Limitations Of the Price Limit Model free essay sample

This paper analyzes the various assumptions of the limit pricing model and assesses whether it is an acceptable model or not. The following paper critically analyzes the Limit Pricing Model, which uses limit pricing which is when companies form collusion or a cartel and try to maintain price levels which may or may not not maximize their profits or stop the entry of new firms in the market. One of the major limitations of the model discussed in this paper is that the model assumes collusion. Another limitation examined is that the model assumes the products to be homogeneous. The writer concludes, after discussing eight limitations of the model, that it is completely inappropriate. In an oligopoly there are a few entrepreneurs who are in tight competition with each other and due to this the market price is sticky or we can say downward rigid. Oligopolists do not usually decrease price (sticky downward prices), and tend to change prices together. We will write a custom essay sample on Limitations Of the Price Limit Model or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Rivals match each others price decrease which leads to a price- war and obviously they do end up losing in it and form a cartel. Cartels are an example of a collusive industry. Collusion occurs when firms in an industry agree to fix prices, divide the market among themselves, or otherwise restrict competition in some way.

Serpens essays

Serpens essays The constellation Serpens is very unique in many different ways. The most noticeable is that it lays in two parts; Serpens Caput which is the head of the serpent and Serpens Cauda, the tail of the serpent. These two separate constellations are joined to form one of the largest constellations in the sky. Serpens is also very unique because it is joined by another constellation, Ophiuchus. Ophiuchus is a man holding onto the serpent. These two constellations appear right next to the Milky Way causing many star formations and exciting stellar activity within the two constellations. (Moore, 128) In 1604, a supernova with a magnitude of 2.5 appeared next to the right leg of Ophiuchus and dissipated in 1605. This supernova is known as Keplers Supernova. There are only three records of supernovas appearing in this galaxy, and this one is included. Because Ophiuchus and Serpens occupy such a wide celestial field in the West Side of the Milky Way, it is constantly being observed for new stellar activity. A mortal woman named Eoronius lay on a hillside preparing to give birth and she was with a man named Ischys. As Coronius waited for her son, the babys father, Apollo, looked down upon earth and witnessed Ischys with his lover. Apollo became insanely jealous and strung a bow piercing Coronius with an arrow. Coronius cried out You could have let me bear your child. Now, in my one person, two will parish. Apollo, not meaning to kill his unborn son as well, quickly swooped down and snatched the boy from Coronius lifeless womb. Apollo took his newly born son, Ophiuchus (also called Aesculapius in Greek mythology), to the cave of Chiron, the Centaur. During Ophiuchuss stay with Chiron, he taught the young boy the art of healing and of medicine. One day as Ophiuchus practiced his lesson, he came upon a snake which looked very deadly and poisonous. He quickly reacted and kill...

A Way To Tackle Poverty In Indonesia Economics Essay

A Way To Tackle Poverty In Indonesia Economics Essay Some indicators can be used to measure the development of a country. One of them is the rate of the poverty. Not only how this measurement be used in a developed country but also in a developing country. In other hand, many policies to reduce poverty have been made by the government or the multinational organization such as World Bank or United Nation. The big question is why it is that important to overcome poverty. Then the next question would be whether the policies have significant impact to decrease the rate of poverty. If the answer is ‘not’, are there any other solutions to help people who are still in the poverty lines? Therefore, this paper will provide descriptive issues about the recent condition of poverty and how social entrepreneurship can becomes the solution to tackle the poverty in developing countries specifically Indonesia. Keyword: Social Entrepreneurship, Poverty SOCIAL ENTREPRENEURSHIP PARADIGM: A WAY TO TACKLE POVERTY IN INDONESIA By: Huda Jamilah Poverty at Glance United Nation (1998) defines poverty as violation of human dignity. Usually, the poor does not have sufficient basic capacity to participate effectively in society. In addition, poverty is pronounced deprivation in well-being (World Bank, 2000). Poverty is the deprivation of food, shelter, money and clothing that occurs when people cannot satisfy their basic needs. We can say someone who earns under $2 a day is face absolute or extreme poverty. The proportion of the developing world’s population living in extreme economic poverty fell from 28 percent in 1990 to 21 percent in 2001. Most of this improvement has occurred in East and South Asia. In East Asia the World Bank reported that â€Å"The poverty headcount rate at the $2-a-day level is estimated to have fallen to about 27 percent [in 2007], down from 29.5 percent in 2006 and 69 percent in 1990.† In Sub-Saharan Africa extreme poverty went up from 41 percent in 1981 to 46 percent in 2001, which com bined with growing population increased the number of people living in extreme poverty from 231 million to 318 million   [ 1 ]   . Poverty can be understood simply as a lack of money, or more broadly in terms of barriers to everyday life. But the truth is poverty rate cannot be decreased until zero condition so that policymakers always have poverty on their development agenda for some reasons. Many studies show some aspects that have caused poverty. Specially, economic factor is the main cause of poverty. Chen and Ravallion (2001) revealed that from 150-country level data, the change in mean income can affect poverty rate. It indicates that at least 80% of people earn less than $10 a day   [ 2 ]   . The total wealth of the top 8.3 million people around the world, rose 8.2 percent to $30.8 trillion in 2004, giving them control of nearly a quarter of the world’s financial assets. In other words, about 0.13% of the world’s population controlled 25% of the worldâ⠂¬â„¢s financial assets in 2004 (World Bank, 2008). In Indonesia, although the rate of poverty decrease to 12,49% this year, the sum of pauper still 20 until million people. Besides, they should face the high rate of inflation year to year. There are several majors causes poverty in Indonesia. Low rate of minimum wage, unemployment, difficult to access information, and lack of entrepreneur.

International Production And Governance Essay Example | Topics and Well Written Essays - 1500 words

International Production And Governance - Essay Example As a result, a steady increase got registered in the output of world trade. The above situation presents a similar case to one of the pillar causes of the Financial Crisis of 2008: mortgage lending in the United States of America. According to Murphy (2010), the availability of credit with low rates of interest encouraged people to seek loans. The upward trend in prices of houses further prompted them to invest in houses and homes. This trend, coupled with standards of lending that seemed relaxed encouraged the exploits. As such, when the financial crisis hit, a lot of lending institutions suffered. The genesis of the crisis, as thus, lay in the marketing policies of the mortgage market. The freestyle and casual manner in which the mortgage financing options and paperwork got done exposed the financial markets to high levels of risk. The lowered standards of accessing and the use of the word of mouth in confirming ability to repay the mortgage led to many people buying houses they could not afford (Murphy 2010). As thus, when the financial crunch descended the financiers suffered. This affected the ways in which international governance and production got looked at, in matters financial. The handling of financial affairs got a wake-up call. All the procedures and paperwork got a thorough look up before issuance of not only mortgages and loans, but also other financial transactions. Tangible, and in some cases physical property, got attached as evidence of the ability to repay loans, Murphy (2010). According to Nayyar (2006), the last half of the past century underwent unprecedented expansion and growth in flows, in international trade. World exports experienced astronomical increases, from $61billion in the 1950s to $883billion (1975) and $6338 billion at the turn of the century. Through this epoch, more growth got observed in world trade than in output. This explains the trend that results when the conditions that favor economic

Genetic experiment Research Paper Example | Topics and Well Written Essays - 750 words

Genetic experiment - Research Paper Example Stem cell research is one of the most hotly debated issue that involved political, social, religious and moral concerns. Stem cell research is one of the most developed genetic experimentation with a wide range of possibilities in the field of biology. There are many possible things that these researches can achieve given if the researches are well grounded, well funded and supported by the society. However, question such as the ethical and moral credibility of the action has surfaced. Stem cell research involves the human embryonic cells. These embryonic cells come from new fertilized eggs that started to divide to form any type of cells in the body. Embryonic cells are the stepping stone to finding out new ways of treating health problems. Transplants have been made easier and effective with the advent of stem cell research. Various stem cell procedures that proved to be effective life saving treatments to various sicknesses such as leukemia, tumors, heart transplants and many more have been developed through the extensive researches of scientist (Basics). The cultured embryonic cells have attached ethical constraints. Embryonic cells are destroyed with the many researches being done by scientists. Subjecting these human embryos into laboratories for experimentation is like killing a human being that is possible to develop maturely. It is unsettling to consider that embryos even if they are still five days old are placed on dishes that will soon die due to failed experiments. On the other hand, scientists and researchers raise various questions related to stem cell research such as: Are human embryos equal with a full grown human? Do the embryos have rights? Does life start at fertilization? Is the destruction of one embryo justifiable when it can provide cure for countless patients? The embryonic cells can either live or die at the dish during experimentation. The government of various countries has been warily affected as funds directed for the research are questioned by their constituents due to the ethical issues attached with the issue. George Bush for example, has supported the stem cell research at the start of his presidential term. But later, he withdrew such funds due to the ethical claims related with the research. Further, President Obama continued the funding during his term showing his support for the advancement of the biotechnological breakthroughs. Political disputes and debates have erupted among different parties exposing their sides on the issue. Policy makers have drafted various laws regarding the research, but restrictions have barricaded the further progress of the researches (â€Å"Stem Cell†). Stem cell research is just one of the many genetic experimentation that evoke reactions from the public. The advent of such researches and other advancement in the field of biotechnological engineering has caused fear to many. One of the most stricken issues is the idea of cloning. As the stem cell research progres sed, other advancement are made possible. Researches has evolved and discovered every now and then. Medical News Today covers the world with breakthroughs, such as: New approach for growing intestinal stem cells Transforming human ES of IPS cells into functional ling epithelial cells New approach for corneal

In class essay about play Antigone Essay Example for Free

In class essay about play Antigone Essay Creon, the king of Thebes, is one of the major characters. The author utilized several characters/ foils in order to build up the king’s image, the pride, cruel, stubborn and superior ruler. Through those conflicts, arguments and persuations, the king’s figure was gradually set up and was foreshadowing the tragic ending of his own life. The conflict between Antigone and Creon in the play is very outstanding and intense. Creon commanded that Eteocles would be buried in formal way, meanwhile, Creon also made laws to prevent people from burying Polynices. Let his corpse rot and be eaten by animals. Antigone buried the body without any hesitation that she was violating the laws. Because Antigone believed there is nothing can be superior to the gods, the gods would agree with her action. She argued that Creon, a mere mortal, did not have the power to override the gods, which enraged Creon. The things Antigone believed utterly subverted Creon’s value. In contrast, Creon thought the king’s power overtopped any other thing, all the laws he made should be obeyed no matter they were right or wrong. He also believed once the king made the decision, there is no way that the king was about to make mistake. Nobody should doubt the power of the king. Compare to Antigone, Creon was too pride of being a king, he wallowed in dominant power, forgot and betrayed the traditions of gods. The closed bonding between Antigone and Polynices also urged Antigone to decide to bury his body. Antigone said, once father, mother and brothers passed away, there would never be another one. Antigone treated the dead fairly because she knew let the body of her family rot in the desolate place was cruel, just like killing the person twice. Creon never regard Polynices was his family but a bastard traitor. He did not want to forgive his sin even though he had already received deserved punishment. Creon ignored Antigone’s argument and sentenced her to death. Once again he thought he was doing the right thing, he did not consider about the impact that would fall on Antigone’s fiancà ©, his son Haemon. Creon was cold inside his stone-like heart, which is a great contrast to Antigone’s selfless and devoted characteristic. Heamon was judicious and sensibl, not like his father Creon. Knowing Antigone sentenced to death, Haemon tried to persuade his father in a rational and  peaceful way. He brought up the general opinion from the citizens that Antigone did not deserve death. He pointed out Creon’s mistake and he would admire his father more if he could fix the situation. But Creon did not take in Haemon’s advise. Creon analysed things with a fixed perpective that he was always right. He was pride and irrational. There is no need to consider advises from lower class people, in this case, his son and his citizens. It was conventional that father gave lessons to son. Though Haemon came to argue with a positive and irenic attitude, not to pick up a fight, Cremon distorted his meaning with the assumption he was on Antigone’s side and called his son the woman’s slave. Readers would conclude Cremon was bad at controling his sentiment and was very easy to get maddened. Tiresias, the prophet also came to persuaded Creon. Tiresias encountered strange phenomenon that indicated the gods was angry about the decision Creon had made. He told Creon to change his mind. Creon found his speech so harsh and dreadful. Once again he felt his power was being challenged by other ordinary people, he doubt Tiresias’s purpose and wondered if he came for his own profit. Creon showed no repects for the messenger of gods, Tiresias, same as the gods themselves. This instance lead to the climax of the play, the gods were enraged and Creon was punished for his mistakes. The above three charaters, as the major foils for Creon, their contrasting traits exposed Creon’s peremptory ruling and cruel father image. The intense conflicts also add more tension and help with the development of the plot.

My Personal Philosophy of Education :: Education Teachers Reflective Writing Essays

Philosophy of Education A classroom is a community for learning, friendship, and growth. The most important aspect of any community, educational or otherwise, is communication. When communicating with my students, I will not talk down to them; instead, I will treat them like the equal human beings that they are. Respect will be given to and earned from all students. I will be honest, humorous, and easy natured, but I will not be afraid to discipline or assert my authority as the situation may dictate. Students will feel comfortable providing feedback on my lessons and classroom policies; they will know that although I may not use all of their suggestions, I have given them due consideration. I will attempt to know each of the students on an individual basis, knowing more than just their names and performances in class. Even if I am led outside math, I will try to inspire each student to achieve his or her best and to follow his or her dreams. I realize that not everyone loves math as I do, and I will not hold that against my students as long as they put forth their best effort. Students will feel welcome and safe in the classroom. They will not be afraid of giving a wrong answer and will take risks to answer questions and participate in class. I will encourage my students to visit me outside of class for anything, whether it is to get class-related help, to ask advice on courses or careers, or to vent about a really bad day. In my classroom, I will teach mathematics at a level in which the students will be able to comprehend the material, but will also be challenged by it. Math should not frustrate, nor bore, nor monotonously repeat mundane problems. To remedy these common problems, I will share my love and enthusiasm of the discipline by creatively introducing new topics and explaining solutions to problems using more than one method, if available. Students will be able to explore multiple solutions and find the method of solution with which they feel most comfortable rather than having to conform to my preferred methods. The array of labs or trips that will be employed to explore mathematics will make class an exciting atmosphere. My Personal Philosophy of Education :: Education Teachers Reflective Writing Essays Philosophy of Education A classroom is a community for learning, friendship, and growth. The most important aspect of any community, educational or otherwise, is communication. When communicating with my students, I will not talk down to them; instead, I will treat them like the equal human beings that they are. Respect will be given to and earned from all students. I will be honest, humorous, and easy natured, but I will not be afraid to discipline or assert my authority as the situation may dictate. Students will feel comfortable providing feedback on my lessons and classroom policies; they will know that although I may not use all of their suggestions, I have given them due consideration. I will attempt to know each of the students on an individual basis, knowing more than just their names and performances in class. Even if I am led outside math, I will try to inspire each student to achieve his or her best and to follow his or her dreams. I realize that not everyone loves math as I do, and I will not hold that against my students as long as they put forth their best effort. Students will feel welcome and safe in the classroom. They will not be afraid of giving a wrong answer and will take risks to answer questions and participate in class. I will encourage my students to visit me outside of class for anything, whether it is to get class-related help, to ask advice on courses or careers, or to vent about a really bad day. In my classroom, I will teach mathematics at a level in which the students will be able to comprehend the material, but will also be challenged by it. Math should not frustrate, nor bore, nor monotonously repeat mundane problems. To remedy these common problems, I will share my love and enthusiasm of the discipline by creatively introducing new topics and explaining solutions to problems using more than one method, if available. Students will be able to explore multiple solutions and find the method of solution with which they feel most comfortable rather than having to conform to my preferred methods. The array of labs or trips that will be employed to explore mathematics will make class an exciting atmosphere.

Full Set of Aqa A2 Tectonics Notes

FULL SET OF NOTES ON TECHTONICS 2012 AQA GEOGRAPHY FULL SET OF NOTES ON TECHTONICS 2012 AQA GEOGRAPHY TECHTONICS| TOPICS| UNDERSTOOD/COVERED? | PLATE MOVEMENT| | SEISMICITY| | VULCANICITY | | These notes were copied from an AQA textbook. They contain EVERYTHING you need to know for the exam for the tectonics section. You WILL however, need to use your own case studies as these are not included. You will need 2 case studies for volcanoes, and 2 case studies for earthquakes. You ideally need to have one LEDC and one MEDC for each.You could use Iceland and Pinatubo for the volcanoes; and Haiti and Japan for the earthquakes These notes were copied from an AQA textbook. They contain EVERYTHING you need to know for the exam for the tectonics section. You WILL however, need to use your own case studies as these are not included. You will need 2 case studies for volcanoes, and 2 case studies for earthquakes. You ideally need to have one LEDC and one MEDC for each. You could use Iceland and P inatubo for the volcanoes; and Haiti and Japan for the earthquakes CORE- size of mars, densest part, made of rocks of iron and nickel. Rigid pper mantle, apart from this most of the mantle is semi molten with temperatures near the core reaching 5000 degrees. These high temperatures generate convection currents. Thinnest layer is the crust which has the coolest less dense rocks. These rocks are rich In silicon o2 aluminium potassium and sodium. TWO TYPES OF CRUST: Oceanic and continental. Composed of mainly sedimentary, metamorphic and igneous rocks. Continental crust can be 70km thick. CORE- size of mars, densest part, made of rocks of iron and nickel. Rigid upper mantle, apart from this most of the mantle is semi molten with temperatures near the core reaching 5000 degrees.These high temperatures generate convection currents. Thinnest layer is the crust which has the coolest less dense rocks. These rocks are rich In silicon o2 aluminium potassium and sodium. TWO TYPES OF CRUST: Oce anic and continental. Composed of mainly sedimentary, metamorphic and igneous rocks. Continental crust can be 70km thick. PLATE TECHTONIC THEORY: People had noticed that certain continents looked like they had once fitted together. Evidence built up over time and Alfred Wegner was allowed to publish his theory. He suggested that they were once all joined and called Pangaea.Wegner proposed that at some time land had drifted apart. Evidence included: 1)Continental fit: seemed to fit together if placed besides each other. 2) Geological Evidence: rocks of the age and type are found in SE Brazil and South Africa. The trends of mountains in East USA and NW Europe are similar when they are placed in old positions. Similar glacial deposits are found in Antarctica, S America 3) Climatological Evidence: Places as far apart as Antarctica, North America and the UK all contain coal deposits of similar age that were formed in tropical conditions. They are no longer in tropical climate zones and m ust have drifted apart. )Biological Evidence: Similar fossil formations are found on either side of the Antartic. Same reptile called meosaurus is found only in S America and South Africa sediments. Plant remains, PLATE TECHTONIC THEORY: People had noticed that certain continents looked like they had once fitted together. Evidence built up over time and Alfred Wegner was allowed to publish his theory. He suggested that they were once all joined and called Pangaea. Wegner proposed that at some time land had drifted apart. Evidence included: 1)Continental fit: seemed to fit together if placed besides each other. ) Geological Evidence: rocks of the age and type are found in SE Brazil and South Africa. The trends of mountains in East USA and NW Europe are similar when they are placed in old positions. Similar glacial deposits are found in Antarctica, S America 3) Climatological Evidence: Places as far apart as Antarctica, North America and the UK all contain coal deposits of similar age that were formed in tropical conditions. They are no longer in tropical climate zones and must have drifted apart. 4)Biological Evidence: Similar fossil formations are found on either side of the Antartic.Same reptile called meosaurus is found only in S America and South Africa sediments. Plant remains, LANDFORMS ASSOCIATED WITH CONSTRUCTIVE MARGINS OCEANIC RIDGES: Where two plates pull apart there is a weaker zone in the crust and an increase in heat near the surface. The hotter expanded crust forms a ridge. The central part of the ridge may feature a central valley where a section of crust has subsided into the magma below. The split in the crust provides a low pressure zone where the more liquid lavas can erupt to form submarine volcanoes. If these eruptions persist, volcanoes may develop until they reach the surface.Islands can be formed. For instance Iceland a volcanic island on a spreading ridge. In 1963 eruptions created the island of surtsey to the south of Iceland. As crus t is pushed away from the heat source at the mid ocean ridge it cools, contracts and sinks towards deeper regions. Where it becomes covered in fine sediments. Occasionally fragments of ocean floor are left at the surface during subduction and the layers of pillow basalts and later deep ocean sediments are exposed. E. g. Toodos ophilite suit in Cyprus. LANDFORMS ASSOCIATED WITH CONSTRUCTIVE MARGINS OCEANIC RIDGES:Where two plates pull apart there is a weaker zone in the crust and an increase in heat near the surface. The hotter expanded crust forms a ridge. The central part of the ridge may feature a central valley where a section of crust has subsided into the magma below. The split in the crust provides a low pressure zone where the more liquid lavas can erupt to form submarine volcanoes. If these eruptions persist, volcanoes may develop until they reach the surface. Islands can be formed. For instance Iceland a volcanic island on a spreading ridge. In 1963 eruptions created the is land of surtsey to the south of Iceland.As crust is pushed away from the heat source at the mid ocean ridge it cools, contracts and sinks towards deeper regions. Where it becomes covered in fine sediments. Occasionally fragments of ocean floor are left at the surface during subduction and the layers of pillow basalts and later deep ocean sediments are exposed. E. g. Toodos ophilite suit in Cyprus. RIFT VALLEYS: When spreading occurs beneath a major land mass, the heating and subsequent updoming of the crust leads to fracturing and rifting. As the sides of the rift move apart, central sections drop down to form rift valleys.Mount Kenya are surface evidence of the igneous activity beneath. As 4000km long up to 50km wide and 600m in depth. This feature can still widen allowing the sea to inundate it. To the North two rifts have widened into the red sea and the gulf of Arabia respectively. Here the rifting has continued and NEW OCEAN FLOOR is forming between Africa on the SW side and Ar abia (NE). RIFT VALLEYS: When spreading occurs beneath a major land mass, the heating and subsequent updoming of the crust leads to fracturing and rifting. As the sides of the rift move apart, central sections drop down to form rift valleys.Mount Kenya are surface evidence of the igneous activity beneath. As 4000km long up to 50km wide and 600m in depth. This feature can still widen allowing the sea to inundate it. To the North two rifts have widened into the red sea and the gulf of Arabia respectively. Here the rifting has continued and NEW OCEAN FLOOR is forming between Africa on the SW side and Arabia (NE). Mid ocean ridges are irregular curving around the planet. If new ocean crust was created equally on both sides, it would appear to create the possibility of over lapping new crust on concave sections and divergence on convex sections.The fact that there are no mountains of ocean floor or sudden gaps in crust is explained by the fact that the seemingly continuous spreading ridg es are frequently bisected by transform (slip) faults, which allow the crust created at the ridges to move outwards at different rates. Seismicity associated with such movements on and around the ridges is characterised by shallow focus earthquakes. Mid ocean ridges are irregular curving around the planet. If new ocean crust was created equally on both sides, it would appear to create the possibility of over lapping new crust on concave sections and divergence on convex sections.The fact that there are no mountains of ocean floor or sudden gaps in crust is explained by the fact that the seemingly continuous spreading ridges are frequently bisected by transform (slip) faults, which allow the crust created at the ridges to move outwards at different rates. Seismicity associated with such movements on and around the ridges is characterised by shallow focus earthquakes. LANDFORMS ASSOCIATED WITH DESTRUCTIVE PLATE MARGINS Destructive plate margins are found where plates converge. There a re three types of convergent margin: 1)Oceanic plate meeting continental plate )Oceanic plate meeting oceanic plate 3)Continental plate meeting continental plate LANDFORMS ASSOCIATED WITH DESTRUCTIVE PLATE MARGINS Destructive plate margins are found where plates converge. There are three types of convergent margin: 1)Oceanic plate meeting continental plate 2)Oceanic plate meeting oceanic plate 3)Continental plate meeting continental plate 1) OCEANIC PLATE MEETING OCEANIC PLATE (CONVERGING) When two pieces of oceanic crust on DIFFERENT PLATES COLLIDE one is subducted beneath the other. The crust that has subducted may be marginally denser or one is moving faster than the other.The processes that accompany subduction are much the same as in the case of ocean/continental plate collision, BUT where the volcanoes usually erupt on crust covered by oceans they form islands. These form characteristically curving lines of new volcanic land known as island arcs with deep ocean trenches. Such island chains may develop over millions of years to become major land e. g. JAPAN OR INDONESIA. Subduction produces frequent shallow- to deep focus earthquakes, some of which are immensely powerful. e. g.In Indonesia where the Australian plate is being subducted beneath Eurasian plate there was an earthquake in 2004 measuring 9 on Richter scale. 2) OCEANIC PLATE MEETING OCEANIC PLATE (CONVERGING) When two pieces of oceanic crust on DIFFERENT PLATES COLLIDE one is subducted beneath the other. The crust that has subducted may be marginally denser or one is moving faster than the other. The processes that accompany subduction are much the same as in the case of ocean/continental plate collision, BUT where the volcanoes usually erupt on crust covered by oceans they form islands.These form characteristically curving lines of new volcanic land known as island arcs with deep ocean trenches. Such island chains may develop over millions of years to become major land e. g. JAPAN OR INDONESIA. Subduction produces frequent shallow- to deep focus earthquakes, some of which are immensely powerful. e. g. In Indonesia where the Australian plate is being subducted beneath Eurasian plate there was an earthquake in 2004 measuring 9 on Richter scale. 3) OCEANIC PLATE MEETING CONTINENTAL PLATE (CONVERGING) Oceanic crust is denser than continental.When plates collide the oceanic crust is SUBDUCTED or taken down into the upper mantle. As oceanic crust descends, friction with the overlying continental crust builds up and can cause MAJOR EARTHQUAKES. Destructive margins are some of the most seismically active zones in the world. Rocks scraped off the descending plate and folding of the continental crust helps to create young fold mountain chains on the edge of continental masses such as THE ANDES (South America). Deep ocean trenches are found along the seaward edge of destructive margins. They mark where one plates begins to descend beneath another.E. g Peru Chile 8km deep trench. The friction caused by the sinking slab of ocean floor also generates loads of heat leading to partial melting of the crust. Magmas derived from the melting of old ocean floor basalts. They try to rise up through fissures and by burning their way through overlying rock until they reach the surface. Where volcanoes erupt on land they help to create young fold mountains such as the Andes. Because magmas from which the volcanic lavas originate have incorporated elements of older crust and continental rocks as they rose, they are more silica rich and more acidic.These magmas flow less easily & leave intrusive such as batholiths within mountains and generating extrusive such as andesitic lava to erupt through volcanoes. Such sticker lava frequently blocks off their own vents until erupting violently to form conical shaped volcanoes of alternating layers of ash and lava. Vulcanicity is a key feature of subduction zones, around 80% of all active volcanoes are found around subduction zones. 4) OCEANIC PLATE MEETING CONTINENTAL PLATE (CONVERGING) Oceanic crust is denser than continental. When plates collide the oceanic crust is SUBDUCTED or taken down into the upper mantle.As oceanic crust descends, friction with the overlying continental crust builds up and can cause MAJOR EARTHQUAKES. Destructive margins are some of the most seismically active zones in the world. Rocks scraped off the descending plate and folding of the continental crust helps to create young fold mountain chains on the edge of continental masses such as THE ANDES (South America). Deep ocean trenches are found along the seaward edge of destructive margins. They mark where one plates begins to descend beneath another. E. g Peru Chile 8km deep trench.The friction caused by the sinking slab of ocean floor also generates loads of heat leading to partial melting of the crust. Magmas derived from the melting of old ocean floor basalts. They try to rise up through fissures and by burning their way through over lying rock until they reach the surface. Where volcanoes erupt on land they help to create young fold mountains such as the Andes. Because magmas from which the volcanic lavas originate have incorporated elements of older crust and continental rocks as they rose, they are more silica rich and more acidic.These magmas flow less easily & leave intrusive such as batholiths within mountains and generating extrusive such as andesitic lava to erupt through volcanoes. Such sticker lava frequently blocks off their own vents until erupting violently to form conical shaped volcanoes of alternating layers of ash and lava. Vulcanicity is a key feature of subduction zones, around 80% of all active volcanoes are found around subduction zones. 5) CONTINENTAL PLATE/CONTINENTAL PLATE CONVERGENCE where subduction of oceanic crust draws two continental masses together, a collision margin may develop.As continents have similar density and thus buoyancy, they will not be subducted. Instead they collide with each other. Volcanic associated with earlier subduction and sediments scraped off the vanishing ocean floor are mixed up and compressed to form young fold mountain chains with deep roots in the lithosphere. The subcontinent of India is an example: It was propelled by sea floor spreading of the indo Eurasian plate some 40 million years ago. This collision formed the Himalayan mountain chain. Himalayas are constantly changing because these highly folded and faulted regions do not become seismically quiet after 1st impact.At this extreme altitude wreathing and erosion reduce mountain height, but isostatic lift in some areas produced by continuing plate motion means that Everest is increasing by 2. 5cm a year. The whole region experiences high levels of seismicity causing earthquakes in 2001, Afghanistan 2002, Pakistan 2005, and China 2008. [isostatic lift= uplift of land mass resulting from tectonic processes] 6) CONTINENTAL PLATE/CONTINENTAL PLATE CONVERGENCE where subduction of oceanic crust draws two continental masses together, a collision margin may develop.As continents have similar density and thus buoyancy, they will not be subducted. Instead they collide with each other. Volcanic associated with earlier subduction and sediments scraped off the vanishing ocean floor are mixed up and compressed to form young fold mountain chains with deep roots in the lithosphere. The subcontinent of India is an example: It was propelled by sea floor spreading of the indo Eurasian plate some 40 million years ago. This collision formed the Himalayan mountain chain. Himalayas are constantly changing because these highly folded and faulted regions do not become seismically quiet after 1st impact.At this extreme altitude wreathing and erosion reduce mountain height, but isostatic lift in some areas produced by continuing plate motion means that Everest is increasing by 2. 5cm a year. The whole region experiences high levels of seismicity causing earthquakes in 2001, Afgha nistan 2002, Pakistan 2005, and China 2008. [isostatic lift= uplift of land mass resulting from tectonic processes] HOT SPOTS: Maps of volcano distribution indicate that although most active volcanoes are associated with divergent and convergent plate margins, others do not conform to this pattern. Hawaiian Islands are an example.Formed in the middle of the Pacific Ocean more than 3,200km from the nearest plate boundary. Some geologists believe the long lived and stationary hot spots are the result of plumes of magma originating deep within the mantle. Others suggest they are created from far less depth and in fact are moving slowly. As basaltic shield volcanoes erupt through the drifting oceanic crust, they may build up from ocean floor to form an island over time. However they become part of the plate and are gradually moved away from the heat source. Some islands will become eroded by waves and form flat topped sea mounts called guyots.Newer volcanoes erupt over the hot sport and a new island is formed. This sequence can form a chain of islands A new island will form to SE of Hawaii when the Loihi submarine volcano builds up to sea level. HOT SPOTS: Maps of volcano distribution indicate that although most active volcanoes are associated with divergent and convergent plate margins, others do not conform to this pattern. Hawaiian Islands are an example. Formed in the middle of the Pacific Ocean more than 3,200km from the nearest plate boundary. Some geologists believe the long lived and stationary hot spots are the result of plumes of magma originating deep within the mantle.Others suggest they are created from far less depth and in fact are moving slowly. As basaltic shield volcanoes erupt through the drifting oceanic crust, they may build up from ocean floor to form an island over time. However they become part of the plate and are gradually moved away from the heat source. Some islands will become eroded by waves and form flat topped sea mounts called guyo ts. Newer volcanoes erupt over the hot sport and a new island is formed. This sequence can form a chain of islands A new island will form to SE of Hawaii when the Loihi submarine volcano builds up to sea level. CONSERVATIVE MARGINS:These margins are sometimes referred to as passive or slip margins and occur where two plates meet and the direction of plate motion is parallel. Two examples: 1)San Andreas fault in Calafornia 2)Alpine Fault in New Zealand No crust is destroyed or created, although these areas of frequent seismic activity as the build up of friction as plates pass each other is released by earthquakes. THEY ARE NOT ASSOCIATED WITH ACTIVE VULCANISM. CONSERVATIVE MARGINS: These margins are sometimes referred to as passive or slip margins and occur where two plates meet and the direction of plate motion is parallel.Two examples: 1)San Andreas fault in Calafornia 2)Alpine Fault in New Zealand No crust is destroyed or created, although these areas of frequent seismic activity as the build up of friction as plates pass each other is released by earthquakes. THEY ARE NOT ASSOCIATED WITH ACTIVE VULCANISM. Earthquakes occur when a build up of pressure within the Earth’s crust is suddenly released and the ground shakes violently. The point within the crust where the pressure release occurs is known as the focus. This can be: 1) Shallow 0-70kmkm 2)Intermediate 70-300km 3)Deep 300-700kmThe seismic shock waves have their highest level of energy at the focus; energy decreases as the waves spread outwards. The place on the Earth’s surface immediately above the focus is called the epicentre. It receives the highest amount of energy and so the most potentially dangerous location. Seismic waves travel out from the focus, there are three types of waves: 1)P Waves- (primary) are the fastest and shake the Earth backwards and forwards. These travel the fastest and move through solids and liquids. 2) S- Waves (Secondary) are slower and move with a sideways motion, shaking the Earth at right angles to the direction of travel.They cannot move through liquids but are more damaging. 3) Surface Waves- these travel near to the surface and slower than the two mentioned already & they’re more destructive than either. They include L waves (long waves) which causes the ground to move sideways and Raleigh waves which make it move up and down. Earthquakes occur when a build up of pressure within the Earth’s crust is suddenly released and the ground shakes violently. The point within the crust where the pressure release occurs is known as the focus. This can be: 1) Shallow 0-70kmkm 2)Intermediate 70-300km 3)Deep 300-700kmThe seismic shock waves have their highest level of energy at the focus; energy decreases as the waves spread outwards. The place on the Earth’s surface immediately above the focus is called the epicentre. It receives the highest amount of energy and so the most potentially dangerous location. Seismic waves tr avel out from the focus, there are three types of waves: 1)P Waves- (primary) are the fastest and shake the Earth backwards and forwards. These travel the fastest and move through solids and liquids. 2) S- Waves (Secondary) are slower and move with a sideways motion, shaking the Earth at right angles to the direction of travel.They cannot move through liquids but are more damaging. 3) Surface Waves- these travel near to the surface and slower than the two mentioned already & they’re more destructive than either. They include L waves (long waves) which causes the ground to move sideways and Raleigh waves which make it move up and down. EARTHQUAKES EARTHQUAKES Magnitude and frequency: Magnitude is amount of energy released and is measured using a RICHTER SCALE. A logarithmic scale. An earthquake measuring 7. 6 is 10 times greater than one measuring 6. 6. The intensity of an earthquake is measured on the 12 point Mercalli scale which reflects the effects of the event.Frequency o f earthquake events varies greatly between seismically active regions (e. g Sunda Trench off SW coast of Indonesia) and seismic zones within the shield areas of ancient crust (Greenland) Seismometers are instruments that measure and record the shock waves created by earthquakes. They locate and measure the size of shock waves and are used in establishing patterns of seismic activity that may help predict future earthquakes. Aftershocks- are earthquakes that follow on from the main event and may last for months afterwards. They are generated by the Earth settling back after the disruption.Aftershocks in Indonesian earthquake of 2004 was followed by a series of aftershocks one being 6. 1 in magnitude. Magnitude and frequency: Magnitude is amount of energy released and is measured using a RICHTER SCALE. A logarithmic scale. An earthquake measuring 7. 6 is 10 times greater than one measuring 6. 6. The intensity of an earthquake is measured on the 12 point Mercalli scale which reflects t he effects of the event. Frequency of earthquake events varies greatly between seismically active regions (e. g Sunda Trench off SW coast of Indonesia) and seismic zones within the shield areas of ancient crust (Greenland)Seismometers are instruments that measure and record the shock waves created by earthquakes. They locate and measure the size of shock waves and are used in establishing patterns of seismic activity that may help predict future earthquakes. Aftershocks- are earthquakes that follow on from the main event and may last for months afterwards. They are generated by the Earth settling back after the disruption. Aftershocks in Indonesian earthquake of 2004 was followed by a series of aftershocks one being 6. 1 in magnitude. TSUNAMI: Enormous sea waves generated by disturbances on the sea floor.They are most often triggered by earthquakes and submarine landslides. Most devastating example occurred in December 2004 in Indonesia. TSUNAMI: Enormous sea waves generated by dist urbances on the sea floor. They are most often triggered by earthquakes and submarine landslides. Most devastating example occurred in December 2004 in Indonesia. HUMAN IMPACT: Depends on population density and distance from the epicentre Primary Impacts: *Collapse of buildings, roads and bridges *disruption to gas, electricity and water supplies Some are primary effects- directly from the earthquake, some are secondary e. g. lectricity breaks so they cannot cook etc. Secondary include: *Fires from ruptured gas mains *Contaminated water *Loss of trade HUMAN IMPACT: Depends on population density and distance from the epicentre Primary Impacts: *Collapse of buildings, roads and bridges *disruption to gas, electricity and water supplies Some are primary effects- directly from the earthquake, some are secondary e. g. electricity breaks so they cannot cook etc. Secondary include: *Fires from ruptured gas mains *Contaminated water *Loss of trade AVALANCHES & LANDSLIDES: Where the slope fa ilure occurs as a result of ground shaking.AVALANCHES & LANDSLIDES: Where the slope failure occurs as a result of ground shaking. LIQUEFACTION: Violent disruption of the ground causes it to become liquid like. Such extreme shaking causes increased pore water pressure which reduces the effective stress and therefore reduces the shear strength of the soil so it fails more easily. Can cause the movement of groundwater. Even though the surface may appear dry, excess water will sometimes come to the surface through cracks bringing liquefied soil, creating ‘soil volcanoes’. This can cause damage to buildings and underground utilities.Buildings can sink as a result. In San Francisco where development has occurred on reclaimed land in the bay area, the ground is far more likely to fail due to liquefaction. It is estimated that $100,000 million worth of damage was caused by this secondary effect. LIQUEFACTION: Violent disruption of the ground causes it to become liquid like. Suc h extreme shaking causes increased pore water pressure which reduces the effective stress and therefore reduces the shear strength of the soil so it fails more easily. Can cause the movement of groundwater.Even though the surface may appear dry, excess water will sometimes come to the surface through cracks bringing liquefied soil, creating ‘soil volcanoes’. This can cause damage to buildings and underground utilities. Buildings can sink as a result. In San Francisco where development has occurred on reclaimed land in the bay area, the ground is far more likely to fail due to liquefaction. It is estimated that $100,000 million worth of damage was caused by this secondary effect. CASE STUDIES CASE STUDIES PROTECTION PROTECTION PREDICTION PREDICTION EARTHQUAKE MANAGEMENT EARTHQUAKE MANAGEMENTEarthquakes are not evenly distributed over the planet; but instead, occur in broad, uneven belts. This is because the vast majority of earthquakes are related to plate motion and are therefore found around plate boundaries. *Most powerful are related to destructive margins where the descent of the oceanic crust creates frequent shallow to deep focus earthquakes. *Earthquakes at constructive margins are often submarine and usually distant from human habituation, presenting a relatively minor hazard. *Earthquakes at conservative margins where plates slip past each other a series of fault lines marks where the crust has failed catastrophically.San Andreas Fault for instance is not a single feature but a broad shatter zone of interrelated faults. In addition to this earthquakes occur in regions that do not appear to be near active plate margins. The earthquakes in China and central Asia occur along extensive lines of weakness related to the collision of India with the Eurasian plate over 50 million years ago. Earthquakes are not evenly distributed over the planet; but instead, occur in broad, uneven belts. This is because the vast majority of earthquakes are relate d to plate motion and are therefore found around plate boundaries. Most powerful are related to destructive margins where the descent of the oceanic crust creates frequent shallow to deep focus earthquakes. *Earthquakes at constructive margins are often submarine and usually distant from human habituation, presenting a relatively minor hazard. *Earthquakes at conservative margins where plates slip past each other a series of fault lines marks where the crust has failed catastrophically. San Andreas Fault for instance is not a single feature but a broad shatter zone of interrelated faults. In addition to this earthquakes occur in regions that do not appear to be near active plate margins.The earthquakes in China and central Asia occur along extensive lines of weakness related to the collision of India with the Eurasian plate over 50 million years ago. PREDICTION PREDICTION EARTHQUAKE MANAGEMENT EARTHQUAKE MANAGEMENT Example of unreliable prediction: 1980’s along San Adreas fau lt in Calafornia studies of paterns led to predictions of an earthquake between 1988 and 1992. The predicted earthquake actually happened in 2004. China 1975 observations of changes in land elevation ground water levels and animal behaviour led to an evactuation warning the day before of a 7. magnitiude earthquake struck. This saved many lives. BUT there was no warning of the 1976 Tangshan earthquake 7. 6 mag which caused 250,000 fatalities. Example of unreliable prediction: 1980’s along San Adreas fault in Calafornia studies of paterns led to predictions of an earthquake between 1988 and 1992. The predicted earthquake actually happened in 2004. China 1975 observations of changes in land elevation ground water levels and animal behaviour led to an evactuation warning the day before of a 7. 3 magnitiude earthquake struck. This saved many lives.BUT there was no warning of the 1976 Tangshan earthquake 7. 6 mag which caused 250,000 fatalities. Currently no reliable way to accurat ely predict when an earthquake will occur. BUT There are several methods: 1) Seismic Records- studying patterns of earthquakes and using these to predict the next event. Seismic shock waves are recorded on a seismometer or seismography. 2) Radon Gas Emissions- radon is an inert gas that is released from rocks such as granite at a faster rate when they are fractured by deformation. 3) Ground Water-deformation of the ground water can cause water levels to rise or fall. ) Remote sensing- some evidence that electromagnetic disturbances in atmosphere directly above areas about to have an earthquake can be detected. 5)Low frequency electromagnetic activity- detection of electromagnetic emissions transmitted from Earthquake regions satellite has made observations that show strong correlations between certain types of low frequency electromagnetic activity and the seismically most active zones on the Earth. Sudden change in the ionosphere electron density and temperature were recorded a wee k before a 7. magnitude earthquake occurred in South Japan in September 2004. 6)Surveying movement across a fault line- known as levelling. Currently no reliable way to accurately predict when an earthquake will occur. BUT There are several methods: 1) Seismic Records- studying patterns of earthquakes and using these to predict the next event. Seismic shock waves are recorded on a seismometer or seismography. 2) Radon Gas Emissions- radon is an inert gas that is released from rocks such as granite at a faster rate when they are fractured by deformation. ) Ground Water-deformation of the ground water can cause water levels to rise or fall. 4) Remote sensing- some evidence that electromagnetic disturbances in atmosphere directly above areas about to have an earthquake can be detected. 5)Low frequency electromagnetic activity- detection of electromagnetic emissions transmitted from Earthquake regions satellite has made observations that show strong correlations between certain types of low frequency electromagnetic activity and the seismically most active zones on the Earth.Sudden change in the ionosphere electron density and temperature were recorded a week before a 7. 1 magnitude earthquake occurred in South Japan in September 2004. 6)Surveying movement across a fault line- known as levelling. Authorities focus on: 1)Making buildings/cities more earthquake resistant 2)Raising public awareness about disaster prevention via an education programme 3)Improving earthquake prediction *Better evacuation routes and sites to receive evacuees make cities better able to withstand the effects of the earthquake. To reduce the risk of fire after an earthquake Japanese government encourage the building of fire resistant buildings and advanced fire fighter facilities *All buildings have strict standards to be earthquake proof (New law in 2007 which ensure buildings are double checked to ensure they meet requirements) – problematic for construction firms *Focus on areas prone to earthquakes such as KOBE and or cities like Tokyo where people from all over the world go to.Here there are real time equipment and dense observation methods. In dense populated areas such as Tokyo there are several buildings designed to be more resistant to earthquakes. (See below) Authorities focus on: 1)Making buildings/cities more earthquake resistant 2)Raising public awareness about disaster prevention via an education programme 3)Improving earthquake prediction *Better evacuation routes and sites to receive evacuees make cities better able to withstand the effects of the earthquake. To reduce the risk of fire after an earthquake Japanese government encourage the building of fire resistant buildings and advanced fire fighter facilities *All buildings have strict standards to be earthquake proof (New law in 2007 which ensure buildings are double checked to ensure they meet requirements) – problematic for construction firms *Focus on areas prone to earthquakes suc h as KOBE and or cities like Tokyo where people from all over the world go to. Here there are real time equipment and dense observation methods.In dense populated areas such as Tokyo there are several buildings designed to be more resistant to earthquakes. (See below) PROTECTION PROTECTION Citizens are advised to keep some supplies like food, water and blankets as well as first aid kits and emergency tools. Police info sheets ensure that people know what to do in each stage of an emergency. Smart meters are installed. These are fed seismic data to allow them to shut down gas supplies automatically in the event of an earthquake. Land use planning attempts to identify the areas at most risk and plan where to build schools and hospitals away from these areas.Insurance is available but even in rich countries like Japan few people are willing to pay for such specific cover. Only 7% of people of Kobe had insurance at the time of the earthquake in 1995. Citizens are advised to keep some su pplies like food, water and blankets as well as first aid kits and emergency tools. Police info sheets ensure that people know what to do in each stage of an emergency. Smart meters are installed. These are fed seismic data to allow them to shut down gas supplies automatically in the event of an earthquake.Land use planning attempts to identify the areas at most risk and plan where to build schools and hospitals away from these areas. Insurance is available but even in rich countries like Japan few people are willing to pay for such specific cover. Only 7% of people of Kobe had insurance at the time of the earthquake in 1995. DEFINITION: EXTRUSIVE ROCK- Igneous rock formed by the crystallisation of magma above the surface of the Earth INTRUSIVE ROCK- Igneous rock formed by the crystallisation of magma below the surface of the Earth DEFINITION:EXTRUSIVE ROCK- Igneous rock formed by the crystallisation of magma above the surface of the Earth INTRUSIVE ROCK- Igneous rock formed by the crystallisation of magma below the surface of the Earth BASALTIC (basic) LAVAS: – Originate largely from the upward movement of mantle material. They are most common along spreading ridges but are also found at hot spots and within more developed rift systems ANDESITIC (intermediate) LAVAS: – Are typical of destructive plate margins where crust is being destroyed RHYOLITIC (acid) LACAS: – Are most often found at destructive and collision margins.Pyroclastic material comprises a wide range of volcanic fragments from ash to larger volcanic bombs. They are characteristic of more gaseous phases of eruption, where the build up of gas beneath blocked volcanic vents creates a violent explosion, shredding the magma into finer particles. BASALTIC (basic) LAVAS: – Originate largely from the upward movement of mantle material. They are most common along spreading ridges but are also found at hot spots and within more developed rift systems ANDESITIC (intermediate) L AVAS: – Are typical of destructive plate margins where crust is being destroyedRHYOLITIC (acid) LACAS: – Are most often found at destructive and collision margins. Pyroclastic material comprises a wide range of volcanic fragments from ash to larger volcanic bombs. They are characteristic of more gaseous phases of eruption, where the build up of gas beneath blocked volcanic vents creates a violent explosion, shredding the magma into finer particles. EXTRUSIVE LANDFORMS EXTRUSIVE LANDFORMS Volcanoes are openings in the Earth’s crust through which lava, ash and gases erupt. Molten rock beneath the surface is referred to as magma but once it is ejected at the surface it is called lava. At depths the enormous pressure upon hot rocks keeps them in a semi solid state. *Fissures and fractures in the crust create low pressure areas that allow some material beneath the crust to become molten and rise. *If these molten rocks reach the surface they are said to be extrusive but if they’re injected into the crust they are said to be intrusive. *But both are termed igneous. Volcanoes are openings in the Earth’s crust through which lava, ash and gases erupt. Molten rock beneath the surface is referred to as magma but once it is ejected at the surface it is called lava. At depths the enormous pressure upon hot rocks keeps them in a semi solid state. *Fissures and fractures in the crust create low pressure areas that allow some material beneath the crust to become molten and rise. *If these molten rocks reach the surface they are said to be extrusive but if they’re injected into the crust they are said to be intrusive. *But both are termed igneous. SHAPE| Fissure Eruptions| Occur where an elongated crack in the crust allows lava to spill out over a large area. Found at spreading ridges where tension pulls the crust apart. E. Iceland in 1973. Found at rifts and early constructive margins. Made of: Basaltic Eruption: Gentle, persistent | | Shield Volcanoes| Made of basaltic rock and form gently sloping cones from layers of less viscous lava. Example: Mauna Loa in Hawaii (taller than mount Everest – from ocean floor). Found in hot spots where oceanic crust meets oceanic crust Eruptions: Gentle and predictable| | Composite Volcanoes| Most common found on land. Created by layers of ash from initial explosive phases of eruptions and subsequent layers of lava from the main eruption phases.E. g. Mount Etna and Vesuvius. (Italy) Rock type: Andesitic Location: Destructive Margins| | Acid or Dome Volcanoes| These are steep sided volcanoes formed from very viscous lava. As the lava cannot travel far it builds up convex cone shaped volcanoes. Lava may solidify in the vent| | Calderas| From when gases that have built up beneath a blocked volcanic vent result in a catastrophic eruption that destroys the volcanic summit, leaving an enormous crater where later eruptions may form smaller cones. | | ACTIVITY: Volcanoes have e rupted in living memoryDORMANT: Volcanoes have erupted within historical record EXTINCT: Volcanoes will not erupt again. ACTIVITY: Volcanoes have erupted in living memory DORMANT: Volcanoes have erupted within historical record EXTINCT: Volcanoes will not erupt again. With all volcanic regions, the majority of magma never reaches the surface but cools to form coarser grained igneous rocks beneath the ground. These rocks may contribute to surface geomorphology through uplift, erosion and expose at the surface. Batholiths form when large masses of magma cool very slowly producing coarse grained rocks.Where magma has been squeezed between existing strata it may form a sill (concordant) or a dyke (discordant). Dyke: A vertical intrusion with horizontal cooling cracks. Cools rapidly on contact with surrounding colder rock. Contracts and cracks, cuts cross bedding planes Batholiths: Being deep seated and surrounded by hot rock the magma cools slowly so that 1) large crystals form and 2) t here is a large metamorphic contact zone Sill: A horizontal intrusion along bedding planes with vertical cooling cracks. Cools rapidly on outside on contact with surrounding rocks.Contracts and cracks. With all volcanic regions, the majority of magma never reaches the surface but cools to form coarser grained igneous rocks beneath the ground. These rocks may contribute to surface geomorphology through uplift, erosion and expose at the surface. Batholiths form when large masses of magma cool very slowly producing coarse grained rocks. Where magma has been squeezed between existing strata it may form a sill (concordant) or a dyke (discordant). Dyke: A vertical intrusion with horizontal cooling cracks. Cools rapidly on contact with surrounding colder rock.Contracts and cracks, cuts cross bedding planes Batholiths: Being deep seated and surrounded by hot rock the magma cools slowly so that 1) large crystals form and 2) there is a large metamorphic contact zone Sill: A horizontal intrusi on along bedding planes with vertical cooling cracks. Cools rapidly on outside on contact with surrounding rocks. Contracts and cracks. *GEYSERS AND HOT SPRINGS: Even in areas where vulcanism does not produce active volcanoes water heated at depth in the crust by magma chambers can periodically escape as stream and hot water.A geyser is an intermittent turbulent discharge of superheated water ejected and accompanied by a vapour phase. *FUMAROLES: Are areas where superheated water turns to steam as it condenses on the surface. These features are typical of areas such as Solfatara in Italy where the mixture of steam and water mixed with sulphur rich gases gives rise to the collective name for these features of solfatara. *GEYSERS AND HOT SPRINGS: Even in areas where vulcanism does not produce active volcanoes water heated at depth in the crust by magma chambers can periodically escape as stream and hot water.A geyser is an intermittent turbulent discharge of superheated water ejected and accompanied by a vapour phase. *FUMAROLES: Are areas where superheated water turns to steam as it condenses on the surface. These features are typical of areas such as Solfatara in Italy where the mixture of steam and water mixed with sulphur rich gases gives rise to the collective name for these features of solfatara. Minor Extrusive Features Minor Extrusive Features

A CASE STUDY †STRATEGY AT H&R BLOCK, INC. Essay

A Case Study Running head: A CASE STUDY – STRATEGY AT H&R BLOCK, INC. A Case Study – Strategy at H&R Block, Inc. Capella University OM 8012 Strategy Dr. Perry Hahn Dec 21, 2005 Abstract This paper will include an analysis of the company from the four strategy perspectives provided in the project deliverable which are: Strategy as rational thought – strategic planning and decision-making, Strategy as revolution – what is referred to as disruptive innovation, Strategy as resource allocation and accumulation in the firm, and finally Strategy as technology leadership viewed as a unique competitive advantage. This paper provides information about H&R Block in the areas identified in the project deliverables. Background information regarding the company is provided, along with the mission, vision, and an overview of management and the current structure. The strategy of the company as defined by the CEO, current management statements in the annual report and investor meetings and conferences is explained. An analysis of this strategy is then presented focusing on core strategic concepts such as five forces model and value chain analyses. This paper then provides a competitive analysis from both an external and internal perspective. External factors affecting this organization that are included involve an industry overview in each of the areas in which the company operates; tax preparation, mortgage services, financial services, business services, and software. In addition, foreign markets are explored for possible opportunities. Internal factors include a SWOT analysis as well as identifying the current business ethics and social responsibility paradigms exhibited by current management. Diversification strategies employed are identified as well as the current state of shareholder value. A final strategy analysis is provided with an overview of results and how the strategic plans of Block have been implemented and to what degree. Finally, future plans are explained and the information in this paper is summarized and final comments are added. H&R Block is a dynamic company with a history of providing excellent tax preparation services to over 16 million clients a year. Can this company branch out successfully into these other complimentary areas of mortgage, financial services, business services, and software and ensure they no longer depend upon one product but instead truly do become what they envision; To help our clients achieve their financial objectives by serving as their tax and financial partner. A Case Study – Strategy at H&R Block, Inc. Introduction Company Background H&R Block opened in Kansas City, MO in 1955 specializing exclusively in income tax preparation. Because the IRS no longer offered free tax preparation starting in 1956, H&R Block was able to capitalize on this enormous new market, by offering this service in the right place at the right time. H&R Block holds the largest market share in the tax preparation business and filed 14.3 million or 15.3% of all tax returns with the IRS in 2003 (HRB, 2003). H&R Block’s fiscal year ends on April 30th. Much of Block’s revenue is highly seasonal with over 50% of its annual revenue from the period of February – April, known as the tax season. H&R Block operates out of 9,301 tax offices and 98 Financial Centers in the United States, as well as 1,334 tax offices in Canada, Australia, and the United Kingdom and has a presence in all 50 states. Many of these offices are seasonally open only from January through April, although some offices remain open year round and phone representatives are available year round. Block views its business in five segments consisting of United States Operations, International Tax Opera tions, Mortgage operations, Investment Services and Business Services. Before H & R Block was born Henry Bloch opened up a bookkeeping business called United Business Company and later his brother Richard joined him. They did bookkeeping for several companies and they had an office of 12 employees, they even did income taxes for some of their clients. Eventually, they were becoming overloaded. So, one day they decided that they weren’t going to do income taxes anymore, but one of their clients, which was an advertiser for the Kansas City newspaper suggested that they  should try to make a business out of doing income taxes. So, their client persuaded them to run an ad twice and the IRS had just stopped doing free income tax returns. So, one day their office was full of people who needed to get their taxes done. On January 25, 1955 Henry and Richard Bloch replaced their original firm with a new firm, H & R Block because they wanted a company that strictly specialized in prep aring income tax returns. The company went public on February 13, 1962, with a $300,000 offering, 75,000 shares at $4 per share. H& R Block became listed on the New Stock Exchange in 1969. Today H&R Block Inc. is a diversified company with subsidiaries that deliver tax services and financial advice, investment and mortgage products and services, and business accounting and consulting services. The world’s largest tax preparation company, H&R Block in fiscal year 2002 served nearly 21 million clients in approximately 10,400 retail offices worldwide and with award-winning TaxCut ® software and online services. Investment services and securities products are offered through H&R Block Financial Advisors Inc., member NYSE, SIPC. H&R Block Mortgage Corp. offers retail mortgage products. Option One Mortgage Corp offers wholesale mortgage products and a range of mortgage services. RSM McGladrey Inc. serves mid-sized businesses with accounting, tax and consulting services. Mission To help our clients achieve their financial objectives by serving as their tax and financial partner. (HRB, 2000). Vision H&R Block seeks to be the world’s leading provider of financial services through tax and accounting-based advisory relationships. (HRB, 2000). Management Mark A. Ernst, 46, is chairman of the board, president and chief executive officer of H&R Block, Inc. He was appointed chief executive officer in January 2001, and elected chairman of the board in September 2002 (HRB 2002). Ernst joined H&R Block in 1998 and was first elected to the board of directors in 1999 when he was appointed president. Since joining the company, Ernst has been responsible for developing and implementing a long-term strategy for the company that strengthens the H&R  Block brand and builds on the company’s history of service to clients. Over the past five years, he has managed the company to achieve annual results that rank H&R Block in the top 10 percent of all companies in the S&P 500 for financial performance. During his tenure H&R Block has sharpened its strategic focus on increasing the value that its tax professionals bring to their client relationships; moved forward with its mission to become its clients’ tax and financial partner; strengthened its senior management team by hiring executives with the expertise needed to offer clients a wider range of financial services; and brought more discipline to its planning processes. The company and its subsidiaries offer a full range of tax, financial and mortgage products and services, including personalized financial advice about ret irement savings, home ownership, and other opportunities to help clients to build a better financial future. (HRB 2000-2005) Structure Block’s Five Business Segments consists of tax services available to the general public in the U.S. This includes the company’s full range of software including TaxCut personal tax preparation software, online tax preparation services through HRBlock.com and tax preparation through one of the company’s tax professionals. The company generates revenue from tax services provided through company owned tax offices and royalties from franchised branches. Also in this segment are H&R Block’s tax preparation classes in which members of the public and perspective employees learn how to complete tax returns. During ‘03 254,000 students enrolled at an average price of $450 for this 80 hour class (HRB 2003). Besides traditional personal tax services, the company also offers software TaxCut ($15-$50) and an online tax preparation program ($35-$100). International tax operations offers all of the services listed above for U.S. citizens living abroad wishing to file U.S. tax returns in addition to filing foreign returns for citizens of foreign countries. Pre-tax income for this segment has increased 114% over the last four years. Investment services: This segment of H&R Block Inc. offers investment advice and related services and securities products through HRBFA (H&R Block Financial Advice) branches to the general public. A nationwide network of registered representatives makes stocks, bonds, mutual funds and similar products and available. In ‘03 Block had 1,600 financial advisors and registered associates in more than 600 offices nationwide (HRB 2003). Average trading volumes fell during fiscal year’ 03 by approximately 21%, as measured by average trades per day. This is one of Block’s  sources of non-seasonal revenue and is expected to drive revenues and overall company growth during the coming years (HRB 2003-2004 statements by management in annual reports and investor meetings). Block views its key to future success of the investment services segment as retention and recruitment of financial advisors, which Block pursued in ’03 by hiring 260 experienced advisors. This segmen t of Block’s business has experienced severely declining revenue which is suggested to have been a result of the unfavorable environment of the equity market during the recent years. However, since acquisition of this business in ‘00 Block has been able to increase clientele in this division by over 14%. H&R Block’s management lists the Investment Services business as one of their priorities for the next six years. Mortgage operations: Subsidiaries in the Mortgage Operations segment originate service and sell prime and sub-prime mortgage loans and securitize residual interests in the United States. Sub-prim mortgage originations constitute 90% of Block’s business in this segment. Through a network of more than 24,000 mortgage brokers in all 50 states this segment offers a diverse mortgage product line to clients that do not meet traditional underwriting criteria, according to Reuters. These services are available through Block’s subsidiaries in addition to HRBFA branches. Block approves about 50% of their loan applications which come from over 2,200 independent sales associates throughout the U.S. Block makes money from the gain on the sale of these loans to other lenders. Through securitization the company makes money from the interest spread between its funding costs and its cost of borrowing. During the past 2 years, the declining interest rate environment has been favorable for the company and the company has been able to achieve as high as 4.46% in net profit margin. (HRB, 2004) Business services: H&R Block’s business services segment provides accounting, tax, consulting, payroll, employee benefits to business clients and tax, estate planning, financial planning, wealth management and insurance services to individuals. These services are made available through a number of sources, the largest of which, RSM McGladrey, Inc, operates more than 100 offices in 22 states. (HRB, 2004). The addition of these business units under the parent company along with the core H&R Block Tax Services, Inc. created the operational backbone to support a fuller line of financial services. Cross selling is heavily used and customer information, with proper consents, is shared amongst the business units for marketing and contacts. Even though this strategy is well under way, and in some ways is doing well other ways not, the average person on the street does not have any idea Block does more than â€Å"taxes†. In addition, some attempts to cross sell have worked to some degree such as mortgage products but others, such as offering IRA products to tax clients, have not. H&R Block’s average client has an income around $38,000 (individual) and do not seem to be interested in savings vehicles to the degree that would be necessary to meet sales goals. Strategy Defined In an effort to become â€Å"America’s year-round tax and financial partner† Block transformed itself from a company focused exclusively on tax preparation to a company that provides comprehensive financial services. This diversification aimed to offer existing clients a wider range of products and services while compensating for sagging revenue during the off season of the tax preparation business. In researching statements  by management in annual reports, investor meeting materials, etc. the author finds the following strategic direction is desired by the company. Several years the new CEO, Mr. Ernst, at H&R Block said that the new strategy is to take the steps necessary to transition the company from â€Å"tax preparer† to â€Å"financial partner† (HRB, 2000). Ask anyone you know what does this company does and you will hear â€Å"prepare taxes† but financial partner? H&R Block, Inc. began to implement a strategy to offer clients, and potential clients, additional financial services beyond tax preparation. H&R Block acquired Olde financial (based in Detroit) and used this firm as a launch to create H&R Block Financial Advisors, Inc. In addition, Block acquired Option One mortgage (Based in Irvine, CA) and renamed the firm to H&R Block Mortgage, Inc. Block’s management feels that the tax preparation market is so unsaturated that it is foreseeable to open 50% more stores in order to provide its customers sufficient convenient locations. H&R Block studies indicate that for some of their clients, convenience of location is valued higher than brand name and that the only way to capture such fringe customers is open stores throughout market areas. These plans are currently under formulation and implementation. Although there was a 6% increase in the number of tax return offices, tax clients served declined 3% during ’03, which lead Block to file 600,000 fewer returns than in ‘02. This was offset by a jump in software sales of 600,000 for the same period. Block achieved increased profitability during the ’04 tax season as a result of higher tax preparation fees. Average tax preparation fees have increased about $10 per year over the last four years to $130.59 suggesting that demand is slightly price elastic. According  to Mr. Ernst because of this elasticity Block can continue to raise its prices to generate revenue growth. The company is competing on quality, not on cost and on ‘location’ whether it be a physical location or via online using the web. In addition, the company has announced the opening of 400-500 new offices for tax season 2005 in under served markets. With the trending to online and software, causing a decrease in office clients, this may be a mistake. One of the Organization’s Corporate Priorities is to integrate and align Tax, eSolutions, Financial Advisors and Retail Mortgage, incorporating advice as a key differentiator. In that respect, the Company’s Vision states: â€Å"To be the world’s leading provider of financial services through tax-and accounting- based advisory relationships.† It appears that the vision statement does not fully reflect the company’s long-term goals since it only mentions two specific products, -tax and accounting- under the umbrella of financial services. By stating only two products, the vision statement implied that tax and accounting are the company’s core strategic goals, with the other products revolving around them. If that were the case, then all the integration and arrangement measures through structural changes done in order to accelerate the alignment process would be much ado about nothing, that is, if the company’s true intention is what can be deduced from the Vision statement. Strategy Analyses Some of the measurements of an effective strategy as outlined by Thompson, Strickland & Gamble (2005) includes consideration of and alignment with the adopted competitive moves and business approaches, a focus on competitive advantage, resource  strengths and overall competitive capabilities. By acquiring complimentary businesses, financial services and mortgage, the company has been able to, to a certain degree, begin offering the millions of customers who come to Block for tax preparation other financial services. During the last few years mortgage has done well, tax held steady with barely an increase, and financial services has lost money. Online services and software have shown good increases in clients yet profitability is very low at this time. Consumer awareness and trust as well as infrastructure and technology needs require more work than originally realized. In addition, the internal problems of an old cash cow business unit, Tax Services, being asked to suddenly share clients with, and work with, business units with differing cultures and oper ating speeds is a much larger issue perhaps than management anticipated. The strategy of providing additional financial products to current tax customers as well as running these complimentary business units as unique operations does have a good fit, H&R Block does have competitive advantage in the service areas mentioned but more so with Tax and Mortgage than with financial services. It may be learned and the results the last few years bears this out, that the client base of Tax and Mortgage are not the most ideal financial services fit. Tax and Mortgage deal primarily with mid to low income groups and high profitability in financial services comes from the mid to high income groups. Value Chain The value chain categorizes the generic value adding activities of an organization. The â€Å"primary activities† include: inbound logistics, production, outbound logistics, sales and marketing, maintenance. The â€Å"support activities† include: administrative  infrastructure management, human resources management, R&D, and procurement. The costs and value drivers are identified for each value activity. The value chain framework quickly made its way to the forefront of management thought as a powerful analysis tool for strategic planning. Its ultimate goal is to maximize value creation while minimizing costs (Porter, 1985). The value chain maps a firm into its strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation. Differentiation results from the way a firm’s product, associated services, and other activities affect its buyer’s activities. All the activities in the value chain contribute to buyer value, and the cumulative costs in the chain will determine the difference between the buyer value and producer cost. A firm gains competitive advantage by performing these strategically important activities cheaper or better than its competitors. One of the reasons the value chain framework is helpful is because it emphasizes that competitive advantage can come not just from great products or services, but from anywhere along the value chain. In strategic management it is critical to understand both the competitive advantage of an organization as well as understand the value chain. Five Forces Model The five forces model developed by Porter (1985) guides the analysis of organization’s environment and the attractiveness of the industry. The five forces include the risk of new competitors entering the industry, threat of potential substitutes, the bargaining power of buyers, the bargaining power of suppliers, and degree of rivalry between the existing competitors (Porter).  A starting point to analyzing the industry is to look at competitive rivalry. If entry to an industry is easy then competitive rivalry will likely to be high. If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high. Generally competitive rivalry will be high if: †¢ There is little differentiation between the products sold between customers. In this case Block has the advantage of a long solid history with the perception being that they know what they are doing and can be trusted. In addition, electronic filing is a long time product of Block that has also gained a lot of trust with customers. Of the two competitors, Jackson Hewitt and Liberty, Block is the only one with a guarantee that pays additional costs of any errors in work done. †¢ Competitors are approximately the same size of each other. The two competitors are very small compared to Block. No other tax preparation firm comes close to re aching the size and market share of Block. †¢ If the competitors all have similar strategies. They do have very similar strategies in the tax services arena; however, this will be an area to review in regards to financial services and mortgage. Suppliers are also essential for the success of an organization, however Block is a service business and suppliers are abundant for office supplies, computer equipment, etc. Block develops its own tax software. All mission critical needs are handled by Block so the threat of suppliers is almost non existent. Although, the IRS in a sense is a supplier of the electronic filing product infrastructure and does heavily influence what sort of electronic filing products are offered. Buyers or customers can exert influence and control over an industry in certain circumstances. This happens when there is little differentiation over the product and substitutes can be found easily. For many low income customers there is no loyalty and they will move to other providers if the fees are lower or they can get their refunds quicker. Regarding threat of substitutes the question is: Are there alternative products that customers can purchase over Block’s product that offer the same benefit for the same or less price? This is high in the case of H&R Block due to the availability of cheap and easy tax preparation programs, the increased use of the internet by a growing number of internet users, and technology is creating new forms of service delivery such as online services and software capabilities and price. Competitive Analysis – External Industry Analyses  Tax Preparation Industry: The IRS projected that for ‘05 they would receive 226.9 million tax  returns, a  number which  they project to  continue  growing at a  rate of 1.6% per  year until 2010  when the total number is expected to be 247.9 million. In the U.S., tax payers may file  their returns either through pipeline filing methods (sending paper forms  through the U.S.P.S.) or by e-filing (IRS 2004-2005). The IRS has strongly encouraged e-filing in recent years which is now becoming increasingly popular and consists of both TeleFiling and online filing. Online filing can be completed either through a broker or from any personal computer. The IRS projects that during ‘04, 58.9 million returns will be e-filed which would constitute 26% of all expected returns. Subsequently, the IRS projects this number to grow 8% per year until 2010 when the number of e-filers is expected to be 93.5 million, or 37.7% of the expected returns dur ing the 2010 tax season. (IRS 20042005). During recent years the IRS has promoted this method by touting higher accuracy, lower costs, less time consuming processing procedures, and refund turn around three to five weeks sooner than pipeline filing. Online filing is expected to increase by 21% from ‘03 to ‘04 and is expected to jump another 18% for the ‘05 tax season. According to HRB, the percentage of individual tax returns completed by paid preparers has risen from 48% in 1990 to 56.8% in 2002. Tax Preparation Competition The most recent U.S. economic census conducted in 1997 suggested that the tax preparation industry is very fragmented. While H&R Block holds 15.3% of this market its largest competitors, Intuit and Microsoft, hold significantly smaller portions. Although both of these companies directly compete with a portion of Block’s business, neither has the same business model or identical products. Intuit Inc. is a provider of business and financial management solutions for businesses and consumers and accounting professionals. This company not only produces products such as TurboTax and the  Quicken line of software, they also provide the general public professional tax help in person. Intuit has offices in 13 states while Block has offices in all 50 and both companies have a presence in the U.K. and Canada. Microsoft also plays a part in the tax preparation industry with Microsoft ® Excel Version 2002 Inside Out software. Growth of two fairly new competitors, Jackson Hewitt and Liberty Tax, which are using similar business model of combination of retail locations and online services. While currently these organizations are no where near the size of Block they are growing significantly each year. The availability of cheap and easy tax preparation programs is also an external factor which is driven by the customer need to conduct business when and where it is convenient for them. The increased use of the internet for tax preparation by a growing number of internet users is also an external factor. Technology is creating new forms of service delivery as mentioned previously regarding online services and software capabilities and price. In addition, the Internal Revenue Service factors as both a resource and competitor in a sense. In the chapter entitled â€Å"Conceptions of Environments† (133) Scott notes that the most common conception of environment of organizations is that of a task environment. He defines this concept as all aspects of the environment that are â€Å"potentially relevant to goal setting and goal attainment† and goes on to note that it is typically narrowed to refer to the nature and sources of inputs, competitors, and markets for output. This based on the belief that most organizations are created to achieve goals, to perform some type of work. Scott goes on later in the book and talks about managing task environments and notes (197) that there are many research resources and theories regarding the various aspects of managing the task environment, i.e., the sources of inputs, markets for outputs, competitors, and regulators. At H&R Block there is a great deal of material that could covered under this subject but one in particular stands out and that is the need at Block for the customers it serves in tax operations to continue to need that service. I am speaking of the Internal Revenue Service as both a resource and a competitor for Block. Block’s tax service is regulated in that all paid tax preparers must conform to tax professional rules and regulations that are part of the tax code and compliance enforcement in the responsibility of the IRS. So in one way, the IRS is a compliance officer to Block and Block must ensure that all tax professionals and company representatives comply with these rules at all times. They include sharing of information, application of tax law and theory, etc. In addition, the IRS has been a partner to Block and these two organizations worked together, almost a joint venture in behavior, to develop electronic filing in the late 80’s. This has been a boon to both organizations. At IRS processing centers labor needs have decreased as more filer’s use electronic filing rather than mailing in paper returns. They have experienced other benefits as well, less errors, etc. At Block this new product produced a new revenue stream that now makes up approximately 30% of revenues in the tax services business unit. Block and the IRS also work together on special projects and have a sort of standing arrangement where if the IRS wants an idea tested or hammered out they go to  Block, the largest preparer with 16 million customers. Five years ago IRS was concerned over the pending proposals for changes to the earned income credit. IRS asked Block to analyze what they might mean to lower income tax papers. With 16 million customer records that could be analyzed for impact it is much more than a random sampling. The IRS used this information to make internal recommendations to the program. In many ways, over the years Block has managed to use the IRS to actually help grow the company and the IRS has benefited from this enormously. This is true case of no organization  generates all the resources necessary for its goal attainment or survival (197). Software Comparison: TaxCut versus Turbo Tax  During ’03 48 million filers used Intuit’s Turbo  Tax while only 20 million used Block’s TaxCut.  (HRB, 2004 & Intuit, 2004). Block’s software  offerings average $10.00 less expensive for  comparable software with similar features which is  illustrated by TaxCut and Turbo Tax’s price ranges  $15.00-$50.00 and $20.00-$70.00, respectively. Both  products tout extremely user friendly features, such as  aggressive deduction finder, error double check, and  import of previous year’s repeatable information to promote continued use. Complaints regarding Turbo Tax are that the software is generally designed for one user to do one return and that it difficult to jump to one part of the return process without completing the entire procedure. Regarding TaxCut’s short comings, consumers have  suggested that it is easier to file more complicated itemized returns with Turbo Tax than TaxCut, although thi s may be outweighed by the smaller price. Both products are designed to file only the federal tax return for the fiscal year the product is purchased, and both also offer a rebate program to get the state version at no cost after rebate. Because tax legislation varies by year, a new version of either product is available each year, which sustains demand for this market. It is unclear if on of these products will clearly dominate the market in the near future because their extremely similar characteristics, pricing and availability. What is clear is that the market for ax preparation software is growing and that as long as both products remain innovative and react to consumers demands they will continue to attract new customers. Block’s brand name is one small advantage regarding TaxCut’s prospects in the future although that is only enough to pique interest in the product, while the features and ease of use will keep customers retuning year after year. Mortgage Industry The specific activity mortgage bankers engage in is the purchase, packaging, and sale of loans to third parties. This segment of Block’s business is sensitive to interest rate fluctuations. Interest rate cuts have driven mortgage rates to a 45 year record low, which, in turn spurred a sharp increase in home mortgage refinances. The industry has directly benefited from significantly higher volume of loan transactions in recent years driving a $2.5 trillion increase, in mortgages originated between ‘00 and ‘03. Because the majority of those interested in refinancing their mortgages have had sufficient opportunity to do so, business in this sector will be driven by new mortgage originations rather than additional refinances. The market for sub-prime mortgage will not slow down as much the prime market over a period of rising interest rates due to the cash-out refinance nature of the business. During ‘02 sub-prime originations constituted 8.3% of all loans and during ‘03 they constituted 8.4%. If interest rates rise in ‘05 as Greenspan has indicated then sub-prime originations should rise to their normal volume of 15% of all loans, nearly double what they are now. Over the new few years, the sub-prime industry expects growth of at least 5% a year. Regardless that low interest rates may have caused a spike of mortgage refinances in recent years, Block has experienced steadily increasing rate of mortgage originations the same time period. Although mortgage refinancing may not continue to be as considerable revenue source in the future, HRB management suggested in a Goldman Sachs conference call that non-refinance mortgage origination rates are increasing steadily  which should at least partially compensate. Financial Advice Industry H&R Block Financial Advisors (HRBFA) competes directly with a broad range of companies seeking to attract consumer financial assets, including full-service brokerage firms, discount and online brokerage firms, mutual fund companies, investment banking firms, commercial and savings banks, insurance companies and others. In ‘99, there was $6 trillion invested in mutual funds which is the largest single portion of this industry. 93% of this $6 trillion was controlled by six firms at that time. These were Vanguard (35%), Janus Capital Corp (20%), Fidelity (17%), PIMCO, Alliance, and MFS with 7% each (NYSE Market Report Searches, 2005). Clearly, Block is a small player in this enormous industry. In the secondary business units, financial services and mortgage, there are huge number of competitors currently offering services. Both businesses who core business are in these areas with high skills and those businesses that branched into these areas whether or not related to their core business. For example, retailers running credit operations. In the regulatory arena Block business units are heavily regulated. Tax Services by Internal Revenue Service and Treasury Department rules, financial services by SEC and broker regulations, and mortgage by lending laws. The most out of control areas are mortgage due to interest rate drivers and tax due to tax law changes. Foreign Markets Of the five segments at Block only one, Tax Services, actually operates in foreign markets. Mortgage, Financial Services, and Business Services operate solely in the United States. Until Recently H&R Block placed a moderate amount of emphasis on foreign markets but the particular services Block offers, and especially the non-tax segments, are not viable in most countries. As disclosed in the companies 2005 Annual Report the International Tax Operations segment has been aggregated with U.S. Tax Operations in the Tax Services segment and prior year results have been reclassified to reflect this change. In the 2005 Annual Report Block stated that international operations contributed $110.0 million, $97.6 million and $85.1 million in revenues for fiscal years 2005, 2004 and 2003, respectively, and $11.3 million, $11.1 million and $10.5 million of pretax income, respectively. This represents only 5.2% of revenue in 2005 but is up a bit from the 3.8% contribution in 2001. Australia is flat over this time period and the growth came from tax law changes in Canada. Considering the markets it makes sense that Block would not allocate a great deal of resources to foreign markets but instead operate primarily domestically. The company’s tax segment provides services to assist taxpayers with required self filings. Few countries have such systems requiring tax payers to self file. In Canada the tax reporting system is similar to the United States in that taxpayers file returns on an annual basis. This is also true in Australia. The United Kingdom is different in that few taxpayers are required to submit any filings. In the financial services area there is impact from foreign markets. The financial services industry has become considerably more concentrated as many firms have been acquired by or merged with other firms in recent years. Some of these competitors have greater financial resources than HRBFA and offer additional financial products and services. Competition from domestic and international commercial banks and larger securities firms is expected to continue to increase as a result of legislative and regulatory initiatives in the U.S. Firms in this industry are impacted by market performance, volatility, investor sentiment, margin balances, government regulation, and many other factors which cannot be controlled. Competitive Analysis – Internal SWOT Analyses A SWOT analysis is an effective method for identifying H&R Block’s strengths and weaknesses, while examining the opportunities and threats the company may face. Strengths: Personalized product and services Only brand to offer software, online and in-office solutions Dynamic marketing skills and structure Brand Client Base/Distribution Scale Very user-friendly website Low cost delivery system Low number of major (tax) competitors and no one on par with Block as far as clients served. H&R tax professionals are offered more education at most tax preparation firms over 400 hours. Weaknesses: Niche brand and market position Mass business system best serves lower income consumers Delivery system perceived to not meet many consumers’ needs Outside of tax relationships, limited or no competitive advantages in financial services/mortgage businesses Customer service in office and telephone Part time employees lack corporate citizenship Offices are leased and appear so Non-contractual service allows customers ease of switching to competitors Opportunities: Financial advisory business Tax preparation software Consumers are rapidly embracing internet availability Digital self-preparation splitting between software and online Online attracting younger, moderate income consumer (Early Adopters) Push for/advantage to E-Filing likely to drive growth for many years Financial services – long-term trend toward advice Online trading phenomenon is likely over – now just way business gets done Pricing for services evolving toward fee-based Major competitors focusing on high net worth market for growth Interest rate cycle impact on conforming loan market refinance business Financial advisory business Tax preparation software Threats: Availability of cheap and easy tax preparation programs Organizing low-end Competitors – Jackson Hewitt and Liberty Tax Banks or other financial companies could offer similar services in the future IRS could reduce complexity of forms and remove demand Technology is creating new forms of service delivery Flood of entries into financial services arena Financial services competitors building brand strength and service capabilities that drive consumer expectations Service capabilities that lead consumer expectations Mortgage industry – scale advantages dominate successful business models Business Ethics According to Thompson business ethics refers to the application of general ethical principles and standards to business behavior. They go on to say that business actions are judged by the general ethical standards of society, not by a special set of more permissive standards. Examples of ethical behaviors are honesty, integrity, keeping one’s word, respecting rights of others, and practicing the Golden Rule. H&R Block has a core set of values that the company attempts, through training and orientation, to instill in each employee. H&R Block’s values are client focused. Integrity: We are honest and ethical in everything we do, Excellence: We take pride in doing our best in everything we do. We embrace change to learn and grow, Respect: We treat each other with respect and dignity, recognizing that innovation springs from unique perspectives, and Teamwork: Everyone’s collaboration and full participation make us stronger and allow us to serve clients better (HRB web site). In my experience at Block, these values, which include being honest and ethical in all actions are adhered to by the majority of employees and leaders. Block has a culture of honesty and integrity which was fostered by Henry Block, the founder, and I would say this is a very ethical company. Social Responsibility Thompson outlines the notion of social responsibility as it applies to businesses concerns a company’s duty to operate by means that avoid harm to stakeholders and the environment and, further, to consider the overall betterment of society in its decisions and actions. At H&R Block one the products sold is known as a Rapid Refund. This is a loan against a refund. The demographics of Block clients are typically middle or lower income tax payers and many qualify for a refundable tax credit known as the Earned Income Tax Credit. This is credit given to low income tax payers and was intended to help those falling into this income range to move higher up in the income levels to assist with supporting their family. Block’s Rapid Refund product is a high cost loan and the interest rate is very high considering the length of the loan, typically a few weeks. The National Consumer Law Center is a non-profit organization specializing in consumer issues on behalf of low-income people. NCLC works with thousands of legal services, government and private attorneys, as well as community groups and organizations, who represent low-income and elderly individuals on consumer issues. According to the NCLC Refund anticipation loans (RALs) are usurious short-term loans secured by the taxpayer’s expected tax refund. Over half of RAL consumers are recipients of the Earned Income Tax Credit (EITC), despite the fact that EITC recipients only constitute 15% of all taxpayers. They also state, from valid research, that low income Taxpayers Lost over $1 Billion in Loan Charges and Fees in 2002 Their research also indicates that check cashing fees add to the cost of getting tax refunds or RALs, especially for those consumers who do not have bank accounts. While many un-banked consumer s find ways to get their checks cashed for free, commercial check cashers count on tax season to boost their revenues. One study found that 45 percent of EITC recipients planned to use a check casher to cash refund checks, further draining this program.50 Check cashers are also moving into the tax-filing and RAL market for their clientele. Since IRS rules prohibit commercial tax preparers from charging their clients to cash tax refund or RAL checks, 51 some tax preparers have formed partnerships with check cashers. H&R Block has teamed up with ACE Cash Express, one of the nation’s largest check cashing chains. This partnership has been proven very profitable for ACE, which has seen growth in its income during tax season. Part of the H&R Block/ACE partnership involves placement of self-service check cashing machines in lobbies of H&R Block tax preparers. ACE reported that 3.2% of its check cashing fees in fiscal year 2002 came from self-service machines located in ACE stores or in H&R Block offices. ACE placed 100 machines at Block locations during 2002 and has an agreement with Block to place up to 250 machines during the 2003 tax-filing season. As of the end of June, ACE had 22 machines in company-owned  locations and 150 machines available for deployment at H&R Block locations for 2003. ACE, expecting a boom ing business in cashing Block checks this year, announced cash inventory of $290 million during the 2003 tax season for 248 self-service machines placed in H&R Block offices. ACE also has a $55 million credit line from banks, for a total cash inventory of $345 million available to cash tax refund and refund anticipation loan checks during the 2003 taxfiling season. In addition to NCLC, several other consumer groups have charged this is a rip off and that Block is stealing some of this earned income credit from needy families and is perceived as being very unethical. Block counters that these clients in fact want this service and Block is doing nothing more than meeting the needs of its clients. This issue draws attention every year and creates quite a bit of bad press. Currently the National Consumer Law Center Consumer Federation of America is working to Ban refund  anticipation loans outright or make them subject to state usury and small loan interest rate laws. Diversification Strategies Thompson points out that diversification becomes an attractive strategy when a company runs out of profitable growth opportunities in its original business. H&R Block since it’s inception in the 1955 was focused on one area, tax preparation. In the 1980’s they did begin to think about diversification when talk began about a flat tax. They purchased a company called CompuServe based in Columbus, OH. At the time it was doing well in the new area of online subscription services. It did not, however, fit all the tests for a good acquisition for Block and the management team at corporate lost some key people at CompuServe and had no skills at all in running such a business. In essence for several years it sort of just stayed flat in growth and innovation and AOL took off and left CompuServe in the dust. CompuServe was finally sold in the mid 1990’s and the buyer stripped off the technical infrastructure for their own use. The other services were  discontinued. This was Blocks first try at diversification so it was a long while before they tried again. In the late 1990’s a new CEO was hired, who is still managing the firm through a brand and strategic shift, and he immediately laid plans to diversify but only with complimentary businesses with a good fit to the core competencies of Block. Block certainly fits with the opening remark from Thompson in this discussion. Tax is mature and has growth potential that is limited each year. Mergers and Acquisitions Thompson (2005) identifies several strategy choices in chapter 6 of Crafting and executing strategy: The quest for competitive advantage and one of those is the merger and acquisition strategy. The authors state that a â€Å"merger is a pooling of two or more companies as equals, with the newly created company often taking on a new name. An acquisition is a combination in which one company purchases and absorbs the operations of another.† According to Thompson the objective of mergers and acquisitions are to achieve one or more of the following organizational business goals; paving the way for acquiring firm to gain more market share and create a more efficient operation, expanding a firm’s geographic coverage, extending a firm’s business into new product categories or international markets, gaining quick access to new technologies, and/or to invent a new industry and lead the convergence of industries whose boundaries are blurred by changing technologies and new market opportunities. Thompson goes on to indicate that combining operations may result in some negative consequences such as resistance from rank-and-file employees, hard-to-resolve conflicts in management styles and corporate culture, and tough problems of integration. In addition, the author’s state that greater-than-anticipated difficulties may occur in; achieving expected cost-savings, sharing of expertise, and achieving enhanced competitive capabilities. Regardless of possible negative effects the merger-acquisition is a much used strategic option and is a common occurrence in business today. H&R Block does have a good example of this strategic method. In 1996 Block acquired Option One mortgage (Based in Irvine, CA) after running the business as a separate company retaining the name and structure in 2000 this firm was renamed H&R Block Mortgage, Inc. In addition, in 2000, H&R Block acquired Olde Financial, a securities firm (based in Detroit) and used this firm as a launch to create H&R Block Financial Advisors, Inc. The addition of these two business units under the parent company, along with the core H&R Block Tax Services, Inc., created the operational backbone to support a fuller line of financial services. Cross selling is heavily used and customer information, with proper consents, is shared amongst the business units for marketing and contacts. In many other ways, outlined in my final project, the company has used these acquired firms to provide the operational structure required to gain entry into new areas relatively quickly. Moving into financial services and mortgage has been a big plus for the company. Mortgage has been especially lucrative financially and while financial services are not as strong it is growing steadily as skills and talent is added. They do fit very well and there is cross marketing and up selling in and across the business units. It is taking longer to really integrate and turn these strategies into operational ways of doing business but they are achieving the plan. Shareholder Value According to Thompson there are three tests that if passed indicates the diversification move can produce added value for share holders. They also state that â€Å"managing a set of unrelated businesses is a much weaker foundation for enhancing  shareholder value than is a strategy of related diversification where corporate performance can be boosted by competitively valuable cross-business strategic fits.† The industry attractiveness test measures whether the industry chosen measures favorably in competitive conditions and a market environment that is as good as or better than the current businesses. It seems that Block meets this test with their diversification strategy. By entering into the financial services and mortgage businesses they are able to cross market and sell to, for most products, existing customers of the core business. The mortgage business has done extremely well in profitability. The cost-of-entry test measures whether the business in consideration has a cost of creating or buying that will limit profitability. In the case of Block the mortgage business has shown incredible returns on the original investment. The financial services firm purchased were slow to contribute profit but are doing so now. The better-off test measures whether, well as it says, the company is better off overall with this business. Financially if there is no increase in profits and shareholder value with the business than without it than it would not meet the test. Block is definitely better off with these businesses than without as shown in the contribution rates of the businesses to the overall corporate profit. In addition, these businesses provide value added services to the 18 million tax clients out there in the form of these added financial and mortgage services. Block, in my opinion as a former long time executive and based upon operating results, has done well in these businesses and seem to have made good choices by using a diversification strategy of related businesses that provide added value to shareholders and customers of the cash cows tax services division. Unfortunately, these units have not all achieved the profitability levels desired and financial services in particular has sustained some heavy losses during the first few years of implementing this strategic plan. Strategy Analysis Strategy – integration of services across business units.  Completing its transformation from tax provider to financial services provider, H&R Block is well aware that it is entering into some stiff competition— from brick-andmortar to click-and-mortar and strictly online ventures One of the areas that could be improved that would allow for better support of the company cross selling and servicing strategy is to create greater cross operational responsibilities for local and regional managers. This company does retain a good deal of silo mentality at this level and managers should have more cross operational responsibilities. For example, those customers using online tax preparation or purchasing TaxCut software could have included year round in person service if needed at the local physical Block office. Both managers should be viewed as responsible for this customer and compensation considering accordingly. This same scenario could work in reverse with physical offi ce customers seeking assistance via the web. Infrastructure is in place to accomplish this and only strategic planning and execution of processes changes is needed. As Thompson states â€Å"organizational capabilities emerge from a process of consciously knitting together the efforts of different work groups, departments, and external allies, not from how the boxes on the organization chart are arranged†. In the past few years technology and functional areas have been reorganized and  processes reengineered to support this type of operational shift, however, the people have  not been paid as much attention to. Currently, if a local Block manager has a client come in that had done their taxes with the software about all the help they can offer is an 800 number to call for support on the product but not with any tax issues. There is no incentive to assist this client any more than that. Customer needs and the market drivers should be primary considerations regardless of wha t branch of the company the client approaches for assistance. H&R Block already has strong brand equity as a tax preparation company, but to successfully take advantage of financial industry deregulation, the company needed to leverage the relationships with its traditional tax customers. Much of this effort falls on its tax preparers. As the first point of contact for customers, they’re charged with gauging the interest level and potential value a tax customer would receive from other financial services, including mortgage products and investment plans. Once customers express interest, the company needed an efficient way to pass information to the appropriate financial advisors and ensure every inquiry was addressed. That was the hard part, with 1,600 advisors spread across 190 financial centers nationwide. Because of changes in policies, processes, structure, and technology solutions, when a tax customer requests more information on other H&R Block services, information on that customer’s background and interest area is automati cally routed to the most qualified financial advisor for an immediate, tailored response. According to a CRM study (HRB, 2003) within the organization conducted by a software firm the company could enable its financial advisors to provide personalized sales and service, they found that H&R Block is giving its customers reason to be loyal and creating a return on relationship over the customer lifecycle. While piloting its financial service center concept, H&R Block initially used a contact management and lead distribution application, but it ultimately lacked the robustness needed. That’s when the financial services group began seeking a new sales force automation solution. Meanwhile, the company had chosen a technology solution as its scalable, web-ready CRM solution to track and route customer inquiries— whether they come in by phone, email, the web or in person—in the company’s newly consolidated customer contact center. Its individual call centers had been using disparate call center tracking software, which meant that the company wasn’t getting a single view of each of its customers—or their profitability levels. The new customer contact center serves the tech support needs of the company’s 10,000 offices as well as its client relations, financial and e-commerce groups. Future Plans Thompson has several key points regarding organizational capabilities; companies don’t implement and execute strategies; people do; all managers have strategy-executing responsibility in their areas of authority, and all employees participate in the strategy execution process; and, when strategies fail, it is often because of poor execution— things that were supposed to get done slip through the cracks. A talented management team is essential talent implies that an appropriate mix of skills and experiences exists within the team. Intellectual capital is more important to strategy execution than other investments. Also decentralizing decision making which takes full advantage of the talent is important to good strategy execution. H&R Block has been reorganizing and changing the management team over the last five years. As they have added businesses through acquisition and development of  new products (online and software, for example) they have added key management per sonnel in those areas with backgrounds and skills in the appropriate fields. While this company does not attract â€Å"stars† it has a very capable management team and the only criticism is that unfortunately many of those newly added have left after two or so years. A great deal of turnover has occurred in seeking just the right individuals. In some cases, they were not working out and in others they sought greener pastures. The management ranks in the middle levels of the company are, however, stable and exhibits a great deal of talent within their respective operational group. This company does retain a good deal of silo mentality at this level and managers should have more cross operational responsibilities. For example, those customers using online tax preparation or purchasing TaxCut software could have included year round in person service if needed at the local physical Block office. Both managers should be viewed as responsible for this customer and compensation cons idering accordingly. This same scenario could work in reverse with physical office customers seeking assistance via the web. Infrastructure is in place to accomplish this and only strategic planning and execution of processes changes is needed. As Thompson states â€Å"organizational capabilities emerge from a process of consciously knitting together the efforts of different work groups, departments, and external allies, not from how the boxes on the organization chart are arranged†. Thompson also states that â€Å"the ultimate goal of decentralized decision making is not to push decisions down to lower levels but to put decision-making authority in the hands of those persons or teams closest to and most knowledgeable about the situation†. Block is a leader in this area. Local and regional managers are responsible for most  decision making regarding hiring, schedule of activities (training, tax  schools, etc.), location selection, local marketing, bookkeeping, public relations, etc. When I was a district manager the total experience was of running my own business with the absence of financial liability. There are, however, policies and procedures for many areas that must be adhered to in all locations but deviations are allowed with proper approvals and usually this is just one level up rather going to the CEO. Another area is evaluation of strategy implementation. For several years the company has been designing and setting up processes to support a balanced scorecard method. (Kaplan, 1996). The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: â€Å"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation.† The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: 1) The Learning and Growth Perspective, 2) The Business Process Perspective, 3) The Customer Perspective, and 4) The Financial Perspective. At H&R Block key performance indicators have been identified and databases put into place to provide executives with data at all levels of the company in the four performance dimensions measured by the scorecard. Executives indicate in personal conversations with the author that the initiative is going well and the tool is providing much needed information to assist with decision making and measurement of results. Summary and closing In a Forbes article printed in early 2004 author Emily Lambert stated â€Å"April 15, looms, but H & R Block Chief Executive Mark A. Ernst has more than taxes on his mind. He’s eager to find out how many of this season’s customers can gradually be convinced to buy H & R Block’s newer offerings, including home mortgages, business consulting and brokerage services. Last fiscal year the company’s non-tax businesses accounted for half of its $3.8 billion in revenue, most of that from its mortgage lending, which it started offering in 1997. Its financial services business hemorrhaged $128 million (pretax) last year, and the business services arm is also lagging. The loans, which can carry interest rates of 129%, appeal to cash-strapped low-income customers. Some customers may be wary, too. The company is under fire for its â€Å"refund anticipation loans.† The loans, which can carry interest rates of 129%, appeal to cash-strapped low-income customers. T he fees accounted for $109 million in revenue last year. H&R Block has settled a number of loan-related laws.† This is a powerful representation of the state of company as of that time which is result of close inspection during a time of transition. What she does not mention is how this compares to the first couple of years of the strategy implementation of broadening services. As of today, the picture is brighter and the company, while still a long way from being there, is closer to achieving some of the goals. This paper outlined the company, the strategy employed, the rationale for various components of the strategy, and how these areas fit within the strategic models studied in this course. One area that the author feels may be needed that is not current present in any of them.