Starbucks Structural Frame Essay -- Starbucks Business Analysis

Starbucks at first was a little structure, run by three accomplices in a little shop in Seattle. The organization at that point was confined to selling just entire bean and ground espresso. It was ordinarily a top down structure were the three individuals in the top administration were the chiefs. In 1984, when Schultz recommended selling espresso and expresso drinks, the executives of Starbucks dismissed the thought, regardless of the way that the move would have made more benefit for the organization. This showed the inflexibility of the administration towards any adjustments in the business. In the wake of assuming control over the activity of Starbucks in 1987, Schultz chose to extend the organization's business. The following hardly any years carried some positive changes to Starbucks. Beginning with 17 stores in 1987, the organization immediately extended by opening stores in Chicago and Portland. With this time of extension, Schultz recruited some accomplished individuals to assist him with dealing with the development plans. In 1989, Schultz employed Howard Behar, who knew about opening and running a few retail locations. After a year, Schultz acquired Orin Smith as the Chief Finance and Operations Officer. Both Behar and Smith were profoundly knowledgeable about the business and aided Schultz fabricate the organization's infrastructure.[1] The new structure of Starbucks was level and it energized serious thoughts from all degrees of the organization. This fundamentally portrayed a sidelong coordination c... ...ffman Neilson(2008), Strategy and Business http://www.relationalcapitalgroup.com/information focus/TheBaristaPrinciple.pdf 2) Shultz, H. (2008) Starbucks rolls out authoritative improvements to upgrade client experience. Recovered March 13, 2008, from, http://www.starbucks.com/aboutus/pressdesc.asp?id=831 3) George, J. also, Jones, G. (2005). Comprehension and Managing Organizational Behavior. (fourth ed.)Upper Saddle River, NJ: Pearson Prentice Hall. 4) Gulati Hoffman Neilson, Strategy and Business, 2008 http://www.relationalcapitalgroup.com/information focus/TheBaristaPrinciple.pdf 5) Barbero, Martin, Starbucks objective: Recapture its initial buzz, Jan 2008. http://www.iht.com/articles/2008/01/30/business/sbux.php 6) Hoovers Database http://premium.hoovers.com/buy in/co/overview.xhtml?ID=ffffrhkchrhhyjjrfk Starbucks' Structural Frame Essay - Starbucks Business Analysis Starbucks at first was a little structure, run by three accomplices in a little shop in Seattle. The organization at that point was limited to selling just entire bean and ground espresso. It was ordinarily a top down structure were the three individuals in the top administration were the leaders. In 1984, when Schultz proposed selling espresso and expresso drinks, the chiefs of Starbucks dismissed the thought, regardless of the way that the move would have made more benefit for the organization. This showed the unbending nature of the administration towards any adjustments in the business. In the wake of assuming control over the activity of Starbucks in 1987, Schultz chose to grow the organization's business. The following hardly any years carried some positive changes to Starbucks. Beginning with 17 stores in 1987, the organization immediately extended by opening stores in Chicago and Portland. With this time of development, Schultz recruited some accomplished individuals to assist him with dealing with the development plans. In 1989, Schultz employed Howard Behar, who knew about opening and running a few retail locations. After a year, Schultz acquired Orin Smith as the Chief Finance and Operations Officer. Both Behar and Smith were exceptionally knowledgeable about the business and aided Schultz manufacture the organization's infrastructure.[1] The new structure of Starbucks was level and it supported serious thoughts from all degrees of the organization. This essentially delineated a horizontal coordination c... ...ffman Neilson(2008), Strategy and Business http://www.relationalcapitalgroup.com/information focus/TheBaristaPrinciple.pdf 2) Shultz, H. (2008) Starbucks rolls out hierarchical improvements to upgrade client experience. Recovered March 13, 2008, from, http://www.starbucks.com/aboutus/pressdesc.asp?id=831 3) George, J. what's more, Jones, G. (2005). Comprehension and Managing Organizational Behavior. (fourth ed.)Upper Saddle River, NJ: Pearson Prentice Hall. 4) Gulati Hoffman Neilson, Strategy and Business, 2008 http://www.relationalcapitalgroup.com/information focus/TheBaristaPrinciple.pdf 5) Barbero, Martin, Starbucks objective: Recapture its initial buzz, Jan 2008. http://www.iht.com/articles/2008/01/30/business/sbux.php 6) Hoovers Database http://premium.hoovers.com/buy in/co/overview.xhtml?ID=ffffrhkchrhhyjjrfk

A Report on the High Cost of College Education in America Essay

A Report on the High Cost of College Education in America - Essay Example 9 October, 10, 2011. Dr. Morgan Bill Joint University students’ association Washington, CO 456007 Dear Mr. Houston: The association is presenting this report, due October, 10, 2011, that was mentioned by the instruction service. The report is entitled the High expense of College Education in America. The motivation behind the report is to advise the partners in the training segment on the significant expense of school educational cost in America which has become a wellspring of debilitation for understudies who might want to have an elevated level of Education. It further stresses on the need chip away at the bringing down of the expense of school educational cost. The substance of this report focuses on the cost of school training which isn't proportional to future pay rates and does not merit all advances and attributes obtained to support instruction. Any inquiries concerning this report can be looked for by reaching Mr. Morgan Bill, the association secretary, at 453-6897. Truly yours, Morgan Bill, Secretary General. Official outline The expense of school training in America has over years progressively gone excessively high. High education cost charges in schools is currently ending up being the most concerning issue confronting undergrads, guardians and supporters. In this hard financial time, understudies and guardians are currently battling a great deal sourcing for assets to meet this significant expense of education cost. This has gone from sourcing school credits from banks and including selling of property resources for support instruction. This pattern has adversely affected on the concerned gatherings to a degree where understudies have nearly lost trust in a superior future. One in number negative effect that has so far been seen is the debilitation it has had on the understudies undertaking different courses in different colleges. It is very obvious from considers led by this group on fruition of school instruction people who graduate bare ly land well-paying positions that coordinate the expense acquired while in school. In addition, a more prominent level of the minimal expenditure earned from these employments wind up being utilized to reimburse the advances that were obtained during school days leaving an insignificant rate for venture. This hence renders a bigger populace of the recently utilized and youthful hustling for as long as they can remember. From these bits of knowledge it is in this way vital to think about the call of the enormous youthful populace and consider a careful audit of the whole expense installment frameworks in universities with goal of bringing down its expense to serve the group of people yet to come. Approach An examined gathering of around 40 understudies from tested colleges and schools in the United States of America were met with a perspective on getting foundation data from the influenced gatherings. Also, different workers who had quite recently finished preparing was tested and m et. The technique chose planned for gathering information that will empower the analysts distinguish the issue and propose expected arrangements. Discoveries The expense of school educational cost for some, universities has after some time become so costly. The cost for school contemplates has neither likened the future pay of those taking the courses nor has it equivalent the advances and numerous credits being spent on education costs. It is subsequently basic to introduce this report as a methods for passing a message of discontent and objection confronting guardians and understudies who pay the consequences to get significant training (Heller, 2001). The most concerning issue for many individuals living in America while joining a school or college is

Film and memory Essay Example | Topics and Well Written Essays - 2000 words

Film and memory - Essay Example The response is one which constructs an enthusiastic reaction among watchers to relate explicitly with various occasions ever. The idea of structure and class in injury films for history is characterized as the sort or sort of film that can identify with a given culture. At the point when one uses a particular structure, it can connect with a particular character or association with the individuals who are watching the film. The classification of standard film is one which can be utilized to distinguish explicit classifications and occasions which have happened and which many identify with. While transferring standard occasions inside the class of dramatization or injury, there is the need to make a particular relationship to an occasion where each individual is as of now mindful of. The message of the verifiable occasion additionally needs to interface with ideas, for example, energy or the principle character of the way of life, explicitly which makes a degree of enticement to general society. The trial or avant †garde delineations; nonetheless, can move into occasions with an alternate type of injury or replication of history that is increasingly verifiable and tastefully fitting to a given occasion. In any case, this draws in an alternate gathering of people who are keen on an alternate point of view to the film (Langford, 2005). The delineation of history as one which makes a feeling of enticement to the groups at that point leads into various sorts of spectatorship by watchers. As the scene stands apart with various impacts and style, there is the capacity to make an alternate feeling of history that is recollected by the crowd. For example spatial definitions that happen, for example, longer points of view or close up shots, make an immediate relationship to the watcher. The onlooker is then ready to make a particular comprehension of a given occasion. For example, on the off chance that there is a person who was well †known ever, at that point individual and close shots with the utilization of room are given, all which characterize the

Ethels Chocolate Lounges

Buyers settle on many buying choices consistently. Proficient advertisers need to comprehend what persuades buyers to make a buy. These variables and impacts are various, from wide social and financial patterns to individual contemplations and individual view of items, administrations, brands and companies’ publicizing strategies.Advertising We will compose a custom contextual investigation test on Ethel’s Chocolate Lounges explicitly for you for just $16.05 $11/page Learn More Routine buying choices don't take a lot of time; be that as it may, with increasingly costly items and administrations, shoppers should think about the relative advantages and expenses of each buying other option. If there should be an occurrence of Ethel’s Chocolate Lounges, broad dynamic is the principle kind of client purchasing choices, though customary materialistic qualities and socialization with individuals from the equivalent or higher societal position (upward portability) are th e most striking components influencing shopper ability to remain at Ethel’s. The tale of chocolate houses goes back to the seventeenth century (Anonymous, n.d.). Around then, individuals from society’s first class would utilize them as a spot for get-together and associating in a sumptuous air with a cup of predominant quality hot cocoa (Anonymous n.d.). Today, Ethel’s Chocolate is the organization which saves and appreciates old chocolate conventions; named out of appreciation for Ethel Mars whose spouse established a treats organization in 1911, Ethel’s Chocolate Lounges represent a one of a kind spot, where chocolate is allowed to live new life (Anonymous, n.d.). All buyer purchasing choices can be partitioned into three classes: routine reaction practices, broad dynamic, and constrained dynamic (Lamb et al., 2010). Routine reaction conduct is an example of buyer dynamic most regularly connected with ease and oftentimes bought merchandise (Lamb et al., 2010). Shoppers who settle on routine purchasing choices are not normally mindful of their needs, until they are exposed to promoting and advertising impacts/battles (Lamb et al., 2010). Constrained dynamic suggests that customers know about the item yet have next to zero information on the present brands and item choices accessible in the market (Lamb et al., 2010).Advertising Looking for contextual analysis on business financial aspects? We should check whether we can support you! Get your first paper with 15% OFF Learn More Neither of these purchasing choices depicts the decision to enjoy at Ethel’s. Or maybe, it is through broad dynamic that clients pick or don't decide to associate at Ethel’s. Broad dynamic becomes possibly the most important factor when the item is over the top expensive and customers purchase the item rarely (Lamb et al., 2010). Buyers are effectively engaged with the way toward taking the purchasing choice. However, everything changes. Purchas er purchasing choices are no exemption. Most presumably, with time, buyers who enjoy at Ethel’s will begin to show routine reaction practices, yet not until they acquaint themselves with Ethel’s items and benefits and become acclimated to the examples of the company’s showcasing and promoting methodologies. Various variables influence buyer purchasing choices; these incorporate yet are not restricted to social, social, individual, and mental impacts (Lamb et al., 2010). In the event of Ethel’s, social and social variables produce the most grounded effects on buyer decisions. Ethel’s Lounges give one of a kind chances to supporters, who need to invest their energy in the lap of extravagance; this implies the social estimations of material achievement and individual flexibility, just as optimistic reference gatherings, rouse buyers to pick Ethel’s (Lamb et al., 2010). The unimportant reality that costs at Ethel’s are not for everybody i nfers, that determination and societal position assume a colossal job in how customers settle on their decisions. Numerous buyers decide to be at Ethel’s on the grounds that they can become individuals or if nothing else feel like individuals from the reference bunches they might want to join (Lamb et al., 2010). It is conceivable to accept that most buyers associating at Ethel’s have their salary needs fulfilled; thus, they look to spend their cash on what best relates to their qualities (De Mooij Hofstede, 2002). Lavish and expensive, Ethel’s expands on customary materialistic qualities. All the while, singular elements like sex ought not be ignored: sex influences customer decisions at Ethel’s, and most buyers going to Ethel’s Chocolate Lounges are women.Advertising We will compose a custom contextual investigation test on Ethel’s Chocolate Lounges explicitly for you for just $16.05 $11/page Learn More Based on the examination of purchase r elements and decisions, socialization with different individuals from the equivalent or higher economic wellbeing will, most presumably, become the most striking driver of inspiration among Ethel’s buyers. Most shoppers at Ethel’s display the most trademark highlights of renown looking for practices: they are hoping to have notoriety brands which represent and reaffirm their social gathering participation (Vigneron Johnson, 1999). Since Ethel’s items are neither basic nor schedule/reasonable for most buyers, renown, dependence on social progression, socialization, and acknowledgment will assist the organization with attracting more guests and hold them. Advertising directors at Ethel’s state that getting a charge out of chocolate in an extravagant setting for ladies is equivalent to taking a light lit air pocket shower (Anonymous, n.d.). The primary needs Ethel’s advances to incorporate (1) people’s taking a stab at upward social versatili ty, and (2) Americans’ want to purchase the best for their cash (Anonymous, n.d.). Ethel’s additionally fulfills numerous other shopper needs, including esteem chasing, social acknowledgment and participation, and socialization with individuals from a similar social gathering. Most presumably, the worth got from going to Ethel’s isn't material yet social and enthusiastic. Most Ethel’s guests are ladies, who experience positive feelings basically from being a piece of Ethel’s lavish and lofty network. End Consumers settle on many buying choices consistently. As the rate and force of market rivalry increment, advertisers look to comprehend the primary drivers of buying practices and factors influencing them.Advertising Searching for contextual investigation on business financial aspects? We should check whether we can support you! Get your first paper with 15% OFF Find out More If there should be an occurrence of Ethel’s Chocolate Lounge, renown chasing, socialization, acknowledgment, and having a place with a higher social layer are the most notable drivers of purchaser purchasing choices. As a general rule, purchasers take part in broad dynamic, until they acquaint themselves with the range and nature of items offered by Ethel’s. For some shoppers, the worth got from visiting Ethel’s isn't material however passionate. Most Ethel’s guests are ladies, who experience positive feelings just from being a piece of Ethel’s sumptuous and renowned network. References Anonymous. (n.d.). Ethel’s Chocolate Lounges. Contextual analysis. De Mooij, M. Hofstede, G. (2002). Intermingling and disparity in shopper behavior: Implications for worldwide retailing. Diary of Retailing, 78, 61-69. Sheep, C.W., Hair, J.F. McDaniel, C. (2010). Promoting. Client version. Bricklayer, OH: South-Western Cengage Learning. Vigneron, F. Johnso n, L.W. (1999). A survey and a calculated system of notoriety looking for customer conduct. Foundation of Marketing Science Review, 1, 1-14. This contextual analysis on Ethel’s Chocolate Lounges was composed and presented by client Sara L. to help you with your own examinations. You are allowed to utilize it for research and reference purposes so as to compose your own paper; be that as it may, you should refer to it as needs be. You can give your paper here.

where the red fern grows :: essays research papers

In the story, Billy was strolling home one day when there was a canine battle in the partner and he went to examine to perceive what was happening and there was a lot of dog’s thumping on one pooch so he chose to get included and split it up. They all dissipated away when they saw him coming. The pooch that was getting beat up and was lying on the ground and it was harmed. He went to the canine and saw it was a wonderful dog hound. He additionally saw that the canine wasn’t hurt that terrible, simply terrified.      When Billy was a kid he constantly needed a couple of dog hounds. In any case, as much as he needed a couple of dogs he didn't get them. Once in a while he would hear the neighboring canines calling treed to their lords, and their lords challenging back to them to tell the dog that they were in transit. This urged Billy to need a dog significantly more. His father revealed to him one day that his grandpa needed to see him soon. When he got to his granddad, his granddad disclosed to him that he had seen an advertisement in the paper for some dog hound puppies. So he proceeded to get an old tin can and began placing cash in it that he produced using working in the fields. Throughout the following year he had set aside up enough cash to purchase his dog hound. He climbed over the mountains to the closest town post office in light of the fact that that’s where his pooches where going to be until he gotten them. He got to the mail station and put them in a potato sack pack and set out toward home. His grandpa had given him a coon trap so he could prepare his pooches. He named his pooches Little Anne and Old Dan. When chasing season had come he had his pooches prepared and all set. The principal night they treed their first ringtail coon. He cleaned the coon and took it to his granddad for cash. He gave the cash to his dad. After about a year his canines had gotten truly adept at chasing. The neighboring children felt that their pooches were the best canines. He revealed to them that his pooches could get any coon. So they tested him believing that they would get five dollars out of him.

Seven Golden Secrets of Creative Writing

Seven Golden Secrets of Creative Writing In the following quote, master of horror Stephen King hits the raw nerve of creative writing, the single most important step you need to take in your journey towards literary expression â€" absolute commitment. Without it, you could get lost in the dark, doomed to wander through the long night of literary anonymity like a navigator without a compass or the will to go anywhere.You can approach the act of writing with nervousness, excitement, hopefulness, or even despair… You can come to the act with your fists clenched and your eyes narrowed, ready to kick ass and take down names. You can come to it because you want a girl to marry you or because you want to change the world. Come to it any way but lightly. Let me say it again: you must not come lightly to the blank page.Stephen KingThe blank page represents to great writers what Everest was to Edmund Hillary and Tenzing Norgay, what the Apollo 11 moon mission was to Neil Armstrong and Buzz Aldrin. It offers an extraordinary journey to the uncharted regions of the imagination, a formidable challenge to the literary spirit of adventure within us. The problem is that writing creatively needs hard work and great commitment, and the vision to see a conclusion. I have developed the acronym W R I T E R S, which I hope will help you along that creative and adventurous road. It embodies seven golden rules of creative writing.W â€" where, who, what, when, whyIf you intend writing a book, a short story or even an essay, know exactly Where you are going. If you dont, you could end up going nowhere. When you know your direction use the other four Ws (Who, What, When, Why) to get there. Sketch a rough plan, just as an artist produces rough brush strokes to begin a work of art, and write down the essential ingredients of your story: the characters (WHO), the plot (WHAT), the direction (WHERE), the period (WHEN), the reasons (WHY).R â€" ResearchAdventure novelist Wilbur Smith, author of dozens of international bestsellers, s pends six months a year researching his subject before putting pen to paper. He then spends the next six months writing the book. Because his novels are usually based on real-life sagas, he manages to blend fiction with reality, giving life, energy and plausibility to his characters. Research your storyline and characters exhaustively. Know far more about your subject than you intend to write.I â€" Images and imaginationOne of the greatest aids to creative writing is the ability to think in images. Before you write it, see it in pictures; and if you can use your senses to strengthen the image, all the better. African locals living near Zambias Victoria Falls call it Mosi oa Tunya â€" the smoke that thunders, a wonderful description evoked by the sight and sound of this wonder of the world. When youre writing about characters, visualize them, hear them, smell them â€" your senses will be great accessories for your descriptions.T â€" TenacityCreative writing is not easy; it requires d iscipline and tenacity. Tenacity means finishing the project at all costs. One quality that separates great authors and the legions of writers of unfinished manuscripts is tenacity â€" the ability to continue even if you think your work will not succeed. James Joyce, whose book the Dubliners was rejected by 22 publishers, went on to write the best-selling English novel of all-time (Ulysses). So even if you think youre failing, carry on. One author I know wrote several books in a cellar. He climbed down a ladder into the cellar every day, his wife pulled up the ladder, and he stayed there writing until his wife let the ladder down later that day. Ive written 11 books and millions of words and it doesnt get easier â€" putting the first word down is like scaling the North face of The Eiger.E â€" EmpathySuccessful writing is all about grabbing the readers attention. Which means your words, characters, dialogue and construction must have empathy. Tie them into your own experiences. This does not mean dull-and-boring, long-winded sentences about yourself. It means incisive originality, directness and raw energy your readers can identify with. Let your writing come from the heart and write it straight. If your words are going to drive you to literary success, make sure theyre firing on all cylinders â€" empathy. Richard Carlson wrote his best-seller Dont Sweat the Small Stuff on a 12-hour Transatlantic flight. The book sold millions of copies because it was empathetic â€" millions around the world identified with his message.R â€" RealityThe great masters of fiction, George Orwell, John Steinbeck, Lewis Carrol and, more recently, Roald Dahl and Harry Potters J. K. Rowling captured the worlds imagination with characters that will live forever. The magic of their writing lies in the reality of their characters. So try to construct your characters with care, affection and detail. Build them up by writing notes about them â€" their personal idiosyncracies, their habits, their loves. When you write, go for the jugular â€" give your readers characters they will love; better still, give them characters drawn from the well of common, everyday human experience.S â€" SimplicityGreat writers know that simplicity is the bedrock of their craft. Short, clear sentences, short paragraphs, uncomplicated, direct constructions, and prose written from the heart are all you need. The Old Man and the Sea by Ernest Hemingway was a simple story about a fisherman and a fish, but it hooked millions of readers. The secret was in the simplicity of the dialogue and narration. Dont use long words to impress, and never be pompous or egotistical. Write with passion, music and simplicity â€" thats the real art of creative writing.

Credit Risk In Banking Finance Essay - Free Essay Example

Credit in bank is a contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date (Joan Selorm Tsorhe p.6). However, credit risk arises whenever a lender is exposed to loss from a borrower, counterparty, or an obligor who fails to honor their debt obligation as they have agreed or contracted (Colquitt 2007, 1). Credit risk implies that payments may be delayed or ultimately not paid at all, which can in turn cause cash flow problems and affects a banks liquidity. Despite innovation in the financial services sector, credit risk is still the major cause of banks failures (Greuning Bratanovic 2009, 135). Credit risk is faced by banks when a borrower (customer) cannot honoring its debt obligations on due date or at maturity. This risk which is also called counterparty risk is capable of putting the bank in distress if not adequately dealt with. There is always the possibility for a borrower to default from his commitments for one or the other reason; therefore a sound credit risk management framework is indispensable to a healthy and profitable banking institution. 2.2 Credit risk management in banking Banks generate their profit from the spread between the interest rate they charge to borrowers and the interest rate they pay to depositors. The major function of banks has always consisted of lending activities and assessing the credit worthiness of a borrower has always been of utmost importance (Andrew Fight, 2004). In order to generate profit, banks make loan with the aim that the latter will be fully repaid as per the agreement. Therefore banks must ensure that borrowers will be able to repay back their obligations on due date in order to maximize the value of the bank. Banks have to manage credit risk effectively, for them to be profitable and to ensure their survival. Banks can reduce their exposure to credit risk by adopting robust credit risk management methods. Credit risk management is basically the procedures adopted by banks with the aim of reducing or avoiding credit risk. It involves tools, procedures and mechanisms that banks rely on to monitor their lending activities. It involves the identification of potential risks, the measurement of these risks, the appropriate treatment, and the actual implementation of risk models. 2.2.1 Credit risk management strategies The methods for hedging credit risk include (as identified by T. Funso, 2012, pp31-38) but not limited to these: 1. Compliance to Basel Accord: Being able to identify, generate, track and report on risk-related data in an integrated manner, with full auditability and transparency and creates the opportunity to improve the risk management processes of banks. The New Basel Capital Accord places explicitly the responsibility on banks to adopt sound internal credit risk management practices to assess their capital adequacy requirements. 2. Adoption of a sound internal lending policy: Strict adherence to the lending policy is by far the cheapest and easiest method of credit risk management. The lending policy should be in line with the overall bank strategy and the factors considered in designing a lending policy should include; the existing credit policy, industry norms, general economic conditions of the country and the prevailing economic climate. 3. Credit Derivatives: This provides banks with an approach which does not require them to adjust their loan portfolio. Credit derivatives provide banks with a new source of fee income and offer banks the opportunity to reduce their regulatory capital. The commonest type of credit derivative is credit default swap whereby a seller agrees to shift the credit risk of a loan to the protection buyer. Frank Partnoy and David Skeel in Financial Times of 17 July, 2006 said that credit derivatives encourage banks to lend more than they would, at lower rates, to riskier borrowers. Recent innovations in credit derivatives markets have improved lenders abilities to transfer credit risk to other institutions while maintaining relationship with borrowers. 4. Credit Securitization: It is the transfer of credit risk to a factor or insurance firm and this relieves the bank from monitoring the borrower and fear of the hazardous effect of classified assets. This approach insures the lending activity of banks. The growing popularity of credit risk securitization can be put down to the fact that banks typically use the instrument of securitization to diversify concentrated credit risk exposures and to explore an alternative source of funding by realizing regulatory arbitrage and liquidity improvements when selling securitization transactions. A cash collateralized loan obligation is a form of securitization in which assets (bank loans) are removed from a banks balance sheet and packaged (tranched) into marketable securities that are sold on to investors via a special purpose vehicle. 5. Credit Bureau: This is an institution which compiles information and sells this information to banks as regards the lending profile of a borrower. The bureau awards credit score called statistical odd to the borrower which makes it easy for banks to make instantaneous lending decision. An example of credit bureau in Mauritius is the Mauritius Credit Information Bureau. Traditional methods of controlling credit risk 1. Screening and monitoring: Adverse selection in loan market requires the lenders screen out the bad credit from the good ones so that loans are profitable to them. Once a loan has been made, the banks has to monitor or follow up the borrowers activities. 2. Long-term Customer Relationship: if the borrower has borrowed previously from the bank, the bank has a record of the loan payments. This reduces the costs of information collection and makes it easier to screen out bad credit risks. Long-term relationship enables banks to deal with even unanticipated moral hazard contingencies. 3. Collateral Requirements: is an important credit risk management tool. Collateral, which is properly promised to the lender as compensation if the borrower defaults, it lesser the lenders losses in the case of a loan default. 4. Credit Rationing: is one way of credit risk management that refers refusing to make loans even though borrowers are willing to pay the stated interest rate or even a higher rate. 5.Know Your Customer principle: ÂÂ  refers toÂÂ  due diligence activities thatÂÂ  financial institutionsÂÂ  and other regulatedÂÂ  companiesÂÂ  must perform to ascertain relevant information from their clients for the purpose of doing business with them. Banks must be fully aware of the repaying capacity of borrowers. 2.3 Basel II framework in Mauritius Basel Accords is the most famous international legislation worldwide. Basle II is implemented in Mauritius since end March 2008 with the Bank of Mauritius having issued several Guidelines in line with the principles set up by the Basel Committee on Banking Supervision (BCBS). Its objective is to maintain an adequate level of Capital Adequacy Ratio, and to improve quantitative risk measurement and risk management across banks (Mauritius Bankers Association Limited, 2008). This international standard helps to ensure proper capital regulations in all banks and make provisions for enhanced risk management practices, which is of great help for banks. Basel II is comprised of three pillars as illustrated in Figure 1 below. Source: (BCBS) Generally, banks can expect to experience losses and these are: Expected Losses (EL): perceived as cost of business undertaking by financial institutions; Unexpected Losses (UL): losses above expected level when banks anticipate their occurrence though the timing and severity cannot be known beforehand. A few portions of unexpected losses might be absorbed by the interest rate charged on credit exposure although market will not support adequate prices to cover all unexpected losses. Loss Given Default (LGD): the amount of fund that bank can lose when the borrower defaults on a loan (BCBS, 2006). In order to cover the risks of these losses, banks need to hold enough capital. Basel II distinguishes between two methods to measure credit risk: The Standardised Approach and the Internal Rating Based (IRB) Approach. The latter can be further divided into two approaches namely the Foundation Internal Rating Based Approach and the Advanced Internal Rating Based Approach. The Internal Rating Based Approach is more sophisticated than the Standardised Approach while the Advanced Internal Rating Based Approach is the most sophisticated Approach within the IRB methods. 2.4 Banking credit risk management guidelines in Mauritius The Bank of Mauritius recognizes that credit constitutes by far the largest part of a financial institutions business in Mauritius and its mismanagement can pose a serious threat to the institutions continued existence, with resulting impacts on the interests of depositors and other stakeholders. Therefore it imposes guidelines which banks in Mauritius must abide with. 2.4.1 Establishment of a credit risk policy Banks have the obligation to establish a written policy that includes principles and objectives governing their willingness to accept credit risk, establish the areas of credit in which they are willing to engage and those in which they are refusing to engage. The policy must define the levels of authority to approve credits, establish prudent limits on the financial institutions exposure to credit risk and on the concentration of credit risk in different areas of the institutions credit portfolio; and defines the accountabilities of the chief executive officer to the board of directors. 2.4.2 Responsibilities and Accountabilities of the Board of Directors The board of directors is responsible for reviewing and approving a banks credit risk strategy and policies. Each bank should develop a strategy that sets the objectives of its credit-granting activities and adopt the necessary policies and procedures for conducting such activities. 2.4.3 Responsibilities and Accountabilities of Chief Executive Officer The chief executive officer shall develop a soundly based credit risk management policy for approval by the board of directors. The latter must ensure clearly documented delegation of credit approval authority of management personnel and committees, and also ensure that the board approved credit risk management policy is implemented in its true spirit, using strictly and exclusively prudential credit appraisal criteria and considerations and not influenced by any extraneous factors. Also it must install adequate internal controls, covering the entire credit spectrum, ensure implementation of an effective internal inspection/audit function. 2.4.4 Conduct Review and Risk Policy Committee The function of the committee would be to assist the board in discharging its responsibilities in the area of credit risk management. 2.4.5 Credit Risk Management Process Credit risk management process should cover the entire credit cycle starting from the origination of the credit in a financial institutions books to the point the credit is extinguished from the books. It should provide for sound practices in: Credit Processing/Appraisal: it is the stage where detailed and authentic information from application forms on credit, is gathered and screened in order to determine the types of credit that are acceptable. Then banks assess customers ability to meet its obligations and this usually includes assessing their collaterals and guarantees. Credit-approval/Sanction: approval authorities will cover new credit approvals, renewals of existing credits, and changes in terms and conditions of previously approved credits, particularly credit restructuring, all of which should be fully documented and recorded. Credit Documentation: documentation is an essential part of the credit process and is required for each phase of the credit cycle, including credit application, credit analysis, credit approval, credit monitoring, collateral valuation, impairment recognition, foreclosure of impaired loan and realization of security. The format of credit files must be standardized and files neatly maintained with an appropriate system of cross-indexing to facilitate review and follow-up. Credit Administration: financial institutions must ensure that their credit portfolio is properly administered, that is, loan agreements are duly prepared, renewal notices are sent systematically and credit files are regularly updated. Disbursement: when the credit is approved, the customer should be advised of the terms and conditions of the credit by way of a letter of offer. The duplicate of this letter should be duly signed and returned to the institution by the customer. The facility disbursement process should start only upon receipt of this letter and should involve, inter alia, the completion of formalities regarding documentation, the registration of collateral, insurance cover in the institutions favour and the vetting of documents by a legal expert. Under no circumstances shall funds be released prior to compliance with pre-disbursement conditions and approval by the relevant authorities in the financial institution. Monitoring and Control of Individual Credits: A proper credit monitoring system provide the basis for taking prompt corrective actions when warning signs point to a deterioration in the financial health of the borrower. Examples of such warning signs include unauthorised drawings, arrears in capital and interest and a deterioration in the borrowers operating environment. Financial institutions must have a system in place to formally review the status of the credit and the financial health of the borrower. It must also include a review of up-to-date information of the borrower. Monitoring the Overall Credit Portfolio (Stress Testing): it is the analysis of what could potentially go wrong with individual credits and the overall credit portfolio if conditions/environment in which borrowers operate change significantly. The results of this analysis should then be factored into the assessment of the adequacy of provisioning and capital of the institution. Such stress analysis can reveal previously undetected areas of potential credit risk exposure that could arise in times of crisis. The results must serve as an important input into a review of credit risk management framework and setting limits and provisioning levels. Classification of credit: Credit classification process grades individual credits in terms of the expected degree of recoverability. Banks must have in place the processes and controls to implement the board approved policies, which will, in turn, be in accord with the proposed guideline. They should have appropriate criteria for credit provisioning and write off. Up until the time the proposed guideline comes into effect, the existing guideline on credit classification will continue to apply. Managing Problem Credits/Recovery: A banks credit risk policy should clearly set out how problem credits are to be managed. It involves following all aspects of the problem credit, including rehabilitation of the borrower, restructuring of credit, monitoring the value of applicable collateral, scrutiny of legal documents, and dealing with receiver/manager until the recovery matters are finalized. Banks must put in place systems to ensure that management is kept advised on a regular basis on all developments in the recovery process. Management Information Systems: The feasibility and effectiveness of the various requirements of the credit risk management framework depend, in large measure, on the adequacy of management information systems in a financial institution. The information generated by management information systems enables the board and management to fulfill their respective oversight roles, including the adequate level of capital that the institution should be carrying. The quality, detail and timeliness of information respecting the composition and soundness of credit portfolio, are critical to credit risk management. A well functioning information system would permit credit exposures approaching risk limits to be identified and brought to the timely attention of management and the board. Also, the systems design can throw out information on concentration of risks within the credit portfolio, including concentration in maturity streams, enabling management to take remedial action in a timely manner. 2.5 Capital Adequacy Ratio Ebhodaghe (1991) defines capital adequacy as a situation where the adjusted capital is sufficient to absorb all losses and cover fixed assets of the bank leaving a comfortable surplus for the current operation and future expansion. Capital adequacy ratio (CAR) is a ratio of a banks capital to its risk. The presence of capital adequacy regulations ensures that banks will hold enough capital so that it can act as a cushion in case of losses, to ensure survival of banks. Therefore, banks in Mauritius compute composite Capital adequacy Ratio, encompassing both credit risk and operational risk. They are required to maintain a minimum composite Capital Adequacy Ratio of 10 per cent which is above the minimum 8 per cent prescribed by BCBS. For the purpose of calculating the CAR, the capital of a bank is divided into two tiers (levels): Core Capital (Tier 1) and Supplementary Capital (Tier 2). mbox{CAR} = cfrac{mbox{Tier 1 capital + Tier 2 capital}}{mbox{Risk weighted assets}} (Source: Wikipedia) 2.6 Nonperforming loan A loan is nonperforming when it is not earning income and, full payment of principal and interest is no longer anticipated, principal or interest is 90 days or more delinquent, or the maturity date has passed and payment in full has not been made. The problem of non-performing loans (NPLs) has gained increasing importance because large amount of NPLs can lead to bank failure. Dermirgue-Kunt(1989) found that failing banking institutions always have high level of NPLs prior to failure. Brewer et al. (2006) use NPLR as a strong economic indicator. Efficient credit risk management supports the fact that lower NPLR is associated with lower risk and lower deposit rate. However it also implies that in long run, relatively high deposit rate increases the deposit base in order to fund relatively high risk loans and consequently increases possibility of NPLR. Therefore, the allocation of the available fund and its risk management heavily depend on how the credit risk is handled and diversified to decrease the NPL amount. NPL is a probability of loss that requires provision. Provision amount is accounting amount which can be further, if the necessity rises, deducted from the profit. Therefore, high NPL amount increases the provision amount which in turn reduces the profit. NPLs lead to unprofitable banks. The eradication of NPLs is important to improve bank performance. Non Performing Loan Ratio (NPLR) is defined as NPLs divided by Total Loans (TLs). 2.6 Banks profitability and its measurement Like all businesses, banks generate their profit by earning more money than they spend in their expenses. Banks generate the major portion of their profit from the fees they charge for their services and the interest they earn on their assets. Their major expense is the interest they pay for their liabilities (deposits). The major assets of a bank are its loans to individuals, businesses, and other organizations and the securities it holds, while its major liabilities are its deposits and the money that it borrows, either from other banks or by selling commercial paper in the money market. And the profitability of any business can be measured through return on assets (ROA) and return on equity (ROE). At the beginning, many banks used a purely accounting-driven approach and focused on the measurement of NI, for example, the calculation of ROA. However, this approach does not consider the risks related to the referred assets, for instance, the underling risks of the transactions, and also with the growth of off-balance sheet activities. Thus the riskiness of underlying assets becomes more and more important. Gradually, the banks notice that equity has become the scarce resource. Thereby, banks turn to focus on the ROE to measure the net profit to the book equity in order to find out the most profitable business and to do the investment (Gerhard.S, 2002). Mostly ROE is used to measure the profitability of banks. The efficiency of the banks can be evaluated by applying ROE, since it shows that banks reinvest its earnings to generate future profit. The growth of ROE may also depend on the capitalization of the banks and operating profit margin. If a bank is highly capitalized through the risk-weighted capital adequacy ratio (RWCAR) or Tier 1 capital adequacy ratio (CAR), the expansion of ROE will be retarded. However, the increase of the operating margin can smoothly enhance the ROE45. ROE also hinges on the capital management activities. If the banks use capital more efficiently, they will have a better financial leverage and consequently a higher ROE. Because a higher financial leverage multiplier indicates that banks can leverage on a smaller base of stakeholders fund and produce higher interest bearing assets leading to the optimization of the earnings.46 On the contrary, a rise in ROE can also reflect increased risks because high risk might bring more profits. This means ROE does not only go up by increasing returns or profit but also grows by taking more debt which brings more risk. Thus, positive ROE does not only repres ent the financial strength. Risk management becomes more and more significant in order to ensure sustainable profits in banks (R. Alton Gilbert and David C. Wheelock, 2007). 2.7 Relationship between credit risk management and bank performance As per different researchers and authors, Credit risk is the most significant of all risks in terms of size of potential losses. As the extension of credit has always been at the core of banking operation, the focus of banks risk management has been credit risk management. When banks manage their risk better, they will get advantage to increase their performance (return). Better risk management indicates that banks operate their activities at lower relative risk and at lower conflict of interests between parties. (Anthony M. Santomero, 1997) The advantages of implementing better risk management lead to better banks performance. Better bank performance increases their reputation and image from public or market point of view. The banks also get more opportunities to increase the productive assets, leading to higher bank profitability, liquidity, and solvency. Therefore, Effective credit risk management should be a critical component of a banks overall risk management strategy and is essential to the long-term success of any banking organization. It becomes more and more significant in order to ensure sustainable profits in banks.