Health Care Reform Project Essay

One solution to managed care in health care is the keeping the cost of the health care down. According to â€Å"Health Care Cost Control: Getting on the Right Track† (2002), â€Å"A real solution will, of necessity, involve pain for all players in health care: employers, government, providers, insurers, pharmaceutical and medical technology companies, and consumers.† To regain control over the heath care crisis the purchasers and the consumers need to come together and decide what the best resolution would be best for them. They will also need to determine what it is that they are willing to sacrifice in order to reduce the high rate of the health care cost. If this doesn’t work the only other alternative would be for the government to step in and decide what needs to mandated, nobody wants this to happen. Another solution to managed care in health care is access to affordable health care. According to â€Å"Health Care in Chaos: Will We Ever See Real Managed Careâ€Å" †Lack of insurance coverage causes people not only to avoid preventive care, but to delay seeking illness care until later into the episode of illness.† The underinsured or uninsured will wait until they absolutely have to or need to be seen and end up going to the Emergency room costing themselves and other a lot more money out of pocket. If managed care was more affordable then there would be a lot less people needing insurance along with better health for those individuals. There are an increased number of uninsured people in the United States to roughly around 45.6 million people (Health Care in Chaos: Will We Ever See Real Managed Care). Quality of care in managed care is another issue that is happening. â€Å"Medicare HMO enrollees with chronic conditions showed worse quality of care.†(Miller, 2015). The quality of care with HMO’s can be considered poorly done. Most people feel that HMO’s do not get the same type of care as  others such as PPO’s this is â€Å"in part because of slow clinical practice change, lack of risk-adjusted capitation rates, and inadequate quality measurement and reporting.† (Miller, 2015). Solutions to these managed care issues all depends on the individual who is insured and wither or not they want to spend a lot of their own money to get the quality of care they are wanting. Most Americans cannot afford insurance either through their employer or through the Affordable Care Act. This is why so many people do not have insurance and have poor health. They are not able to obtain the care they need which then makes health care rise to cover those who seek medical help through the Emergency rooms. More hospitals have to write the debts off which is costing them to lose more money from the patients who are unable to pay for their services. Having managed care is a vicious circle, you either cannot afford to have the health care you and your family needs or you have health care but it is not very good and you still have to pay a lot out of your own pockets just to be seen and have mediocre care. According to â€Å"Managed Care: Get Used To It† (2010) â€Å"The concept embodies many modes of delivering medicine, ranging from the nightmarish bureaucratic encounter to the highly professional clinic.† The worst part of managed care is that providers can decide the service and access because the fee of service treatment is limited to what the providers think is right. â€Å"All managed care plans have a built-in incentive to limit costs, because more treatments do not automatically mean more revenue for health providers.† (Managed Care: Get Used To It† (2010). References Health Care Cost Control: Getting on the Right Track. (2002). Retrieved from http://www.managedcaremag.com/archives/0202/0202.edge.html Huntington, J., (Jan. 6, 1997) â€Å"Health Care in Chaos: Will We Ever See Real Managed Care?† Online Journal of Issues in Nursing Vol. 2, No. 1, Manuscript 1. Managed Care: Get Used to It. (2010). Retrieved from http://www.nytimes.com/2010/03/14/business/14views.html?_r=0 Miller, R.H. (2015). Does managed care lead to better or worse quality of care? Retrieved from http://content.healthaffairs.org/content/16/5/7.short

Promotional and Advertising Strategies Essay

The author comes from Iran, with an ideological and religious fanatic government which owns and controls all of economical and industrial activities with an armed to teeth minority. In such countries they can produce and sell any low quality with any prices that they want, and actually customers have not many choices, and almost all of promotional techniques and strategies are meaningless! So here we are talking about free trade and free market countries like US. This paper review and scrutiny the circumstances surrounding the promotional and advertising Strategies for two automotive companies: TOYATA and HUNDAI. The author is very curious about those companies, because HUNDAI (1967) began car production almost 32 years after TOYOTA (1935)! But now, in all aspects both companies are equal in quality, branding, marketing, price and customer service, even HUNDAI is further! HMC (Hyundai Motor Company) was unknown brand with low quality and cheap price cars, but after it came in the US market converted its products to high quality and luxury quickly and stealing loyal customers away from many industry pioneers! But how was this late-moving car maker able to gain an advantage in this extremely competitive market? (Graf B, 2013) Introduction Definition of Advertising: The term â€Å"Advertising† first appeared in the 17th century. It has its root in the Latin word â€Å"advertere,† which means, â€Å"to make people notice or know. † It can be roughly explained as â€Å"to extensively notify the public. † According to the Dictionary of Chinese Etymology, the Chinese definition of advertising means, â€Å"openly announce to the public,† with the annotation of â€Å"such as putting up notices or publishing advertisements in newspapers. † (Yan Boqin, 1978) Definition of Marketing: â€Å"Marketing† is an economic term meaning promotion and distribution. Originally applied in agriculture, it drew more and more attention after the 19th century and spread rapidly. From economic, social, business and customers’ angles, the property of its definition can be determined (Li Zongru, 2004). For highlighting the brand in the eyes of public and attracting new customers, product promotion is one of the essentials. There are many channels to promote a product or service. Successful promotions strongly depends on believe and culture of people, style of living, income level, government policies and economical and industrial infrastructures. Some firms use multiple methods, while others may use different methods for various marketing purposes. Irrespective of the type of service or product, a strong group of promotional strategies can help position the company in a favorable light with not only current customers but new ones as well. The following are top ten promotional strategies: â€Å"1- Contests, 2-Social Media, 3-Mail Order Marketing 4-Product Giveaways, 5-Point-of-Sale Promotion and End-Cap Marketing, 6-Customer Referral Incentive Program, 7-Causes and Charity, 8-Branded Promotional Gifts, 9-Customer Appreciation Events, 10-After-Sale Customer Surveys† (Carl Hose. 2014; Small businesses; Retrieved December 2, 2014 from http://smallbusiness. chron. com/top-ten-promotional-strategies-10193. html) Comparing the promotional strategies used by Toyota and Hyundai for a similar product Today almost all of carmakers have a lot of experiences and they have access to modern and new technologies. So they can produce good quality and good design cars and also offer good services to customers, especially in US, there is no way to sell any products with low quality and low customer service. In result the best promotional strategies are those that involve culture, attitudes and beliefs of the people. The following are some examples of such strategies. Green Environment: Increasing public awareness about environmental protection, governments forced to implement hard regulation and criteria for automobile firms. Toyota published on its website: 1. Diversifying energy sources: â€Å"Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world. † 2. Fuel Cell: â€Å"By generating electricity from hydrogen, Toyota’s fuel cell vehicles are not only environmentally friendly they’re also highly energy efficient. With such eco-friendly characteristics, Fuel Cell Vehicles are the next step toward achieving sustainable mobility. † 3. Plug-In Hybrid: â€Å"Introducing the next step for eco-friendly cars; a combination of the proven engineering of current hybrids with home recharging. It has an increased electric range and produces lower emissions. † 4. Measuring environmental issues surrounding vehicles: â€Å"For more improvements in efficiency, Toyota proactively manages power train efficiency, reduces vehicle load, and controls energy management by integration of fuel-saving technologies such as charge control, idling stop, etc. † 5. Various vehicles: â€Å"Along with our emphasis of conventional vehicles and hybrid vehicles as fundamental core technology while pursuing further advancement. † 6. Alternative fuels: â€Å"Based on these core technologies, Toyota will develop next-generation vehicles utilizing alternative fuels such as gas fuel, electricity and hydrogen. † (Retrieved December 2, 2014 from http://www. toyota-global. com/innovation/environmental _technology/) Hyundai published on its website: 1. Blue Drive: Our Blue Drive ® technology gives you lower pollution and higher performance. Blue Drive is a philosophy that guides Hyundai in its effort to become the automotive leader in sustainability. It’s helped focus our engineers and designers on creating lighter vehicles, developing more efficient power trains and even inventing proprietary hybrid technologies. 2. Plug-in and zero-emission: In the future, Blue Drive will expand to include plug-in hybrid vehicles, zero-emission electric vehicles and fuel-cell vehicles that run entirely on hydrogen. Their only emission is water. 3. Electric hybrid: Hyundai introduced the first electric hybrid with electrifying performance. Our engineers have invented the industry’s most advanced hybrid vehicle. 4. New battery: Unlike other hybrids on the market, ours uses a patented Lithium Polymer battery. It has 40% less volume; it’s 25% lighter and 10% more efficient. The battery also has a longer life-span-it comes with a lifetime warranty guarantee. So you can feel good about preserving the environment for the life of your vehicle. (Retrieved December 2, 2014 from https://www. hyundaiusa. com/new-thinking/environment. aspx) Slogan: â€Å"An advertising slogan is usually a short tagline – less than five words — that tells potential customers the benefits they can expect when choosing your product or service, or establishes your company brand. † (Kristen Hamlin, 2014; Retrieved December 2, 2014 from http://smallbusiness. chron. com/ importance-ad-slogans-31343. html) 1. Toyota’s ownership slogans: marketing efforts in North America have focused on emphasizing the positive experiences of ownership and vehicle quality. The ownership experience has been targeted in slogans such as â€Å"You asked for it! You got it! † (1975–1979); â€Å"Oh, what a feeling! † (1979 – September 1985, in the US); â€Å"Who could ask for anything more? † (September 1985 – 1989); â€Å"I love what you do for me, Toyota! † (1989–1997); â€Å"Everyday† (1997–2001); â€Å"Get the feeling! † (2001–2004); â€Å"Moving Forward† (2004–2012); and â€Å"Let’s Go Places† (2012–present). 2. Hyundai’s Brand slogan: â€Å"NEW THINKING. NEW POSSIBILITIES. †; reflects the will of Hyundai Motor Company to create new possibilities to benefit the world and its people by encouraging and developing new thinking. All members of Hyundai have the brand slogan deeply engraved in their hearts as they move forward in their effort to provide new values and experiences desired by today’s customers through innovative ways that are unique to the brand, driven by new thinking about customers and cars. ( Retrieved December 3, 2014 from http://worldwide . hyundai. com/WW/Corporate/Corporate Information/BrandSlogan/index. html) New Compact Vehicle Strategy: According to the Ford India President, compact car sales are expected to double by 2018 from around one million units in 2013. This surge in demand in expected to be fueled by rising disposable incomes in the second most populous country in the world, and also owing to the increasing demand for fuel-efficient smaller cars due to rising fuel prices. ( Trefis Team ,2014. Retrieved December 3, 2014 from http://www. forbes.com/sites /greatspeculations/2014/06/13/tata-motors-looks-to-improve-passenger-car-sales-by-penetrating-the-compact-segment/) 1. Toyota: The automobile market in emerging markets is growing each year in tandem with the economic growth of each country. Within those markets, there has been marked growth in the sales of compact vehicles, so Toyota is promoting a new compact vehicle strategy that emphasizes the compact vehicle lineup and seeks to meet the needs of consumers in emerging markets. 2. Hyundai: The South Korean automaker ranked seventh among mass-market brands in the this year’s U. S. Initial Quality Study by J. D. Power and Associates, topping such brands as Toyota, Infiniti, Audi and Lincoln. Hyundai’s Accent compact and Elantra small car were named among the top three cars in their segments. (Hans Greimel, 2011. Retrieved December 2, 2014 from http://www. autonews. com/article /20101206/RETAIL03/ 312069982/hyundai-plans-new-brand-strategy) Financial Services Strategy: Every year, millions of people around the world transition out of poverty in any number of ways—by adopting new farming technologies, investing in new business opportunities, or finding new jobs, for example. Effective tools for saving, sending, and borrowing money and mitigating financial risks can help people weather setbacks and achieve greater financial stability over the long term. (Retrieved December 4, 2014 from http://www. gatesfoundation. org/What-We-Do/Global-Development/Financial-Services-for-the-Poor) 1. Toyota: Toyota Financial Services has constructed a global network that covers approximately 90% of the markets in which Toyota sells its vehicles. Mainly concentrated on auto loans, leases and Toyota dealer floor plan requirements, TFS provides auto sales financing to approximately 5. 4 million customers. Thus effectively helping them in making their own cars more affordable to their potential consumers all around the world. Again being a strategy that helps them a stronger competitor in the market. 2. Hyundai: Through our service brands, Hyundai Motor Finance and Kia Motors Finance, we provide financial products tailored to meet the needs of Hyundai and Kia dealerships nationwide, including dealer inventory and facility financing. And, through these dealerships, we provide indirect vehicle financing and leasing solutions to over 1 million retail customers. Our subsidiary, Hyundai Protection Plan, Inc.offers vehicle service contracts and other vehicle protection products under the Hyundai Protection Plan and Power Protect brands. (Retrieved December 2, 2014 from http://www. Hyundaicapital america. com/hca. aspx) Two uses for consumer-oriented promotions that could assist a company in both the short and long term for the carmaker companies What are consumer-oriented sales promotions? There are two points of view: 1- Retail Promotions consist of inducements offered by retailers to consumers includes retail coupons, price discounts, double coupons, special displays, features etc. 2- Consumer Promotions consist of inducements offered by manufacturers to consumers includes manufacturer’s premiums, bonus packs, coupons, samples, rebates, etc. There are some reasons for the importance of the sales promotion. First, the growth of retailer power in distribution channels has led to an excess in consumer promotions. Sometimes, manufacturers make special offers to consumers because a powerful retailer insisted that they do so. Another time, as a way of neutralizing retailer power by intensification the bonds of loyalty consumers may feel toward the brand. Either way, retailers frequently serve as the driving force behind consumer promotions. Second, the type of competition has converted significantly during recent years resulting in ever greater consumer price sensitivity. The growing of brands and brand extensions, intensity segmented consumer markets, and lower brand loyalty have combined to make consumers much more aware of price given that many product categories are populated by several competitors. Third, price deals have become the rule rather than the exception for many products. Rebates on certain brands of automobiles, department store sales, and coupons on many grocery items are only a few areas where consumers have grown to expect price breaks. Indeed, the expectation is more than, when possible, many consumers will wait for promotional offers rather than buy with no deal. Fourth, advertising clutter has forced marketers to find new ways of getting consumer attention. Product benefits alone frequently prove insufficient to prompt consumer action much less get their attention. Thus, marketers increasingly look to sales promotion to find ways of breaking through to customers who face a constant bombardment of promotional messages. Eventually increasing of consumer promotion can also be attributed to more pressure on marketing management for short-term results. Investors want to immediate bottom-line results rather than the long-term health or stability of the companies in which they invest. Sales promotions are tools to increase near term sales. However, as their use becomes more common, their costs become regular and recurring and therefore potentially self-defeating. (Retrieved December 5, 2014 from www. udayton. edu/†¦ /Consumer%2520Promotion. p) The strategic manner in which the leading car company has made its pricing decisions by using one or more of the four pricing objectives â€Å"The four Ps of marketing is the combination of product, price, place (distribution), and promotion. Marketers develop strategies around these four areas in marketing to enhance branding, sales, and profitability. â€Å" (Ross Gittell, 2014, Retrieved December 5, 2014 from http://catalog. flatworldknowledge. com/bookhub/reader/3157? e=gittell_1. 0-ch06_s02#). Price is the only revenue generating element amongst the 4ps, the rest being cost centers. Pricing objectives or goals give the company direction to the whole pricing process and consider the following: 1- Survival; 2- Get competitive advantage; 3- Financial, marketing, and strategic objectives of the company; 4- Enhance image of the firm, product or brand; 5- Hold price leadership; 6- Increase market share; 7- Consumer price point and elasticity; 8- Available resources; 9- Catch target of return of investment and sales; 10- Prevent new entrants; 11- Match competitors prices. Toyota gets credit for being the most known brand on the market; however the Corolla comes up nowhere in the competitor charts in terms of price, model distinction, or performance (TrueTrends, 2012). Providing a competitive advantage for the Corolla requires differentiating the car in pricing, quality, service, innovation, brand, convenience, and anywhere else that makes it more desirable over its competition (McCrimmon, 2008). How Toyota as a leading company can offer lowest prices? i. e. $89 a month for lease! The answer is: by maintaining its lowest costs. Along with differentiation Toyota also uses low cost to try and gain a competitive advantage in the automotive industry. â€Å"Toyota is (or was at the time) the low cost producer in the industry. Toyota achieves its cost leadership strategy by adopting lean production, careful choice and control of suppliers, efficient distribution, and low servicing costs from a quality product. †(Michael E. Porter, 2013) This quote from Michael Porter sums up how Toyota achieves this low cost strategy. Through research, it is evident that Toyota is still the low cost leader in the automotive industry. Societal trends have moved away from an individualistic culture—which identified social status and hierarchy based on material possessions—to an environmentally aware society (Grewal & Levy, 2012). With consumers’ minds wrapped around things like fuel mileage, cleaner emissions, and hybrid technology we find them moving further away from SUVs and trucks (Farooq, 2012). However, the 2013 Corolla is foreshadowed to be outshined by the Dodge Dart, as it loses some of its competitive edge in pricing and other award winning features (TrueTrends, 2012). By 2012 Toyota is planning to have more than 20 models that use batteries to extend fuel economy just like their Prius (Krolicki). Although they have not been as aggressive in the electric car market recently, like their competitors, they are planning to release a rechargeable version of their Prius by June 2012 (Krolicki). This re-chargeable version will position Toyota to attempt to take over as a low cost leader of hybrid technologies within the market, which supports Toyota’s overall strategy of low cost (Krolicki). Two actions that other car companies may take in order to differentiate themselves and gain a competitive advantage Hyundai rightly understood the consumer motivations to create magnetic products, price them strategically, position them sharply and keep making the magnetism more potent. Having understood the finer differences in consumer motivations, it opted for sharp arrow ‘reasons-to-buy’ differentiation over the ‘blanket-all approach’ taken by most of the other players. It is an aggressive marketer. It focuses on medium and low price products. Hyundai has also started premium products range to capture the growing market. (Anshuman goyal, pricing strategy of Hyundai, 2007; Retrieved December 9, 2014 from www. hyundai. com) The segments are based on type of customer like age group, attitude, end use of product, demographic behavior and purchasing power, status of the people of the region. Each competitor has its own strong point and value and position there product so as to attract maximum number of customers. (Kottler, Keller, Jha, Koshy, 2007, Marketing Management) Hyundai brand continues to dominate the market for premium cars, despite increasing competition. The firm should first consider the competitors price. If the company i. e. Hyundai contains features not offered by the nearest competitor, it should evaluate their worth to the customer and that value to the competitor price. Competitors are more likely to react when there is high competition. In case of Hyundai, many products are there such as Sonata, Santro, Hyundai i10, Accent etc. Hyundai continues to provide stiff competition to Honda in all the segments and poses an even bigger threat to expansion plans of Hyundai. (Anshuman goyal, pricing strategy of Hyundai, 2007; Retrieved December 9, 2014 from www. honda. com) Two examples of the most effective advertising medium for a Car company The TV advertising have been having the largest audiences in all ages, but car buyers are specific ages who have not enough time to watching TV even less than one hour per day, because they are too busy in today competitive era. Instead the internet via smart phones and computers is like a ghost became as a inseparable part of their life, at any time more than 15 hours a day, and even when they are eating, showering, walking, sporting, biking, swimming, and in any place even in high mountains and deep forests, roads and villages! Another reason for effectiveness of internet rather than TV is: new intelligence algorithms via data mining analyze the behavior of customers and put proper Ads to the web pages related to the target customers with very lower advertising costs. As a most important subject which advertisers should also pay attention to it is cultural differences, they have to be careful since cultures vary in different countries, they must understand the local audience culture before releasing new commercials, in order to avoid any misunderstanding. Another internet related way for advertising can be the online promotional games, such as Toyota’s use of MSN commercial games to promote its products, for instance. There are two interactive contents focusing on entertainment: fun activities and downloads. Both of them were found in about one third of the 100 web sites, respectively. Fun activities were also utilized to promote the brand in the sites and they are not related to scores or performance. Activities for fun included virtual test drive (www. gmc. com), virtual plant tour (www. cocacola . com), virtual auto show (www. lexus. com), e-cards (www. saturn. com), a coloring sheet (www. wendys. com), a virtual skin beauty analysis (www. neutrogena. com), and so forth. Downloads promoting and affiliated with the company’s brand were also analyzed. Desktop images such as wallpaper and icons were the most offered downloads, followed by music (Seounmi Youn, 2001, Retrieved December 9, 2014 from http://list. msu. edu/cgi-bin/wa? A3=ind0209c&L=AEJMC&E =0&P=3326464&B=†¦ _&T=text%2Fplain;%20charset=us-ascii) For the carmakers, another impressive promotion method is â€Å"complete test ride†. The buyers are very keen to getting experience to drive with a brand new car and having the opportunity to really feel its advantages and disadvantages. For encouraging the customers to more participating in test drive activities, offering some gifts can always increase the interest and willingness of then. Getting the best result always does not correspond with the cost of the advertising. So carmakers should choose their advertising media in accordance with today era. However as always, inviting stars to speak for different models with different appeals will have so effectiveness to increasing the public awareness. Conclusion Some observers suspect that Hyundai’s recent successes may be anomalies, abetted by the difficulties that the company’s U. S. and Japanese competitors faced after the global economic crisis, the rise in the yen’s value, Toyota’s wave of recalls, and the 2011 earthquake and tsunami in Japan and Fukushima nuclear disaster. Others say that the company’s highly protected home market has enabled its growth, allowing Hyundai to establish a global presence while its domestic competitors restrict themselves to tiny slivers of the Korean market. But the single factor that has made the most difference is the company’s own interest in building world-class capabilities. Starting in 1998, Hyundai’s leaders set out to develop the kind of prowess the company would need to become a global automobile powerhouse, able to hold its own in the United States and other fiercely competitive markets. Early on, that meant offering a comprehensive warranty and taking specific steps to dramatically improve its quality ratings. Once customers were convinced of the brand’s reliability, Hyundai added other capabilities, such as design, which led to a more diversified product line and more stylish features. Meanwhile, it developed a knack for getting the word out through clever, consistent marketing. The result is a coherent mix of quality improvement, design, and marketing that gives Hyundai a clear advantage over its industry competitors. Although these are required capabilities at all automakers, Hyundai has excelled at combining them over the past decade, and its sales numbers reflect this success. The company’s effort to become a world-class automaker is beginning to pay off, and it’s far enough along that its story can be credibly told. (Source: Strategy & Business. February 26, 2013. Retrieved December 2, 2014 from http://www. strategy-business.com/article/00162? pg=all). References Anshuman goyal, pricing strategy of Hyundai, 2007; www. honda. com Anshuman goyal, pricing strategy of Hyundai, 2007; www. hyundai. com Carl Hose. 2014; Small businesses; http://smallbusiness. chron. com/top-ten-promotional-strategies-10193. html Hans Greimel, 2011. http://www. autonews. com/article /20101206/RETAIL03/ 312069982/hyundai-plans-new-brand-strategy Kottler, Keller, Jha, Koshy, 2007, Marketing Management Kristen Hamlin, 2014; http://smallbusiness. chron. com/ importance-ad-slogans-31343. html http://www. gatesfoundation.org/What-We-Do/Global-Development/Financial-Services-for-the-Poor Ross Gittell, 2014, http://catalog. flatworldknowledge. com/bookhub/reader/3157? e=gittell_1. 0-ch06_s02# Trefis Team, 2014. http://www. forbes. com/sites /greatspeculations/2014/06/13/tata-motors-looks-to-improve-passenger-car-sales-by-penetrating-the-compact-segment/ Seounmi Youn, 2001, http://list. msu. edu/cgi-bin/wa? A3=ind0209c&L=AEJMC&E =0&P=3326464&B=†¦ _&T=text%2Fplain;%20charset=us-ascii Strategy & Business. February 26, 2013. http://www. strategy-business. com/article/00162? pg=all.

Diversification and Firm Performance

DIVERSIFICATION AND FIRM PERFORMANCE: AN EMPIRICAL EVALUATION Anil M. Pandya and Narendar V. Rao Abstract Diversification is a strategic option that many managers use to improve their firms’ performance. This interdisciplinary research attempts to verify whether firm level diversification has any impact on performance. The study finds that on average, diversified firms show better performance compared to undiversified firms on both risk and return dimensions. It also tests the robustness of these results by classifying firms by performance class.The results show that among the best performing class of firms, undiversified firms have higher returns, but these returns are accompanied by high variance. Whereas, highly diversified firms show lower returns, and much lower variance. Results further show that diversified firms perform better than undiversified firms on risk and return dimensions, in the low and average performance classes. The paper concludes that a dominant undivers ified firm may perform better than a highly diversified firm in terms of return but its riskiness will be much greater.If managers of such firms opt for diversification, their returns will decrease, but their riskiness will reduce proportionately more than the reduction in their returns. In such firms, there will be a tradeoff between risk and return. INTRODUCTION Two seemingly irreconcilable facts motivate this study: one, diversification continues to be an important strategy for corporate growth; and two, while Management and Marketing disciplines favor related diversification, Finance makes a strong case against corporate diversification.With the help of a large sample, this interdisciplinary study tries to address this contradiction in the associative relationship between diversification and firm performance. Diversification is a means by which a firm expands from its core business into other product markets (Aaker 1980, Andrews 1980, Berry 1975, Chandler 1962, Gluck 1985). Rese arch shows corporate management to be actively engaged in diversifying activities.Rumelt (1986) found that by 1974 only 14 percent of the Fortune 500 firms operated as single businesses and 86 percent operated as diversified businesses. Many researchers note a rise in diversified firms (Datta, Rajagopalan and Rasheed 1991, Hoskisson and Hitt 1990). European corporate managers according to a survey, not only favor it but actively pursue diversification (Kerin, Mahajan and Varadarajan 1990). Firms spend considerable sums acquiring other firms or bet heavily on internal R&D to diversify away from their core product/markets.Of late U. S. firms are beginning to moderate their zeal for diversification and are consolidating around their core businesses. But this trend has not affected large Asian corporations which continue to remain highly diversified. As in any economic activity there are costs and benefits associated with diversification, and ultimately, a firm's performance must depend on how managers achieve a balance between costs and benefits in each concrete case. Moreover, these benefits and costs may not fall equally on managers and investors.Management researchers argue that diversification prolongs the life of a firm. Researchers in finance argue diversification benefits managers because it buys them insurance, and shareholders usually bear all the costs of such insurance. Diversification can improve debt capacity, reduce the chances of bankruptcy by going into new product/ markets (Higgins and Schall 1975, Lewellen 1971), and improve asset deployment and profitability (Teece 1982, Williamson 1975).Skills developed in one business transferred to other businesses, can increase labor and capital productivity. A diversified firm can transfer funds from a cash surplus unit to a cash deficit unit without taxes or transaction costs (Bhide 1993). Diversified firms pool unsystematic risk and reduce the variability of operating cash flow and enjoy comparative adva ntage in hiring because key employees may have a greater sense of job security (Bhide 1993).These are some of the major benefits of diversification strategy. Diversification, firm size, and executive compensations are highly correlated, which may suggest that diversification provides benefits to managers that are unavailable to investors (Hoskisson and Hitt 1990), creating what economists call the agency problem (Fama 1980) and managers stand to lose if they become unemployed, either through poor firm performance or bankruptcy (Bhide 1993, Dutta, Rajagopalan and Rasheed 1991, Hoskisson and Hitt 1990).Diversification can also lead to the problem of moral hazard, the chance that people will alter behavior after entering into a contract-as in a conflict of interest by providing insurance for managers who have invested in firm specific skills, and have an interest in diversifying away a certain amount of firm specific risk and may look upon diversification as a form of compensation (Ami hud and Lev 1981, Bhide 1993).Although it may be necessary for a firm to reduce firm specific risk to build relations with suppliers and employees, only top managers can decide what is the right amount of diversification as insurance (Bhide 1993). Diversification can be expensive (Jones and Hill 1988, Porter 1985) and place considerable stress on top management (McDougall and Round 1984). These are the costs of diversification.In the final analysis, this situational argument regarding balancing costs and benefits can only explain the performance of individual firms but it cannot address the theoretical question about the veracity of diversification as a valid corporate strategy. Consequently, following the benefit-cost agreement, whether in general, diversification enhances firm performance becomes an empirical question. Further, recent reviews of the rather extensive literature do not find agreement about the direction of association between firm diversification and firm performanc e.This lack of a clear answer in the literature motivates the present study. The paper is organized in four sections. The first section briefly reviews the empirical literature and presents the research hypotheses. Section two describes the research methodology and operationalizes the dependent and independent variables. Section three presents the results of the study. The concluding section discusses the results and summarizes the findings. REVIEW OF EMPIRICAL LITERATURE AND HYPOTHESIS The impact of diversification on firm performance is mixed.Three recent reviewers (Datta, Rajagopalan and Rasheed 1991, Hoskisson and Hitt 1990, Kerin, Mahajan and Varadarajan 1990), broadly conclude: (a) the empirical evidence is inconclusive; (b) models, perspectives and results differ based on the disciplinary perspective chosen by the researcher; and  © the relationship between diversification and performance is complex and is affected by intervening and contingent variables such as related ver sus unrelated diversification, type of relatedness, the capability of top managers, industry structure, and the mode of diversification.Some studies claim diversifying into related product-markets produces higher returns than diversifying into unrelated product-markets and less diversified firms perform better than highly diversified firms (Christensen and Montgomery 1981, Keats 1990, Michel and Shaked 1984, Rumelt 1974, 1982, 1986). Some claim that the economies in integrating operations and core skills obtained in related diversification outweigh the costs of internal capital markets and the smaller variances in sales revenues generated by unrelated diversification (see Datta, Rajagopalan ; Rasheed 1991).While agreeing that related strategy is better than unrelated, Prahalad and Bettis (1986), clarify that it is the insight and the vision of the top managers in choosing the right strategy (how much and what kind of relatedness), rather than diversification per se, which is the key to successful diversification. Accordingly, it is not product-market diversity but the strategic logic that managers use that links firm diversification to performance; which implies that diversified firms without such logic may not perform as well.Markides and Williamson (1994) show that strategic relatedness is superior to market relatedness in predicting when diversifiers related outperform unrelated ones. Others however argue, it is not management conduct so much, but industry structure that governs firm performance (Christensen and Montgomery 1981, Montgomery 1985). Besides diversification types and industry structure, researchers have also looked at the ways firms diversify. Simmonds (1990) examined the combined effects of breadth (related vs. nrelated) and mode (internal R ; D versus Mergers ; Acquisitions) and found that relatedly diversified firms are better performers than unrelatedly diversified firms, and R ; D based product development is better than mergers and acquis ition- led diversification (Simmonds 1990, Lamont and Anderson 1985). Among studies of acquisitions the results are mixed. Some report that related acquisitions are better performers than unrelated ones (Kusewitt 1985), or there is no real difference among them (Montgomery and Singh 1984).Some studies on breadth and performance find relatedly diversified firms perform better than firms that are unrelatedly diversified (Rumelt 1974, 1982, 1986). Others show confounding effects in firm performance because of diversification category and industry (Christiansen and Montgomery 1981, Montgomery 1985). Recent studies suggest service firms should not diversify (Normann 1984), whereas, Nayyar (1993), shows that in the service industry diversification ased on information asymmetry is positively associated with performance, whereas diversification based on economies of scope is negatively associated with performance. A contradiction of Johnson and Thomas' (1987) confirmation of Rumelt's findin g that the appropriateness of product diversity is judged by a balance between economies of scope and diseconomies of scale. It also appears there is a limit on how much a firm can diversify; if a firm goes beyond this point its market value suffers and reduction in diversification by refocusing is associated with value creation (Markides 1992).Apart from the empirical evidence, the efficient market hypothesis (EMH) holds that competition among investors for information ensures that current prices of widely traded securities are the unbiased predictors of their future value, and that current prices represent the net present value of its future cash flow. Evidence supports the existence of weak, semi- and near-strong forms of market efficiency (Fama 1970). If this view of the market is true, then investors have the information necessary to construct portfolios of stocks to maximize their risk/return strategies for a given amount of resource.Consequently, a firm's management cannot do better for the investor by diversifying into different product markets and create a portfolio that will improve returns or better manage risk than investor’s stock portfolio. Stockholders also do not pay a premium for diversified firms (Brealey and Myers 1996); the market does not value risk/return trade-off positively for unrelated diversification (Lubatkin and O'Neil 1987), and acquiring firms only earn normal returns (Lehn and Mitchell 1993), and not economic rents.Finally, corporate takeovers discipline managers who waste shareholder resources and bust-ups promote economic efficiency by reallocating assets to higher valued uses or more efficient uses (Jensen and Ruback 1983, Lehn and Mitchell 1993). The review of empirical literature from Management/Marketing disciplines and the theoretical and empirical literature from Finance show that the relationship between diversification and performance is complex and is affected by intervening and contingent variables. Taken toge ther, the evidence and arguments presented above seems to suggest that diversified firms (i. . highly unrelatedly diversified firms) as a class, should perform less well than an optimal securities portfolio, and thus for our study we propose the following null hypothesis. Our null hypothesis (H0) is that: Highly diversified firms should perform less well than moderately diversified and single product firms. There are numerous arguments and findings against the null hypothesis proposed above. In certain markets, an investor may face assets constraint in constructing a portfolio, restricting diversification opportunities (Levy 1978).Farrelly, and Reichenstein (1984) show that total risk rather than systematic risk alone, better explains the expertly assessed risk of stocks. Jahera, Lloyd and Page (1987), find well-diversified firms have higher returns regardless of size. DeBondt and Thaler (1985, 1987), argue that the market as a whole overreacts to major events. Prices shoot up on go od economic news and decline sharply on bad news. According to Brown and Harlow (1988, 1993), investors hedge their bets and over react or under react to important news by pricing securities below their expected values.As uncertainties decrease, stock prices adjust upwards, regardless of the direction of the impact of the initial event. The post-event adjustment in prices tends to be greater in the case of bad news than in the case of good news. Haugen (1995) also casts doubts on the validity of the EMH. Finally, Fama and French (1992), changing their earlier stance, argue that the capital asset pricing model (CAPM) is incapable of describing the last fifty years of stock returns, and the beta is not an appropriate measure of risk.This implies that a stockholder may not be better positioned to diversify his portfolio of stocks as compared to a corporate manager as implied by the null hypothesis. On the basis of this discussion, we could argue that market inefficiency may not allow i nvestors to optimally allocate their resources. It can put managers, especially good ones, in a more advantageous position to diversify their product market portfolios and thereby improve firm performance. Thus, our alternate hypothesis (H1) is: that diversified firms perform better in terms of return and risk measures compared to less diversified firms.Thus, on average, diversified firms as a class should perform better than moderately diversified or single-product firms. STUDY DESIGN The availability of the Compustat database has made it possible to study a larger sample of firms over several years and approach the problem of diversification from a more macro perspective. The approach used in this study is akin to that of military historians who examine past battles and in the context of operational tactics conclude that combatants with greater orce (material and manpower) tend to win more often. Those with insufficient force need the advantage of mobility and surprise to neutrali ze superior force in order to win. These insights, based on outcomes of many battles, allow historians to disengage from contingencies and specificities of stewardship and terrain. This does not imply that situational specifics should be ignored in planning military campaigns. The finding only points out the general truth of certain tactics.Similarly, in the context of the conduct of business strategy, we could also first examine the performance of diversified firms without regard to specifics of strategy, like type, breadth, modality and industry, and figure out if in general, the average performance of diversified firms is better than that of undiversified firms. The diversification literature is unable to demonstrate that diversification type, breadth, modality, and industry have consistent and predictable impact on performance. We therefore treat these as situational contingencies and do not take them into account.Earlier studies of diversification use cross sectional data, smal l samples and single measures of performance. We on the other hand, examine a large sample of firms with data over a seven year period. We use about two thousand firms, and multiple performance measures. The starting point of our main study is 1984, the earliest data point for segment information available on the Compustat database. Specialization Ratio (revenue from a firm's largest segment divided by its total revenue) as the dependent variable measures the extent of diversification.Accounting and market returns, their variability, coefficient of variation, and the Sharpe Index are the independent performance variables. The study also tests the robustness of classification of firms based on SR ratios. For this part of the study, the data is available from 1981. It also tests the robustness of results based on the extent of performance and the degree of diversification. MEASUREMENT OF CONCEPTS Diversification is treated as the independent variable in this study. As a policy variabl e, managers can control the extent of diversification desired, and performance is the dependent variable.This section defines and operationalizes these concepts. Diversification This study uses Specialization Ratio (SR) to classify firms into three classes of diversification. Its logic reflects the importance of the firm's core product market to that of the rest of the firm (Rumelt, 1974, 1982; Shaikh ; Varadarajan, 1984). After we started this work some researchers have argued that the entropy measure of diversification is probably a better one. We leave it to future research to test the robustness of SR versus other measures of diversification.Operationally, SR is a ratio of the firm's annual revenues from its largest discrete, product-market activity to its total revenues. In the diversification literature, SR has been one of the methods of choice for measuring diversification. It is easy to understand and calculate. TABLE 1 Values of Specialization Ratios in Rumelt's and Our Cla ssification Schemes SR Values in Rumelt’s Scheme SR Values in Our Scheme Undiversified, Single Product Firms SR ? . 95 SR ? 0. 95 Moderately Diversified Firms 0. 95 ; SR ? 0. 7 0. 95 ; SR ? 0. 5 Highly Diversified Firms SR ; 0. 7 SR ; 0. 5 Performance Management researchers prefer accounting variables as performance measures such as return on equity (ROE), return on investment (ROI), and return on assets (ROA), along with their variability as measures of risk.Earlier studies typically measure accounting rates of return. These include: (ROI), return on capital (ROC), return on assets (ROA) and return on sales (ROS). The idea behind these measures is perhaps to evaluate managerial performance-how well is a firm's management using the assets (as measured in dollars) to generate accounting returns per dollar of investment, assets or sales. The problems with these measures are well known. Accounting returns include depreciation and inventory costs and affect the accurate reporting of earnings.Asset values are also recorded historically. Since accounting conventions make these variables unreliable, financial economists prefer market returns or discounted cash flows as measures of performance. For the sake of consistency, we use two accounting measures: ROE and ROA; along with market return to measure performance. Return on equity (ROE) is a frequently used variable in judging top management performance, and for making executive compensation decisions.We use ROE as a measure to judge performance and calculate the average return on equity (AROE) across all sampled firms and time periods, its standard deviation and also the coefficient of variation for each of the three diversification groups. ROE is defined as net income (income available to common stockholders) divided by stockholders equity. The coefficient of variation (CV) gives us the risk per unit of average return. ROA is the most frequently used performance measure in previous studies. It is defined as net income (income available to common stockholders), divided by the book value of total assets.We also calculate the average return on assets (AROA) across all sampled firms and time periods calculate its standard deviation and also the coefficient of variation for each of the three diversification groups. Market return (MKTRET), is the third dependent variable we use. MKTRET is computed for a calendar year by taking the difference between the current year's ending stock price, and the previous year's ending price, adding to it the dividends paid out for the year, and then dividing the result by the previous year's ending price.This study includes companies for which complete data to calculate the variances used is available on Compustat PC- Plus for the period 1984 through 1990. In addition, we calculate the average market return (AMKTRET) for each of the three groups, the standard deviation of AMKTRET, and the Sharpe Index (Sharpe, 1966), a commonly used risk-adjusted performance measure. It measures the risk premium earned per unit of risk exposure. RESULTS AND DISCUSSION As mentioned earlier, Table 1 presents comparison of breaks between Rumelt’s classification and the modified version.Using the Compustat database we then classified 2637 firms using Rumelt’s classification scheme for the years 1981-1990. Table 2 presents the AROE and its standard deviation using Rumelt’s classification. While we intended to calculate AROA and MKTRT for this data set we were unsuccessful because of the problem of missing data. The 1984 – 90 data set proved to be better and was used for the alternate classification scheme for all the three performance variables. Using the same Compustat database, we classified 2188 firms in three groups: Single Product Firms (SR ; 0. 5), Moderately Diversified Firms (0. 5 ? SR ? 0. 95), and Highly Diversified Firms (SR ; 0. 5), for each of the seven years, from 1984 to 1990, for which complete segmental data was available. We kept only those firms in the sample that remained in the same SR category for the entire seven year period, and had all the data for computing the variables. After classification, we calculated each of the three performance variables: return on equity (ROE), return on assets (ROA), and market return (MKTRET), for each firm in each of the three groups, for each year from 1984 to 1990.We also calculated the average ROE (AROE), average ROA (AROA), and average MKTRET (AMKTRET), first by averaging across the seven years for each firm, and then by averaging across firms by pooling across the years, along with their standard deviation, and coefficient of variation. Tables 3, 4 and 5 present the results. The number of firms in each performance group varies slightly because we had to ensure that the data was available for all variables, for all the seven years. Statistical ProcedureThe test of the null hypothesis requires a test of equality of means of each classification group , and for each performance variable. While the study may indicate one way analysis of variance (ANOVA), it is not a robust test. The application of ANOVA requires that the data set meet three critical assumptions: first, the test is extremely sensitive to departures from normality; second, the assumption of homogeneity of variance is necessary; and third, the errors should be independent of group mean.While for our study the first and the third assumptions checked out, the second assumption regarding the homogeneity of variance failed. We carried out Hartley's test of equality of variance for each performance variable. This test confirmed that variance of the three groups is unequal for each performance variable. We faced the Beherens-Fisher problem or checking for equality of means when variances of the underlying population are unequal. Such situations indicate Cochran's approximation test for hypotheses testing (Berenson and Levine 1992).This test requires us to test the null hyp othesis of equality of means, taken two at a time, and according to the test we must reject the null if the t (observed) exceeds t (critical) at chosen levels of significance. (Statistical information available from authors by request) TABLE 2 Performance Based on Rumelt's SR Classification Scheme: ROE-1981-1990 N AROE SD CV Undiversified Firms (SR ? 0. 95) 1663 3. 8 277. 73. 13 Moderately Diversified (. 95 < SR ? .7) 371 2. 3 181. 2 78. 78 Highly Diversified (SR < . 7) 603 9. 9 100. 9 10. 25 Results Classification Methods: Comparison and a Test of Robustness Table 1 compares the breaks in SR values. Table 2 reports the results using Rumelt's scheme with 1981-1990 data, and Table 3 reports the results using our scheme with 1984-1990 data.The first column in Table 2 shows the three categories of diversification based on SR values; N stands for the number of firms that remained in the same group for the period 1981-1990, and had performance data for the entire period under study; ARO E stands for the average of the ROE calculated over N firms; SD stands for the standard deviation of AROA; and CV represents the coefficient of variation, given by the ratio of SD divided by the AROE, representing the risk per unit average return. Tables 3 through 5 follow the same layout for ROE, TABLE 3 Performance As: Return On Equity (AROE)-1984-1990N AROE SD CV Undiversified 1844 -1. 6 323. 3 NA Moderately Diversified 315 32. 7 409. 4 12. 52 Highly Diversified 23 14. 6 9. 8 0. 67 N= Sample Size, AROE= Average Return on Equity, SD= Standard Deviation, CV= Coefficient of VariationROA and MKTRET. The highly diversified group in Table 2 has AROE of 9. , SD equal to 100. 9 and CV of 10. 25; the moderate group has AROE of 2. 3, SD equals 181. 2 and CV equals 78. 8. The Undiversified group AROE is 3. 8, SD 277. 9 and CV 73. 1. The highly diversified group has the highest AROE, the lowest Standard Deviation and the lowest Coefficient of variation. The results are in the expected direct ion. The results follow the expected path with the exception that AROE of the moderate group is less than that of the undiversified group but the mean values are not far apart and the difference is statistically insignificant.The result for the undiversified and the highly diversified groups are as expected. The SD values are also in the expected direction. Compare these results with results obtained in Table 3. Table 3 shows the relationship between the degree of diversification and group-wise performance measured by ROE. The sample consists of 1844 single product firms with SR greater or equal to 0. 95. The average ROE of these firms over the seven year period is -1. 6 percent, with a SD of 323. 3. The moderately diversified group with SR between 0. 95 and 0. , has 315 firms. The AROE of the group equals32. 7 percent and the SD equals 409. 4. While the AROE of this group is clearly superior to that of single productfirms, the group shows high ROE variability. Thus, the moderately diversified group shows an slightly improvedrisk-return profile. The third group with SR values of less than 0. 5, is the smallest, and includes only 23 firms. The average ROE of the group equals 14. 6 or about half that of the second group, with SD of 9. 8, which is much lower than the first and the second group.The CV is the lowest at 0. 67, which is about 1/20 of the moderate group. Table 3 shows that while highly diversified firms have lower risk than moderately diversified firms; moderately diversified firms have higher average ROE compared to highly diversified firms. It also shows that single product firms have lower risk than moderately diversified firms, but moderately diversified firms have much higher returns. When we combine the return and risk measures as given by the coefficient of variation CV, we do see consistent results, i. e. that highly diversified firms have better risk-return profile than moderately diversified firms; and moderately diversified firms perform be tter in risk-return terms when compared to single product firms. We find that the Tables 2 and 3 show results in expected direction. The highly diversified groups have higher AROE and lower SD compared to the other two groups. This comparison of the two classification schemes shows sufficient consistency especially in the two extreme groups to strongly suggest that performance tends to be invariant to classification breaks.The comparison also demonstrates the validity of using the more pronounced classification scheme used in this study. Performance as Return on Assets and its Variability Table 4 shows the relationship between the degree of diversification and group-wise performance based on ROA. The sample consists of 1848 single product firms with SR greater or equal to 0. 95. The AROA of these firms over the seven year period is – 1. 9 percent, with a SD of 38. 2. TABLE 4 Performance As: Return On Assets (AROA)-1984-1990 N AROA SD CV Undiversified 1848 -1. 38. 2 NA Moderat ely Diversified 316 4. 0 5. 0 1. 25 Highly Diversified 24 5. 8 2. 7 0. 47 N= Sample Size, AROA= Average Return on Assets, SD= Standard Deviation, CV= Coefficient of Variation The moderately diversified group with SR between 0. 95 and 0. 5 has 316 firms. Its AROA equals 4 percent with a5 percent SD. In absolute terms, the AROA of this group is higher than that of undiversified firms and has lower SDof 5. 0 percent, as compared to 38. percent of the first group. The CV is positive at 1. 25, which shows a much improved risk-return profile. The third group of the highly diversified firms includes 24 firms, with AROA of 5. 8 and SD of 2. 7. These values are lower than the first and the second group. The CV of this group is high at 0. 47, being 38 percent of the moderate group. Statistical results in Table 2 show that as we move from undiversified group of firms to the highly diversified group of firms, the average return on assets increases, and the variability of ROA as given by SD decr eases, and CV or the risk per unit return decreases.Statistically, according to Table 4, the above results are significant at the 1% level. Based on these findings reject the null hypothesis. Performance as Market Return Table 5 reports group-wise markets return performance. The sample consists of 1195 firms in the single product category, and 280 and 23 firms in the moderately and highly diversified groups. The sample for each group is smaller than it was for AROA and AROE because we eliminated firms that did not have complete information for the period under study.The average market return AMKTRET of the undiversified group over the study period is 8. 2 percent. The SD is 21. 1, the risk per unit of return as measured by the CV is 2. 57 and the Sharpe Index is 0. 0421. The moderately diversified group with SR between 0. 95 and 0. 5 has 280 firms. Their AMKTRET equals 13. 2 percent and the SD equals 40. 8 percent. Whereas, the average market return of this group is clearly superior to that of the single product firms, the group shows higher variability as compared to the first one. The CV, i. e. , the risk per unit return also is higher at 3. 8. The Sharpe Index of the moderate group is 0. 1443, about three times higher than the first group, and is in the expected direction. The third group includes 23 firms. Its AMKTRET equals 16. 3, with SD of 10. 1, which is much lower than the first and the second group. The CV is 0. 67, about a fourth of the first group. The Sharpe Index at 0. 89 is about six times higher than that of moderately diversified firms. Table 5 shows that the average market return for the highly diversified group is higher than the moderately diversified group, followed by the single product group.The variability of market returns of the highly diversified group is lower than firms in the single product group. Moderately diversified firms on average have a higher market return, but higher risk than single product firms. The Sharpe Index, the i nverse of which gives us risk per unit return, and is a better risk-return measure, shows that the performance of highly diversified firms is much better than the moderately diversified ones, and performance of moderately diversified firms is better than single product firms. TABLE 5 Performance As: Market Return (AMKTRET)-1984-1990N AMKTRET SD CV SI Undiversified 1195 8. 2 21. 1 2. 57 0. 0421 Moderately Diversified 280 13. 2 40. 8 3. 08 0. 1443 Highly Diversified 23 16. 3 10. 1 0. 67 0. 8900 N= Sample Size, AMKRET= Average Market Return, SD= Standard Deviation, CV= Coefficient of Variation, SI= Sharp’s Index Analysis of ResultsStatistical analysis of the results in Tables 3, 4 and 5 are reported in Table 6. These results look strong. They `show that performance of firms as measured by all the variables in the undiversified group is markedly below that of the firms in the highly diversified group and that these results are statistically significant. The results also show that the performance of firms in the moderately diversified group is better than that of the firms in the undiversified group. These results are also statistically significant.The performance difference between the moderate and highly diversified group however, is not always that clear. When measured on AROA, Sharpe Index and CV, the results are in the expected direction and significant, but when performance is measured by AROE and its SD, and AMKTRET and its SD, the results are not as clear. TABLE 6 Statistical Analysis of Performance Variables STATISTIC AROA AROE AMKTRET n 729. 33 727. 33 499. 3 F max (3,n) 20. 17* 1747. 78* 16. 32* F12 58. 37* 0. 67*+ 0. 27+ F23 3. 43* 1747. 78* 16. 32* F13 200. 17* 1088. 33* 4. 45* t’12 6. 29* 1. 41**** 1. 9** t’23 2. 91* 1. 86*** 0. 96*+ t’13 7. 38* 2. 08*** 3. 07* *Significant at 0. 01 or less; **Significant at 0. 025; ***Significant at 0. 05; ****Significant at 0. 1; *+Significant at 0. 25; +Not significant. The results sugge st that we can reject the null and accept the alternate hypothesis: that higher the degree of diversification, greater is the average performance, measured in risk-return terms.The following paragraphs analyze the results for each performance variable in greater detail. Analysis of Results by Performance Class We further massage our data by subdividing each diversification category: undiversified, moderately diversified, and highly diversified, into three performance classes by adding and subtracting one standard deviation from the average ROE. Thus, each category is divided into three performance subclasses: Average ROE + 1 Std. Dev. ; Average ROE; and Average ROE – 1 Std. Dev†¦ This gives rise to a total of nine performance classes, three for each level of diversification.If the hypothesis that the higher the degree of diversification, the higher the performance is robust, then we should expect it to hold when we compare performance across the performance sub-classes. That is; the high, average and below average ROE performance of highly diversified firms should be higher than the respective performance of the three moderately diversified groups, and each of the three moderate performance groups should have higher average ROE as compared to each of the three undiversified groups.If this relation holds then we can say with greater degree of confidence that diversification of firms leads to higher performance for all classes of firms. We, therefore, hypothesize that the best, the average and the medium performing groups demonstrate a consistent pattern of performance across the three diversification groups on both risk and return dimensions. Table 7 shows classification of firms based on degree of diversification and by performance class. These results are both in expected and unexpected directions.The performance for the low and average performing firms, both in terms of risk and return diversification is in expected directions. But the results fo r the high performance group is found to be in the expected direction only for risk, while for the return measure the performance is in the opposite direction. In the worst performance sub-class, the AROE of undiversified firms is -59. 53, and the SD is 103. 16. As we go toward increasing level of diversification, AROE performance increases to -5. 78 and SD drops down to 5. 58 for the moderate group. For the highly diversified group, AROE becomes +2 and SD falls to 0. 2. In the average performance sub-class, the AROE for the undiversified group is 2. 46, and SD is 6. 87. For the moderately diversified group, ROE increases to 4. 21 and SD falls to 2. 91. For the highly diversified group, AROE increases to 5. 27 and SD falls 1. 60. The results for these two performance sub-classes are consistent with the results obtained for the entire group as shown in Table 3. The results for the best performance sub-class show interesting results. The AROE for the undiversified group is 35. 28 and the SD is 36. 44. AROE for the moderately diversified group decreases to 12. 9. SD also decreases to 3. 3. For the highly diversified group, AROE drops to 9. 52, nearly a fourth of the undiversified group, and the SD decreases to 0. 87, one thirty sixth of the undiversified group. Clearly the results for the best performance class are contrary to earlier findings as far as ROE is concerned, but they are in expected direction as far as standard deviation is concerned. We are, however, able to reject the null hypothesis if we look at CV (Risk per unit return). The value of CV decreases as we move from undiversified to highly diversified group.These results suggest that dominant firms operating with core competencies and operating in less competitive environments are better off concentrating on one business segment. Our results show that such firms have superior returns but are unable to diversify away market risks. These firms may waste investor resources by diversifying into other bu sinesses. On the other hand, firms operating in markets where they face considerable competition and have fewer core competencies, or are unable to dominate their markets, they are likely to be better off diversifying, as it would reduce risk for such firms and increase average returns.SUMMARY AND CONCLUSIONS The study began with questions regarding discrepancies in empirical and theoretical investigations into the relationship between firm diversification and performance. Our results suggest that the average performance of diversified firms (especially highly diversified ones) perform well on a risk-return basis on accounting measures as well as market-based measures, when compared with group of firms that are not as highly diversified. Managers tend to judge performance using accounting measures such as ROE and ROA where as financial markets use market-based measures such as MKTRET.Our results show that on both types of performance measures, the group of diversified firms on avera ge tends to perform better. The data show that with an increasing degree of diversification, the average return on assets, average return on equity and average market return, increase and the average risk per average unit return decreases. The results are clearer when comparisons are made between the highly diversified and the undiversified group, and the moderate and undiversified groups. The results are not as sharp when we compare results between the moderately diversified and the highly diversified group.The implication of the finding is that in general diversification is helpful but it does not tell us how much of it is helpful. Additional research on economies of scope for these groups of firms may throw some light on this issue. The marginal ambiguity between the moderate and the highly diversified groups may also be the result of eliminating the contingent variables like type, modality and extent of diversification. Controlling these variables may provide greater insight and clarify the differences between the moderate and the highly diversified groups of firms and lend support to theory building.The most surprising finding of our study was about the class of â€Å"best performing† firms. The study found that AROE of undiversified firms was four times better than the highly diversified firms, but such firms had 36 times the volatility of the highly diversified firms. This result implies that the best performing firms, if they diversify, will reduce their earnings, but dampen the volatility of their returns. Managers of such firms therefore will be tempted to dampen the volatility of returns by diversification.Such actions, according to this study will lead to a reduction in returns, but the reduction in volatility of returns will be much greater. This is clearly beneficial to managers and employees of the firm, but a benefit of such insurance for the shareholders is not as clear. The implications for investors are that, if they risk such high pe rformance, they ought to stay in for the long haul, and have high tolerance for volatility. But even for this class of firms based on coefficient of variation, we feel that the average performance of highly diversified firms tends to be better than that of the undiversified firms.One must judge Jack Welch, the CEO of General Electric (GE) in this context. GE's top management group insists that each of their divisions must be either number one or number two in their specific product markets. Thus GE, a high performing conglomerate is trying to emulate characteristics of a dominant undiversified firm at the product market level in order to earn very high returns and concomitantly it practices the art of being an aggressive and active conglomerate at the corporate level to reduce the risk engendered by dominant firms.But not all high performing firms are as careful, well managed or lucky. The study echoes the belief of senior corporate executives who think diversification enhances firm value because it contributes to improvement of the firm's risk-return profile. The results also speak to the concerns of investors. Diversification, especially for the truly high performing firms reduces risk but at the cost of returns. There is undoubtedly a trade-off here between risk and return when managers of such single firms diversify from their core business.Thus diversification does buy insurance for the managers which may help managers and employees more than investors. But in the case of the average and the low performing single firms (most likely the non dominant firms), gain from diversification in return and risk terms, seem significant. The moderate and highly diversified groups also benefit from diversification on risk and return dimensions but their performance is not stellar by any stretch of the imagination. One can argue that diversification tends to reduce the already severe competitive threat faced by the majority of firms in these groups.The implications for investors follow suit. They are better off picking stocks of well-diversified firms as these deliver better returns over time as compared to moderately diversified or undiversified firms. The finding that on average, highly diversified firms, including conglomerates, show better performance than single product firms or moderately diversified firms, supports the belief of corporate executives but is contrary to the viewpoint of research in finance. A classification scheme by definition remains arbitrary, no matter how well we justify the scheme.The only safeguard against such arbitrariness is to demonstrate that the results of the study are invariant to changes in arbitrarily set classification boundaries. We were somewhat successful in showing that changing classification boundaries did not change the thrust of our results. Both methods showed that AROE of highly diversified group of firms was greater than that of the undiversified group. But this still is a fruitful direction for f uture research. We were able to examine ROE alone because of data limitations.The 1981-1990 data set was not consistent for all the variables and segments of businesses. Other variables need to be tested. Researchers may also want to know if, at what point, the results are no longer invariant to SR classification values. Our study has several other limitations. The research period (1984-1990) of this study does not match the time periods reported in earlier studies. If diversification matters as a strategy, then it ought to do so no matter what the time period. This study has examined pooled time series data and finds the results consistent with expectations.Subject to the availability of data, replication over different time periods will adequately address this issue. Economic arguments require that we measure performance in terms of cash flows. We do need to look at the net present value of cash flows to make strong statements about the usefulness of a diversification strategy in the capital budgeting sense. Market return may be a reasonable substitute but the examination of the net present value of cash flow may be necessary from the point of view of the stock market. This is left to future research.Although SR is an acceptable measure of diversification, the entropy measure (Hoskisson, et. al. , 1993) has become an important and probably a better measure of diversification. This study was extensive enough. Perhaps multiple measures of diversification in a future study will alleviate methodological concerns about the appropriateness of diversification measures. The research design of this study differs somewhat from similar earlier studies, and as stated at the outset, it does not address the question whether investor portfolios outperform diversified firms.Therefore, while addressing several possible objections, we urge caution in accepting these results, and suggest future research to verify the findings reported here. Finally, this study examines the ass ociation between corporate diversification and performance per se. It does not address the differences in performance caused by types of diversification, like related, or unrelated; nor does it use modifying variables like firm size and other firm-level factors, or modalities of diversification such as internal product development or mergers and acquisitions.The results of this study are interesting enough to warrant the inclusion of variables that control for industry structure and contingency variables such as interest rates or the state of the economy; or underlying managerial motivation like risk reduction, agency problem, or moral hazard. Such controls will provide greater insight into the diversification strategy, as a practice and as a phenomenon.

Skip navigation links BFS 3460-08B-2 FIRE PROTECTION SYSTEMS Essay - 4

Skip navigation links BFS 3460-08B-2 FIRE PROTECTION SYSTEMS (BFS3460-08B-2) - Essay Example Personnel who would be inhaling this toxicant will breathe heavier as well as this gas is much heavier than air. Inhalation of vapors of this product may also affect the cardiovascular and central nervous system and in extreme cases may even cause death (Kidde Aerospace, 2007). Perhaps the most poisonous element on this compound is Methanol which if ingested may cause irregular heartbeat, headache, dizziness, visual disturbances and blindness . As stated in the safety data sheet of Halon, Prolonged exposure to methanol may cause reproductive harm and heart, kidney, liver, and nerve damage. Other symptoms of prolonged exposure to this compund include nausea, vomiting, irregular heartbeat, symptoms of drunkenness, disorientation, bluish skin color, and convulsions which are all the after effects of a heart and nervous system condition (Kidde Aerospace, 2007). Because this agent also effectively cools the temperature of any object it becomes proximate with, the usage of Halon also causes other side effetcs. If Halon comes in contact with the liquid of this product, it will cause frostbite to the eyes. Contact to the skin would also cause frostbite to the skin (Kidde Aerospace, 2007). Kidde Aerospace. (2007). Material Data Sheet of a Fire Extinguisher with recylced Halon 1301 and Methanol. Retrieved from:

The Impact of Globalisation on BRIC Economises Literature review

The Impact of Globalisation on BRIC Economises - Literature review Example Globalisation has been attributed to the acceleration of international economic integration, which has been unexpected in numerous ways. However, there are expectations that this might contribute to the vulnerability of workers in BRIC economies. There are resenting developments in the world concerning the increased importance of emerging economies, for instance, China has become a large exporter, whereby it has raised its reputation in international production networks entailing off shore business. Therefore, globalization has enabled these countries to work together in order to counter well-established interests and organizational structures. The relationship between America and Europe has been substantial in facilitating the developments between the BRIC countries.Globalization in BRIC countries that are attributed to integration with the inputs, finished goods, and services, which are underscored by increased business transactions in the world trade. There are factors that are sp ecific to each country or region, and they have an influence to domestic and trade reforms in BRIC countries since these countries have made a significant expansion of their exports, thus contributing to the development of their economies.In addition, this has a significant distinction of the BRIC to other countries in the world; for example, China’s performance has been in accordance to the perceptions of the pubic in other countries that have been attributed to the same economic performance, such as India, Russia and Indonesia.... The relationship between America and Europe has been substantial in facilitating the developments between the BRIC countries. Globalization in BRIC countries that are attributed to integration with the inputs, finished goods and services, which are underscored by increased business transactions in the world trade. In fact, the ratio of trade-to –trade GDP and the shares of the value addition by the exporters has fostered a uniform development in the wide range of various economies in the world. There are factors that are specific to each country or region, and they have an influence to domestic and trade reforms in BRIC countries, since these countries has made a significant expansion of their exports, thus contributing to the development of their economies (European Commission, 2009, 1). In addition, this has a significant distinction of the BRIC to other countries in the world; for example, China’s performance has been in accordance to the perceptions of the pubic in other countries that have been attributed to the same economic performance, such as India, Russia and Indonesia. Globalization in the BRIC economies has made a significant contribution to the creation of opportunities for investors, whereby the multinationals in the world are targeting these countries, with the objectives of exploiting their markets (Dranitsyna, 2007, 1). For instance, in China, the General Motors made higher sales compared to America, in 2010, and there are expectations that China will become the world’s largest market for aviation and luxurious goods. In fact, BRIC countries have eliminated competition concerning growth and incremental consumption with other countries in the future. Moreover, globalization has caused a shift in the global consumption towards the emerging

Working Women and the Vote Personal Statement Example | Topics and Well Written Essays - 500 words

Working Women and the Vote - Personal Statement Example Her statement was the basis of this article with the calling of the majority says to be heard. It was time to put an end to the male chauvinism at that time in history where the place of women in society was only to preserve motherhood and being submissive to their men. The working women were sick and tired of this trend and, therefore, had to put an end to this through whatever way. There were up to 1 million women who were participating in labour activity. This is because they had to play the role of breadwinners in their respective family.   Women have developed a new form of work ethic that would change the general daily life, therefore; they had to participate in the voting process. The article further faults the roles senators give to women in places of job allocation and that women can do jobs that men can equally do. The contest between the two genders now is focused on the issue of breadwinning. The focus is not on a political contest or rather a system that further aliena tes women by denying them voting rights. That chivalry is dead as the senators have continually made efforts to shorten women’s working hours. The senators totally disenfranchise the electorate in an effort to show them the importance of short working hours. It is evident that have been numerous instances where the learned senators have shot down bills. Most of the bills were meant to cause reforms to women and to improve their position in the society. A case at hand is during the Albany hearing they made desperate efforts to justify their voting against the bill.

Should more information be provided on food labels Essay

Should more information be provided on food labels - Essay Example For example, the nutrition facts that are provided on a breakfast cereal would mostly comprise of minerals and vitamins. However, should this be all it contains or is there a necessity for improving on it? To argue out this effectively, an appropriate stance would be that of affirmative being that much of the products bought need to accurately represent the true nature of their contents. This is because it will effectively enable consumers make informed decisions on the right type of product to buy depending on their nutritional needs.2 The sense in this is that just because a particular food item contains much of vitamins implies that it is the most appropriate as it could contain other contents not revealed. As such, producers need to include other labels on the products. Consequently, this can be possibly enhanced when a consumer is able to eat healthily due to the act of choosing the right type of food even after sampling most of the so as to get the right nutrient content.3 Healthy living can only be enhanced by the adoption of an item whose food label is richly justified; thus, a greater reason why food labels should be enriched with more information. Another factor that would be argued out in this perspective is that a good food label would enhance caution among consumers especially when they note that it contains an additive (allergen) they don’t need (Weirich 2007, 117-121). In this, the producer is obliged to provide all these information and evade liability for harm caused by any of such when used by a consumer. If this information is hid, then the consumer may not make a right choice and end up being harmed by the hidden content that was not revealed in the food label.4 A third factor is that, with more information on food labels, a consumer is able to identify the serving size of the item for consumption, and the number of servings that are contained in the product’s single package. This is essential as it helps consumers determine the

You choose the topic Essay Example | Topics and Well Written Essays - 1000 words - 3

You choose the topic - Essay Example In Summa Theologiae, Aquinas makes an emphatic philosophical analysis to prove that God exists, and his existence can be deduced from what is around, suggesting that Gods existence is self-evident and does not require any emphatic proofs. Therefore, from Aquinas’s philosophical arguments in Summa Theologia, the truth that cannot be known from existence can be known from a cause-effect relationship in that judging from what can be perceived, there has to be a higher order that causes what can be experienced in reality. The paper investigates Aquinas attempt to construct what is not known through that which is known in a cause-effect relationship to understand the existence of God. Aquinas borrows his main arguments from the Ontological argument of St. Anselm, who argued that God is the end beyond which nothing else can be conceived to exist. As such, God being the greatest being has to exist, for existence is much higher than non-existence. Consequently, Aquinas borrowed heavily from the existence of truth to explain that God exists. If the truth exists, then God being the absolute truth itself has to exist. The truth is self-evident in that there has to be that which is true and that which is false, suggesting that an absolute truth has to exist. Therefore, God exists in reality and is the direct cause of the truth, which can only be attributed to him. Aquinas refers to John 14:6, which states that â€Å"Am the truth the way and life.† As such, though we may not know God, it is clear that the truth exists. The truth emanates from an absolute truth much higher than itself, which is a proof that God exists in reality. Aquinas argues that every whole is greater than its parts. As such, everything that exists is a part of some whole at which everything has to intersect to make whole. The thing that exists so that

Criticism on mass media found in Stones Natural Born Killers Research Paper

Criticism on mass media found in Stones Natural Born Killers - Research Paper Example The two attractive serial killers have already killed 52 people in the course of three weeks when the story of the movie starts. Both of them gain fame through Wayne Gale, a sensationalistic journalist, and host of the tabloid TV-show American Maniacs. After being bitten by a rattlesnake and searching for anti-venom in a convenience store, Mickey and Mallory get arrested by the police at and end up in prison. After some time Wayne Gale arranges an interview with Mickey, which should be broadcasted right after the Superbowl. The interview provokes a riot between the inmates and the prison guards, giving Mickey and Mallory the chance to flee. Wayne is coming with them and is filming the entire jailbreak. After killing Wayne and leaving his, still recording, camera behind as evidence, they begin a new life. In the end they are shown in a mobile home with two little kids and another one on its way. Even though the road, the route 666 to be precise, is displayed in the first part of the m ovie and in the very end, Natural Born Killers is not by definition a road movie. The Oxford dictionary (2010: 1536) defines a road movie as â€Å"a film of a genre in which the main character is travelling, either in flight or on a journey of self-discovery†. Even though self discovery surely is part of the reason why Mickey and Mallory travel around - which can be seen in the scene where Mallory throws away her old clothes, and with that leaves her childhood behind (Stone, Natural Born Killers, 1994: 0:19h) - that is not the main topic the movie is about.

Journal (Answer All questions) Essay Example | Topics and Well Written Essays - 1000 words

Journal (Answer All questions) - Essay Example Consequently, describes strategic management as question eight provides the similarities and the differences between military and business strategies. The second last question, describes strategic analysis, development and implementation; the last question provides my experience in relation to the group work. Discussion one Strategies are driven by numerical figures and wide extent of research and analysis of the results; the results are not based on biases, personal opinions or even individual/group’s perception but rather on the tested or expected outcomes. The idea of numerical figures and research in the formulation of strategies at organizational or individual level bring in the scientific dimension of strategies. Additionally, strategies may be considered as an art or craft owing to the fact that it is a tool applied at various managerial facets and it involves the formulation, instrumentation and the examination of various processes geared towards achieving certain goal s (Johnson et al, 2011). Discussion two Intended strategy applies to myriad organizational dimensions; it involves undertaking deliberate planning and execution of the planned courses of actions. In some occasions it may also be referred as deliberate strategy for instance humanitarian organization may formulate tools that will enable them deliver specific forms of assistance to victims of a disaster or industries may develop tools that will enable them fit in a competitive market. Tools used in intended strategy may include; objectives, visions as well as the application of a SWOT analysis process to enhance the achievement of the desired goal (Cooper, 2007). On the other hand, emergent strategies encompass a framework of actions arise over time in the process of implementing organizational plans without intended missions, objectives as well as visions. According to Mintzberg, it is described as ‘a realized pattern that was not intended’. For instance; an organization may realize certain imperative actions that may develop in the process of their operation which may also facilitate the achievement of their goals. Discussion Three The learning school strategy is among the ten schools of strategy; it is based on the idea that strategy is a tool that develops in the process of acquiring new ideas and skills concerning various organizational facets. For instance; an organization may be faced by various challenges in the process of its operation however, new ideas may emerge in the process that may assist in creating a solution to the problem (Bhatt, 2005). The other school of strategy is the position strategy that was developed by Michael Porter who believed that strategy is ascribed to the position of individual in a certain situation or the position of an organization in a certain market scenario which will influence its courses of action. For example; a high demand of commodities in the market may force an organization or an industry to raise the prices of its commodities (Bhatt, 2005). Discussion Four A strategist is a person with the intellectual capacity and skills to formulate a method through the combination of various ideas and perception in order to ensure that certain specific desired goals are achieved. The

Critical Thinking and Ethics Essay Example for Free

Critical Thinking and Ethics Essay Critical thinking is logical decision making. Critical thinker’s decisions are only based on facts and logical thinking. For a skilled critical thinker, decisions are made once the information is clear and concise, as well as being open to alternative end results that are also based off of facts and possible collaboration. For most, being a skilled critical thinker, is learned as we mature and are exposed to more situations where thinking is the only way to find a conclusion. Ethics Ethics are the beliefs of a society and individuals of what is right and wrong. Most people use ethics as a means to direct the choices they make in life as well as the way they treat others during interactions. Ethics are derived from many different places, your parents and close family member in regards to how you were raised, your religious community or lack of religion and the people that you surround yourself with. Ethics can also be described as how you feel, when faced with a choice, this is called your moral judgment. Why we need ethical decision making For many people, you are not solely a critical thinker or an ethical thinker. Most people will listen to their moral judgment as well as review facts before coming to a conclusion. The reason this is so important for society is because not all logical conclusions are ethical. For example, it is law that you may not break into a strangers car, however if you see a baby inside on a hot day, most people would feel that it would be ethically wrong to just walk away while said baby suffers and possible dies. This is an example of a logical decision, do not break into a car, is not always an ethical decision, save a baby’s life. Conclusion Not all facts and reasoning can negate an ethical choice. Sometime, what is logically correct is wrong in the face of someone’s morality. This is why  ethical decision making is important in critical thinking, because sometimes, although a choice may not be critically correct, the ends could save others from pain and heartache, and that is where it becomes an ethically sound choice. References Manias, N Monroe, D Till, J.E. (2013) Ethics Applied Ruggiero, V.R. (2015). Thinking Critically about Ethical Issues. New York: McGraw-Hill Education.

Reflective Independent Learning Essay Example for Free

Reflective Independent Learning Essay 1. A critical part of being an independent learner is reflecting on your learning. Go to the following link from the University of Hull and learn more on how to be a reflective learner: University of Hawaii Reflective Learning 2. Being an independent learner is a guiding principle for university learning and success. Clearly, learning independently is a complex activity that involves many things but crucially it requires the ability to take responsibility for and to reflect on your learning so that you can achieve the goals that you set for yourself. Find out more about what it means to be an independent learner and how you can improve in this area by going to the following link and reading this article from Hull University: Study Advice 1. Write a short paragraph answering the following questions: a) Describe several things that you have done or are doing at university that would be defined as independent learning. b) Being motivated, confident and reflective were highlighted in the article as key to independent learning. How do you rate yourself in these areas? c) Referring to the articles above, describe how you can improve your independent learning. One of the important things that I use and I define as independent learning is portfolios. I use them not only for all my classes but also for everything I take a picture of or draw or write or even tutorials that shows how to make things. I consider that very important because it helps me to remember everything I did and I liked, so every time I take my portfolio and browse it, I remember all the good and positive things I did and that make me happy. In my opinion, motivation, confidence, and reflection are the fundamental keys to be an efficient independent learner because they give energy that make you feel that you want to do something that you like. And when you do something you like it gives you motivation and confidence. It‘s a kind of cycle that never ends. And personally I think those three elements are what keep artists doing the good work. In my case I use normal portfolios, but the negative thing about that is that a certain time I will end up having many portfolios which will take a lot of space.

How To Tame A Wild Tongue English Language Essay

How To Tame A Wild Tongue English Language Essay How to Tame a Wild Tongue is a chapter from the book titled Borderlands/La Frontera: The New Mestiza written by the author, Gloria E. Anzaldua. In this chapter the writer talks about her Chicana life in a time full of immigration controversies where Latinos living in the United States struggled to find their national identity and a language to speak freely without shame and fear. Hispanic immigrants or Hispanics born in the United States are mentally tortured by the dominant English language and culture into changing into something that is neither English nor Spanish but a mixture of both. Anzaldà ºa targets Chicano readers who share her experience in finding a clear identity and American readers as well in order to better understand Chicano life. In the title Gloria Anzaldà ºa chose for this chapter in her book, is a title that does not make much sense at first sight but as the reader beings to read the first few paragraphs, he realises that the meaning of the title is how to change a persons language and way of speaking, such as accent, on an immigrant population. In this case it would be the authors own experiences and her maternal language Spanish or to be more precise, Chicano Spanish. As the reader continues reading, he discovers that forcing someone to only speak another language is near to impossible. Anzaldà ºa showed strong opposition by talking in Spanish with her friends: My home tongues are the languages I speak with my sister and brothers, with my friends. They are the last five listed, with 6 and 7 being closest to my heart. (56) She loved speaking Spanish and wanted at least her name to be spoken and heard in Spanish but instead she remembers being sent to the corner of the classroom for talking back to the A nglo teacher when all I was trying to do was tell her how to pronounce my name. If you want to be American, speak American. If you dont like it, go back to Mexico where you belong.(53). Anzaldà ºa is showing defiance by not wanting to let go of her maternal language. She is proving the futility in changing ones language and speaking patterns by switching back and forth between Spanish and English. When a teacher would catch her speak Spanish at school she would be punished by that teacher. I remember being caught speaking Spanish at recess that was good for three licks on the knuckles with a sharp ruler. (53). She was accused of talking back to a teacher when all she did was giving an explanation. I remember being sent to the corner of the classroom for talking back to the Anglo teacher when all I was trying to do was tell her how to pronounce my name. (53). A society such as the one described in Gloria Anzaldà ºas How to Tame a Wild Tongue cannot be easily influenced or changed if that society is still living in their territory or close to it. It is in this type of settings that futility manifests the most. On the other hand, once a society or group of individua ls are taken away from their territory they will, unknowingly, become heavily influenced if not entirely changed when it comes to their language, culture and history no matter how proud they are. In her book, the author discusses the cultural and gendered impacts of the language itself. From an early age girls are taught not to talk too much, not to talk back and not to ask questions. In Northern parts of Mexico and Southern most parts of the United States, the female plural in Spanish is excluded from the language, leaving women fall under the masculine plural. Many Latinos and Latinas think people living in these parts of the world are ruining the Spanish language by letting yourself influenced by the English language. You are being criticised for learning or speaking English, the language of the oppressors, thus being treated as a traitor by your own people. Pocho, cultural traitor, youre speaking the oppressors language by speaking English, youre ruining the Spanish language, I have been accused by various Latinos and Latinas. Chicano Spanish is considered by the purist and by most Latinos deficient, a mutilation of Spanish. (55). In this chapter, Anzaldà ºa discusses some examples of how the Spanish language changed and evolved in this part of the world since the first Spanish colonisations began in the region. A combination of different languages, Spanish, English and native American sounds and words were combined to develop into the present day Chicano Spanish. But because of these combinations, the language was viewed as a bastard form which is neither Standard Spanish nor Standard English. It was considered by other Hispanics that the language was of poorer quality and thus caused Chicanas and Chicanos to feel uncomfortable in expressing themselves. Anzaldà ºa sees this as something that needs to be changed. The attack on the Chicanos native language needs to be stopped because If a person, Chicana or Latina has a low estimation of my native tongue, she also has a low estimation of me. (58). The author states that language is part of ethnic identity and should be something you can find pride in if women hope to improve their self-estimation. Ethnic identity is twin skin to linguistic identity I am my language. Until I can take pride in my language, I cannot take pride in myself. (59). Closing to the end of the chapter, the author discusses the language in terms of learning what it is incorporated within oneself. Through Chicano literature, such as books and poetry, through Mexican movies, such as Nosotros los pobres, the first real Mexican movie (60), and music, Chicanos felt a sense of belonging. It is an expression of their language and thus an expression of them. With these works, the Mexican people get an external reinforcement of their heritage and culture. Anzaldà ºa discusses that on the border, the language is getting forgotten. Living in the lands between America and Mexico seems to be a place of confusion, of separation of not knowing to which side you belong. Nosotros los Chicanos straddle the borderlands. On one side of us, we are constantly exposed to the Spanish of the Mexicans, on the other side we hear the Anglos incessant clamouring so that we forget our language. (62). However, Anzaldà ºa states that deep down in their hearts, being Mexican is not about where you live or where were you born. It is not in your mind but in your soul. Around the border, conflict and confusion is strong but as Anzaldà ºa states, her people have been patient and hope that one day the conflict and confusion will end. In the meantime, the Mexican people will survive as they always had. In coclusion, Gloria E. Anzaldà ºas story of How to Tame a Wild Tongue proved to be a convincing argument because she is the voice of the Chicano people living on both sides of the border. She narrates from her own experience of being a Chicana living in the United States where all the pressure of forgetting her language was put on her shoulders for many years. Anzaldà ºas writing style is very poetic and moving and chose to use a lot of imagery to impress her readers and also to let Non-Latin American people learn more about the life of Chicanos which is known so little about to an outsider. Work Cited Anzaldua, Gloria. Borderlands La Frontera. San Francisco : Aunt Lute Books, 1987