Chesapeake Energy Corporation

natural gas† {Chesapeake Annual Report, 1998, p. 1}. Recently, Chesapeake finished the transformation from an aggressive exploration company focused on developing short-reserve life, to a lower-risk, longer reserve life natural gas producer. Chesapeake†s operations are focused on â€Å"developmental drilling and producing property acquisitions.† These operations are â€Å"concentrated in three major areas: the Mid-continent, the onshore Gulf of Mexico and far northeastern British Columbia, Canada† [Chesapeake Annual Report, 1998, p. 1]. Aubrey K. McClendon is Chesapeake†s Chairman of the Board, Chief Executive Officer and Director. Tom L. Ward is the President, Chief Operating Officer and Director. â€Å"McClendon met cofounder Tom Ward in the 1980†³s. Both were independent oil producers; they teamed up in 1983† [Morgenson, p. 2]. They each have more than 16 years of experience in the oil and natural gas industry. All other members of the management team have multiple years of experience in the industry. Chesapeake has concentrated on expanding its holdings in natural gas since the company†s incorporation in 1989. Chesapeake thinks that natural gas will be the fuel choice of the 21st century. The company has been highly competitive in both its exploration activities and efforts to increase its inventory of undeveloped leasehold land. This combination should enable Chesapeake to remain a competitive force in the energy producing industry. New technology in the oil and gas industry has made exploration and production more profitable. This is key for the survival of American businesses that compete with OPEC and other foreign cartels that have very low production costs. New technology, including three-dimensional imaging, which has greater resolution than the previously existing technology, will enable Chesapeake to detect reserves more accurately. Also, horizontal drilling has enabled companies to drain more than one reserve at a time. With profits continuing to be squeezed within this industry, new technology is necessary to help American businesses compete on a global scale. The oil and gas industry is truly a global market. The industry boosted gains in 1999 from increased production efficiency and a decrease in the current supply. U.S. firms, along with OPEC, have voluntarily reduced their total production, which has increased the price. OPEC currently supplies approximately 40% of the world oil production. If OPEC chooses to produce at a lower output, Chesapeake could easily increase production with its low production costs and huge reserves. Many other nations are emerging as competitors, such as the former Soviet Union and Latin American countries. The continuing increase in supply from other nations would potentially saturate the market, causing lower prices and lower profits. Demand is expected to rise only slightly more than two percent through the year 2005. The outlook for this industry is for increased competition domestically (from smaller companies) and internationally from emerging nations. The U.S. has superior technology, which will help keep profits up as supply increases and demand remains relatively constant. Natural gas makes up 72% of Chesapeake†s revenue. They usually sell the product to third parties and are not dependent on any one buyer. Less than 10% of their revenues are generated from two buyers. Governmental Regulations – Operational and Labor Relations The oil and gas industries are subject to considerable government regulation. These laws and regulations are primarily directed toward â€Å"the handling and disposal of drilling and production waste products and waste created by water and air pollution control devices† [Chesapeake 10-K, 1998, p. 10]. The oil and gas industry is accountable to numerous government agencies, including the Environmental Protection Agency, the Department of the Interior, the Department of Energy, the State Department and the Department of Commerce. Virtually every aspect of operations is subject to complex and ever changing regulations. The oil and gas industry is tightly regulated in regard to labor relations by government department and agencies, including the Occupational Safety and Health Association (OSHA) and the National Labor Relations Board (NLRB). Some states have their own state sponsored occupational safety plans, while the remainder must comply with federal OSHA regulations. Some of the topics covered under OSHA include personal protective equipment, hazardous communication (HAZCOM) and safety process training. Chesapeake had 453 employees as of March 15, 1999. None of these employees were represented by organized labor unions. The company considers its employee relations to be good [Chesapeake 10-K, 1998, p. 13]. Unocal (NYSE: UCL) employed 7,880 people as of December 31, 1998, of which 575 were represented by various U.S. labor unions [Unocal 10-K, 1998, p. 12]. Both companies are subject to new laws and regulations regarding the environment and labor. Chesapeake and Unocal cannot predict what adverse financial conditions the new laws and regulations will bring. However, short-term and long-term costs will increase as companies improve existing operations to become and remain compliant with government regulations. As a result, all companies in petro-chemical industries are experiencing tremendous difficulty operating profitable businesses. Several businesses have ceased operations as a result of increased regulation coupled with poor profit margins. Chesapeake is at a higher risk regarding this scenario since most of its operations are domestic. Unocal, although a U.S. based company, operations are concentrated primarily overseas, and therefore experience increased leniency regarding environmental and labor regulations. During the last two years, Chesapeake Corporation took a significant hit in terms of earnings, stock price and credit ratings. Positive 1996 earnings turned to a loss in 1997 and tumbled to a bigger loss of $10 per share in 1998. This earnings decline caused the stock price and credit rating to plummet. The company also faces a class action lawsuit stemming from alleged violations of federal securities laws. Top management and directors are accused of using insider information to sell personal holdings in the company at artificially inflated prices. Chesapeake had very disappointing years in 1997 and 1998 as evidenced by the fall in the stock price. The company underwent a substantial repositioning to increase natural gas holdings and reduce risk. As a result of this repositioning, Chesapeake incurred considerable debt and is dependent on the market prices of oil and natural gas to increase, and in effect, improve profit margins. Additionally, in 1997, Chesapeake changed their fiscal year end from June 30th to December 31st. As part of the repositioning, Chesapeake increased long term debt over $400 million to a total of $920 million, coupled with a short-term indebtedness of $25 million. This increased borrowing drastically reduced the company†s ability to obtain additional financing. Standard Poor†s and Moody†s placed Chesapeake on review with a negative outlook. The ability to meet obligations for this additional debt will depend on the production and financial performance of the company, market prices of oil and natural gas, and general economic conditions. Common Size Income Statement Analysis Chesapeake had an extremely large write-down of assets (impairment) as a result of reduced oil and gas prices during the past few years. This charge increased operating costs by over $1.2 billion during 1997-98 with 72% of that cost coming in 1998. The asset write-down, combined with expense increases in production, marketing and interest, were the main contributors of total operating costs to be over three times total revenue. The result was 1998 EBIT of ($920) million, and a non-existent ROE, since the company had a net loss approaching $1 billion. Unocal†s ROE was 5.9% in 1998 and 25.1% in 1997. The impairment cost reported by Chesapeake is questionable because of the very large amount that was charged. In perspective, Unocal with over $5 billion in property assets recorded an impairment charge of $97 million during 1998. If oil and gas prices rise in the near future, the impairment costs may be reversed giving the impression that the company is doing very well. Future investors of Chesapeake equities should consider this fact prior to making any investment decisions. Chesapeake had a $140 million reduction to both sides of the balance sheet. The repositioning of the firm focused on increasing inventory of natural gas reserves, â€Å"the fuel of choice for the 21st century† [1998 Annual Report, pg. 18]. Oil and gas properties nearly doubled from 1997 to 1998, totaling $2.2 billion. However, nearly $1.6 billion was depreciated, depleted and amortized. Additionally, cash decreased nearly $100 million, short-term investments were liquidated, and paid-in capital exceeded $1.1 billion over the past two years to provide additional cash for purchases of gas reserves. As a result, total property, plant and equipment was 85% of total assets in 1998 compared to 77% in 1997. In comparison, Unocal†s PPE was 66% and 64% of total assets respectively. Long-term debt increased over $400 million in 1998, totaling $920 million compared to $510 million in 1997. The $920 million was 113% in relation to total liabilities and owners equity of $813 million. In 1998, current liabilities were $131 million compared to current assets of $118 million. This resulted in a reduced current ratio of .90 from a 1997 ratio of 1.42. The Unocal current ratios during 1998 and 1997 were 1.01 and 1.29 respectively. Chesapeake has relied primarily on cash flow through financing activities during the past few years. Cash flow from operations was approximately $95 million in 1998 and $180 million in 1997, while cash flow from financing was $365 million and $278 million respectively. Sales accounted for $378 million in 1998 and appear to be rising approximately 35% annually from 1996 and 1997. However, an accurate comparison is unavailable because of the change in the company†s fiscal year end. Low oil and gas prices forced Chesapeake to borrow, sell equity, and liquidate short-term investments in order to continue operations and invest in oil and gas properties. The company is dependent on the rise of prices during 1999 to continue operations and provide shareholder wealth. The company has several restrictions from being able to borrow additional funds. Additionally, the price of stock has dropped from a high of $34 in 1996 to a low of $.63 in 1998. This has further reduced the company†s ability to generate cash. The current ratios for Chesapeake Energy are as follows: 1.00 (June 96), 2.03 (June 97), 1.42 (December 97), and .90 (December 98). Current liabilities remained constant over this period, ranging from a high of 19% (June 96) to a low of 15% (June 97), with the current level at 16% of total assets. Extreme levels of change in current assets caused the current ratio to fluctuate drastically. Current assets declined from a high of $297 million (31% of total assets) to a current low of $117 million (15% of total assets). This decline in current assets caused the deterioration of the current ratio. The acid test ratios are as follows: .94 (June 96), 2.00 (June 97), 1.37 (December 97), and .81 (December 98). As previously mentioned, current liabilities remained constant. Net accounts receivable remained flat as a percentage of total assets: 9% in 1996, 7% in 1997 (Both June December), and 9% in 1998. Marketable securities were sold off during the past three years, decreasing from 11% ($104 million) of total assets to zero. Cash decreased from 13% ($124 million) of total assets in 1997 (both June December) to 4% in 1998. The combination of severe decreases in both cash and marketable securities are the reasons that the acid test ratio decreased so dramatically. The quick ratios are as follows: .96 (June 96), 2.00 (June 97), 1.38 (December 97), and .86 (December 98). As mentioned previously, current liabilities remained constant and current assets declined. As with the current ratio, the main reason for the deterioration of the quick ratio is the continued loss of current assets. The above ratios and the reasons for their poor trends indicate Chesapeake is currently in a liquidity crisis. This, in combination with the increased debt liabilities, is an extreme warning to both investors and management. This condition also adds to the suspicion that assets are being sold off to fund current debt obligations. The firm†s ability to meet its obligations with cash, as they come due, is approximated by the cash flow liquidity ratio. As previously mentioned, solvency improved and then deteriorated as indicated by the current and quick ratios. The trends are confirmed when looking at cash flow. From 1995 to 1997, Chesapeake†s cash flow liquidity improved from 1.47 to 1.8. 1997 to 1998 showed a large drop in liquidity from 1.8 to 0.95. The company†s financial statement data gives an indication as to why. From 1995 to 1997, short-term solvency improved from 1.47 to 1.8. When looking at the data, cash from operations rose from $55 million in 1995, to $139 million in 1997. The 1997 rise was due to a change in the accounting period. During this same period, cash on hand rose from $56 million to $123 million and marketable securities rose from zero to $13 million. While cash was increasing, current liabilities rose from $75 million to $153 million. Current liabilities doubled during this period, while cash flow increased 150%. The larger increase in cash flow, relative to short-term obligations, accounts for the improvement in solvency during the 1995 to 1997 period. During the 1997 and 1998 periods, liquidity deteriorated as shown by the decrease in the cash flow liquidity ratio from 1.8 to 0.95. The data indicates that cash from operations dropped approximately 32% to $95 million. When looking at the Cash Flow Statement, the large decrease in operating cash is mainly due to the large net loss incurred during the period. At the same time, cash dropped 76% to $30 million while marketable securities fell to zero. Much of the cash appears to have gone to fund the company†s payables and accrued liabilities. Current liabilities were reduced 15% to $131 million. The larger reduction in cash flow relative to current obligations accounts for the deterioration in short-term solvency. The cash flow data confirms that Chesapeake†s liquidity suffered severe deterioration. A reduction in current liabilities is a good sign, but the little amount of cash generated and being used to fund current obligations is not enough. Cash assets are being used to fund these obligations as well. In comparison to the industry debt ratio of .31, Chesapeake ended with a debt ratio of 1.31 in 1998 compared to .71 in 1997. The long-term debt to total capitalization ratio increased from .64 in 1997 to 1.37 in 1998, while the industry average was .44. The tremendous increase in debt was attributable to significantly lower oil and gas prices during the past three years, and a failed drilling venture known as the Louisiana Trend. The company was forced to liquidate assets and take on a substantial amount of debt to meet operational expenses and increase oil and gas field reserves. Chesapeake was added to the Standard Poor†s â€Å"CreditWatch with negative implications† [Yahoo Finance, Nov. 14, 1999] in December of 1998. The low price of fuel during fiscal years 1996 through 1998 was the primary reason for Chesapeake†s troubles. The debt incurred has covenants restricting the company from seeking additional debt and from paying dividends to preferred stock holders. Principal on a large portion of the outstanding debt is not due until 2004 allowing the company time to improve operations. This will also give fuel prices a chance to rise, which is determinant to the company†s survival. The industry average for times interest earned is 5.2, while Chesapeake†s operating profit was ($856) million. The ratio equated to well below zero in 1997 and 1998. In 1998, interest payments were more than $68 million. The financial leverage index could not be computed since there was not a return on equity. Chesapeake overextended their credit by substantially financing with debt and has jeopardized their ability to make obligated payments for their debt and fixed costs. Chesapeake Energy Corporation natural gas† {Chesapeake Annual Report, 1998, p. 1}. Recently, Chesapeake finished the transformation from an aggressive exploration company focused on developing short-reserve life, to a lower-risk, longer reserve life natural gas producer. Chesapeake†s operations are focused on â€Å"developmental drilling and producing property acquisitions.† These operations are â€Å"concentrated in three major areas: the Mid-continent, the onshore Gulf of Mexico and far northeastern British Columbia, Canada† [Chesapeake Annual Report, 1998, p. 1]. Aubrey K. McClendon is Chesapeake†s Chairman of the Board, Chief Executive Officer and Director. Tom L. Ward is the President, Chief Operating Officer and Director. â€Å"McClendon met cofounder Tom Ward in the 1980†³s. Both were independent oil producers; they teamed up in 1983† [Morgenson, p. 2]. They each have more than 16 years of experience in the oil and natural gas industry. All other members of the management team have multiple years of experience in the industry. Chesapeake has concentrated on expanding its holdings in natural gas since the company†s incorporation in 1989. Chesapeake thinks that natural gas will be the fuel choice of the 21st century. The company has been highly competitive in both its exploration activities and efforts to increase its inventory of undeveloped leasehold land. This combination should enable Chesapeake to remain a competitive force in the energy producing industry. New technology in the oil and gas industry has made exploration and production more profitable. This is key for the survival of American businesses that compete with OPEC and other foreign cartels that have very low production costs. New technology, including three-dimensional imaging, which has greater resolution than the previously existing technology, will enable Chesapeake to detect reserves more accurately. Also, horizontal drilling has enabled companies to drain more than one reserve at a time. With profits continuing to be squeezed within this industry, new technology is necessary to help American businesses compete on a global scale. The oil and gas industry is truly a global market. The industry boosted gains in 1999 from increased production efficiency and a decrease in the current supply. U.S. firms, along with OPEC, have voluntarily reduced their total production, which has increased the price. OPEC currently supplies approximately 40% of the world oil production. If OPEC chooses to produce at a lower output, Chesapeake could easily increase production with its low production costs and huge reserves. Many other nations are emerging as competitors, such as the former Soviet Union and Latin American countries. The continuing increase in supply from other nations would potentially saturate the market, causing lower prices and lower profits. Demand is expected to rise only slightly more than two percent through the year 2005. The outlook for this industry is for increased competition domestically (from smaller companies) and internationally from emerging nations. The U.S. has superior technology, which will help keep profits up as supply increases and demand remains relatively constant. Natural gas makes up 72% of Chesapeake†s revenue. They usually sell the product to third parties and are not dependent on any one buyer. Less than 10% of their revenues are generated from two buyers. Governmental Regulations – Operational and Labor Relations The oil and gas industries are subject to considerable government regulation. These laws and regulations are primarily directed toward â€Å"the handling and disposal of drilling and production waste products and waste created by water and air pollution control devices† [Chesapeake 10-K, 1998, p. 10]. The oil and gas industry is accountable to numerous government agencies, including the Environmental Protection Agency, the Department of the Interior, the Department of Energy, the State Department and the Department of Commerce. Virtually every aspect of operations is subject to complex and ever changing regulations. The oil and gas industry is tightly regulated in regard to labor relations by government department and agencies, including the Occupational Safety and Health Association (OSHA) and the National Labor Relations Board (NLRB). Some states have their own state sponsored occupational safety plans, while the remainder must comply with federal OSHA regulations. Some of the topics covered under OSHA include personal protective equipment, hazardous communication (HAZCOM) and safety process training. Chesapeake had 453 employees as of March 15, 1999. None of these employees were represented by organized labor unions. The company considers its employee relations to be good [Chesapeake 10-K, 1998, p. 13]. Unocal (NYSE: UCL) employed 7,880 people as of December 31, 1998, of which 575 were represented by various U.S. labor unions [Unocal 10-K, 1998, p. 12]. Both companies are subject to new laws and regulations regarding the environment and labor. Chesapeake and Unocal cannot predict what adverse financial conditions the new laws and regulations will bring. However, short-term and long-term costs will increase as companies improve existing operations to become and remain compliant with government regulations. As a result, all companies in petro-chemical industries are experiencing tremendous difficulty operating profitable businesses. Several businesses have ceased operations as a result of increased regulation coupled with poor profit margins. Chesapeake is at a higher risk regarding this scenario since most of its operations are domestic. Unocal, although a U.S. based company, operations are concentrated primarily overseas, and therefore experience increased leniency regarding environmental and labor regulations. During the last two years, Chesapeake Corporation took a significant hit in terms of earnings, stock price and credit ratings. Positive 1996 earnings turned to a loss in 1997 and tumbled to a bigger loss of $10 per share in 1998. This earnings decline caused the stock price and credit rating to plummet. The company also faces a class action lawsuit stemming from alleged violations of federal securities laws. Top management and directors are accused of using insider information to sell personal holdings in the company at artificially inflated prices. Chesapeake had very disappointing years in 1997 and 1998 as evidenced by the fall in the stock price. The company underwent a substantial repositioning to increase natural gas holdings and reduce risk. As a result of this repositioning, Chesapeake incurred considerable debt and is dependent on the market prices of oil and natural gas to increase, and in effect, improve profit margins. Additionally, in 1997, Chesapeake changed their fiscal year end from June 30th to December 31st. As part of the repositioning, Chesapeake increased long term debt over $400 million to a total of $920 million, coupled with a short-term indebtedness of $25 million. This increased borrowing drastically reduced the company†s ability to obtain additional financing. Standard Poor†s and Moody†s placed Chesapeake on review with a negative outlook. The ability to meet obligations for this additional debt will depend on the production and financial performance of the company, market prices of oil and natural gas, and general economic conditions. Common Size Income Statement Analysis Chesapeake had an extremely large write-down of assets (impairment) as a result of reduced oil and gas prices during the past few years. This charge increased operating costs by over $1.2 billion during 1997-98 with 72% of that cost coming in 1998. The asset write-down, combined with expense increases in production, marketing and interest, were the main contributors of total operating costs to be over three times total revenue. The result was 1998 EBIT of ($920) million, and a non-existent ROE, since the company had a net loss approaching $1 billion. Unocal†s ROE was 5.9% in 1998 and 25.1% in 1997. The impairment cost reported by Chesapeake is questionable because of the very large amount that was charged. In perspective, Unocal with over $5 billion in property assets recorded an impairment charge of $97 million during 1998. If oil and gas prices rise in the near future, the impairment costs may be reversed giving the impression that the company is doing very well. Future investors of Chesapeake equities should consider this fact prior to making any investment decisions. Chesapeake had a $140 million reduction to both sides of the balance sheet. The repositioning of the firm focused on increasing inventory of natural gas reserves, â€Å"the fuel of choice for the 21st century† [1998 Annual Report, pg. 18]. Oil and gas properties nearly doubled from 1997 to 1998, totaling $2.2 billion. However, nearly $1.6 billion was depreciated, depleted and amortized. Additionally, cash decreased nearly $100 million, short-term investments were liquidated, and paid-in capital exceeded $1.1 billion over the past two years to provide additional cash for purchases of gas reserves. As a result, total property, plant and equipment was 85% of total assets in 1998 compared to 77% in 1997. In comparison, Unocal†s PPE was 66% and 64% of total assets respectively. Long-term debt increased over $400 million in 1998, totaling $920 million compared to $510 million in 1997. The $920 million was 113% in relation to total liabilities and owners equity of $813 million. In 1998, current liabilities were $131 million compared to current assets of $118 million. This resulted in a reduced current ratio of .90 from a 1997 ratio of 1.42. The Unocal current ratios during 1998 and 1997 were 1.01 and 1.29 respectively. Chesapeake has relied primarily on cash flow through financing activities during the past few years. Cash flow from operations was approximately $95 million in 1998 and $180 million in 1997, while cash flow from financing was $365 million and $278 million respectively. Sales accounted for $378 million in 1998 and appear to be rising approximately 35% annually from 1996 and 1997. However, an accurate comparison is unavailable because of the change in the company†s fiscal year end. Low oil and gas prices forced Chesapeake to borrow, sell equity, and liquidate short-term investments in order to continue operations and invest in oil and gas properties. The company is dependent on the rise of prices during 1999 to continue operations and provide shareholder wealth. The company has several restrictions from being able to borrow additional funds. Additionally, the price of stock has dropped from a high of $34 in 1996 to a low of $.63 in 1998. This has further reduced the company†s ability to generate cash. The current ratios for Chesapeake Energy are as follows: 1.00 (June 96), 2.03 (June 97), 1.42 (December 97), and .90 (December 98). Current liabilities remained constant over this period, ranging from a high of 19% (June 96) to a low of 15% (June 97), with the current level at 16% of total assets. Extreme levels of change in current assets caused the current ratio to fluctuate drastically. Current assets declined from a high of $297 million (31% of total assets) to a current low of $117 million (15% of total assets). This decline in current assets caused the deterioration of the current ratio. The acid test ratios are as follows: .94 (June 96), 2.00 (June 97), 1.37 (December 97), and .81 (December 98). As previously mentioned, current liabilities remained constant. Net accounts receivable remained flat as a percentage of total assets: 9% in 1996, 7% in 1997 (Both June December), and 9% in 1998. Marketable securities were sold off during the past three years, decreasing from 11% ($104 million) of total assets to zero. Cash decreased from 13% ($124 million) of total assets in 1997 (both June December) to 4% in 1998. The combination of severe decreases in both cash and marketable securities are the reasons that the acid test ratio decreased so dramatically. The quick ratios are as follows: .96 (June 96), 2.00 (June 97), 1.38 (December 97), and .86 (December 98). As mentioned previously, current liabilities remained constant and current assets declined. As with the current ratio, the main reason for the deterioration of the quick ratio is the continued loss of current assets. The above ratios and the reasons for their poor trends indicate Chesapeake is currently in a liquidity crisis. This, in combination with the increased debt liabilities, is an extreme warning to both investors and management. This condition also adds to the suspicion that assets are being sold off to fund current debt obligations. The firm†s ability to meet its obligations with cash, as they come due, is approximated by the cash flow liquidity ratio. As previously mentioned, solvency improved and then deteriorated as indicated by the current and quick ratios. The trends are confirmed when looking at cash flow. From 1995 to 1997, Chesapeake†s cash flow liquidity improved from 1.47 to 1.8. 1997 to 1998 showed a large drop in liquidity from 1.8 to 0.95. The company†s financial statement data gives an indication as to why. From 1995 to 1997, short-term solvency improved from 1.47 to 1.8. When looking at the data, cash from operations rose from $55 million in 1995, to $139 million in 1997. The 1997 rise was due to a change in the accounting period. During this same period, cash on hand rose from $56 million to $123 million and marketable securities rose from zero to $13 million. While cash was increasing, current liabilities rose from $75 million to $153 million. Current liabilities doubled during this period, while cash flow increased 150%. The larger increase in cash flow, relative to short-term obligations, accounts for the improvement in solvency during the 1995 to 1997 period. During the 1997 and 1998 periods, liquidity deteriorated as shown by the decrease in the cash flow liquidity ratio from 1.8 to 0.95. The data indicates that cash from operations dropped approximately 32% to $95 million. When looking at the Cash Flow Statement, the large decrease in operating cash is mainly due to the large net loss incurred during the period. At the same time, cash dropped 76% to $30 million while marketable securities fell to zero. Much of the cash appears to have gone to fund the company†s payables and accrued liabilities. Current liabilities were reduced 15% to $131 million. The larger reduction in cash flow relative to current obligations accounts for the deterioration in short-term solvency. The cash flow data confirms that Chesapeake†s liquidity suffered severe deterioration. A reduction in current liabilities is a good sign, but the little amount of cash generated and being used to fund current obligations is not enough. Cash assets are being used to fund these obligations as well. In comparison to the industry debt ratio of .31, Chesapeake ended with a debt ratio of 1.31 in 1998 compared to .71 in 1997. The long-term debt to total capitalization ratio increased from .64 in 1997 to 1.37 in 1998, while the industry average was .44. The tremendous increase in debt was attributable to significantly lower oil and gas prices during the past three years, and a failed drilling venture known as the Louisiana Trend. The company was forced to liquidate assets and take on a substantial amount of debt to meet operational expenses and increase oil and gas field reserves. Chesapeake was added to the Standard Poor†s â€Å"CreditWatch with negative implications† [Yahoo Finance, Nov. 14, 1999] in December of 1998. The low price of fuel during fiscal years 1996 through 1998 was the primary reason for Chesapeake†s troubles. The debt incurred has covenants restricting the company from seeking additional debt and from paying dividends to preferred stock holders. Principal on a large portion of the outstanding debt is not due until 2004 allowing the company time to improve operations. This will also give fuel prices a chance to rise, which is determinant to the company†s survival. The industry average for times interest earned is 5.2, while Chesapeake†s operating profit was ($856) million. The ratio equated to well below zero in 1997 and 1998. In 1998, interest payments were more than $68 million. The financial leverage index could not be computed since there was not a return on equity. Chesapeake overextended their credit by substantially financing with debt and has jeopardized their ability to make obligated payments for their debt and fixed costs.

Aircraft wing design Assignment Example | Topics and Well Written Essays - 1000 words

Aircraft wing design - Assignment Example Aircraft wing plays a vital role in its final operation and as such incorporates a number of fundamental design considerations. According to Kundu et al. (2003, p.241).   it literally impossible for one to design an aircraft part without comprehensively understanding the role of that part in the aircraft and the fundamental theories that accompany its design. In this paper, a detailed plan for design of an aircraft wing is described on that basis, an aircraft wing model proposed. Design considerations Various design considerations are put into consideration when designing an aircraft wing. these are below:The author states that the wing span is crucial in design. Basically, this is constrained by the size of the hangar, as well as the ground facilities. However, such must be based on the structural dynamic constraints. Measures must be the put in place to minimize the induced direct drag. Consideration is also taken not to raise the wing’s structural weight in a manner that extremely increases the savings on induced drag. the area of the wing, just like is the case in selecting the span considers various aspects include the drag constraint, speed of stalling and field length, as well as the volume of fuel. despite the fact that in some instances these factors allow for creation of small wings, the size of the wing in this case is increased in order to obtain a reasonably appropriate CL on basis of the pre-defined flight conditions (Moir & Seabridge, 2007; Raymer, 2008, p. 67).

Managerial Economics Resit Assignment Essay Example | Topics and Well Written Essays - 1250 words

Managerial Economics Resit Assignment - Essay Example However, in a free market economy, price is highly influenced by the market forces of demand and supply and the utility or the value customers are expecting from a commodity is also influenced by these market forces. This paper addresses factors that determine the price of computers in a free market and explain why computer price has continued to fall even while the demand constantly increased. Price determinants of computer in free market Free market is a market system with few government restrictions on how a product or service can be produced and marketed or on how a factor of production can be employed (Kates, 2011). Government in all other market systems do intervene in matters regarding how a good or service can be produced and marketed and how factors of production such as land, labor, capital and organization can be employed more than in the case of free market. As there are relatively few government restrictions in countries like United States and Canada, their economies are said to be closer to free-market economy. In a free market economy, price is determined by the market forces of demand and supply. Consumers are willing to pay for a goods or service only if they are worth the price. Similarly, suppliers are ready to produce and market only if consumers are ready to pay for them. Market equilibrium occurs when market demand and supply are equal and this is how the price of a commodity is determined. Thus, value or utility of the commodity and willingness to pay are significant factors that determine the demand and supply forces in the market. In a free market mechanism, price is never affected by outside forces such as government restrictions. The resources are allocated by the spending decisions of millions of consumers and producers. As governments place no or relatively very less restrictions on what can be bought and sold, owners of factors of production and producers of goods and services have fuller right to buy and sell whatever they own thr ough the market system. When it comes to computers in a free-market, the price is determined according to the demand and supply forces. As depicted in the table and graph below, price of computers in a free market is determined in the equilibrium point where the demand for computers and its supply intersect. When price of the computers areas lower as 10,000 or 15,000, the demand may increase to 60 and 50 respectively and the supply will reduce to 20 and 30 respectively. As the table shows, there is only one price of shifts ($ 20,000) where the market is in equilibrium. Quantity demanded is equal to quantity supplied at 40, 000 computers. At all other states, the market price is in disequilibrium wherein supply of computers and demand for computers are in a state of imbalance. Disequilibrium occurs either when the demand exceeds supply or the supply exceeds the demand for computers. Price per computer $ Demand (000 computers) Supply (000 computers) Market position Effects on price 10 ,000 60 20 Shortage Rise 15,000 50 30 Shortage Rise 20,000 40 40 Equilibrium Stable 25,000 30 50 Surplus Fall 30,000 20 60 Surplus Fall 35,000 10 70 Surplus Fall As far as computers in free-market mechanism is considered, government will not intervene in resource allocation. In other economic systems, governments may choose to interfere in the price mechanism mainly because they want to control,

Rhetorical analysis of Obama's speech Essay Example | Topics and Well Written Essays - 750 words

Rhetorical analysis of Obama's speech - Essay Example In this speech, Obama seeks to inform the audience on the 23 Executive Orders that he designed to address gun control and gun violence in America. Obama equally seeks to convince the audience on the need to address gun control and gun violence in America as well as persuade them to comply with the 23 Executive Orders that he designed. To achieve this, Obama relies on various rhetorical strategies. Notably, Obama uses different ethos, logos, and pathos to persuade the audience to address gun control and gun violence in America and comply with the 23 Executive Orders that he designed. Obama uses repetition where he replicates words and phrases to make a point. He uses the phrases â€Å"Let’s do the right thing† and â€Å"We will† to associate the audience with the idea of address gun control and gun violence in America (Paulson 1). He uses repetition to confirm the need for collaborative effort in controlling gun control and gun violence that persuades the audience to own the control measures. Obama uses an ethical appeal by convincing the audience on the credibility of various people addressing gun control and gun violence in America. As the President of America, Obama has authority to address this issue. He equally starts the speech by thanking and recognizing the efforts of Joe Biden who is the vice president of America in addressing gun control and gun violence in America (Paulson 1). This convinces the audience to adopt the recommended findings. Obama informs the audience that he tasked Joe Biden and his cabinet to propose mechanisms of controlling the effects of gun violence. Obama persuades the audience by asserting that he will rely and use the presidency powers to implement the proposals of Joe’s task force (Paulson 1). He also presents the credibility of Todd Jones to head the Bureau of Alcohol, Tobacco, and Firearms by confirming that he has been acting on this

Business Opportunities In Ethiopia Economics Essay

Business Opportunities In Ethiopia Economics Essay As there are lot of business opportunities in Ethiopia in different sectors, as it is not possible to address all of them. But try to concentrate and search opportunities on some of basic and important business sectors for foreign investors 3.1 Business Opportunities in Manufacturing Sector The manufacturing sector plays an important role in economy of Ethiopia it has almost a share of 5% of GDP and 37.8% to the annual output value of industrial production in 2008/09 (Central Statistical Agency Statistical Abstract 2009). The important manufacturing sectors in Ethiopia are  production of food, beverages, tobacco, textiles and garments, leather goods, paper, metallic and non-metallic mineral products, cement and chemicals.  The production of textile and garments, leather products and agro-processing are one of the most important areas for investment, because of its geographical advantage of easy and fast access to Middle-East and Europe. In manufacturing section we discussed on business opportunities in textile and garment industry and leather product. 3.1.1 Textile and garment In 1939 under the Italian government supervision and technology, the first textile factory was opened. Presently the current textiles industry involves in the process of spinning, weaving and processing. Ethiopia has five public textile factories producing mostly work-wear garments for the domestic market. Numerous privately-owned factories produce shirts, suits, work clothes and uniforms for national and foreign markets. Ethiopias textiles and clothing industry is undergoing major development, aided by the presence of a cheap, skilled and highly-motivated workforce. This surge has been helped by the countrys impressive economic growth over the past years. Ethiopias enormous export potential is made possible by the wide availability of raw cotton and other natural fibers and Ethiopias access to domestic, regional and international markets. The basis for the full cycle of business opportunities and the enormous growth potential for the textile industries is the local production of cotton. Large-scale production is carried out under irrigation, mainly in the Awash Valley, which has more than 50,000 hectares under cultivation. Another 45,000 hectares of high-quality cotton is cultivated by small-scale farmers. There still exists huge potential for the expansion of cotton cultivation in Ethiopia, especially in the Omo-Gibe, Wabi Shebelle, Baro Akobo, Blue Nile and Tekeze River basins. The production of cotton is well integrated into the textile sector, with garment factories relying heavily on domestically produced cotton. Available within Ethiopia are all essential ingredients for a competitive textile industry: raw materials, low wages and low energy costs. This gives the country a comparative advantage over other countries and regions. The Ethiopian Government is actively promoting the further modernization of the textile sector with the aim of attracting foreign investors that can penetrate the global market. Output and Products Ethiopias textile manufacturing industry embraces both medium and large public and private enterprises. Their main activities include spinning, fabric formulation, dyeing, finishing and sewing. The Ethiopian textile industry is the third largest manufacturing industry, only second to the food processing, beverage and leather industry. In the fiscal year 2000/01, with a total output value of 699.91 million birr (1USD=8.6 birr), the contribution of textile industry to GDP was 1.35% and 8.31% to the output value of the manufacturing industry. The Ethiopian textile sector mainly produces 100% cotton textiles. Each enterprise produces one product range, such as cotton yarn, cotton fabrics, bed sheets, blanket, knitwear etc. All the cotton yarn in the Ethiopian market is supplied to the local handlooms. It is estimated that the annual hand-loomed fabric is around 95 million square meters. Supply of raw material and accessories Out of the raw materials used by textile enterprises, cotton is widely grown in Ethiopia and it is easily available from local suppliers. Other materials including chemical fiber, wool, dyestuffs and chemicals as well as a small share of lint depend on imports. Export Market Data from Ethiopian Export Promotion Agency show that the fiscal year 2000/01 witnessed apparent increase over the previous year both in the variety and quantity of textile export. Variety increased from 6 kinds, mainly cotton yarn and bleach cloth made from pure cotton, to over 20 kinds including gray cloth pure cotton, bleach cloth, knitwear, bedding products etc. Among them, gray cloth made from pure cotton is the major export item, roughly contributing to 2/3 of the total export quantity. Ethiopias textile export is mainly targeted at European and African markets. In Europe, the export destinations for Ethiopian textiles are Italy, Sweden, and Belgium etc. African major export destinations are Djibouti, Kenya, and Swaziland etc. Ownership and geographical distribution of textile enterprises Due to the reform undertaken by the Ethiopian government in recent years, such as privatization and the favorable conditions for the inflow of foreign and domestic private investment into the textile sector, ownership of the industry has diversified. Various type of ownership, such as public enterprises, privately owned enterprises, shareholding corporation, partnership enterprise and individual enterprises etc have come into being and developed. Broadly classifying the enterprises into public and private, there are currently 19 public and 16 private enterprises which makes a total of 35 enterprises. Most public enterprises are large scale, playing leading roles, as evidenced by the number of enterprises and employees, total output values, income from sales etc. Most textile enterprises are situated in  densely populated large or medium cities. Out of the total 35 textile enterprises in Ethiopia, 18 are in Addis Ababa, the capital city. Textile enterprises located in Amhara and Southern (S.N.N.P) regions are 6 and 5 respectively. Marketing System of textile products Products such as yarn, fabric and blanket made by Ethiopian textile enterprises are usually distributed by private trading companies to the local market. The export of the product is mainly handled by the enterprises themselves. Imported textile hold a large market share in Ethiopian market and nearly one thousand small-scale family-owned trading firms and a small number of large trading companies are engaged in the import business of textile. Favorable Conditions for the Development of the Textile Sector in  Ethiopia Abundant Cotton Resources Ethiopia covers an area of 1.1036 million square kilometers and boasts vast fertile land, rich geographical and weather conditions, and abundant water resources. Domestic cotton production has already developed to a certain scale and for a long time it has made major contribution to satisfying the requirement of fiber by the textile sub-sector. Ethiopia has a large area of irrigated farmland which is very suitable for planting cotton. There is also great potential for further expanding the cultivation and increase the current yield. Abundant cheap labor resource With a population of more than 70 million, and with cheap cost of labor, Ethiopia can provide sufficient labor force with cost-competitiveness for the development of labor intensive textile sub-sector. The cost of labor in the Ethiopian textile sector is not only lower than some Asian nations with developed textile sector, such as China, India, Pakistan but also than some African countries such as Tunisia, Mauritius, Kenya, etc. Support through policy and incentives Ethiopia identifies textile as the key industry to the development of industrialization as well as the exploitation of local resources to promote export in accordance with the policy of  ¡Ã‚ ° Agriculture Development led Industrialization (ADLI). ¡Ã‚ ± The long-term strategy of the Ethiopian government is not only to develop the textile and garment industry and expand shares in domestic market, but also to develop a competitive, profitable industry in the export market. The Ethiopian government has been steadily pushing towards market-oriented reform by means of developing the private sector, deregulating rigid control over the economy, liberalizing foreign exchange, lowering tariff rate, etc. Given that export promotion is of paramount importance, the government has issued a series of export incentives. All in all, in terms of macroeconomic policy, the Ethiopian government has created an enabling environment for the development of textile sub-sector. Investment policy and incentives According to the newly revised investment policy, the minimum capital required for foreign investors has been lowered, creating a conducive investment environment.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  The minimum capital requirement for foreign investors on a single investment project has been reduced to 100, 000 USD from 500, 000 USD for solely invested projects and for joint venture it has been lowered to 60, 000USD from 300,000USD. In addition, a series of investment incentives have been put in place, such as:   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Remittance of foreign currency of profit and dividends from investment   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Exemption from income tax from 1-5 years etc. In order to promote export, various flexible taxation encouragement measures have been undertaken such as export tax refund, tax coupon and bonded warehouse. Simplified procedures have greatly shortened customs clearance time. The Ministry of Trade and Industry has launched textiles and garment export forum to attract domestic textile and garment exporters into the discussion of issues and future development for textile and garment sector in order to promote the export of textiles and garments.   Increased Domestic Demand Ethiopia has a large territory with a large population. The growth rate of the population is 2.7%, creating a large potential market. According to the country economic development program, the average growth rate of GDP in the coming years will reach around 7%. As a result of the development of economy and the progress in reduction of poverty as well as the improvement of people ¡Ã‚ ¯s living standards, it is believed that not only the present market demand would increase, but also a new market demand will arise. Currently the Ethiopian per capita fiber consumption is roughly 1kg, which is far below the worlds average level of 8.7kg and Africa average level of 3.2 kg. It is estimated that domestic fiber demand will increase at an annual rate of 5% and the large and continuously increasing domestic market will fuel the development of the textile sector. Easy access to international market In the latter half of the 20th  century, the consumption of fiber products all over the world has increased five times, while the world population has increased only 1.4 times.  Ã‚  The improved living standards quality of human beings has created 2/3 of the increase in fiber production. In recent years, along with the revival of world economy, particularly the economic growth of U.S.A, Europe and Japan, the market demand has increased. In 2000, import volume of textiles in the world amounted to US $167.13 billion. The United States and EU were the two largest textile importers,  Ã‚  occupying 39.2% of the world ¡Ã‚ ¯s textile import value. Africa Growth Opportunity Act (AGOA) In May 2000, the United States approved Africa Growth Opportunity Act (AGOA) to give sub-Sahara region of Africa, specifically 48 countries, special preferential trade policy. In August 2001, Ethiopia was entitled AGOA qualifications and is one of the 18 beneficiary countries which can export textiles and garments to the United States free of duty and without quota restrictions. Everything but Arms of the European Union The European Union (EU) has given preferential trade policy to the Lesser Developed Beneficiary Countries (LDBC) including Ethiopia. Accordingly, Ethiopia is a beneficiary of Everything but Arms initiative of the EU in which all Ethiopian export products except arms can enter the EU market free of duty and without quota restrictions. Common Market for Eastern and Southern Africa (COMESA) Ethiopia is a member of the Common Market for Eastern and Southern Africa (COMESA) agreement embracing 20 countries in Eastern and Southern Africa with a population of approximately 353 million. Exports and imports with member countries enjoy preferential tariff rates. Bilateral Agreement Ethiopia has signed bilateral trade agreements with 16 nations such as Russia, Turkey, Yemen etc which provide legal framework for enjoying most-favoured-nation treatment and removing tariff barriers. According to Generalized System of Preference (GSP), most of the products made in Ethiopia enjoy tariff treatment in the United States, Canada, Switzerland, Norway, Sweden, Finland, Austria, Japan and the majority of EU member nations. 3.1.2 Leather products Ethiopia exports processed and semi-processed hides and skins to the world market. Some of the products, such as Ethiopian highland sheepskin (which has gained an international reputation for making gloves), are known for their quality and natural characteristics. Ethiopian hide and skin exports include pickled sheep skin, wet blue sheep skin, crust sheep skin, wet blue goat skin, crust goat skin, crust cow hides, finished garment leather, finished glove leather, lining/upper leather, suede leather, full grain leather, embossed leather and patent leather.   The manufacturing and export potential of finished leather and leather products (such as leather garments, footwear, gloves, bags and other leather articles) is also highly promising. Production capacity of hides and skins Ethiopia has a major comparative advantage in the raw materials sector needed for the leather sector which makes it in principle very appropriate for leather product exporting: Ethiopia has the largest livestock production in Africa, and the 10th  largest in the world. Ethiopias livestock population is currently estimated at 35 million cattle, 21 million sheep and 16.8 million goats. Annually it produces 2.7 million hides, 8.1 million sheepskins and 7.5 million goatskins.[1]  This comparative advantage is further underlined by the fact that the cost of raw hides and skins constitute on average between 55 to 60% of the production of semi-processed leather (Kiruthu 2002). These data are provided by LLPTI and ETA. Muchie (2000: 539) provided slightly different estimates for the late 1990s: 30 million cattle, 24 million sheep and 19 million goats, while CSA (2002) provided diverging figures for 2000/01, especially in the case of skins: 35.4 million cattle, 11.4 million sheep and 9.6 million goats. Leather processing categories and suppliers With in the leather sector, the CSA distinguishes two broad categories. The first one is the tanning/dressing of leather, manufacture of luggage and handbags, while the second concerns the manufacture of footwear. The footwear enterprises are more numerous, but smaller in terms of employment than the former category. For example, in 1999/2000 out of 53 leather establishments, 38 (72%) were in footwear, employing only 49% of the total persons engaged (CSA 2002). Since the downfall of the Derg, a rapid expansion has been taking place in the tannery sub-sector. In 1990 there were only eight tanners, consisting of six public and two private plants. In November 2002, 19 tanneries were registered with the Ethiopian Tanners Association (ETA): 15 private and 4 public ones; the latter are in the process of privatisation. Furthermore, six private tanneries are in development. The annual sheep and goatskin production of an estimated 15.6 million skins falls below the capacity of the 19 tanneries (LLPTI). According to the ETA, the current daily capacity of the tanneries of 133,450 skins is being utilized for only 50.1%, while this percentage is higher for hides (65.6%), albeit of a much lower daily capacity of 5,055 hides. All but one tannery can produce skins, while only half of them have the capacity to produce hides. Regarding small-scale footwear producers in Addis Ababa, some studies have been undertaken (e.g. Tebarek 1997, Tseguereda 2002 and Zewdie et. al. 2003, this volume). There is a clear cluster of such producers in a specific part of  Merkato, the largest open-air market in Africa. Within this cluster (i.e.Woreda  5), there is a sub-cluster called  Shera Tera, where there are not only many producers, but also the largest concentration of suppliers of almost all raw materials necessary for shoe production. The very existence of a well-developed system of suppliers in the footwear sector represents one of the main assets of small shoe producers. The ability of suppliers to manufacture a wide variety of products with short delivery times allows the shoe producers to postpone to the last moment their purchase of inputs. Products Sheep and goats skins represent the bulk of Ethiopian leather production. Ethiopian highland sheepskins (cabretta), in particular retain a high reputation in international markets for some natural characteristics of clarity, thickness, flexibility, strength and compact texture which make them especially suitable for high quality gloves, sports equipment and garments.  Goat skins classified as  Bati-genuine  and  Bati-typeare characterised by thick, highly flexible and clean inner surfaces and are in high demand for the production of fashion leathers, especially suede (à ¢Ã¢â€š ¬Ã‚ ¦). Hides, in stead are not regarded as particularly attractive in international markets due to the poor quality and the small size of the  zebu,  the most common bovine in Ethiopia. (Bini 2002: 17). The Ethiopian leather and leather product sub-sector produces a range of products from semi-processed leather in various forms to processed leathers such as shoe uppers, leather garments, stitched upholstery, school bags, handbags, industrial gloves, and finished leather. Such leather products have been exported to markets in Europe, the USA, Canada, Japan and the Far East. There is also export to countries in Africa, in particular to Nigeria and Uganda, as well as to the near East, i.e. Yemen. The market for leather products is mainly international and not domestic. Export During the past two decades leather and semi-processed hides and skins have constituted the second major export product of the country with between 10 and 20 % of total foreign earnings, second only to coffee with between 50 and 60% of earnings (apart from the late 1990s when it was just under 10%). The percentage has been fluctuating, and the most recent figures indicate a  decrease  in exports. In 2000/2001, 12,170 tons of skins and hides were exported, generating 618 million Birr (almost US $ 73 million); this accounted for 17.2 % of total foreign earnings. However, in the 2001/2002 fiscal year a smaller volume (10,462 tons) of skins and hides were exported, and, as a result, only 481 million Birr was obtained, accounting for 14.1 % of total foreign earnings (Addis Tribune 2002). It has to be said though that the year 2000/2001 witnessed a peak in the foreign earnings in this sector. The largest share of the foreign earnings comes from sheepskins; in 1995 sheepskins, mainly in pickles, accounted for 66% of the total of US $ 61.3 million in foreign earnings by the leather sector, while this percentage was 18% for (wet-blue) goatskins and 16% for hides and other skins (Muchie 2000: 549). It is also sometimes claimed that the large majority (i.e. 90%) of all the sheepskins that are produced in Ethiopia are exported. The importance of Ethiopian exports relative to other African countries, can be indicated by the share Ethiopia contributes to total African skin exports: 51% in the case of sheep and 30% in the case of goats. Exported products go in particular to the UK and Italy; in 1996 these countries took up 27% and 26% respectively (Kodama 2001 and Muchie 2000). Constraints for development Supply A major problem with the leather sector is the by-product status of hides and skins: Cattle, goats and sheep are mainly used for meat (cf. Kodama 2001 and Worku 2002). Thus, the product, i.e.  hides and skins, arrives when meat is needed,not when it is appropriate for leather processing. In Ethiopia meat is needed in three waves because of religiously induced fasting seasons and festivals; for example, in Amhara, which provides the largest volume of sheepskins, these festivals are Easter (April), Ethiopian New Year and Mesqal (September), and Christmas and Timqat (January). Quality As a result of this by-product status, not enough attention is paid to maintaining the quality of the hides and skins. Different serious problems at the source impacting on the leather quality are: flay cuts, putrefaction, animal diseases (ekek), branding, poor pattern, dirt and dung, hides/skins are not sold when prices are considered to be too low (deteriorating quality), etc. Estimates of the loss to the Ethiopian economy due to such problems reach US $ 14 million per year. In order to address these problems, (pilot) projects are underway with the participation of ESALIA, CFC, UNIDO, FAO, UNIC and others. At the same time, meat consumption, especially in the rural areas, is intertwined with the system of food security. Unless the food security of peasants is ensured, the meat consumption will not increase. Berhanu and Kibre (2002) have made an interesting study of competitiveness in the Ethiopian leather sector. For the tanning sector, they have concluded that the main factors affecting  competitiveness are: low capacity utilization; the poor economic infrastructure: inefficient infrastructure and inefficient bureaucratic structures combined significantly raises the transaction costs of firms, making it difficult to compete nationally or internationally; the technology employed is not updated (regularly), in particular the lack of learning in production management; the lack of hard currency to purchase spare parts and inputs; the relative lack of export support and/or promotion services For the leather footwear firms, the main factors affecting competitiveness are the poor quality of domestic leather, and the high cost of (imported) inputs. They conclude that resource endowment is not enough for competitiveness, and that, similarly, the availability of cheap and abundant labour by itself does not seem to be sufficient to compete internationally. Labour costs in Ethiopia, for example, are estimated to be lower than those in China: the basic wage in Ethiopia is around US $ 0,7 per day, or almost 6 Birr, while it is around US $ 1 in China. Most relevant with respect to technology is the lack of timely and efficient maintenance, modification, and innovation. This has in particular to do with the lack of spare parts (foreign currency shortage), and unsatisfactory learning effort exhibited by labour and management. 3.1.3 Recommended Modes of Entry in Manufacturing Sector Recommend mode for Textile and Garment Industry Leather products The government of Ethiopia invites companies to participate in the investment of Ethiopias textile industry. Foreign companies can participate in this industry in the following three forms: 1.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  By setting up wholly-owned (sole) enterprises by themselves. 2.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  By setting up enterprises in joint venture with Ethiopian companies. 3.  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  By establishing cooperation with Ethiopian public enterprises. These enterprises, which are in the process of privatization by the government, have their own future prospects and plans. Some wish to expand their enterprises by installing new and modern machinery and equipment, some would like to develop their human resources through training. Some would like to study new market opportunities, etc. Therefore, there are various ways of cooperation with these enterprises, which may require discussion with specific enterprises. However, there are three forms of cooperation which applies to all enterprises which foreign investors can participate. These are: a)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Joint venture b)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Wholesale ownership c)  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Contract Management d) Direct investment 3.1.4 SWOT Analysis Strength Availability of excellent resources/huge domestic raw material base Abundant and inexpensive labour force Attractive investment incentive packages and tax structure Substantial growth industries: average of circa 10-30% per sector. Weakness Lack of trained management and skilled worker Quality of finished product Lower Productivity in various segments.   Industry is highly dependent on Cotton and raw leather. Lack of Technological Development that affect the productivity and other activities in whole value chain Opportunities Large, Potential Domestic and International Market. Product development and Diversification to cater global needs.   Scope for move toward garment infrastructure and value added production Scope for effectively exploiting markets with phase out quota regime effectively Scope for Technology up gradation on equipment front Threats Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world. International labor and Environmental Laws.   To balance the demand and supply. To make balance between price and quality.   3.2 Business opportunities in Agriculture Sector Agriculture is the backbone of the Ethiopian economy. The sector contributes about 43% of the GDP and 86% of exports.   The export of Ethiopia is dominated by coffee and oil seeds, which together accounted to 50.6% in 2008/09. Other principal export commodities are chat, flowers, pulses, and live animals. Ethiopia with 18 major agro-ecological zones and various agro-ecological sub-zones has a suitable climate for growing over 146 types of crops. 3.2.1 Food and beverage crops Maize Maize is an important crop in Ethiopia. It is grown in the mid highland areas of the country. There are huge tracts of land in all regions suitable for maize farming. Maize is mainly produced in SNNPR and Oromia regions where there are about 1.77 million hectares under cultivation. Wheat and Barley Farming Wheat and barley are mostly grown in the highlands and mid highland areas of the country mainly in Oromia (Bale and Arsi Zones) and some parts of Amhara (North Gondar and North Shewa) Regions.   Wheat and barley are the main cereal crops in the country with about 1,095,436 and 1,398,215 hectares under cultivation, respectively. The potential for the private sector in agro-processing and out growers scheme of development is significant. It offers excellent opportunities for production of wheat under irrigation in the Afar, Gambella, SNNPR and Somali Regions. Oil seeds and pulses A variety of oil seeds (e.g. sesame, rapeseed, linseed, groundnut, sunflower, Niger seed, cotton seed, etc.) are grown in Ethiopia. The demand for sesame has been increasing in the global market making sesame an increasingly important export commodity in Ethiopia. In 2008/09, Ethiopia exported 287,000 tons of sesame valued at 356.1 million USD, accounting for 24.6% of the total export earnings. Rapeseed, linseed, groundnut, sunflower, Niger seed and cotton seed also serve as raw materials for the domestic edible oil industry.   Cultivation of pulses like beans, peas, chickpeas, lentils, soybeans, etc. is also common in Ethiopia. Cultivation is carried out in both the highland and lowland areas of the country mainly by peasant farmers. Currently, the country exports a large quantity of pulses to the international market. There are also a number of factories that process pulses in the country. Rice Farming Rice could suitably grow in many parts of the country. The predominant potential areas are:- West central highlands of Amhara Region (Fogera, Gonder Zuria,Dembia, Takusa and Achefer); North West lowland areas of Amhara and Benshangul Regions (Jawi, Pawi, Metema and Dangur); Gameblla regional state (Abobo and Etang Woredas) South and South West Lowlands of SNNPR (Beralee, Weyito, Omorate, Gura Ferda and Menit); Somali Region (Gode); South Western Highlands of Oromia Region (Illuababora, East and West Wellega and Jimma Zones). Spices The major spices cultivated in Ethiopia are ginger, hot pepper, fenugreek, turmeric, cummins, cardamoms, corianders and black pepper. Currently, there are nearly 122,700 ha under spice farming. Spice production reached 244,000 tonnes per year. The potential areas for the cultivation of spice are Amhara and Oromiya, SNNP and Gambella regions. The potential for low land spice farming is estimated to be 200,000ha. Coffee Ethiopia is one of Africas leading exporters of coffee generating most of its export earnings. Coffee is grown over 600,000 hectares, the largest of these areas lie in the south and south western highlands of the country.   More than 60% of Ethiopian coffee is produced as forest or semi-forest coffee. The four main coffee growing regions in Ethiopia are: Harrar, Ghimbi, Sidama /Yirgacheffe, and Jimma/Keffa. The country has more genetic diversity among its coffee varieties than any other county.   Nine different varieties are cultivated in the four major growing areas.   Tea Ethiopian tea is some of the best quality tea in the world. Ethiopias current annual tea production from three private estates is approximately 7000 tons of black tea per annum. The total area covered by tea plantation is 2700 ha and the country only produces black tea but has potential to grow all types of tea. Investment potential exists in large-scale commercial tea production and modern tea blending and packing industries. The tea industry in Ethiopia has been lacking investment. The Government has been proactive to increase private investment in tea plantations. As part of its privatization program for state owned enterprises, in 2000, two estates covering 2,109ha for $27milliom USD were sold to private investors. Moreover, an Indian company that owns and runs the Tata Tea Estate has signed an agreement with a domestic owned private company to manage the tea estate. The company will transfer the latest technology of tea planting, growing, harvesting and manufacturing of black te a, assist in planting tea in 5,000 hectares of land and also have the option of investing in the equity of the company at a future date. 3.2.2 Horticultural crops Due to Ethiopias good agro-climatic circumstances it is able to produce fruits and vegetables throughout the year. Both the low- and highland areas offer good opportunities. The major fruits and vegetables growing areas of the country are summarized as follows East Hararghe (eastern part of the country) with vegetables dominating, East Shewa (Central Ethiopia in Oromia Regional State) produces both fruits and vegetables including tomato, green beans, orange, mandarin, papaya West S

Hearts of Darkness :: Example Personal Narratives

Hearts of Darkness I walked in the door with shaky hands and my heart beating a mile a minute. The building was beautifully decorated and I felt very out of place. I had never had a job before and was nervous that busing tables at a country club wasn't really for me. I walked into the linen room and put on my burgundy bus coat for the first time. Now I was feeling more excited than nervous. I would meet people and learn new things. Maybe this would not be so bad. Everyone seemed very nice and another bus girl offered to give me a tour. We went to the main dining room, a smaller dining room, the bar and the kitchen. She told me not to spend too much time there because the Mexican guys were kind of scary. I thought that was a mean thing to say but I listened and didn't even say hello to them. After a few days I became curious about why she had said to stay away from the guys in the kitchen. I asked around and heard a lot of rumors about sexual harassment. I decided to say hello to some of the Hispanic men anyway and not listen to the rumors. I wanted to find out firsthand if they were true. The first man I saw was short with dark, shoulder-length hair. I said hello and he replied with a shy Hola. When I saw the next man, I said, "Hola" very enthusiastically to let him know I wanted to be friends. He replied with the same and a very broad smile. I decided then that I did not need to listen to other people. These men seemed very nice. From then on I always said hello to my new friends in the kitchen. I'd had two years of Spanish at school and could somewhat communicate with them. I learned their names and a little about their lives. My favorite person at the club turned out to be Felipe, one of the chefs. He was the nicest person I had ever met. He always yelled Chreeeessy! when I came in the kitchen and gave me a huge hug. He would ask me how I was and how my soccer team was doing. I learned that he had a wife and a son.

Learning English Essay

Life long learning is the concept that it is never too soon or too late for learning. Lifelong learning is attitudinished that one should be open to the new ideas, decisions, skills or behaviours. English is neccessity of life and the same as lifelong learning when you want to live in the real world; English is very important and neccessity in your life. For example, when I was young I could not speak any language and then after I grew up my parents, my teachers; they tried to teach Thai language to me because they knew if I cannot understand Thai language it would be very difficult to live with another people when I grew up where I studied my teacher taught English to our students because he knew English is very important in the world, but I did not know why at that time I did not study hard. Sometime, English was boring; this is the reason why I did not have interest to study it, perhaps I think, I am lazy and it is not good for me. English is important key to success. If you want to do anything in the world such as, to study, to do your business, to make a new friends, to go aboard etc. Especially when you go aboard to study another course. It is teach in English and then when you graduate and want to get a good job, it is very important for you to do anything in your business. You can use it to make new friends from all over the countrys in the world for your business. It has an adventure over than somebody cannot use English. Your business has a good chance for your success. The real world has a lot of business competitors if you cannot use English maybe you get someone who want to do business with you and may decieve you and then your business may fail or bankrupt. Whatever English enlightens us about how to succeed in the real world eventually I want to study English, but according to my chance when I live in India. My disere is simutnious about studying English and to write research proposal an apply to study in some course at the university because i will hope it would be good for me to improve my English and I will finish maybe it has been good. When I have finished. I will get a good job and I can communicate or contact with foriegners who give a good chance and good work for me. Though I will achieve good things or bad experiences but I think, English is meaningful and worthwhile to study. I will want to study all the time, it cannot stop to learn probably if i will study for a long time, it will help me to succeed in anything. I am hopeful it can improve my life although it is very difficult and very complicated for me, but I will want to try and study. It  has worthiness or worthless it depends on you. If you think and do in the right way it is good for you and anybody, but on the other hand it is good for you only and then it can destroy someone.