis and the need for efficient management of receivables. The element of risk should be carefully analyzed. Cash sales are totally riskless but not the credit sales, as the same has yet to be received. To the buyer the economic value in goods and services process immediately at the time of sale,  while the seller expect an equivalent value to be received later on. The cash payment for goods and services received by the  buyer will be made by him in a future period. The customer  from whom receivables or book debts have to be collected in  future are called Trade debtor and represent the firm’s claim on assets. Receivables management, also termed as credit management, deals with the formulation of credit policy, in  terms of liberal or restrictive, concerning credit standard and credit period, the discount offered for early payment and the 156 collection policy and procedures undertaken. It does so in such a way that taken together these policy variables determine an optimal level of investment in receivables where the return on that investment is maximum to the firm. The credit period extended by business firm usually ranges from 15 to 60 days. When goods are sold on credit, finished goods get converted  into accounts receivable (trade debtors) in the books of the seller. In the books of the buyer, the obligation arising from credit purchase is represented as accounts payable (trade creditors). â€Å"Accounts receivable is the total of all credit extended by a firm to its customer.† A firm’s investment in account receivable depends upon  how much it sells on credit and how long it takes to collect receivable. Accounts receivable (or sundry debtors) constitute the 3rd most important assets category for business firm after plant and equipment and inventories and also constitute the 2nd most important current assets category for business firm after inventories. Poor management of accounts receivables are: neglect of  various overdue account, sharp rise in the bad debt expense, and the collection of debts expense and taking the discount by customers even though they pay after the discount date and  even after the net date. Since accounts receivable represent a sizable  investment on the part of most firms in the case of  public enterprises in India it forms 16 to 20 per cent of current assets. Efficient management of these accounts can provide  considerable saving to the firm. 157 Factors involving in Receivable management: 1. The terms of credit granted to customers deemed creditworthy. 2. The policies and practices of the firm in determining which customers are to be granted credit. 3. The paying practices of credit customers. 4. The vigoir of the sellers, collection policies and practice. 5. The volume of credit sales. Goals of Receivable Management The basic goal of credit management is to maximize the  value of the firm by achieving a trade off between the liquidity (risk and profitability). The purpose of credit management is not to maximize sales, nor to minimize the risk of bad debt. If the objective were to maximize  sales, then the firm would sell on credit to all. On the contrary, if minimization of bad debt risk were the aim, then the firm would not sell on credit to anyone. In fact, the firm should manage its credit in such a way that sales are expanded to an extent to which risk remains  within an acceptable limit. Thus to achieve the goal of  maximizing the value, the firm should manage its trade credit. The efficient and effective credit management does help  to expand sales and can prove to be an effective tool of  marketing. It helps to retain old customers and win newcustomers. Well administrated credit means profitable credit accounts. The objectives of receivable management is to  promote sales and profits until that point is reached where the 158 return on investment is further funding of receivables is less than the cost of funds raised to finance that additional credit. Granting of credit and its management involve costs. To  maximize the value of the firm, these costs must be controlled. These thus include the credit administration expanses, b/d  losses and opportunity costs of the funds tied up in receivable. The aim of credit management should be to regulate and  control these costs, not to eliminate them altogether. The cost can be reduced to zero, if no credit is granted. But the profit foregone on the expected volume of sales arising due to the extension of credit. Debtors involve funds, which have an opportunity cost. Therefore, the investment in receivables or debtors should be optimized. Extending liberal credit pushes sales and thus  results in higher profitability but the increasing investment in debtors results in increasing cost. Thus a trade off should be sought between cost and benefits to bring investment in  debtors at an optimum level. Of course the level of debtors, to a great extent is influenced by external factors such as industry norms, level of business activity, seasonal factors and the  degree of completion. But there are a lot of internal factors include  credit  terms,  standards,  limits  and  collection  procedures. The internal factors should be well administered to optimize the investment in debtors. 159 Credit Management In order that the credit sales are properly managed it is necessary to determine following factors: 1. Credit Policy 2. Credit Evaluation of Individual Buyers 3. Credit Sanction Decisions 4. Control and Monitoring of Receivables Credit Policy The first stage of credit sales is to decide policy in which most important variable is whether credit sales should be made or not and if yes to what extent i.e. what percentage of sales should be done on cash and what percentage on credit. The  discussion with cement companies marketing and financà ©Ã‚  department clearly suggest that the credit policy is more  dependent upon market forces and less on company specially  in periods when there is excessive competition which has  happened a number of times in the history of cement industry after decontrol and manufactures have been forced to provide credit if they wanted full utilization of capacity. If in the market there is practice of providing credit, those companies who do not fall in line have lower sales and so lower utilization of instilled capacity. The management has to weigh whether it  should avoid risk of realization and problem of arranging  funds for larger sales on credit or decide for reduced capacity util ization thereby resulting in higher cost per tonne of cement produced. 160 Actually the policy should be based on cost benefit  analysis of these factors but often policy is decided without detailed calculations. In actual practice when one waits to push sales the marketing department pressurizes the management to provide liberal credit to buyers to realize sales targets. Credit Rating The second virtual point of credit policy is to whom to give credit and whom it should be denied. Whether it should be given to everyone or on selective basis? As per standards one can workout impact of credit sales on profits by following formulae: ∆P = ∆S (1-V) – K * ∆I – B, ∆S in the above formula ∆P = Change in profit ∆S = Change in sales V = Ratio of variable cost to sales K = Cost of capital i.e. interest cost of credit ∆I = Increase in receivables investment B = Bad debts ratio on additional sales The change in profits (∆P) is dependent upon ratio of variable cost and fixed cost and change in sales. The figure is worked out by deducting variable cost from sales i.e. sales  minus variable cost is change in profits. The above formula appears to be very simple but for  policy purposes it requires that policy maker should be able to estimate precisely the impact of credit on sales value, the  variable cost and bad debts besides the cost of capital. In practice besides the cost of capital, it is very difficult to measure extent of increase in sales as a result of credit and it is only broad estimate of sales department. Similarly, it is very difficult if not impossible to workout likely bad debts. The variable cost can be worked out with great precision if proper costing system is maintained. Because of difficulties in  quantifying various variables in the formulae often credit  policy is decided without working details on prevailing market conditions and the need of the company to push sales at a point of time. It has been by various companies that no details are worked. Credit Period The credit period is the time length for which seller agrees to provide credit to the buyers. It varies according to the practice of trade and varies between 15 to 60 days. In some  cases for an early payment pre-agreed discount is given to  induce buyer make an early payment. For late payment in the  agreement there is provision for interest payment by buyer. If credit is given for longer period it induces to push up sales but this is true only when one provides longer period credit than competitors. The customer-distributor, dealer, consumers is attracted to a firm who provides longer period credit. The impact of credit on profits and sales can be worked out from the following formula: ∆P= ∆S (1-V)*K*∆1-b, ∆S The various components are as under : 162 ∆ P= Change in profit ∆ S= Change in sales ∆ 1= Change in investments receivables V= Ratio of variable cost to sales K= Cost of giving credit b= bad debits ratio to increased credit The discussion with the industry suggests that they rarely take decision on period of credit based on formula. It is market conditions and practices in the trade, which decides the period of credit and hardly any calculations of cost are done. In practice it is marketing department whose advice plays an  important and deciding role. In the period when sales have to be pushed up more credit is provided and there is no uniform policy overtime. During rainy season (July-Sep.) when demand is generally slack more liberal credit is granted than rest of the year. Further, when stocks accumulate due to sluggish sales,  producers accept the terms of their customers and traders  about the period of credit but when market conditions are  tight, the seller becomes more strict in providing credit. Optimum Credit Policy Credit policy refers to those decision variables that influence the amount of trade credit i.e. the investment in receivables. The firm’s investment in receivable are affected by general economic conditions, industry norms, pace of technological change, competition etc. Though the firm has no control on these factors, yet they have a great impact on it and it can certainly influence the level of trade credit through its 163 credit policy within their constraints imposed externally. The purpose of any commercial enterprise is the earning of profit. Credit itself is utilized to increase sales, but sales must return a profit. Further, whenever some external factors change, the firm can accordingly adopt its credit policy. R.J. Chambers says, â€Å"The responsibility to administer credit and collection policies may be assigned to a financial executive or marketing executive or both of them jointly depending upon the original structure and the objectives of the firm.† Different types of credit policy are: 1. Loose or Expansive Credit Policy– Firms following this policy tend to sell on credit to customers very liberally. Credits are granted even to those whose credit worthiness is not proved, not known and are doubtful. Advantages of Loose or Expansive Credit Policy: (i) Increase in Sales (higher sales), (ii) Increase in profit (higher profit), Disadvantages of Loose or Expansive Credit Policy: (i) Heavy bad/debts. (ii) Problem of liquidity (iii) Increase in cost of credit management. 2. Tight or Restrictive Credit Policy– Firms following this policy are very selective in extending credit. They sell on credit, only to those customers who had proved credit worthiness. Advantages of Tight of Restrictive Credit Policy: (i) Minimize cost. (ii) Minimize chances of bad debts. 164 (iii) Higher sales in long run. (iv) Higher profit in long run. (v) Do not pose the serious problem of liquidity. Disadvantages of Tight or Restrictive Credit Policy: (i) Restrict Sales. (ii) Restrict Profit Margin. Benefits of Credit Extension: (i) Increases the sales of the firm. (ii) Makes the credit policy liberal. (iii) Increase the profits of the firm (iv) The market value of the firms share would rise. Cost of Credit Extension: (i) Bad debt losses (ii) Production and selling cost. (iii) Administrative expenses. (iv) Cash discounts and opportunity cost. Cost Benefit Trade off Profitability 165 Aspects of Credit Policy: (i) Credit terms (a) Credit Period (b) Cash Discounts (ii) Credit Standard (iii) Collection policy or collection efforts. (i) Credit terms – The stipulations under which the firm sells on credit to its customers are called credit terms. (a) Credit Period – The time duration for which credit is extended to the customers is referred to as credit period. It is the length of time for customers under which they are allowed to pay for their purchases. It is generally varies between 15-60 days. When a firm does not extend any credit the credit period would obviously be zero. It is generally stated in terms of a net date, for example, if firm allows 30 days of credit with no discount to induce early payments credit then its credit terms are stated at ‘net 30’. Usually the credit period of the firm is governed by industry norms, but firms can extend credit for  longer duration to stimulate sales. If the firm’s bad debts build up, it may tighten up its credit policy as against the industry norms. According to Martin H. Seidhen, â€Å"Credit period is the duration of time for which trade credit is extended. During this period the overdue amount must be paid by the customer. The  length of credit period directly affects the volume of  investment in receivables and indirectly the net worth of the company. A long credit period may blast sales but it also 166 increase investment in receivables and lowers the quality of trade credit.† (b) Cash Discounts – It is the another aspect of credit terms. Many firms offer to grant cash discount to their customers in order to induce them to pay their bill early. The cash discount terms indicate the rate of discount and the period for which discount has been offered. If a customer does not avail this offer, he is expected to make the payment by the net date. In the words of Martin H. Seiden â€Å"Cash Discount prevents debtors from using trade credit as a source of Working Capital.† Liberalizing the cash discount policy may mean that the discount percentage is increased and or the discount period is lengthened. Such an action tends to enhance sales (because the discount is regarded as price reduction), reduce the average collection period (as customers pay promptly). Cash Discount is a premium on payment of debts before due date and not a compensation for the so – called prompt payment. (iii) Credit Standard – The credit standard followed by the  firm has an impact of sales and receivables. The sales  and receivables level are likely to be high, if the credit  standard of the firm are relatively low. In contrast, if  the firm has relatively low credit standard, the sales  and receivables level are expected to be relatively  high. The firms credit standard are influenced by three  Ã¢â‚¬Å"C† of credit. (a) Character – the willingness of the  customers to pay, (b) Capacity – the ability of the  customers to pay, and (c) Condition – the prevailing  economic conditions. Normally a firm should lower its credit standards to the  extent profitability of increased sales exceed the associated costs. The cost arising due to credit standard realization are administrative cost of supervising additional accounts and  servicing increased volume of receivables, bad debt losses,  production and selling cost and cost resulting from the slower average collection period. The extent to which credit standard can be liberalized  should depend upon the matching between the profits arising  due to increased sales and cost to be incurred on the increased sales. (iii) Collection policy- This policy is needed because all  customers do not pay the firm’s bill in time. There are certain customers who are slow payers and some are non-payers. Therefore the collection policy should aim at accelerating  collections from slow payers and non-payers and reducing bad debt losses. According to R.K. Mishra, â€Å"A collection policy should  always  systematization  emphasize  in  promptness,  collection  efforts. It  regularity  will  and  have  a  psychological effect upon the customers, in that, it will make them realize the attitude of the seller towards the obligations granted.† The collection programme of the firm aimed at timely  collection of receivables, any consist of many things like  monitoring the state of receivable, despatch of letter to  customers whose due date is approaching, telegraphic and  telephone advice to customers around the due date, threat of legal action to overdue accounts, legal action against overdue accounts. The firm has to be very cautious in taking the steps in  order to collect from the slow paying customers. If the firm is strict in its collection policy with the permanent customers, who are temporarily slow payers due to their economic  conditions, they will get offended and may shift to competitors and the firm may loose its permanent business. In following an optimal collection policy the firm should compare the cost and benefits. The optimal credit policy will maximize the profit and will consistent with the objective of maximizing the value of the firm. Credit Evaluation Before granting credit to a prospective customers the  financial executive must judge, how creditworthy is the  customer. In judging the creditworthiness of a customer, often financial executive keep in mind as basic criteria the four (i) Capital –refers to the financial resources of a company as indicated primarily by the financial statement of the firm. (ii) Capacity – refers to the ability of the customers to pay on time. (iii) Character – refers to the reputation of the customer for honest and fair dealings. (iv) Collateral – represents the security offered by the customer in the form of mortgages. Credit evaluation involves a large number of activities  ranging from credit investigation to contact with customers, appraisal review, follow up, inspection and recovery. These  activities required decision-making skills which can partly be developed through experience but partly it has to be learned externally. This is particularly true in area of pre-credit  appraisal and post-credit follow up. It is an important element of credit management. It helps  in establishing credit terms. In assessing credit risk, two types of error occur – (i) A good customer is misclassified as a poor credit risk. (ii) A bad customer is misclassified as a good credit risk. Both the errors are costly. Type (i) leads to loss of profit on sales to good customer who are denied credit. Type (ii)  leads in bad debt losses on credit sales made to risky customer. While misclassification errors cannot be eliminated wholly, a firm can mitigate their occurrence by doing proper credit evaluation. Three broad approaches used for credit evaluation are: A. Traditional Credit Analysis – This approach to credit  analysis calls for assuming a prospective customer in terms of 5 of credit: (i) Character, (ii) Capacity, (iii) Capital, (iv) Collateral, and (v) Conditions. To get the information on the 5 firm may rely on the following. 1. Financial statements 2. Bank references 170 3. 4. Credit agencies 5. Experience of the firm 6. B. Trade references Prices and yields on securities Sequential Credit Analysis – This method is more efficient method than above method. In this analysis, investigation is carried further if the benefits of such analysis outweighs its cost. C. Numerical Credit Scoring – This system involves the following steps. 1. Identifying factors relevant for credit evaluation. 2. Assign weights to these factors that reflect their relative importance. 3. Rate the customer on various factors, using a suitable rating scale (usually a 5 pt. Scale or a 7pt. Scale is used). 4. For each factor, multiply the factor rating with the factor weight to get the factor score. 5. Add all the factors score to get the overall customer rating index. 6. Based on the rating index, classify the rating index. D. Discriminant Analysis – The credit index described above is somewhat ad hoc in nature and is based on weight which are subjective in nature. The nature of discriminate analysis may be employed to construct a better risk index. Under this analysis the customers are divided into two categories: 1. who pay the dues (X) 171 2. who have defaulted (O) The straight line seems to separate the x’s from o’s, not completely but does a fairly good job of segregating the two groups. The equation of this straight line is Z = 1 Current Ratio + 0.1 return on equity A customer with a Z score less than 3 is deemed credit worthy and a customer with a Z score less than 3 is considered not credit worthy i.e. the higher the Z score the stronger the credit rating. (V) Risk Classification Scheme – On the basis of information and analysis in the credit investigation process, customers may be classified into various risk categories. Risk Categories Description 1. Customers with no risk of default 2. Customer with negligible risk of default (< 2%) 3. Customer with less risk of default (2% to 5%) 4. Customer with some risk of default (5% to 10%) 5. Customer with significant risk of default (> 10%) Credit Granting Decision – After assessing the credit worthiness of a customer, next step is to take credit granting decision. There are two possibilities: (i) No repetition of order. Profit = P (Rev-Cost) – (1-P) Cost 172 Where P is the probability that the customer pays his dues, (1-P) is the probability that the customer defaults, Rev is revenue for sale and cost is the cost of goods sold. The expected profit for the refuse credit is O. Obviously, if the expected profit of the course of action offer credit is positive, it is desirable to extend credit otherwise not. Customer pays (Rev-cost) Offer credit Customer default (1-P) Refuse credit (ii) Repeat Order – In this case, this would only be accepted only if the customer does not default on the first order. Under this, once the customer pays for the first order, the probability that he would default on the second order is less than the probability of his defaulting on the first order. The expected profit of offering credit in this case. Expected profit on initial order + Probability of payment and repeat order x expected profit on repeat order. [P1 (Rev1 – Cost1)-(1-P1) Cost1] + P1 x [P2(Rev2-Cost2)-(1P2) Cost2] The optimal credit policy, and hence the optimal level of accounts receivable, depends upon the firm’s own unique operating conditions. Thus a firm with excess capacity and low variable production cost should extend credit more liberally and carry a higher level of accounts receivable than a firm operating a full capacity on a slim profit margin. When a sale is made, the following events occur: 173 (1) Inventories are reduced by the cost of goods sold. (2) Accounts receivable are increased by the sales price, and (3) The differences is recorded as a profit. If the sale is for cash. Generally two methods have been commonly suggested for monitoring accounts receivable. (1) Traditional Approach (a) (b) (2) Average collection period Aging Schedule Collection Margin approach or Payment Pattern Approach (a) Average Collection Period (AC): It is also called Day Sales Outstanding (DSOI) at a given time ‘t’ may define as the ratio of receivable outstanding at that time to average daily sales figure. ACP = Accounts receivable at time â€Å"t† Average daily sales According to this method accounts receivable are deemed to be in control if the ACP is equal to or less than a certain norm. If the value of ACP exceed the specified norm, collections are considered to be slow. If the company had made cash sales as well as credit sales, we would have concentrated on credit sales only, and calculate average daily credit sales. The widely used index of the efficiency of credit and collections is the collection period of number of days sales 174 outstanding in receivable. The receivable turnover is simply ACP/360 days. Thus if receivable turnover is six times a year, the collection period is necessarily 60 days. (b) Aging Schedule – An aging schedule breaks down a firm’s receivable by age of account. The purpose of classifying receivables by age group is to gain a closer control over the quality of individual accounts. It requires going back to the receivables’ ledger where the dates of each customer’s purchases and payments are available. To evaluate the receivable for control purpose, it may be considered desirable to compare this information with earlier age classification in that very firm and also to compare this information with the experience of other firms of same nature. Financial executives get such schedule prepared at periodic intervals for control purpose. So we can say Aging Schedule classifies outstanding accounts receivable at a given point of time into different age brackers. The actual aging schedule of the firm is compared with some standard aging schedule to determine whether accounts receivable are in control. A problem is indicated if the actual aging schedule shows a greater proportion of receivable, compared with the standard aging schedule, in the higher age group. An inter firm comparison of aging schedule of debtors is possible provided data relating to monthly sales and collection experience of competitive firm are available. This tool, 175 therefore, cannot be used by an external analyst who has got no approach to the details of receivable. The above both approaches have some deficiencies. Both methods are influenced by pattern of sales and payment behaviour of customer. The aging schedule is distorted when the payment relating to sales in any month is unusual, even though payment relating to sales in other months are normal. II. Payment Pattern Approach – This pattern is developed to measure any changes that might be occurring in customer’s payment behaviour. It is defined in terms of proportion or percentage. For analyzing the payment pattern of several months, it is necessary to prepare a conversion matrix which shows the credit sales in each month and the pattern of collection associated with it. The payment pattern approach is not dependent on sales level. It focuses on the key issue, the payment behaviour. It enables one to analyze month by month pattern as against the combined sales and payment patterns. From the collection pattern, one can judge whether the collection is improving, stable, or deteriorating. A secondary analysis is that it provides a historical record of collection percentage that can be useful in projecting monthly receipts for each budgeting period. Control of Accounts Receivable Some of the important techniques for controlling accounts receivable are ratio analysis, discriminate analysis, 176 decision tree approach, and electronic data processing. Information system with regard to receivables turnover, age of each account, progress of collection size of bad debt losses, and number of delinquent accounts is also used as one of the control measures. Ratio analysis is widely used in the control of accounts receivable. Some of the important ratios used for this purpose are discussed below: (1) Average collection Period (Receivables x 365/Annual Credit Sales): The average collection period indicates the average time it takes to convert receivables into cash. Too low an average collection period may reflect an excessively restrictive credit policy and suggest the need for relaxing credit standards for an acceptable account. On the other hand too high an average collection period may indicate an excessively liberal credit policy leading to a large number of receivables being past due and some being not collectable. (2) Receivables Turnover Sales/Receivables): (Annual Credit This ratio also indicates the slowness of receivables. Both the average collection period ratio and receivables ratio must be analyzed in relation to the billing terms given on the sales. If the turnover rates are not satisfactory when compared with prior experience, average industry turnover and turnover ratios of comparable companies in the same industry, an analysis should be made to determine whether there is any 177 laxity in the credit policy or whether the problem is in collection policy. (3) Receivables to Sales (Receivables/Annual Credit Sales x 100) Receivables can be expected to fluctuate in direct relation to the volume of sales, provided that sales terms and collection practices do not change. The tendency towards more lenient credit extension as would be suggested by slackening of collections and increase in the number of slow paying accounts needs to be detected by carefully watching the relationship of receivables to sales. When credit sales figures for a period are not available, total sales figures may be used. The receivables figures in the calculation ordinarily represent year-end receivables. In the case of firms with seasonal sales, year-end receivables figures may be deceptive. Therefore, an average of the monthly closing balances figures may be more reliable. (4) Receivables as percentage of Current (Receivables/Total Current Assets Investment) Assets The ratio explains the amount of receivables per rupee of current asset investment and its size in current assets. Comparison of the ratio over a period offers an index of a firm’s changing policies with regard to the level of receivables in the working capital. Some other ratios are: 1. Size of receivable = receivable/total current assets 2. Size of debtors = debtors/total current assets 178 3. Size of loans and advances = loans and advances/total current assets The size of receivables of selected companies has been given in table 5.1 Table 5.1 Size of Receivables of the Selected Cement Companies for the years from 2003-04 to 2007-08 Year ACC Mangalam Gujarat Ambuja 0.52 0.35 0.43 0.35 0.46 0.52 0.43 0.54 0.38 0.54 0.44 0.46 Shree Cement 0.58 0.55 0.63 0.61 0.66 0.61 India Cement 0.54 0.72 0.79 0.84 0.87 0.75 Industry Average 0.53 0.53 0.61 0.61 0.62 0.58 2003-04 0.68 2004-05 0.61 2005-06 0.67 2006-07 0.64 2007-08 0.62 Company 0.64 Average Source: Based on data provided annual Reports of the cement companies. The size of receivable of all the cement companies shows  fluctuating trend throughout the study period except Gujarat Ambuja, and Shree. Both the companies show increasing trend. The minimum size of receivable in ACC is 0.61 (2004-05),  Mangalam is 0.38 (2007-08), Gujarat Amubja is 0.35 (2003-04 and 2004-05), Shree Cement is 0.55 (2004-05) and in India  Cement is 0.54 (2003-04). The maximum size of receivable in  ACC is 0.66 (2003-04), Mangalam is 0.52 (2003-04), Gujarat Ambuja is 0.54 (2007-08), and Shree cement is 0.66 (2007-08) and in India cement is 0.87 (2007-08). The study of the  composition of receivables is a very important tool to evaluate  the management of receivables. It assists to show the point where receivables are concentrated most. The size of sundry debtors in cement manufacturing   companies in India has been computed and presented in the table 5.2. Table 5.2 Size of Sundry Debtors of the Selected Cement Companies  for the years from 2003-04 to 2007-08 Shree Cement 0.22 India Cement 0.11 Industry 0.21 Mangalam Gujarat Ambuja 0.34 0.05 2004-05 0.29 0.32 0.05 0.33 0.08 0.22 2005-06 0.32 0.34 0.07 0.32 0.11 0.23 2006-07 0.28 0.31 0.08 0.27 0.14 0.22 2007-08 0.27 0.21 0.09 0.26 0.12 0.19 Company 0.28 0.30 0.07 0.28 0.11 0.21 Year ACC 2003-04 0.19 Average Source: Based on data based on Annual Report of Cement Company It is evident from the table 5.2 that the size of sundry  debtors in ACC, India Cement, Mangalam and Shree show fluctuating trend throughout the study period. Percentage to current assets was highest to 0.32 in ACC in 2005-06 and  highest 0.33 in Shree in 2004-05. Gujarat Ambuja shows  increasing trend throughout the study period. The percentage of sundry debtors to current assets where reduced shows that in those years the speed of increase in current assets was much more than that of the sundry debtors. The size of receivable of all the cement companies shows fluctuating trend throughout  the study period except Gujarat Amubja. The minimum size of  receivable in ACC is 0.21 (2003-04), Mangalam is 0.21 (2007-08), Gujarat Ambuja is 0.05 (2003-04 and 2004-05), Shree cement is 0.22 (2003-04) and in India Cement is 0.08 (2004-05). The  maximum size of receivable in ACC is 0.32 (2005-06),  Mangalam is 0.34 (2003-04 and 2005-06), Gujarat Ambuja is 0.09 (2007-08), and Shree Cement is 0.33 (2004-05) and in India Cement is 0.14 (2006-07). The average collection period of selected cement  companies has been given in table 5.3 Table 5.3 Average Collection Period in Selected Cement Companies for the years from 2003-04 to 2007-08 (in days) Year ACC Mangalam Gujarat Ambuja Shree 1999-00 34 36 7 46 India Cement 18 2000-01 43 36 7 47 20 2001-02 43 33 8 49 22 2002-03 41 27 10 48 37 2003-04 26 28 10 37 47 Company 39 32 8 45 29 Average Source: Based on data provided in Appendix The minimum Average Collection Period in ACC is 34 (2003-04), Mangalam is 27 (2006-07), Gujarat Ambuja is 7 (200304 and 2004-05), Shree Cement is 37 (2007-08) and in India Cement is 18 (2003-04). The maximum Average Collection Period in ACC is 43 (2004-05 and 2005-06), Mangalam is 36 (2003-04 and 2004-05), Gujarat Ambuja is 10 (2006-07) and  2007-08), and Shree Cement is 49 (2005-06) and in India Cement is 47 (2007-08). 181 The Creditor turnover of selected cement companies has been given in the table 5.4. Table 5.4 Creditor turnover of Selected Cement Companies or the years from 2003-04 to 2007-08 Shree 11.10 Mangalam Gujarat Ambuja 8.77 1.12 1.63 India Cement 1.40 Industry Average 4.80 2004-05 12.60 6.98 0.71 1.15 1.38 4.56 2005-06 12.93 5.80 0.63 1.41 1.09 4.37 2006-07 12.19 5.48 0.95 1.93 0.97 4.30 2007-08 13.42 3.71 0.73 1.58 0.90 4.07 Company 12.45 6.15 0.83 1.54 1.15 4.42 Year ACC 2003-04 Average Source: Based on data based on Annual Report of the cement companies It is evident from the table 5.4 that Creditor turnover in ACC and Gujarat Ambuja and Shree fluctuating trend. Mangalam and India Cement show decreasing trend all over  the study period. The minimum Creditor turnover in ACC is 1.10 (2003-04), Mangalam is 3.71 (2007-08), Gujarat Ambuja is 0.62 (2005-06), Shree Cement is 1.15 (2004-05) and in India Cement is 0.90 (2007-08). The maximum Creditor turnover in ACC is 13.42 (2007-08), Mangalam is 8.77 (2003-04), Gujarat Ambuja is 1.12 (2003-04), and Shree Cement is 1.93 (2006-07) and in India Cement is 1.40 (2003-04). The  debtors  turnover  in  cement  manufacturing  companies in India has been computed and presented in thetable 5.5. 182 Table 5.5 Size of Receivable of Selected Cement Companies  for the years from 2003-04 to 2007-08 Year ACC 10.65 Mangalam Gujarat Ambuja 10.21 50.26 2003-04 2004-05 8.58 10.21 2005-06 8.45 2006-07 2007-08 Shree 7.90 India Cement 20.45 Industry Average 19.89 52.07 7.78 17.85 19.30 11.19 44,17 7.47 16.66 17.59 8.95 13.64 36.79 7.67 9.92 15.39 10.20 13.06 37.41 9.94 7.73 15.67 Company 9.37 11.66 44.14 8.15 14.52 17.57 Average Source: Based on data based on Annual Report of the Cement Companies It is evident from the table 5.5 that the debtors turnover in ACC is fluctuating maintains approximately a fixed level. Mangalam and Gujarat Ambuja show fluctuating trend  throughout the study period. Debtors turnover was highest to 13.64 in Mangalam and 9.94 in Shree in 2006-07 and 2007-08  respectively. India Cement shows decreasing trend throughout the study period. The minimum debtors turnover in ACC is 8.45 (2005-06), Mangalam is 10.21 (2003-04 and 2004-05),  Gujarat Ambuja is 36,79 (2002-03), Shree Cement is 7.47 (200506) and in India Cement is 7.73 (2007-08). The maximum debtors turnover in ACC is 10.65 (2003-04), Mangalam is 13.64 (2006-07), Gujarat Ambuja is 52.07 (2004-05), and Shree Cement is 9.94 (2007-08) and in India Cement is 20-45 (2003-04). 183 Select References: O.M. Introduction to Financial Management (Homewood illnois: Richard D. Irwin, 1978). Lawerence D. Schal and Charles W. Haley, Financial Management, 3rd Edition. New York, McGraw Hill, 1973). S.E Bolten, Managerial Finance, (Boston: Houghton Mitten Co., 1976). R.J. Chambers, Financial Management, (Sydney: GTE Law Book Company Ltd,. 1967). Joseph L. Wood, ‘Credit and Collections’ in Daris Lillian, ed., Business Finance Handbook, (Englewood, Cliffs, New Jersey : Prentice Hall, 1962. Martin H. Seiden, The Quality of Trade Credit (New York : National Bureau of Economic Research, 1964. Theodore N. Backman, Credit and Collection: Management and Theory (New York : McGraw Hill Book Company, 1962). 184

How to Find Your Birth Parent or Child

It is estimated that 2% of the U.S. population, or about 6 million Americans, are adoptees. Including biological parents, adoptive parents, and siblings, this means that 1 in 8 Americans are directly touched by adoption. Surveys show that a large majority of these adoptees and birth parents have, at some point, actively searched for biological parents or children separated by adoption. They search for many different reasons, including medical knowledge, the desire to know more about the individuals life, or a major life event, such as the death of an adoptive parent or the birth of a child. The most common reason given, however, is genetic curiosity - a desire to find what a birth parent or child looks like, their talents, and their personality. Whatever your reasons for deciding to start an adoption search, it is important to realize that it will most likely be a difficult, emotional adventure, full of amazing highs and frustrating lows. Once youre ready to undertake an adoption search, however, these steps will help you get started on the journey. How to Begin an Adoption Search The first objective of an adoption search is to discover the names of the birth parents who gave you up for adoption, or the identity of the child you relinquished. What do you already know? Just like a genealogy search, an adoption search begins with yourself. Write down everything you know about your birth and adoption, from the name of the hospital in which you were born to the agency which handled your adoption.Approach your adoptive parents. The best place to turn next is your adoptive parents. They are the ones most likely to hold possible clues. Write down every bit of information they can provide, no matter how insignificant it may seem. If you feel comfortable, then you can also approach other relatives and family friends with your questions.Collect your information in one place. Gather together all available documents. Ask your adoptive parents or contact the appropriate government official for documents such as an amended birth certificate, petition for adoption, and the final decree of adoption.Medical historyHealth statusCause of and age at deathHeight, weight, eye, hair colorEthnic originsLevel of educationProfessional achievementR eligionAsk for your non-identifying information. Contact the Agency or the State that handled your adoption for your non-identifying information. This non-identifying information will be released to the adoptee, adoptive parents, or birth parents, and may include clues to help you in your adoption search. The amount of information varies depending upon the details that were recorded at the time of the birth and adoption. Each agency, governed by state law and agency policy, releases what is considered appropriate and non-identifying, and may include details on the adoptee, adoptive parents, and birth parents such as: on some occasions, this non-identifying information may also include the parents ages at time of birth, the age and sex of other children, hobbies, general geographical location, and even the reasons for the adoption.Sign up for adoption registries. Register in State and National Reunion Registries, also known as Mutual Consent Registries, which are maintained by the go vernment or private individuals. These registries work by allowing each member of the adoption triad to register, hoping to be matched with someone else who might be searching for them. One of the best is the International Soundex Reunion Registry (ISRR). Keep your contact information updated and re-search registries on a regular basis.Join an adoption support group or mailing list. Beyond supplying much needed emotional support, adoption support groups can also provide you with information concerning current laws, new search techniques, and up-to-date information. Adoption search angels may also be available to assist with your adoption search.Hire a confidential intermediary. If youre very serious about your adoption search and have the financial resources (there is usually a substantial fee involved), consider petitioning for the services of a Confidential Intermediary (CI). Many states and provinces have instituted intermediary or search and consent systems to allow adoptees and birth parents the ability to contact each other through mutual consent. The CI is given access to the complete court and/or agency file and, using the information contained in it, attempts to locate the individuals. If and when contact is made by the intermediary, the person found is given the option of allowing or refusing contact by the party searching. The CI then reports the results to the court; if the contact has been refused that ends the matter. If the person located agrees to contact, the court will authorize the CI to give the name and current address of the person sought to the adoptee or birth parent. Check with the state in which your adoption occurred as to the availability of a Confidential Intermediary System. Once youve identified the name and other identifying information on your birth parent or adoptee, your adoption search can be conducted in much the same way as any other search for living people.