Psychology Is It Effective - 1014 Words

On Psychiatry: Is it Effective? It is common to not completely understand the difference between psychiatry and psychology. To clear up the confusion, psychology is the study of the functions of the human brain, while psychiatry is the study and diagnosis of mental disorders. Mental disorders are â€Å"a clinically significant behavioral or psychological syndrome or pattern that occurs in an individual and that is associated with present distress or disability or with a significantly increased risk of suffering death, pain, disability, or an important loss of freedom† (The New Definition of a Mental Disorder). With this knowledge given and the stereotypes that is often prevailed, (Some examples of said stereotypes are that a psychiatrist would†¦show more content†¦Not in the slightest. Psychiatry, at its early stage, was considered a â€Å"soft-science†, since the diagnosing of patients was based on inferring, observation, and the doctors’ assumptions. Now, due to the development and improvement of magnetic resonance imaging (MRI) scanning to the brain, statistics, and strict and rigorous criteria of diagnosing patients, the study of psychiatry has been dubbed a â€Å"hard-science† (Psychiatry). An example of an MRI (magnetic resonance image) to a patient’s brain. There are many tests and procedures a psychiatrist has to follow to diagnose someone with a mental illness, such as when a doctor wants to test someone for schizophrenia. To be diagnosed with this mental disorder, the symptoms must match the ones stated in the DSM, or the Diagnostic and Statistical Manual of Mental Disorders. These symptoms include extremely disorganized speech or conduct, the lack of ability to act or function normally, having hallucinations, demonstrating delusional demeanor, and/or dazed/coma-like or extreme hyperactive behavior, which is also called catatonic behavior (Schizophrenia). To test someone for this illness, the patient will have to go through lab tests, such as complete blood count (CBC), other blood tests, alcohol and drug screenings, and sometimes the psychiatrist calls for an MRI or CT (also known as a CAT) scan. All this taken into account, it is

The Bad Seed Vs Lord Of The Flies - 1451 Words

The Lord of the Flies and â€Å"The Bad Seed† have some similarities and some differences. First, the Lord of the Flies and â€Å"The Bad Seed† are the same because they both show theories on where evil comes from, either nature or nurture. Additionally, they both show that children are capable of evil. On the other hand, The Lord of the Flies and â€Å"The Bad Seed† have some differences. First, the Lord of the Flies focuses on the nurture theory, or the theory that evil is fueled by surroundings, but â€Å"The Bad Seed† focuses on the nature theory, or the theory that evil is passed down through genetics, and you are born evil. Second, in the Lord of the Flies, Jack, the antagonist, only resorts to murder after being on the island for a time. On the other†¦show more content†¦Now, all of the boys are under the lead of Jack, and everyone turns against Ralph. They all start to hunt Ralph, who hides in a cave. To try and drive him out, they roll a boulder down to crush him. However, it doesn’t work, and Ralph is still in the cave. After it fails, they set the jungle on fire to get him to leave. The whole jungle quickly goes up in flames. Ralph runs to the beach, being chased by the other boys. They find a navy officer standing on the beach, who had seen the fire. The boys are all rescued. â€Å"The Bad Seed† is a movie made in 1956 about a psychotic 8-year-old girl, who kills people to get what she wants. It begins with a woman named Christine, Kenneth, her husband, and Rhoda, their daughter. Kenneth is being transferred to Washington DC by the Air Force. Christine is left to take care of Rhoda alone. Rhoda appears perfect, always doing her chores and never getting into trouble. However, she always asks for gifts from their landlady, Monica. Christine sometimes wonders if Rhoda is too young to be as mature as she is. However, the gardener, Leroy, believes that Rhoda isn’t as perfect as she appears. One da y, Christine drops off Rhoda at a school picnic. Later in the day, she gets news that a boy in Rhoda’s class, Claude Diegel, was found dead in the lake near where they were having the picnic. Christine picks Rhoda up. When Christine says that she’s sorry that Rhoda had to experienceShow MoreRelatedAnalysis Of The Book Vs. 1-2 2006 Words   |  9 PagesLiterary Context Paragraph Analysis Vs. 1-2 : The chapter introduces the solemnity of the giving of the law upon Mount Sinai, which was one of the most striking appearances of the divine glory. The reader is given the circumstances of the time and place and the proposal of God’s covenant with Israel. The people come to Sinai and God’s message is given to them. Moses is called up the mountain, into the presence of God, and was employed as the messenger of the covenant. This covenant was grantedRead MoreA Picatrix Miscellany52019 Words   |  209 Pagesbeginning from Aries, with Mars, the Sun and Venus and ending in Pisces with Saturn, Jupiter and Mars. 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A red apple in a poem is never merelyRead More8 stages of social development6628 Words   |  27 PagesIf an individual does indeed successfully reconcile these forces (favoring the first mentioned attribute in the crisis), he or she emerges from the stage with the corresponding virtue. For example, if an infant enters into the toddler stage (autonomy vs. shame doubt) with more trust than mistrust, he or she carries the virtue of hope into the remaining life stages Stages of psychosocial development Stages of Social Development In this post Cold War and postmodern age, we are asking serious questionsRead MoreSAT Top 30 Essay Evidence18536 Words   |  75 PagesWilliam Shakespeare (â€Å"To be? Or not to be?†) ...................................................................... 29 Harry Potter by J.K. 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Causes and Effects of the Global Financial Crisis

Question: Describe about the Causes and Effects of the Global Financial Crisis of 2007-09, With Special Reference to the Impacts on Financial Markets, Institutions and Instruments. Answer: Introduction The financial crisis depicts a situation in which the financial markets all over the world face a rapid downturn or devaluation in the assets. The impact of the financial crisis is considered so severe that it affects the economies all the around the world. The global financial crisis of 2007-09 affected the worlds strongest and stable economies such as the United States and Australia (Cihak, 2009). The financial crisis triggers as a result of several events happened in sequence and the same was the reason for the financial crisis 2007-09. The financial crisis is not good for anyone as it affects the entire economy adversely and misbalances it. Therefore, it is essential to conduct an enquiry into the causes and effects of the finical crisis of 2007-09 so that its recurrence could be stopped (Cihak, 2009). In the context developed above, this essay has been presented addressing the causes and effects of the financial crisis 2007-09. In this essay, the focus is on the Australian and the United State economies and thus, the analysis of the causes and effects has been conducted from the Australia and the US economies view point. Further, the essay also explores the impact of the financial crisis on the financial markets in Australia and the United States. Brief Overview of the Financial Crisis 2007-09 The events started building since the year 2007 when the banks and the financial institutions in the United States started experiencing reduction in the investors interest. The banks and financial institutions of the US were found to be overburdened with the debt and the value of the mortgage loan assets were observed to be reduced significantly. The bubble in the financial market in the United States not only destroyed the US economy, but it spread all across the globe including the sound and stable economies like Australia (Claessens et al., 2014). Since, the financial system of the United States was the main culprit of this global crisis, therefore, the US economy hampered more badly than the other economies. The impact of the global financial crisis on the Australian economy was observed to be lower than the other countries. The economies like US and UK got hit by recession on revelation of the financial crisis, but Australian economy was strong enough to fight with the recession (Australian Government, 2011). Causes of the Financial Crisis 2007-09 Reasons for the financial crisis 2007-09 were many, but the most crucial one is identified as the weak financial policies of the United States and the UK. The fiscal and monetary financial policies of the United States and the UK were observed to be very weak. An example of the weak monetary policies of the United States could be the reduction in the federal fund rates by a big margin. In order to control the recession, the US government reduced the federal fund rates from 6.5% to 1.75% in the year 2001 (Frbsf.org, 2002). Further, the monetary policies of the US also eased up the regulations with respect to the mortgage loans. Consequently, the banks and financial institutions in the US sold out huge amount of mortgage loans without ensuring adequate security for payback (Verick and Islam, 2010). Further, a detailed study into the causes of the financial crisis 2007-09 has been conducted as below: Low Interest Rates In order to maintain a proper balance in the inflation rates, it is becomes necessary for the government to adjust the interest rates. However, the adjustments in the interest rates should be made very cautiously and as per the needs, otherwise, the impact could be opposite of what was expected. The US government cut the interest rates by a big margin, which made the borrowings cheaper and the flow of money in the market got increased (Norgren, 2010). The reduction in the interest rates is shown in the figure given below: Figure 1: Interest Rate Cut by US The impact of low interest rates was seen more on the housing loans in the United States. Due to cheaper interest rates, the demand of the housing loans increased sharply and banks also lent money as much as they could. However, on revelations of the financial crisis, it came out that the banks allowed housing mortgage debt way more than the value of securities. Since, the value of securities was far lower than the loans given by the bank, the assets of the banks were declared undervalued (Norgren, 2010). Innovations in the Financial Market The innovation in the financial market has laid integration of the financial markets not only at the domestic level but at the global level. In the present era of globalisation, the banks and the financial institutions of all the countries are interrelated with each other in such a way that the impact of problems faced by one can be perceived on the others (Norgren, 2010). Further, many innovated financial instruments also came out in the market such as debt securitisation securities and over the counter derivative securities. Although, these innovations were made to diversify the risk of debt lenders, but the market could not succeed in that due to downfall in the investors confidence (Thakor and Simon, 2012). Thus, the innovated financial products and the new regulations also contributed in the collapse of the financial markets in the US. Inadequacies in the Risk Management Immediately before the financial crisis, the financial market in the United States and the UK were observed to be booming. The banks and the financial institutions relied too much on the past performance without paying required attention to the future outlook. The non consideration of the future outlook while formulating the risk management policies shows inadequacies in the risk management (Norgren, 2010). Further, the stress testing applied by the banks and the financial institutions in evaluating the risk also was claimed to be erroneous. The stress testing failed in taking into account the liquidity in measuring the risk, which was the measure inadequacy found in the system of risk management adopted by the banks in US and UK. Apart from that the credit rating agencies also could not measure the risk adequately in assigning the credits to the debt issuers (Claessens et al., 2012). Weaknesses in the Regulatory Regime The weakness in the regulatory regime in the banking and financial industry of the United States and the UK were among the measure causes for the financial crisis 2007-09. The governments and the central banks of the United States and the United Kingdom were found to be the worst in regard to policy framing (Norgren, 2010). The government policies in the US lowered the credit controls and allowed the banks and the financial institutions to lend freely, which resulted into substantial increase in the household debt of the US. Further, the lapses in the supervisory framework of the US and the UK also contributed to the financial crisis. The weaknesses in the regulatory regime also dampen the harmony and coordination among the financial markets at the international level (Spangler, 2012). Effects of the Financial Crisis 2007-09 The financial crisis of 2007-09 was considered to be the worst ever as claimed by the economists from all around the world. The strongest economies of the world such as the United States and UK got affected severely and the stable economies like Australia also got hit. However, the impact of financial crisis on Australian economy was not that deep as it was on the US and the UK economies. Further discussion in this regard has been carried out in the following paragraphs: On the Overall Economies of Australia and the US The gross domestic product is considered to be the representative of the economic growth of a country. Therefore, in order to analyse the impact of the global financial crisis on the economies of Australia and the US, the trend in gross domestic products have been measured during the years of crisis and after the crisis. The trend in gross domestic product has been depicted in the graph shown below: Figure 2: GDP trend in Australia and US From the graph shown above, it can be observed that the growth rate in the gross domestic product of Australia dipped down heavily in the year 2009, when the global financial crisis was revealed. However, in the same year US economy was observed to be relatively stable as the decline in the gross domestic product was only 2% (World Bank, 2016). Immediately, on revelation of the global financial crisis, the Australian economy got hampered, but recovery after the crisis was phenomenal. As could be observed from the trend line shown in the graph, the gross domestic product of Australia has been increasing more rapidly than that of the US. Further, it has been observed that though the gross domestic product of Australia was down in the year 2009 severely, but the recession was far still away. The Unemployment rate in Australia was observed to be way lower than that was prevailing in the US. The trend in the unemployment rate could be observed from the graph shown below: Figure 3: Trend in Unemployment Rate From the graph, it could be observed that the unemployment rate in Australia increased a bit after the revelations of the global financial crisis. However, in the United States, the recession creeped in the economy and the unemployment rate increased significantly from 5% in the year 2008 to 10% in the year 2011 (World Bank, 2016). The rise in the unemployment rate at a rapid pace shows the severity of the impact of the financial crisis on the US economy. There are three big reasons that Australia survived from the financial crisis such as demand from china for the Australian goods and services, strict regulatory environment, and stable financial institutions (Hiller, 2010). The demand from china continuously gave a push to the exports of Australia, which helped the Australian economy to maintain a proper trade balance. Further, the regulatory environment in Australia has always been so stringent that the banking and financial sector is rarely left free to do things at their will. As discussed in the sections given above, the loopholes in the banking and finance regulations had been the main culprit of the financial crisis, thus, maintaining a stringent legal and regulatory environment is really important for a stable economy. On the Financial Markets, Institutions Instruments of Australia The impact of the financial crisis 2007-09 was perceived to be drastic on the financial market of the United States. A figure, depicting the performance of Nasdaq from the year 2007 to 2016, has been presented below: Figure 4: Nasdaq Yearly performance From the graph presented above, it can be observed that Nasdaq was performing extremely well before the declaration of the financial crisis in the year 2008-09. At the end of 2007, the Nasdaq was observed to be ruling at the levels of 3500 index points. Suddenly, in the year 2008, the market started getting down and then it collapsed completely in the year 2009. From the chart, it can be observed that Nasdaq fell from 3500 in the year 2007 to 1500 in the year 2009, which shows a drastic collapse (Macrotrends, 2016). Due to the collapse of the US capital market, the market indices of other countries all over the world got affected adversely. The Australian capital was also the one that experienced decline on revelations of the financial crisis. The Australian stock market index, SP/ASX200 was observed to be falling from 6700 in the year 2007-08 to 3400 in the year 2008-09 (Thangaraj and Chan, 2012). It was the impact of instant change in the market sentiments that the Australian market declined so rapidly. However, later on, it was understood that the impact of the financial crisis on the Australian economy will be lower due to much better position of the banks and the financial institutions in regard to collateralized debt obligations. Thus, it was considered that the recovery of the Australian capital market would be immediate and faster than US and UK. Further, the housing industry of Australia was also observed to be much controlled and in a better position as compared to the United States. As expected, the ASX200 came back recovering from the shock of the financial crisis in the late 2009, when the index went up to 4870.60 levels in the month of December 2009 (ASX200, 2016). However, in the year 2010, the market again showed a glimpse of downfall at the start of the year, but the situation was under control by the end of the year. The fear in the investors of rise in the debt created negative market sentiments in the start of the year 2010 or at the end of the year 2009. Conclusion The discussion carried out in this essay revolves around the causes of the global financial crisis 2007-09 and the impact of it on the Australian and US economy. From the discussion carried out here, it could be analysed that the three broad factors should always be balanced to avoid the crisis situations. Those three factors are the fiscal policies, monetary policies, and the regulatory regime of the financial market. The main causes of the global financial crisis 2007-09 were the lapses in the fiscal and monetary policies of the US government. Further, the weak regulatory environment around the banks and financial markets also contributed to the big mess. In regard to the impact, it has been analysed that the US and UK economies were affected more badly than the others. The Australian economy also got affected adversely, but the impact was not so severe as compared to the US and UK. References ASX200. 2016. End of Month Values. [Online]. Available at: https://www.asx.com.au/about/historical-market-statistics.htm [Accessed on: 09 September 2016]. Australian Government. 2011. The Australian economy and the global downturn part 1: reasons for resilience. [Online]. Available at: https://www.treasury.gov.au/PublicationsAndMedia/Publications/2011/Economic-Roundup-Issue-2/Report/Part-1-Reasons-for-resilience [Accessed on: 09 September 2016]. Cihak, M. 2009. Financial Crisis (Introduction). Journal of economics and finance, 59(6), pp. 502-506. Claessens, S. et al. 2012. Crisis Management and Resolution: Early Lessons from the Financial Crisis. [Online]. Available at: https://www.imf.org/external/np/seminars/eng/2012/fincrises/pdf/ch16.pdf [Accessed on: 09 September 2016]. Claessens, S., Ayhan Kose, M., Laeven, L., and Valencia, F. 2014. Financial crises: causes, consequences, and policy responses. International Monetary Fund. Frbsf.org. 2002. Why did the Federal Reserve System lower the federal funds and discount rates below 2 percent in 2001? [Online]. Available at: https://www.frbsf.org/education/publications/doctor-econ/2002/january/federal-funds-discount-rate-2001/ [Accessed on: 09 September 2016]. Hiller, B. 2010. Australias resilience during the global crisis, 2007-2009. Marxist interventions, 2(2010), pp. 59-77. Macrotrends. 2016. NASDAQ Composite - 45 Year Historical Chart. [Online]. Available at: https://www.macrotrends.net/1320/nasdaq-historical-chart [Accessed on: 09 September 2016]. Norgren, C. 2010. The causes of the global financial crisis and their implications for supreme audit institutions. [Online]. Available at: https://www.intosai.org/uploads/gaohq4709242v1finalsubgroup1paper.pdf [Accessed on: 09 September 2016]. Spangler, T. 2012. The law of private investment funds. OUP Oxford. Thakor, A.V. and Simon, J.E. 2012. Innovation Caused the 2008 Financial Crisis. Journal of Financial Economics, 103(1), pp. 130148. Thangaraj, R.K. and Chan, T.K. 2012. The effects of the global financial crisis on the Australian building construction supply chain. Australasian Journal of Construction Economics and Building, 12 (3), pp. 16-30. Verick, S. and Islam, I. 2010. The great recession of 2008-2009: causes, consequences and policy responses. [Online]. Available at: https://ftp.iza.org/dp4934.pdf [Accessed on: 09 September 2016]. World Bank. 2016. Gross Domestic Product. [Online]. Available at: https://data.worldbank.org/indicator/NY.GDP.MKTP.CD [Accessed on: 09 September 2016]. World Bank. 2016. Unemployment rate. [Online]. Available at: https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS [Accessed on: 09 September 2016].

Luxury Good and Gucci free essay sample

Gucci‘s overall strategy was to vertically integrate to strengthen its overall brand image. After vertically integrating they acquired other luxury retailers to continue to grow horizontally and to increase economies of scope. The economics of the luxury goods industry changed forcing Gucci to modify its strategy. Consumers demand shifted from classic style buyers to style conscious buyers. Gucci not only had to change due to the economics of the industry but they also had several problems with their existing structure. Hence Gucci made the following moves to reposition it to compete in the new economics of the luxury goods industry. Gucci The partnership between DeSole and Ford addresses the company’s inability to have streamlined decision making and consistent branding throughout the company. By partnering product design and strategy, Gucci can now make product and business decisions that deliver a consistent message externally. All products and communications will support the brand image of a luxury goods retailer that Gucci wants to deliver to the marketplace. We will write a custom essay sample on Luxury Good and Gucci or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The cost cutting and targeted layoffs address Gucci’s poor cost structure. While profit margins were healthy, the extravagant spending by the former CEO was reducing profitability. The company had excess headcount in some areas and less in others. The layoffs improved Gucci’s cost structure and streamline the organization. Secondly, Gucci lacked the management talent to run a high end luxury company. By laying off underperforming managers and hiring experienced business executives, Gucci significantly improved the quality of its management team. The cash investment by PPR protects Gucci from hostile takeovers by competitors. The improvement in Gucci’s capital structure enables Gucci to move from an acquisition target to a potential acquirer of substitutes and new entrants. This is critical because in the fashion industry, new brands are always emerging in the market. The $3 billion dollar cash investment enables Gucci to protect its core market better. Additionally, the acquisition of YSL through the merger diversifies Gucci’s product portfolio and creates high barriers to entry. Buyers Due to changing consumer demands, Gucci started to focus on fashion in particular the â€Å"glamorous edge. † Since switching cost for consumers are low and consumers are now demanding new fashions every season focusing on seasonal trends competitively positioned Gucci against its rivals and impeded consumers from finding substitutes. Gucci changed its target consumer from an older more conservative buyer to a modern, youthful, fashion conscious one. Since all of Gucci’s competitors had the same target (30-50 year affluent women) going after a modern, youthful spirited consumer allows Gucci to focus on a different segment of the luxury market, capturing a different slice of the pie. To create loyalty, give consumers options, and to prevent consumers from switching and buying a substitute product Gucci decided to revolutionize their product assortments to correspond with the seasonal trends. In addition they increased the quality of their products comparable to Hermes and offered these products at a value to meet the consumer’s needs. Furthermore, Gucci tailored their product assortment in each DOS to local customers to attract more consumers in the local markets. To better forecast product demand for seasonal goods and to keep inventory costs down Gucci added customer intelligence to the decision making process to better understanding consumers buying behavior. In order to obtain higher profit margins and offer a comprehensive line of products it was necessary for Gucci to diversify its portfolio. Hence Gucci introduced items from scarves to fur coats. To remain focused and maintain its â€Å"luxury status†, Gucci did not introduce diffusion product lines. Gucci had initially set its prices too high hence reducing their retail prices by 30% was necessary to attract and maintain customer loyalty. In order to generate demand for the product Gucci doubled their advertising and turned Tom Ford into a celebrity hoping to attract media and attention from around the world. To restore Gucci’s image as a high end luxury goods retailer they renovated all of their stores to support this new image. In addition all internal and external communications had the same look and feel to convey a consistent brand identity. Furthermore, they reduced distribution through retail stores that didn’t support the new brand image regardless of sales. Gucci launched an official web site to create awareness and exhibit new product lines and to position themselves against their competitors. Suppliers Suppliers are a key driver of profitability—a key competitive force. Suppliers are responsible for delivering a premium product that satisfies the company’s standards in quality and that reflects Tom Ford’s creative vision. Without fast turnover to meet fashion forward trend demands and a quality product, the repositioning of the Gucci brand could not have taken place. To fulfill this vision Gucci created an incentive program to keep suppliers loyal to ensure a quality product was manufactured, on time delivery, and it would prevent the suppliers from forging relationships with Gucci’s competitors. In addition, Gucci made suppliers more efficient through technology and logistics investments, provided training for suppliers and built an EDI network allowing Gucci to efficiently communicate with partner suppliers through the production process. As more fashion products will be produced every season along with the classic products, delivery and meeting demand could become an issue if production processes are not efficient. Investing in suppliers ensures that supplier threat, which is high, is controlled and suppliers have incentives to stay with Gucci. Supplier threat is high because of there is an absence of substitutes suppliers. Switching costs are high for Gucci other suppliers may be producing for their rivals. Other suppliers may not deliver the quality and craftsmanship Gucci is expecting. In addition, other suppliers do not have experience in producing Gucci products (current suppliers have been with Gucci for long time). Hence they will have a longer learning curve slowing down the production process. There are few suppliers in specific regions: Gucci suppliers had production capacity to meet Gucci’s growth (20-30% a year). However, finding new suppliers would be going into Prada’s territory. With more growth, suppliers gained bargaining power with sub-suppliers and with Gucci. Initially, Gucci had power because suppliers worried that Gucci would go overseas for suppliers. Complementors Complementors are a not a high threat to Gucci because there only a few of them, media and advertising. Competition There are many firms in this industry because profit margins are high. However with the number and volume of MA activity on the rise, consolidation is imminent with a few big players left in the market. Consolidation among competition has given competitors lower cost structure resulting in a competitive advantage such as ad purchasing discounts and supplier negotiating power. The competitors have a diversified product portfolio to target multiple segments of the market. They dominate in particular segments, for example Hermes and leather bags. Since there is slow industry growth precipitating fights for market share is certain to occur. This may result in a high threat from competitors such as LVMH and Prada. Threat of Entry The threat of entry is low because brand identity and product differentiation has been well established in this industry. In addition, access to distribution channels is limited and the new entrant would be competing with already established channels of distribution for Gucci and others firms. Gucci and other competitors have substantial resources to fight back because they of their monetary resources and could obstruct the new entrant or buy them out. Luxury Good and Gucci free essay sample Gucci‘s overall strategy was to vertically integrate to strengthen its overall brand image. After vertically integrating they acquired other luxury retailers to continue to grow horizontally and to increase economies of scope. The economics of the luxury goods industry changed forcing Gucci to modify its strategy. Consumers demand shifted from classic style buyers to style conscious buyers. Gucci not only had to change due to the economics of the industry but they also had several problems with their existing structure. Hence Gucci made the following moves to reposition it to compete in the new economics of the luxury goods industry. Gucci The partnership between DeSole and Ford addresses the company’s inability to have streamlined decision making and consistent branding throughout the company. By partnering product design and strategy, Gucci can now make product and business decisions that deliver a consistent message externally. All products and communications will support the brand image of a luxury goods retailer that Gucci wants to deliver to the marketplace. We will write a custom essay sample on Luxury Good and Gucci or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The cost cutting and targeted layoffs address Gucci’s poor cost structure. While profit margins were healthy, the extravagant spending by the former CEO was reducing profitability. The company had excess headcount in some areas and less in others. The layoffs improved Gucci’s cost structure and streamline the organization. Secondly, Gucci lacked the management talent to run a high end luxury company. By laying off underperforming managers and hiring experienced business executives, Gucci significantly improved the quality of its management team. The cash investment by PPR protects Gucci from hostile takeovers by competitors. The improvement in Gucci’s capital structure enables Gucci to move from an acquisition target to a potential acquirer of substitutes and new entrants. This is critical because in the fashion industry, new brands are always emerging in the market. The $3 billion dollar cash investment enables Gucci to protect its core market better. Additionally, the acquisition of YSL through the merger diversifies Gucci’s product portfolio and creates high barriers to entry. Buyers Due to changing consumer demands, Gucci started to focus on fashion in particular the â€Å"glamorous edge. † Since switching cost for consumers are low and consumers are now demanding new fashions every season focusing on seasonal trends competitively positioned Gucci against its rivals and impeded consumers from finding substitutes. Gucci changed its target consumer from an older more conservative buyer to a modern, youthful, fashion conscious one. Since all of Gucci’s competitors had the same target (30-50 year affluent women) going after a modern, youthful spirited consumer allows Gucci to focus on a different segment of the luxury market, capturing a different slice of the pie. To create loyalty, give consumers options, and to prevent consumers from switching and buying a substitute product Gucci decided to revolutionize their product assortments to correspond with the seasonal trends. In addition they increased the quality of their products comparable to Hermes and offered these products at a value to meet the consumer’s needs. Furthermore, Gucci tailored their product assortment in each DOS to local customers to attract more consumers in the local markets. To better forecast product demand for seasonal goods and to keep inventory costs down Gucci added customer intelligence to the decision making process to better understanding consumers buying behavior. In order to obtain higher profit margins and offer a comprehensive line of products it was necessary for Gucci to diversify its portfolio. Hence Gucci introduced items from scarves to fur coats. To remain focused and maintain its â€Å"luxury status†, Gucci did not introduce diffusion product lines. Gucci had initially set its prices too high hence reducing their retail prices by 30% was necessary to attract and maintain customer loyalty. In order to generate demand for the product Gucci doubled their advertising and turned Tom Ford into a celebrity hoping to attract media and attention from around the world. To restore Gucci’s image as a high end luxury goods retailer they renovated all of their stores to support this new image. In addition all internal and external communications had the same look and feel to convey a consistent brand identity. Furthermore, they reduced distribution through retail stores that didn’t support the new brand image regardless of sales. Gucci launched an official web site to create awareness and exhibit new product lines and to position themselves against their competitors. Suppliers Suppliers are a key driver of profitability—a key competitive force. Suppliers are responsible for delivering a premium product that satisfies the company’s standards in quality and that reflects Tom Ford’s creative vision. Without fast turnover to meet fashion forward trend demands and a quality product, the repositioning of the Gucci brand could not have taken place. To fulfill this vision Gucci created an incentive program to keep suppliers loyal to ensure a quality product was manufactured, on time delivery, and it would prevent the suppliers from forging relationships with Gucci’s competitors. In addition, Gucci made suppliers more efficient through technology and logistics investments, provided training for suppliers and built an EDI network allowing Gucci to efficiently communicate with partner suppliers through the production process. As more fashion products will be produced every season along with the classic products, delivery and meeting demand could become an issue if production processes are not efficient. Investing in suppliers ensures that supplier threat, which is high, is controlled and suppliers have incentives to stay with Gucci. Supplier threat is high because of there is an absence of substitutes suppliers. Switching costs are high for Gucci other suppliers may be producing for their rivals. Other suppliers may not deliver the quality and craftsmanship Gucci is expecting. In addition, other suppliers do not have experience in producing Gucci products (current suppliers have been with Gucci for long time). Hence they will have a longer learning curve slowing down the production process. There are few suppliers in specific regions: Gucci suppliers had production capacity to meet Gucci’s growth (20-30% a year). However, finding new suppliers would be going into Prada’s territory. With more growth, suppliers gained bargaining power with sub-suppliers and with Gucci. Initially, Gucci had power because suppliers worried that Gucci would go overseas for suppliers. Complementors Complementors are a not a high threat to Gucci because there only a few of them, media and advertising. Competition There are many firms in this industry because profit margins are high. However with the number and volume of MA activity on the rise, consolidation is imminent with a few big players left in the market. Consolidation among competition has given competitors lower cost structure resulting in a competitive advantage such as ad purchasing discounts and supplier negotiating power. The competitors have a diversified product portfolio to target multiple segments of the market. They dominate in particular segments, for example Hermes and leather bags. Since there is slow industry growth precipitating fights for market share is certain to occur. This may result in a high threat from competitors such as LVMH and Prada. Threat of Entry The threat of entry is low because brand identity and product differentiation has been well established in this industry. In addition, access to distribution channels is limited and the new entrant would be competing with already established channels of distribution for Gucci and others firms. Gucci and other competitors have substantial resources to fight back because they of their monetary resources and could obstruct the new entrant or buy them out. Luxury Good and Gucci free essay sample Gucci‘s overall strategy was to vertically integrate to strengthen its overall brand image. After vertically integrating they acquired other luxury retailers to continue to grow horizontally and to increase economies of scope. The economics of the luxury goods industry changed forcing Gucci to modify its strategy. Consumers demand shifted from classic style buyers to style conscious buyers. Gucci not only had to change due to the economics of the industry but they also had several problems with their existing structure. Hence Gucci made the following moves to reposition it to compete in the new economics of the luxury goods industry. Gucci The partnership between DeSole and Ford addresses the company’s inability to have streamlined decision making and consistent branding throughout the company. By partnering product design and strategy, Gucci can now make product and business decisions that deliver a consistent message externally. All products and communications will support the brand image of a luxury goods retailer that Gucci wants to deliver to the marketplace. We will write a custom essay sample on Luxury Good and Gucci or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The cost cutting and targeted layoffs address Gucci’s poor cost structure. While profit margins were healthy, the extravagant spending by the former CEO was reducing profitability. The company had excess headcount in some areas and less in others. The layoffs improved Gucci’s cost structure and streamline the organization. Secondly, Gucci lacked the management talent to run a high end luxury company. By laying off underperforming managers and hiring experienced business executives, Gucci significantly improved the quality of its management team. The cash investment by PPR protects Gucci from hostile takeovers by competitors. The improvement in Gucci’s capital structure enables Gucci to move from an acquisition target to a potential acquirer of substitutes and new entrants. This is critical because in the fashion industry, new brands are always emerging in the market. The $3 billion dollar cash investment enables Gucci to protect its core market better. Additionally, the acquisition of YSL through the merger diversifies Gucci’s product portfolio and creates high barriers to entry. Buyers Due to changing consumer demands, Gucci started to focus on fashion in particular the â€Å"glamorous edge. † Since switching cost for consumers are low and consumers are now demanding new fashions every season focusing on seasonal trends competitively positioned Gucci against its rivals and impeded consumers from finding substitutes. Gucci changed its target consumer from an older more conservative buyer to a modern, youthful, fashion conscious one. Since all of Gucci’s competitors had the same target (30-50 year affluent women) going after a modern, youthful spirited consumer allows Gucci to focus on a different segment of the luxury market, capturing a different slice of the pie. To create loyalty, give consumers options, and to prevent consumers from switching and buying a substitute product Gucci decided to revolutionize their product assortments to correspond with the seasonal trends. In addition they increased the quality of their products comparable to Hermes and offered these products at a value to meet the consumer’s needs. Furthermore, Gucci tailored their product assortment in each DOS to local customers to attract more consumers in the local markets. To better forecast product demand for seasonal goods and to keep inventory costs down Gucci added customer intelligence to the decision making process to better understanding consumers buying behavior. In order to obtain higher profit margins and offer a comprehensive line of products it was necessary for Gucci to diversify its portfolio. Hence Gucci introduced items from scarves to fur coats. To remain focused and maintain its â€Å"luxury status†, Gucci did not introduce diffusion product lines. Gucci had initially set its prices too high hence reducing their retail prices by 30% was necessary to attract and maintain customer loyalty. In order to generate demand for the product Gucci doubled their advertising and turned Tom Ford into a celebrity hoping to attract media and attention from around the world. To restore Gucci’s image as a high end luxury goods retailer they renovated all of their stores to support this new image. In addition all internal and external communications had the same look and feel to convey a consistent brand identity. Furthermore, they reduced distribution through retail stores that didn’t support the new brand image regardless of sales. Gucci launched an official web site to create awareness and exhibit new product lines and to position themselves against their competitors. Suppliers Suppliers are a key driver of profitability—a key competitive force. Suppliers are responsible for delivering a premium product that satisfies the company’s standards in quality and that reflects Tom Ford’s creative vision. Without fast turnover to meet fashion forward trend demands and a quality product, the repositioning of the Gucci brand could not have taken place. To fulfill this vision Gucci created an incentive program to keep suppliers loyal to ensure a quality product was manufactured, on time delivery, and it would prevent the suppliers from forging relationships with Gucci’s competitors. In addition, Gucci made suppliers more efficient through technology and logistics investments, provided training for suppliers and built an EDI network allowing Gucci to efficiently communicate with partner suppliers through the production process. As more fashion products will be produced every season along with the classic products, delivery and meeting demand could become an issue if production processes are not efficient. Investing in suppliers ensures that supplier threat, which is high, is controlled and suppliers have incentives to stay with Gucci. Supplier threat is high because of there is an absence of substitutes suppliers. Switching costs are high for Gucci other suppliers may be producing for their rivals. Other suppliers may not deliver the quality and craftsmanship Gucci is expecting. In addition, other suppliers do not have experience in producing Gucci products (current suppliers have been with Gucci for long time). Hence they will have a longer learning curve slowing down the production process. There are few suppliers in specific regions: Gucci suppliers had production capacity to meet Gucci’s growth (20-30% a year). However, finding new suppliers would be going into Prada’s territory. With more growth, suppliers gained bargaining power with sub-suppliers and with Gucci. Initially, Gucci had power because suppliers worried that Gucci would go overseas for suppliers. Complementors Complementors are a not a high threat to Gucci because there only a few of them, media and advertising. Competition There are many firms in this industry because profit margins are high. However with the number and volume of MA activity on the rise, consolidation is imminent with a few big players left in the market. Consolidation among competition has given competitors lower cost structure resulting in a competitive advantage such as ad purchasing discounts and supplier negotiating power. The competitors have a diversified product portfolio to target multiple segments of the market. They dominate in particular segments, for example Hermes and leather bags. Since there is slow industry growth precipitating fights for market share is certain to occur. This may result in a high threat from competitors such as LVMH and Prada. Threat of Entry The threat of entry is low because brand identity and product differentiation has been well established in this industry. In addition, access to distribution channels is limited and the new entrant would be competing with already established channels of distribution for Gucci and others firms. Gucci and other competitors have substantial resources to fight back because they of their monetary resources and could obstruct the new entrant or buy them out.