Sunday, February 16, 2020

BEHAVIOURAL FINANCE AND MARKET EFFICIENCY Essay

BEHAVIOURAL FINANCE AND MARKET EFFICIENCY - Essay Example Due to the presence of inefficiency within the global market, the sales and profitability of a company is not only affected but also the country’s ability to build a more reliable capital asset. Therefore, in response to poor market efficiency, the study on behavioural finance has gained importance back in 1990s2. Using knowledge on behavioural finance, the main causes and underlying drivers of the most recent global financial crisis will be identified and tackled in details. As part of analyzing the factors that has triggered the recent global financial crisis, both behavioural and non-behavioural explanation behind such crisis will be compared and contrast. In relation to the presence of irregularities in the global markets, whether or not â€Å"value† is riskier than â€Å"growth† will be answered based on the theory behind the rational risk pricing. 2. Main Causes and Underlying Drivers of the Most Recent Global Financial Crisis 2.1 Non-behavioural Explanatio n behind the Most Recent Global Financial Crisis Next to the Great Depression which occurred back in 1930s, the worst global financial crisis happened between 2007 to 2008 when most of the large-scale financial institutions worldwide were at risks of bankruptcy aside from the sudden fall in the stock markets3. Specifically the U.S. real estate bubble in 2006 had caused serious damages to the status of global financial institutions4, 5. Eventually, the prolonged 2007 to 2008 global financial crisis has somehow contributed to the European sovereign-debt crisis6, 7. This increases the risks wherein most of the largest financial institutions such as the Lehman Brothers had serious problems about their liquidity and bank solvency8. Based on the study of macroeconomics, a lot of potential factors have been considered to be the main drivers behind the most recent global financial crisis. Based on the historical trend in the global financial crisis, one thing that is certain is that increas e in financial imbalances within the world market has something to do with today’s global financial crisis9. Likewise, it is also suspected that the growing imbalances in the worldwide capital flows are one of the main reasons behind the recent global financial crisis10, 11, 12, 13. Furthermore, it is also possible that the combination of the increasing imbalances in the flow of capital worldwide and the use of monetary policies have contributed to the development of the recent global financial crisis14, 15. Financial crisis is often characterized by having relatively low levels of national savings, huge fiscal and financial deficits, business bankruptcy and foreclosure, low GDP output, high unemployment rate, and huge trade or current account deficits16. With regards to the continuously increasing global financial imbalances, Merrouche and Nier (2010) explained that the incidence of global financial imbalances is somehow strongly connected with the huge dispersion between a huge net capital flows between two or more different countries and the position of the current account across different countries17. In line with this, a country with excessive inflows of capital can have long-term low interest rates which can influence most investors to search for other investment options as most financial institutions would try other means of maintaining their daily operational costs18, 19. Likewise, excessively high inflows of capital can also significantly reduce the wholesale funding cost of the

Monday, February 3, 2020

Marketing Decision Making Essay Example | Topics and Well Written Essays - 1750 words

Marketing Decision Making - Essay Example Promotion is considered as one of the major elements of marketing mix and it possesses its own mix of communication tools. Advertising, direct marketing, sales promotion among others are some of the elements of IMC, these tools enable a company to implement its advertising and marketing objectives constructively through a coordinated approach. This paper seeks to discuss the basic elements of communication mix putting more emphasis on their pros and cons and how they influence an organizations ability to succeed in their marketing program. It will provide an overview of a promotional product that I created and how I intend to market it using the IMC approach. The rational that I will follow in choosing or rejecting specific elements of the integrated marketing mix will also be provided (Mossman, 2007). Advertising is any paid form of promotions that does not employ active participation of personal presentation to promote ideas, goods, or services through the use of a specific sponsor . Advertising uses a number of channels which include the print media, media broadcast through radios and television, outdoor advertising and other forms of non personal selling. Advertising is a promotional strategy that maintains the omnipresence nature of an organization by increasing its non personal availability to different people. Advertising is highly flexible as it allows a business to focus on a small and precise segment or a mass market depending on the intention of the advertising model. It is also highly cost effective as compared to other elements of market mix as it reaches a large number of target consumers at a lower cost per person (Chen, 2011). With advertising, the message is repeated severally to the consumers which allow them time to compare the product with others offered with other organizations. Dramatization captures the attention of the audience and creates a lasting impression on their minds, a feature that is only possible with advertising. Advertising c an also trigger quick sale and impulse buying among consumers which improves the impacts intended by the promotional strategy employed. However, advertising also have a number of disadvantages as compared to the other available elements of market mix. Feedback is an important aspect of promotion as it enables a business to repackage their product according to the consumer’s desires. Advertising has no room for any immediate feedback from consumers and is less persuasive when compared with the other elements of communication mix (Lichtenthal and Eliaz, 2003). Personal selling is a face to face interaction between the product promoter and the prospective consumers for the sole purpose of making presentation, answering any questions that may arise and finally procuring orders from the consumers. Personal selling is one of the most powerful elements of communication mix as they provide room for building customer relationship and long lasting business relations with the buyers. It provides the room for getting feedbacks from the consumers which allows for any adjustments on the products being marketed. Personal selling occurs in an environment where the consumers attention is fully captured increasing the possibility of getting a genuine response from them on how they view the products and the company. Despite the numerous advantages that personal selling posses, it is however an expensive means of product promotion