Effect of Economic Factors on Stock Price

Effect of Economic Factors on Stock Price Effect Of Economic Factors On Stock Price With A Particular Reference To London Stock Exchange Introduction Its believed that an economic atmosphere is a major factor in determining the primary trend of a stock market. L H Beng (1998)The stock market, on the other hand, is often regarded as an effective and a reliable barometer of a countrys economy, and the stock prices are deemed as a reflection of future expectations concerning the economic well being of a country. Invariably, Stock, by its very nature, cannot be seen off as an independent entity from economic realities and performance. Consequently, it is of great interest to find out or examine the relationship between some economic variables and the pricing of stocks in the London stock exchange. This empirical study is carried out to examine the effect of economic factors on stock price with reference to FTSE100 price index of London stock Exchange. The main objective of the study is to examine some peculiarities or differences in terms of economic variables that influence stock prices in the London stock market. The effects of retail sales index, consumer price index and industrial production index (IPI) on stock prices shall be duly examined. The study makes use of regression model to analyze nine year (Jan. 2000 Nov. 2009) monthly data obtained on ftse100 price index and some identified explanatory variables among other numerous variables that could be identified to determine stock prices in any economy. Literature Review Series of empirical studies have been carried out on the effect or influence of economic variables on the stock price. P I Ojeaga V O Folajin (2009) showed in their study that stock price correlated with the price of industrial product and composite price index, also strongly related to the average naira dollar exchange, market capitalization, broad money supply and maximum lending rate in Nigeria economy. N F Chen, R Roll S A Ross (1986) argued that stock returns are exposed to systematic economic news, that they are priced in accordance with their exposures and that the news can be measured as innovations in state variables whose identification can be accomplished through simple and intuitive financial theory. The study was carried out with the use of efficient market theory and rational expectations inter temporal asset-pricing theory (Cox et al 1985). According to the study, industrial production and changes in risk premium have a great influence on the stock returns while index of oil price changes showed no effect on the asset pricing. Abeyratna G, Anirut P and David M P (2004) displayed empirically in their study that there is a long run equilibrium relationship between the stock prices and the rate of inflation, the money supply and the Treasury bill rate in an emerging market of South Asia. Mukherjee and Naka (1995) applied Johansens (1998) VECM to analyze the relationship between the Japanese Stock Market and exchange rate, inflation, money supply, real economic activity, long-term government bond rate, and call money rate. They concluded that a co integrating relation indeed existed and that stock prices contributed to this relation. R C Maysami, L C Howe and M A Hamzah (2004) concluded in their research study that Singapore stock market and the SES All-S Equities Property Index formed significant relationships with all macroeconomic variables identified, while the SES All-S Equities Finance Index and SES All-S Equities Hotel Index form significant relationships only with selected variables. Specifically, for the SES All-S Equities Finance Index, real economic activity and money supply were not significant, and in the case of SES All-S Equities Hotel Index, money supply, and short- and long-term interest rates were insignificant. Omran (2003) examined the impact of real interest rates as a key factor in the performance of the Egyptian stock market, both in terms of market activity and liquidity. The co integration analysis through error correction mechanisms (ECM) indicated significant long-run and short-run relationships between the variables, implying that real interest rates had an impact upon stock market performance. Maysami and Koh(2000) studied and found out that inflation, money supply growth, changes in short- and long-term interest rate and variations in exchange rate formed a co-integrating relation with changes in Singapores stock market levels. As revealed above, two variables (index of industrial production and consumer price index) out three highlighted variables have been tested by earlier researchers and the results showed a clear relationship with stock prices. In this study, the variables will be retested along side with retail sales index vis-a-viz London stock exchange. About The London Stock Exchange The London Stock exchange is the most important exchange in Europe and one of the largest in the world. It lists over 3000 Companies and with 350 of the companies coming from 50 different countries, the LSE is the most international of all exchanges. The London stock exchange is comprised of two different stock markets: the main market and the alternative investment market (AIM). The main market is solely for established companies with high performance, and the listing requirements are strict. Approximately 1,800 of the LSEs company listings trade on the main market, and the total market capitalization of 37 Billion. The LSE is completely electronic, but different shares are traded on different systems. Highly liquid shares are traded using SETS automated system on an order driven basis. This means that when a buy and sell price match, an order is automatically executed. For securities that trade less regularly, the London stock exchange implements the SEAQ system, where market makers keep the shares liquid. These market makers keep are required to hold shares of a specific company and set the bid and ask prices, ensuring that there is market for the stock. The LSE also has a new and growing exchange for equity derivatives called EDX London, created in 2003. In 2004, EDX traded an average of 382,599 contracts per day. It aim is to become the leading derivative market in the world (see http://www.advfn/stockexchanges/about/LSE/LondonStockExchange.html) Stock Market A stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those on traded privately. The size of the world market was estimated at about $36.6 trillion US at the beginning of October 2008. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organisation specialized in the business of bringing buyers and sellers of the organisation securities together. The stock market in the United States is NYSE while in Canada; it is the Toronto stock exchange. Major European examples of stock exchanges include London Stock Exchange, Paris Bourse, and the Deutche Borse. Asian examples include the Tokyo stock exchange, the Hong kong stock exchange, and Bombay stock exchange. In Latin America, there are such exchanges as the BMF Bovespa and BMV (see http//en.wikipedia.org/wiki/stock_market). Securities A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt security (such as banknotes, bonds and debentures) and equity securities, e.g., common stocks; and derivative contracts, such as forwards, futures, options and swaps. The company or other entity issuing the security is called the issuer (see http://en.wikipedia.org/wiki/security_(finance)). Stock Market Index The movement of the prices in a market or sections of a market are captured in price indices called stock market indices of which there many, e.g. S P, the FTSE and the Euronext indices. Such indices are usually market capitalization weighted, with the weights reflecting the contribution of the stock to the index. The constituents of the index are reviewed frequently to include / exclude stocks in order to reflect the changing business environment (see http://en.wikipedia.org/wiki/stock_market). Ftse 100 Index It is a share index of the 100 most highly capitalized UK Companies listed on the London Stock exchange. FTSE 100 companies represent about 81% of the market capitalization of the whole London Stock Exchange. Even though FTSE All share index is more comprehensive, the FTSE 100 is by far the widely used UK stock market indicator (see http://en.wikipedia.org/wiki/FTSE_100Index). Industrial Production Index (Ipi) The industrial production index is an economic indicator which measures real production output. It is expressed as a percentage of real output with base year. Production indexes are computed mainly as fisher indexes with the weights based on annual estimates of value added. This index, along with other industrial indexes and construction, accounts for the variation in national output over the duration of the business cycle (see http://en.wikipedia.org/wiki/industrial_production_index). Consumer Price Index (Cpi) CPI is a measure estimating the average price of consumer goods and services purchased by households. A consumer price index measures a piece change for a constant market of goods and services from one period to the next within the same area (city, region, or nation). It is a price index determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical urban consumer. The percent change in the CPI is a measure estimating inflation (see http://en.wikipedia.org/wiki/consumer_price_index). According to B Hobijn D Lagakos (2003) CPI is the benchmark measure of inflation. Retail Sales Index (Rsi) RSI is a monthly measurement of all goods sold by retailers based on a sampling of retail of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. Many analysts choose to look at the figure ‘ex-auto (excluding the volatile car sales figure). It is thought that this number is a better measure of across-the-board purchasing trends. The report does not include money spent on services, so it represents less than half of total consumption during the month. However, even with these limitations the figures are closely watched as an indicator of the health of the economy (see http://www.investorword.com/5768/retail_sales_index.html). Data And Methodology Of The Research Data In this research work, the data used are monthly market index data from Jan. 2000 to Nov.2009. Secondary data were obtained from yahoo finance (FTSE 100 index) and Office for national statistics (consumer price index, industrial production index and retail sales index). November data were not captured in the regression result because, data available for industrial production index does not cover November (the last data released was in October 2009). Methodology The method adopted is multiple regression model to analyse the quantitative relationship between ftse100 index and three explanatory variables i.e. index of industrial production, consumer price index and retail sales index. According to Gray Koop (2006, 2008 2009) Regression quantifies the effect of an explanatory variable, X, on a dependent variable, Y. Hence, it measures the relationship between two variables. The relationship between Y and X is assumed to take the form, Y= ÃŽ ± + ÃŽ ²X, where ÃŽ ± is the intercept and ÃŽ ² is the slope of a straight line. This is called the regression line. The regression line is the best fitting line through an XY graph. No line will ever fit perfectly through all the points in an XY graph. The distance between each point and the line is called a residual. The ordinary least squares (OLS) estimator is the one which minimizes the sum of squared residuals and provides estimates of ÃŽ ± and ÃŽ ². Regression coefficient should be interpreted as marginal effects (i.e. as measures of the effect on Y of a small change in X. Thus, multiple regression model in this research work can be represented as Y=ÃŽ ±+ ÃŽ ²1X1 + ÃŽ ²2X2 + ÃŽ ²3X3 +ÃŽ µ Where Y = stock price (ftse100 index) ÃŽ ± = intercept ÃŽ ² = coefficient for the explanatory variables X1 = consumer price index X2 = index of industrial production X3 = retail sales index Ε = Error (residual) Therefore the estimated regression equation is thus: Y=ÃŽ ±+ÃŽ ²1X1+ÃŽ ²2X2+ ÃŽ ²3X3 The multiple regression correlation coefficient,R2, RY.X1X2X32=(Y-Y)2(Y-Y)2 This a measure of the proportion of variability explained by the regression relationship model or the regression equation. Roughly, this means R2 is the percentage at which the model explains the changes in the dependent variable based on the independent variables. The standard deviation is the range at which there is +/- error with a 95% confidence level. In order to gauge the accuracy of ÃŽ ± and ÃŽ ² estimates, the use of hypothesis testing on regression coefficients become very relevant at 95% confidence interval. This is given as Null hypothesis H0: ÃŽ ²1 = ÃŽ ²2 = ÃŽ ²3 = 0 Alternative hypothesis H1: ÃŽ ²1 ≠  ÃŽ ²2 = ÃŽ ²3 = 0 If the P-value is less than 5% (0.05) then t is ‘large and the conclusion is ÃŽ ² ≠  0. But, if the P-value is greater than 5% then t is ‘small which means ÃŽ ² = 0. Analysis Of Results Regression Statistics Multiple R 0.74673553 R Square 0.55761396 Adjusted R Square 0.54597222 Standard Error 588.751002 Observations 118 Source: Regression results The value of R (multiple Correlation coefficients) obtained for the data is 0.75 which lies between 0 and 1 indicating a positive relationship between stock price index and the selected economic variables (consumer price index, industrial production index and retail sales index). It is significant to note that out of all the possible economic indicators that affect stock prices, 56% of changes could be attributable to real production output, inflation and goods sold by retailers as shown by above regression results. Coefficients Standard Error t Stat P-value Intercept -37034.902 3685.920336 -10.0477 2.15E-17 CPI 318.608541 33.76303871 9.436607 5.716E-16 IPI 226.107972 20.48881882 11.03568 1.053E-19 RSI -131.07512 19.96271818 -6.566 1.598E-09 Source: Regression results Considering the model specification presented and utilizing the results obtained after running the data through Microsoft Excel 2007 the estimated regression model becomes; STOCK PRICES=-37034.90+318.61(CPI) +226.11(IPI)-131.08(RSI) The regression result above shows that there is a positive relationship between stock price and consumer price index (X1). This is in accordance with earlier expectation stated. Having P-value as 5.716E-16 i.e. its less than 5%. It means ÃŽ ²1 ≠  0; null hypothesis will be rejected while alternative hypothesis is accepted. This indicates that parameter estimate is statistically significant, meaning that consumer price index has relevant influence in explaining stock price. P-value for X2 is 1.053 Ãâ€" 10^-19 which is less than 0.05, this shows that the result is statically relevant, it means, index of industrial production has a positive relationship with stock price. Therefore, ÃŽ ² ≠  0; null hypothesis should be rejected and accept alternative hypothesis. The above regression result shows a positive relationship between stock prices and retails sales index considering the P-value of 1.598E-09 which is less than 0.05. Statically, it shows that parameter estimate is very relevant and that, retail sales index contribute meaningfully to stock price determination in London stock exchange. Consequently, ÃŽ ²3 ≠  0; null hypothesis must be rejected while accepting alternative hypothesis. Conclussion This study examined the effect of economic factors on stock price; the scope was limited to London stock exchange. As a result, FTSE 100 index was used as an independent variable while index of industrial production, consumer price index and retail sales index were examined as explanatory variables. It was deduced from the result of multiple regression model used that, there is a positive relationship between stock prices (as represented by FTSE 100 index) and the above listed economic variables most especially in the London stock Exchange. This by extension correlates with the results of some earlier researchers on the subject matter. In safe guarding stock prices in London stock exchange market, it becomes highly imperative and a major point of consideration for policy makers when trying to influence the economy through changes in economic variables such as the money supply, interest rates, or the exchange rate while aiming to correct economic ills such as inflation or unemployment to always access its multiplier effect which may inadvertently depress the stock market, and curtail capital formation which itself would lead to further slowdown of the economy. References Abeyratna G, Pisedtasalasai A Power D (2004), Macroeconomic influence on the stock market: evidence from an emerging market in South Asia. Journal of Emerging Market Finance 3(3), 85-304. ADVFN (2010), ‘London Stock Exchange, http://www.advfn/stockexchanges/about/LSE/LondonStockExchange.html (accessed 4 Jan 2010). Gray Koop (2006, 2008 2009), Analysis of financial data, West Sussex, Wiley. Investor word (2010), ‘Retail Sales Index, http://www.investorword.com/5768/retail_sales_index.html (accessed 5 Jan 2010). Loo Hooi Beng (1998), The effects of Economic factors on Kuala Lumpur Stock Exchange Composite Index, Malaysia (online at http://www.uum.edu.my/438/1/Loo_Beng.pdf accessed 27 Dec 2009). Maysami R C Koh T S (2000), A vector error correction model of the Singapore stock market, International Review of Economics and Finance 9, 79-96. Mukherjee T K Naka A (1995), Dynamic relations between macroeconomic variables and the Japanese stock market: an application of a vector error correction model. The Journal of Financial Research 18(2), 223-237. Mukherjee T K Naka A (1995), Dynamic relations between macroeconomic variables and the Japanese stock market: an application of a vector error correction model, The Journal of Financial Research 18(2), 223-237. N F Chen, R Roll, and S A Ross (1986), Economic forces and the stock market, Journal of business 59(3), 83-403. Omran M (200), Time series analysis of the impact of real interest rates on stock market activity and liquidity in Egypt: Co-integration and error correction model approach. International Journal of Business 8(3). P I Ojeaga and V O Folajin (2009),The effect of economic factors on stock price in a global economy A case study of Nigerian stock market (online at http://www.essay.se/about/economic+factors+on+stock+market/ accessed 15 Dec2009). R C Maysami, L C Howe and M A Hamzah (2004), Relationship between Macroeconomic Variables and Stock Market Indices: Cointegration Evidence from Stock Exchange of Singapores All-S Sector Indices, Jurnal Pengurusan 24, 47-77. Wikipedia (2010), ‘Consumer Price Index, http://en.wikipedia.org/wiki/consumer_price_index (accessed 4 Jan 2010). Wikipedia (2010), ‘FTSE 100 Index, http://en.wikipedia.org/wiki/FTSE_100Index (accessed 4 Jan 2010). Wikipedia (2010), ‘Industrial Production Index, http://en.wikipedia.org/wiki/industrial_production_index (accessed 4 Jan 2010). Wikipedia (2010), ‘Security (Finance), http://en.wikipedia.org/wiki/security_(finance)) (accessed 4 Jan 2010). Wikipedia (2010), Stock market, http://en.wikipedia.org/wiki/stock_market (accessed 4 Jan 2010).

urbanization in third world countries Essay -- essays research papers

Urbanization and its effect on third world living conditions Urbanization is the spreading of cities into less populated agricultural areas. Most people would not think that this is necessarily a problem. They would say that it is good that the â€Å"developing countries† were becoming more developed. With urbanization comes factories and more jobs, so the people can make more money and be happier. Right? The problem is that these people must sacrifice their traditional lifestyles, for this new â€Å"Urbanism†(the way of life, attitudes, values, and patterns of behavior fostered by urban settings Knox 234). A lot of these people don’t choose this lifestyle- they are forced into it. Because there is a growing demand for natural resources in the core countries, the semi periphery and periphery countries (where many of the resources are) get exploited. The â€Å"civilized† world enters the other countries, buys land from the government and then forces the people who are on that land off of it. These people then move to the cities because they have nowhere else to go. Once they get to the city they are lucky to find a job. Sometimes these jobs pay as little as 80 American dollars a year and can barely support a family. As a result many turn to crime or prostitution to make ends meet. Our worst poverty is generally better than the average people in these third world cities.   Ã‚  Ã‚  Ã‚  Ã‚  The people in these cities lack not only those things that are necessary to sustain life- such as food, clean water and adequate sewage. But they also lack those things that we consider to be essential to life such as electricity, running water, and education, forget any of the things that we just have to enjoy, like cars clothes candy drugs television and entertainment. Eventually large slums develop around or inside of the cities, in these slums; large groups of poor and uneducated people end up living together in poverty. The World Bank met in 1999 to address these problems; in their report they write â€Å" Hundreds of millions of urban poor in the developing and transitional world have few options but to live in squalid, unsafe environments where they face multiple threats to their health and security. Slums and squatter settlements lack the most basic infrastructure and services. Their populations are marginalized and largely disenfranchised. They are expos ed to disease, c... ...ople off of it. If people were not forced off the land, into the city, the cities would grow at a natural rate. When Urbanization occurs at a natural rate (the United States) Poverty is present but not as magnified.   Ã‚  Ã‚  Ã‚  Ã‚  Truth is that these problems cannot be fixed by anyone. If there are people that have a lot then there are going to be people who have a little. These rules are written in the very laws of nature. The governing powers (companies, world bank, tri-lateral commission) think that if they can just raise these people up to a little bit higher living standards than they will be o.k. But the more you give people, the more they want, it’s just human nature.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Bibliography 1.World Bank Group. â€Å"cities alliance for cities without slums, action plan for moving and upgrading slums†. Annual meeting.1999 No authors were given 2. United nations human settlements program. â€Å" urbanization, facts and figures† New York, 6-8 of june 2001 3. another united nations human settlement report, no author no date

Kfc-Stratefy for Developing

Kentucky Fried Chicken Strategic Plan-Part One Jeanette Cortez, Autumn Crowther, James Hopper Fernando Manaloto, Joe Newkirk, and Rita Salem International Strategic Planning and Implementation STR/GM 581 March 31, 2011 Dr. Tim Becker, MBA Introduction Kentucky Fried Chicken has been established as a franchise in Latin America and the focus of this plan will be the El Salvador franchise. The strategic management process is vital and a well laid out plan is necessary. Consequently, by evaluating the background of KFC, the outcome should lead to a clear mission and vision statement outlining the purpose and goals of the company.Also, the mission and vision will keep all shareholders informed of the objectives that should be met by KFC. â€Å"Defining the company mission is one of the most often slighted tasks in strategic management† (Pearce II & Robinson Jr. , 2009, p. 42). A mission lays out the organization’s goals and basically specifies the purpose of the organization . Decisions and strategies can be established after environmental scanning is done along with a Situational Analysis (SWOT). The strategic process also involves frequently assessing the industry structure and choosing strategic plan options that help expand global operations.The two chosen strategic options that will be discussed will be product differentiation and cost leadership. This plan should give clarity on how the options and recommendations fit with both the competitive situation and the organizational situation. Background Based in Louisville, Kentucky, Kentucky Fried Chicken (KFC) corporation is touted as the â€Å"world’s most popular chicken franchise† (KFC, 2011). KFC serves over 12 million customers in 109 territories and countries throughout the world (KFC, 2011).Famous for its Original Recipe Fried Chicken, there are â€Å"more than 5,200 restaurants in the United States and more than 15,000 units around the world† (KFC, 2011). This company whos e inception was in a gas station back in 1930 by Colonel Harland Sanders is now owned and operated by Yum! Brands, Incorporated. As of 2008, Yum! had revenues in excess of $11 billion and was ranked #239 on the Fortune 500 list (KFC, 2011). KFC Mission Statement, Vision and Strategy KFC’s Mission Statement is: â€Å"’The Association of KFC Franchisees, Inc. s united to protect, promote and advance the mutual interests of all member franchisees and the Kentucky Fried Chicken system. † (Association of Kentucky Fried Chicken Franchisees, Inc. 2006). KFC’s parent company is Yum! Brands (Yum! ). Yum! ’s vision and strategy is â€Å"committed to continuing the success realized during our first ten years. Our success has only just begun as we look forward to the future, one which promises a long runway for growth, especially on an international level† (Yum! , 2011). KFC El Salvador also falls under Caribbean and Latin America Franchisee Association (CARIBLA).CARIBLA’s mission statement and objectives are â€Å"the mission of the CARIBLA Franchisee Association is to represent, promote, and protect the general interests of all member YUM franchisees in Latin America and the Caribbean† (CARIBLA, 2011). Objectives – Contribute to maintain and improve the profitability the restaurants for the short and long term (supply chain management projects). – Represent the members' interests in different areas. – Defend and protect franchisees contractual rights. – Communicate as one voice with YUM Restaurants International. (Association Mission and Objectives,  para. 1). Strengths, Weaknesses, Opportunities and Threats | |Beneficial |Harmful | |Internal |Strengths |Weaknesses | | |1. Purchase power of consumer is rising. |1. Frachise cost is high. | | |2. More than half of Salvadorans income is spent on food. |2. Competition is high in the industry. | |3. Recognized worldwide brand name (15,000 w orld-wide locations. |3. Small country population. | | |4. Quality and freshness regulated throughout every franchise. | | | |5. Offers choices of local food on menu. | | |External |Opportunities |Threats | | |1. Online Sales assist profits. 1. Foreign products are currently fashionable but interest could | | |2. Introduction of new products. |decrease. | | |3. Expansion due to rising economy (Continual Growth) |2. Economic climate stability. | | |4. Only current location in capital city – San Salvador largest |3. Local suppliers are minimal. | | |hub for travelers. |4. â€Å"Pollo Campero† is a Salvadorian brand and well established | | | |chicken eatery. | | | |4.Many fast food competitors such as Burger King, McDonalds, | | | |Pizza Hut, etc. | Product Differentiation The goal of product differentiation is to increase profits by increasing consumer demand and decreasing the demand of price elasticity. Organizations typically attempt to differentiate their products t hrough physical characteristics, location, service, and subjective image differences. KFC’s product differentiation is most impacted by location, service, and physical characteristics.Consumers value a variety of products and because each consumer has different tastes, the organization will attempt to pry consumers away from current competitors by offering physically differentiated products. KFC must differentiate itself vertically, meaning the company will set itself apart from competitors by the actual quality of its products (Waldman and Jensen,  n. d. ). However, KFC’s management must wisely choose upon its locations. The company’s largest competitor, Pollo Campero, operates in 14 different locations in El Salvador and poses a high threat to the company.In addition to location, an organization’s products are highly differentiated by service. With the presence of Pollo Campero, KFC must not only rely on good food but also provide exceptional customer service that will retain its customer base. Cost Leadership The cost leadership strategy targets a broad market. KFC has developed strong relations with suppliers that use cheap ingredients. Additionally, the organization has the capital required to increase production in assets. While this type of investment represents a barrier to entry that many organizations may not overcome, this is an advantage for the organization.Furthermore, KFC’s flexibility in supply chains, product differentiation, and ease in their productions gives the organizations a competitive edge over its competitors (QuickMBA. com,  2010). Conclusion KFC is based in Louisville, Kentucky and is subsidiary of Yum! Brands, and operates in over 109 countries. A KFC store in El Salvador operates under three mission statements of Yum! , the Association of KFC Franchisees, and CARIBLA. KFC has recognizable strengths, weaknesses, opportunities and threats to be evaluated before further expansion in El Salvador. Product differentiation and cost leadership are advantages that KFC utilizes in edging out competitors. Recommendations KFC has choices to make in expanding in El Salvador. One recommendation is for KFC to contact the lone KFC operator in El Salvador to persuade him/her to open more franchises in San Salvador with a goal of gaining more name recognition to expand into other El Salvadoran cities. KFC’s strengths and name recognition will create more opportunities in El Salvador. Another recommendation is to have the lone franchisee to find out if interest in opening new KFC stores exists among El Salvador’s entrepreneurs.The franchisee could be paid a bonus for recruiting applicants that receive franchise approval. Both of these recommendations depend on KFC equaling or surpassing food quality and customer service of chief rival, Pollo Campero, and by using product differentiation and cost leadership. References Kentucky Fried Chicken (2011). Retrieved from KFC website on March 27, 2011: www. kfc. com. Association of Kentucky Fried Chicken Franchisees, Inc.. (2006). Association of Kentucky Fried Chicken Franchisees, Inc.. Retrieved from http://www. kfcf. com/history. htm CARIBLA Franchisee Association. (2011). CARIBLA. Retrieved from website on March 28, 2011: http://www. caribla. com/association_mission. htm Pearce II, J. A. , ; Robinson Jr. , R. B. (2009). Strategic management: Formulation, implementation, and control (11th ed. ). Waldman and Jensen. (n. d. ). Product Differentiation ; Strategy. Retrieved from http://courses. umass. edu/resec732/docs/Waldman%20and%20Jensen%20Chapter%2013. pdf QuickMBA. com. (2010). Strategic Management. Retrieved from

The Field Of Business Management - 1178 Words

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These people are CEO’s, management analysis, contractors, architects, etc. These people are the little people behind those astonishing buildings. Management analysist are im portant because they are the ones that handle the business’s money, they handle any important documents, and hold important business conferences. Informing candidates about the educational requirement to be a successful management analysis, the daily job responsibilities they also have to encounterRead MoreStrategy Management : Multinational Corporations And Other Industries Essay1366 Words   |  6 Pages147651 ASSIGNMENT-6 Strategy management in organizations: Multinational corporations and other industries have strategic management departments set up in order to design and implement strategies. Strategic management is formed with managers from various teams and with several years of experience. The best thing about the strategic management team is that refer to previous years of data and history of the organization in designing the strategies. Strategy management team in an organization is veryRead MoreIncorporating Conflict Management and Negotiation into the Field of Information Communication Technology1522 Words   |  6 Pagesreport was written for the University of the Sunshine Coast with a purpose to make recommendations for incorporating conflict management and negotiation into the field of information communication technology. The report clearly outlined two conflict management skills and one negotiation skill and briefly described and outlined the benefits and challenges. Conflict management is the process of limiting and contro lling the negative conflict while increasing and controlling the positive conflict. 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