Recent orders
A career in Financial Risk Management
Name:
Professor:
Class:
Date:
A career in Financial Risk Management
Personal Statement
Financial Risk Management has always been my forte. Financial Risk Management at graduate level offers immense opportunities for students. It offers learners a chance to gain computational, mathematical, and statistical skills requisite for maneuvering today’s financial needs. This course offers a real chance for the learners to appreciate the dynamics of a rapidly changing business environment. Such skills are valuable when understanding the various risks in the industry, and enable the learner to come up practical skills for navigating the turbulent waters. In addition, being successful in today’s business world requires the learner to have a clear understanding of the psychological and managerial issues that have a direct impact on management of business. Many problems and risks bedevil today’s business. The environment changes rapidly, and this requires competent staff that can address and remedy the situation as it arises. Financial Risk Management is the right course to address these challenges.
I would like to study this course at UCL for a number of reasons. First, this is a public university with a bias towards research. I love doing research because without so, one becomes intellectually redundant. Secondly, UCL has a highly respectable standing in world league tables. This would grant me an opportunity to study and carry out research with the best brains, and by using the most recent publications. The financial world changes rapidly, and this calls for timely and consistent research to keep up with the happenings. Third, the location of the University is ideal for this kind of academic course. London is a major financial hub. The Financial Services Authority (FSA), Bank of England (BoE), and Financial Services Industry (FSI) have a direct and an unwavering interest in the quality of financial analysis and risk management. The collaboration of UCL and these institutions will offer an opportunity for learners to up their analytical skills, develop an interest in entrepreneurial skills, and offer the best advice concerning the financial risk situation.
There is every motivation to study Financial Risk Management. I have always fancied offering practical advice in real situations. There is a high demand for risk management expertise. This is because managing risk is the first step towards succeeding as an enterprise, especially in the prevailing market forces. The conduct of business is now global and understanding risk factors, and initiating mitigating measures is a sure way to get to a winning start. The development of global markets and instruments means there will always be inherent risks in the running of any business. The risk managers must have a clear and concise understanding of credit risk, market risks, operational risks, and liquidity risk. This course handles these areas in a more comprehensive manner, alongside other quantitative risks and the tools requisite for understanding market changes. It would be interesting to learn other changes in risk management when I commence this course.
My academic and professional background makes me ideal for a course in Financial Risk Management. First, I hold a degree in Mathematics, which predisposes me to an analytical mind. Mathematics enables an individual to have a pragmatic and practical approach to problem analysis. I am also a mature student who understands the requirements of graduate studies. I am also efficient, have organizational skills and human skills, and ability to manage myself well. I can also assess situations objectively, and have a sense of self-discipline. In addition, I am forward looking and have a strategic mind, with a keen eye for risk. I have the ability to keep abreast with the volatility of financial markets. Lastly, I have communication skills with the ability to win over teams to my side. Communication also requires an organization to pass relevant information to all stakeholders. It would be imprudent to lie to organizations about actual risk, or to communicate such information ambiguously. The risk manager must have the ability to summarize a lot of information, analyze it, and come up with an honest assessment of the situation. Hence, communication skills are a requisite for a successful financial risk manager.
My programming experience comes from the work I have been doing since the year 2008. During that year, I helped to raise funds for Wenchuan earthquake victims, and helped to organize 30 people of Chinese descent to watch the opening ceremony of the 2008 Olympics. I also represented Chinese students at school, and did voluntary work for a famous singer’s concert. In all these endeavors, I gained praiseworthy reports.
A career in Financial Risk Management has numerous opportunities, given the shifting nature of business operations. I would like to acquire the skills that would enable me to offer faithful and timely advice to organizations on all matters of risk, and to become a trailblazer in my field of specialization. The financial world is prone with many risks. I would like to assist business organizations and investors to understand business environments before investing their resources. This would minimize chances of loss, and would ensure businesses remain sustainable in the end. Finally, completing this course will enable me to play an active role in risk management by learning what is new, and what can potentially affect businesses. This course has the potential to change the way I view the world of finance and risk, and will be the perfect opportunity for me to learn what motivates and excites me. It is my hope that the skills I learn will be of immense value to organizations.
A business report on the forecasted analysis of EcoGenics, Inc. Company with two products
17811754762500TO:Bank Manager
TO:Bank Manager
3225802514600Report
A business report on the forecasted analysis of EcoGenics, Inc. Company with two products
91700100000Report
A business report on the forecasted analysis of EcoGenics, Inc. Company with two products
10801357653655EcoGenics, Inc.
November 30, 2012
Authored by: YOUR Student ID
100000100000EcoGenics, Inc.
November 30, 2012
Authored by: YOUR Student ID
Report
A business report on the forecasted analysis of EcoGenics, Inc. Company with two products
Table of Contents
Company overview1
Product cost estimate2
Variable costs3
Fixed Costs4
Selling Price estimate4
Cost plus price4
Market Price4
Break even analysis4
per product5
Company Break-even5
five year financial projection5
operational budgets5
five year income statements6
investment appraisal6
net present value6
conclusion and recomendations6
conclusions7
recommendations7
environmental impact7
reflective essay7
bibliography7
appendix7
Section A
About Our Company
EcoGenics is a United States of America based company that specializes in the manufacture and distribution of high quality, plant-based (herbal) skin care products. The company was voted as the “Best Skin Care in America” in the years 2012 and 2013. Our company offers a simple and yet streamlined group of two products (Micro-Dermabrasion Cream and Mineral Masque Soufflé) both of which we are planning to start exporting to the United Kingdom. Each of these products is specially designed to offer a multi-functional effect and to be suitable to all types of skins, people of all ages as well as ethnicities. Our formulas are quite unique and are a combination of both science and nature. Our products employ the healing powers of nature in combination with the most advanced and top of the range anti-aging technology.
Our products
Our products are as follows;
1.Micro-Dermabrasion Cream
The primary benefits of this cream are that it offers a Spa Quality and appeal Microdermabrasion treatment right at home, it renews and polishes, exfoliates, smoothes as well as rejuvenates the surface of the user’s skin surface. The product generally weights 59.18g and is priced at £25.
Benefits
The benefits of this product is that is reveals a younger, more even toned and smoother skin. It also reduces the appearance of aging as well as evidence of uneven skin tone. The product employs unique diamond shaped particles/crystals like the ones used in the various top of the range professional microdermabrasion machines. These kinds of crystals are quite advanced and are suspended in a vitamin matrix that is a highly enriched cream based with a combination of Olive Oil and Soy.
The product sloughs off the dry, dull and unwanted dead cells with the user’s skin still retaining its moisture. It also helps in reducing the enlarged pores as well as eliminates black heads. With just one application, results become visible. The regular use of our products is guaranteed to help in brightening the one’s complexion as well as reduce the appearance of wrinkles and fine lines. Ultimately, the product leaves our clients with a brighter and even fresher appeal coupled with a strikingly youthful glow!
2. Mineral Masque Soufflé
The primary benefits of this product are that it deeply cleans as well as re-mineralizes our skin. It also helps in fighting acne.
The Benefits
This product would allow our customers to indulge and greatly enjoy a spa treatment in the very privacy of their own homes. Mineral Masque Soufflé is a lightweight whipped product that employs Kaolin clay for the purpose of tightening and deep cleansing the skin. The product is naturally rich in Deep Sea Mud and minerals and helps in the re-mineralization of the skin while it absorbs all the excess impurities and oils. This product cleanses the pores and this ultimately helps in brightening the skin tone as well as texture. This product ultimately leaves one’s skin feeling very velvety smooth and yet soft and supple at the same time. Additionally, the product contains a Chamomile Extract that calms the skin. The product also has a very refreshing spearmint fragrance that cools after and every use. Our product helps in fighting Acne, provides a balanced complexion while also providing a natural glow to the user’s skin.
The Trends
Even though the concept of skin care in the UK has greatly been impacted by very low levels of consumer confidence, very high growth rates are expected especially after the recession and economic downturn (Euromonitor,2012,p.1).This is because, immediately after the global recession, it was noted that skin care in the United Kingdom was one of the main categories that was less impacted or affected due to the fact that women continued to deeply indulge themselves.
Competitors
As of 2011, the global giant Proctor & Gamble Ltd maintained its lead as the major player with close to 10% market share. The company has managed to maintain its leading position in the United Kingdom through its Olay skin care product range. Its main products that offer competition to our products are Olay Professional’s Age Defying Day Moisturiser having SPF 30 as well as Olay 2-in-1 Day Cream plus Serum.
Prospects
The UK skin care industry is expected to see a 2 percent constant value CAGR between the years 2011 and 2016 to attain £2.4 billion at the constant 2011 prices (Euromonitor,2011,p.1).
Marketing
In order to beat competition, our company has engaged the best minds in product marketing and theories of marketing in shaping our entry and marketing strategy. Our marketing will be duly informed by Porter’s Five Forces for shaping marketing strategy (Porter,1985,p.18). In regard to segmentation, the skin cream will target males and females who are above 30 years and are regular visitors to spas.
Section B
In this section, we provide a detailed analysis of the methodology used in determining the product cost estimate, selling price estimate, break-even point analysis and a 5 year financial projection.
The Standard cost card for each and every product is provided side by side in the appendix 2 below.
Product Cost estimate
Micro-Dermabrasion Cream
Variable Costs
Variable production Costs
Variable Selling Costs
Fixed Costs
Fixed Production Costs
Fixed Selling and Administrative Costs
Mineral Masque Soufflé
Variable Costs
Variable production Costs
Variable Selling Costs
Fixed Costs
Fixed Production Costs
Fixed Selling and Administrative Costs
See Appendix 2 for an in-depth analysis
Breakeven Point
In Cost Volume Profit (CVP) analysis, breakeven point is defined as the price of a given product/service (P) minus the variable cost per unit sold (VC).It denotes the contribution margin (Worm,1997).
The costing methods that is employed in our case is absorption costing method because we consider both the variable and fixed costs that are absorbed by the product. This cost accounting technique is also critical for the purposes of external reporting.
Five Year Budgeted Income Statement
The sales volume would need to be increased by 3% on a yearly basis since this is the first time that our products will be marketed and sold in the UK. Over the years the expenditure on advertising/marketing/development costs will be gradually decreased by 8% in order for the company to concentrate its resources on its key competencies.
The manufacturing process that will be involved in the production of both products will involve the use of two dedicated production lines housed in two separate facilities. These facilities will need to be moved to the UK within the first year of operation in order to solve logistical challenges ad tax issue.
Conclusion / recommendations
The company will mainly concentrate I n the production of product 1 due to its high rate of return on investment. The business is viable due to the fact that most individuals prefer natural and herbal products due to their environmental friendliness.
Section C
The business will have an impact on the environment due to the carbon fot print that will be produced at the manufacturing/production and transportation of the raw materials and finished products. We therefore have a solid sustainability policy that embodies all pillars of corporate social responsibility and triple bottom line reporting. We aim to strike a balance between sustainability and profitability by employing such a policy (Hohnen & Potts,2007,p.11).
A reflection
The process of writing this report has taught me several things on cost management accounting. I have also learned more on marketing and product launch in international locations. Certainly, my skills in formulating an internationalization strategy have improved as well as those for writing business reports. The elements I found more interesting are the ones involved with the cost volume profit analysis. The evaluation of the breakeven point was before this exercise a mystery. I however had very difficult time in the mathematical elements of the work since most of the accounting parts required the use of complex arithmetic. Overall, this process has added me more experience that will help me both in my personal and professional life.
References
Euromonitor International (2012). Skin Care in the United Kingdom. HYPERLINK “http://www.euromonitor.com/skin-care-in-the-united-kingdom/report”http://www.euromonitor.com/skin-care-in-the-united-kingdom/report
Hohnen,P., Pots,J (2007). Corporate Social Responsibility-An Implementation Guide for Business. International Institute for Sustainable Development. Available online at HYPERLINK “http://www.iisd.org/pdf/2007/csr_guide.pdf”http://www.iisd.org/pdf/2007/csr_guide.pdf
Porter,ME (1985).Competitive Advantage.New YorK;Free Press
Worm, M (1997) “Break-Even Analysis and the Commercial Loan Decision.” Journal of Lending and Credit Risk Management. November 1997
Appendix 1Competitor benchmarking/analysis
Suppliers Product 1 Product 2
EcoGenics, Inc Micro-Dermabrasion Cream Mineral Masque Soufflé
Proctor & Gamble Olay Regenerist Microdermabrasion and Peel Kit Pro-X Clear Acne Protocol
Avon ANEW CLINICAL Advanced Dermabrasion System Clearskin® Professional Acne Treatment System
Unilever Plc Fair and Lovely UNILEVER AVIANCE acne pro
Appendix 2Selling Price calculations/Standard Cost Card
Standard cost card per unit
Traditional Absorption Product 1 Product 2 Standard cost card per unit
Marginal costing Product 1 Product 2
Direct materials 7 8 Direct materials
Direct labor 1 2 Direct labour Direct expenses 1 1 Direct expenses Other variable costs 0.3 2.29 Other variable costs Fixed costs (per unit) 3.5 5 Total costs 12.80 18.29 Total variable costs Profit mark-up 12.20 6.71 Profit mark-up Selling price ₤25 ₤25 Selling price Appendix 3Workings to Support Budgeted Income Statement
Production costs –
Product 1 – units ______ £ Production costs –
Product 2 – units ____ £ Total Year 1
Direct Materials Direct Materials Direct labour Direct Labour Direct expenses Direct Expense Other Variable costs Other Variable costs Production costs Per unit ______ Production costs Per unit _____ Production costs of goods sold
Product 1 – units sold ______x £ £ Production costs of goods sold
Product 2 – units sold ____ x £ £ Total Year 1
Production costs of goods NOT sold
Product 1 – units sold ______x £ Production costs of goods NOT sold
Product 2 – units sold ____ x £
Appendix 5Budgeted Income Statement – Five year projection – using Marginal costing principles
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Sales
Less Cost of Sales (Variable) Contribution Fixed Costs Budgeted Profit Appendix 3Break-even point
Appendix 4Net Present Value
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Cost 25 25.7 28 32 34 35
Cash Flows (profits) (In MIllions) 25 26 29 38 40 42
Calculation or Discount factor 0.2 0.2 0.25 0.3 0.2 0.25
Present Value 24 26.3 28.4 36 36 38
Net Present Value 24 26 28 36 36 38
The Power Word-of-mouth has in Marketing, and how to Cultivate it, by Rafael Schwartz, Published by Forbes Magazine, on
The Power Word-of-mouth has in Marketing, and how to Cultivate it, by Rafael Schwartz, Published by Forbes Magazine, on September 8, 2020.
Name
Institution
Class
Due Date
In The Power, Word-of-Mouth has in Marketing, and How to Cultivate it, published in the Forbes Magazine on September 8, 2020, Rafael Schwarz claims that online and offline word-of-mouth by a firm can influence consumers’ preference certain brands. He argues that consumers have always consulted with other consumers about the commodity they would want to purchase for the first time (Schwarz, 2020). The author suggests that the old customer’s review of the product, mostly influenced by how the firm treats the customer, affects the new customer’s decision to purchase or drop the product. Word-of-mouth plays a vital role in maintaining a customer’s lifetime value, profit maximization, and business expansion.
According to Rafael, a firm must follow six principles in the word-of-mouth promotion of their products to capture the customer’s loyalty, strengthen their trust and attract more to their brands. He advises that a firm invest in social currency, put up product triggers to the customers, connect emotionally with them, avail their product in all markets, offer practical value, and maximize captivating and memorable connections (Schwarz, 2020). These principles bring the firm closer to its brand consumers and make them feel safe, and it gives the consumers a sense of belonging, thus making them want to stick and continue working with the brand. More often than not, consumers pay attention to the treatment they receive on business premises rather than the value or price of the commodity. They believe quality customer treatment reflects on the quality of the products as well. Therefore, a firm that has mastered the principles is likely to maintain most of its old customers and attract new ones through them.
Estimation of Customer value influenced by word-of-mouth is relatively straightforward. Product firms use the purchasing patterns of their customers to study their product preferences and predict their future purchases and the channels they are likely to use (Schrage, 2017). Firms use sophisticated statistical models to project their customers’ past purchases, preferred commodities’ type, and price range, and time intervals to their future likelihood of making new purchases. However, it should be noted that this method can prove inaccurate since it is impossible to tell exactly the intentions of a consumer or their financial constraints. These factors can easily change their purchasing patterns as it tempers with their purchasing powers, especially the latter. Firms, therefore, acknowledge the fact that sometimes their predictions can be incorrect and establish measures to control such situations and expectations to avoid experiencing a drastic loss.
Firms also calculate their customer’s referral value to estimate how valuable their customers are to them in spreading their brands to other new customers in the market. This process is a bit complicated compared to calculating a customer’s lifetime value. It requires a firm to commit longer periods to conduct this analysis, usually six to twelve months, depending on the type of business in play (Schrage, 2017). This time consideration enables a firm to make accurate conclusions regarding their loyal customers’ influence on new customers by establishing variance in the referrals number. The firm accomplishes its objective by determining the average number of referrals a customer has made due to introducing an incentive on products purchased as a market campaign mechanism. Therefore, it requires the firm to study the customer’s purchase patterns but from a different angle from determining their lifetime value. Most brands prefer to count referrals influenced by the incentive market campaign within one year.
It is also important for a firm to distinguish the new consumers drawn to the products but not necessarily through their loyal customers. Some customers embrace new brands mainly because they want a change or get a new experience with a different product (Fan & Dong, 2021). They might as well have compared prices of the new brand’s commodities and found them to be affordable compared to the ones they’re used to, hence switching to the new brand. These are some of the factors that draw consumers to new brands other than being referred by their friends or people around them who identify with the brand. For a firm to identify referrals linked to their loyal customers and those not, they survey the ground and ask their new customers their trigger and motivation to purchase their brand (Kumar et al., 2007). They also question whether they would have been drawn to their product had it not been for the influence of an old customer. Answers and conclusions drawn from analysis enable a firm to understand and appreciate their customers more.
Firms pay more attention to their customers’ concerns, suggestions, and requirements. Firms understand how impactful their word-of-mouth is to their customers. Therefore, they establish strategies and policies that enable them to connect with the customers personally and create a sense of belonging (Schrage, 2017). Firms invest in employee training programs as one of the ways of enhancing customer treatment. Employees are subjected to lessons and training that help them interact with customers respectfully. They are taught to be patient and considerate because they interact with different customers daily. They are required to help them without complaining, even if the customer seems to be mistaken. According to most brands, the customer is always right, and the employees’ main aim is to ensure customer satisfaction at all times (Alavijeh et al., 2018). However, they are also taught how to stand up for themselves and handle abusive customers, which happens on rare occasions. Employees come out of training knowledgeable and ready to serve customers diligently, whether physically in the stores or online.
Firms also conduct self-evaluation over different periods to comprehend the business’s market position and what is required to maximize customer lifetime value. Firms hold meetings within their corporations to discuss consumer satisfaction and ways to attract more to their brands. It is a clear indication that they acknowledge and value their customer’s contribution to their firms, whether directly or indirectly. Firms strive to maximize the aspects that led to referrals being made in the first place, including word-of-mouth. They introduce new, quality, and advanced products that make them more competitive in the market (Alavijeh et al., 2018). Furthermore, they introduce discounts and vouchers to their loyal customers, which motivates them to shop with them some more and request their friends to join in the offers. Gifts and prizes to be won are also introduced to propel customers to purchase more commodities and spread the word to their friends and family hence attracting more new customers.
Customer Lifetime value enables a firm to calculate and determine the expected profit margin resulting from loyal customers. Since Customer Lifetime Value involves customer data scrutiny and analysis, the firm gets insights and can tell the profit to expect from their customers after a given time frame (Kumar et al., 2007). For this reason, firms lay down plans and policies concerning their costs and effective resource placement. Some of the costs incurred by firms include commodity restock, employee payments, store enhancements costs, and advertisement costs. Firms are able to work their way around these costs and on time, thus ensuring the smooth running of activities in the business, with little to no inconveniences. When the customers are happy and satisfied, everyone is happy
Customer Lifetime Value enables a firm to determine advertisement schemes that are capital intensive (Sauro, 2021). Consumer market segments allow firms to identify advertisements schemes that are likely to drain their resources, yet they do not yield a reasonable outcome. Therefore, they can change their marketing strategies depending on the resources they have at their disposal and adopt relevant and profit-yielding schemes. This way, firms prevent unnecessary costs that would otherwise result in a loss, thus insufficient funds to run their operations in the long run.
Conclusions
Consumers play a vital role in propelling and elevating a business in any market setup. They complete the cycle of goods exchange, and without them, a business would not exist. Therefore, firms should pay attention to consumer needs and address them appropriately, including their verbal exchange. Word-of-mouth has a massive effect on the consumer lifetime value, which consequently affects the performance of a business. Businesses that put their customers’ interests first and address them respectfully tend to strive and perform well in the market.
References
Alavijeh, M. R. K., Esmaeili, A., Sepahvand, A., & Davidaviciene, V. (2018). The effect of customer equity drivers on word-of-mouth behavior with mediating role of customer loyalty and purchase intention. Engineering Economics, 29(2), 236-246.
Fan, J., & Dong, L. (2021). A study on improving customer value based on the effect of word of mouth. Frontiers in Psychology, 12.
Kumar, V., Petersen, A., & Leone, R. (2007). How Valuable Is Word of Mouth? Harvard Business Review. Retrieved November 11, 2021, from https://hbr.org/2007/10/how-valuable-is-word-of-mouth.
Sauro, J. (2021). Why Your Customer Lifetime Value Is Important – dummies. Dummies. Retrieved November 11, 2021, from https://www.dummies.com/business/customers/why-your-customer-lifetime-value-is-important/.
Schrage, M. (2017). What Most Companies Miss About Customer Lifetime Value. Harvard Business Review. Retrieved November 11, 2021, from https://hbr.org/2017/04/what-most-companies-miss-about-customer-lifetime-value.
Schwarz, R. (2020). Council Post: The Power Word-Of-Mouth Has in Marketing, And How to Cultivate It. Forbes. Retrieved November 11, 2021, from https://www.forbes.com/sites/forbescommunicationscouncil/2020/09/08/the-power-word-of-mouth-has-in-marketing-and-how-to-cultivate-it/?sh=4851c8213df0.