Sunday, December 29, 2019
Ratio analysis is a technique of quantitative analysis - Free Essay Example
Sample details Pages: 4 Words: 1263 Downloads: 9 Date added: 2017/06/26 Category Management Essay Type Analytical essay Did you like this example? The first limitation of the ratio analysis is information problems. Ratio analysis is a technique of quantitative analysis and thus ignores qualitative factors such as management skills, track record and the rate of change in the market which may be important in decision making. (Universal teacher publications). Don’t waste time! Our writers will create an original "Ratio analysis is a technique of quantitative analysis" essay for you Create order The ratios are seen as red flags as they do not provide answers to questions raised by the users of an organisations accounting information. They only provide a trend indication and basis for comparison. For example, if the return on capital employed at Kidds plc is 20.9%, the potential yield of the business cannot be derived and clearly cannot be achieved. (Benedict Elliot 2008). The limitations of information problems arises because ratios are not definite measures as they only provide clues to a companys financial situation thereby, not reflecting the performance of the company. Also out-dated information is likely to be presented in the financial statement which does not give a proper reflection of the organisation current financial position. Furthermore, where historical cost convention is used, valuation of asset could be misleading. Hence ratio based on the information is not good for decision making, and because of the reluctance of companies to divulge information which may be beneficiary to their competitors, they tend to provide dubious and obscure information which has little or no use. (Geoff 2009:225). The need for comparison: Ratio analysis is a useful tool in analysing the performance of a firm, but would have no usefulness if there is no element of comparison. Ratios need comparators to be meaningful because a ratio in isolation would be of little use, unless the ratio has a norm with which it can be compared or a standard against which it can be judged. (Benedict and Elliot 2008:541). Comparisons can be made on the basis of past relationship and statistics within the firm by comparing its achievement to that of its competitors in accordance to the norms and customs of the industry. Though problems are bound to arise because of the unique nature of the business, coupled with the difficulty in finding a similar firm for the comparison purpose. A typical inter-firm comparison report calculates the companys own ratio and a quartile analysis of all members so a company can see how it compares with the average in the industry. (Benedict and Elliot 2008:541). 3. Ratios can be manipulated: The third limitation of ratio analysis has to do with the deliberate manipulation of ratios by organisations, so as to present its accounts in a more attractive proposition. The accounting ratio which allows for flexibility in its rules and regulations encourages companies when faced with this problem to come to differing solutions. (Black 2009:225). This flexibility is seen by some as strength of accounting procedures where the requirements of specific companies allow individual accounting treatments to be adopted where appropriate. (Black 2009:225). A typical example is when borrowings of a firm are excluded from its capital so as to eliminate any form of bias its inclusion in the financial statement may produce. To cover up its poor financial position, some organisations may resort to window dressing which takes the form of sen ding customers faulty goods at the year-end and treating them as sales knowing that they will be returned in the following financial period.(Benedict and Elliot 2008:543). 2. CURRENT RATIO AND ITS IMPROVEMENT Current ratio can be defined as the relationship existing between the current assets and liabilities of a business organisation. It is a measure of general liquidity and it is used to make an analysis for the short term financial position or liquidity of a firm. (Accounting for management 2011). It gives an overall indication of the performance of a business organisation and how it is able to meet its debt obligations. The current ratio is also known as working capital ratio. (Benedict and Elliot 2008:532). It can be calculated using the formula below:             Current ratio =     Current assets      Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Current liabilities (Benedict and Elliot 2008: 532) The current ratio consists of two fundamental elements which are: 1.      Current assets 2.       Current liabilities. 1. Current assets: These are assets which are held for the short term and primarily for trading and constitutes of stock, cash @hand, cash @bank, prepayments, sundry debtors, bills receivable, and other assets that can be converted easily to cash. (Atrill and Mclaney 2011:44). 2. Current liabilities: These are basically amounts due for set tlements in the short term. (Atrill and Mclaney 2011: 47). This comprises outstanding expenses such as bills payable, overdraft, creditors, accruals, dividend and tax payable. (Accounting for management 2011). An example of current ratio can be illustrated below:  Example: If the current asset of larsol store is  £40,000 and its current liability is  £28,500 then the current ratio can be calculated as:                   Current ratio =     Current Assets           =      40,000                   Âà ‚                             Current Liabilities                    28,500        = 1.4  Hence, our current ratio gives 1.4 which can always be expressed as times cover. (Benedict and Elliot 2008:532). SIGNIFICANCE OF CURRENT RATIO The current ratio gives an overall insight of an organisations financial stability. It is a quick measure of an organisations liquidity position and it represents the margin of safety or cushion available to the creditors. (Accounting for management 2011). It also acts also as an index of technical solvency and an index of the strength of working capital of a firm. (Accounting for management 2011). A high current ratio gives an understanding of how a business organisation is able to pay off its debts (current liabilities) in time and when due. This indicates that the business organisation financial position is liquid and solid. (Accounting for management 2011).Also, when the current ratio of the business organisation is low, it gives us an indication that the firm would not be able to pay its liabilities in time without experiencing difficulties. This demonstrates a weak liquidity position. (Accounting for management 2011).  LIMITATIONS OF THE CURRENT RATIO The Limitations of the current ratio are: The problem of assets valuation and window dressing tends to exist It is a crude ratio because it ignores the quality of the current assets. (Accounting for management 2011).  Â IMPROVEMENT OF THE CURRENT RATIO RETURN ON CAPITAL EMPLOYED (ROCE) Benedict and Elliot (2001) defined return on capital employed as the ratio that shows the relationship between the profit for the year (before deduction of interest on loan capital and taxation) and the capital employed in the business. The return on capital employed can also be referred to as the primary ratio. It is a focal point in the determining of business profitability. (Benedict and Elliot 2001). The ratio usually expressed in percentage can be calculated using: ROCE= Operating profit x 100 Share capital + Reserves + Non-current liabilities (Atrill Mclaney 2011)   The return of capital employed ratio is one of the major ratios frequently used by business organisations when establishing or setting profit targets. A viable business should generate a considerably higher return that that available by investing in a bank or other similar interest-bearing deposits. (Black: 212). The return on capital employed is also vital in the assessment of the performance of funds deployed in an organisation. (Atrill Mclaney 2011:195). An example of the return on capital employed (ROCE) can be seen below IMPROVEMENT OF THE RETURN ON CAPITAL EMPLOYED The Return on capital employed (ROCE) is an important measure of performance of input and output of a firm in the form of profit. (Harvey et al 2001:376). It can be improved by through the following: 1. The return on capital employed can be improved by reducing asset level of a business organisation. 2. It can be improved by also increasing the level of sales. 3. ROCE can also be improved by increase in an organisations annual earnings. 4. By reducing capital employed. 5. By increasing its production and revenue, the return on capital employed (profit) can also be improved. (Palmer 2000)  Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
Saturday, December 21, 2019
Zeitoun, By Dave Eggers - 1699 Words
In the novel, Zeitoun by Dave Eggers, the main character, Abdulrahman Zeitoun, is an immigrant of Syria who stays in New Orleans after Hurricane Katrina and is arrested due to the suspicion of looting, but really is arrested because of his race and how he looks. Zeitoun’s faith and loyalty to his community and home is tested through the many obstacles of Hurricane Katrina and including his religion, racism, and his very own dignity. The author, Dave Eggers who is also the speaker in novel, proves all examples of Zeitoun’s challenges credibly in the text. Quote 1: â€Å"Zeitoun s grandmother had stayed put during countless storms in her home on Arwad Island, and he planned to do the same. A home was worth fighting for.†(Eggers, 70) Eggers shows in this quote how Zeitoun refuses to leave his home of New Orleans with his family. Eggers portrays that even though a house may seem replaceable, Zeitoun still chooses to not leave his home like his family who did not leave their home land of Arwad Island. The author also shows the symbolism of Zeitoun’s refusal to leave is like his assimilation coming to America. The symbolism of Zeitoun’s refusal to leave also shows how dedicated he is to his new country of America and refuses to give up when faced with discrimination. Eggers proves that Zeitoun continues fighting for his home in the United States. Quote 2: â€Å"Look above you, at the stars and moon. How do the stars keep their place in the sky, how does the moon rotate around theShow MoreRelatedAnalysis Of The Book Zeitoun By Dave Eggers988 Words  | 4 Pagessummer assignment, we were assigned to read Zeitoun by Dave Eggers, which recounts the story of a Muslim-American man named Abdulrahman Zeitoun who remained in New Orleans during 2005’s deadly Hurricane Katrina. While trapped in the city, Zeitoun paddles in his canoe in the flooded streets aiding those who are in danger; however, Zeitoun is suddenly arrested under accusations of being affiliated with an Al-Qaeda Terrorist Cell. Throughout the novel, Zeitoun is portrayed as a gentle and compassionateRead MoreAnalysis Of The Book Zeitoun By Dave Eggers978 Words  | 4 Pagesassignment, we were assigned to read Zeitoun by Dave Eggers, which recounts the true story of a Muslim-American man named Abdulrahman Zeitoun who remained in New Orleans during 2005â €™s deadly Hurricane Katrina. While trapped in the city, Zeitoun paddles in his canoe in the flooded streets coming to the aid of those who are in danger; however, Zeitoun is arrested under accusations of being affiliated with an Al-Qaeda Terrorist Cell. Throughout the novel, Zeitoun is portrayed as a gentle and compassionateRead MoreSummary Of Dave Eggers s Zeitoun 1028 Words  | 5 PagesAmerican author, Dave Eggers, addresses the endeavors of Zeitoun during and after Hurricane Katrina in his book â€Å"Zeitoun.†His goal is to educate the audience about the prejudices and troubles experienced during the disaster. A formal, yet sympathetic tone is used in the book to not only inform the audience about the hardships experienced by Zeitoun, but to also encourage sympathy among the audience. One struggle he focuses on is Islamophobia and how it negatively affects Zeitoun and his family. HeRead More`` Zeitoun, By Dave Eggers : Rhetorical Appeals, Ethos, Logos, And Patho s1583 Words  | 7 PagesDave Eggers is the author of many common read books. One of his known reads is a true story titled Zeitoun, about a Syrian-American living in New Orleans, Louisiana during Hurricane Katrina. Eggers uses many strategies throughout this story to involve the audience and get a sense of how people lived through Hurricane Katrina. Consequently, he narrowed into one particular family’s tribulations, and that family happened to be the Zeitouns. Many times throughout the book, Zeitoun, Eggers exhibits theRead MoreThe Mistreatment Of The Zeitoun Family1493 Words  | 6 Pagesjournalist and author, Dave Eggers, in his famed novel, Zeitoun, recounts the mistreatment of the Zeitoun family in the aftermath of Hurricane Katrina based on their racial and religious profiles in a post-9/11 America. His purpose is to reveal the unwarranted injustices faced by Muslim-American Hurricane Katrina victims through a description of the Zeitoun family’s experience s, in order to educate his readers of the impact discrimination has on emergency response. Eggers adopts a sympathetic toneRead MoreKaren Eggers s Zeitoun Essay938 Words  | 4 Pages121 19 October 2016 ZEITOUN-KATHY In Dave Eggers nonfiction novel Zeitoun, Kathy is an American woman who converts from Christianity to Islam before marrying her Syrian-born Muslim husband, Abdulrahman Zeitoun. Together, they have three daughters and own and operate a painting company in New Orleans. In her earlier years, Kathy found herself divorced with an infant son working fifty hours a week. â€Å"†¦.her life was a struggle, and she was looking for some order and answers.†(Eggers 61). Kathy startedRead MoreZeitoun Rhetorical Essay1440 Words  | 6 PagesCortnie Schierman Fijacko English 111 5 October 2012 Rough Draft: Rhetorical Analysis Essay David Eggers, in Zeitoun, shows a story of a Muslim American family living through many challenges. After 9/11 Muslim families, like the Zeitouns, face many problems living in America. Eggers wants to inform other Americans on the situation of Muslim living in the United States, present day. People who are uneducated about the Muslim religion need to be informed on how similar lives are of other people allRead MoreIslamophobia Essays1853 Words  | 8 Pagesthat continued a half decade later†(The New York Times). In his book â€Å"Zeitoun†Dave Eggers, a national bestseller and well respected poet, analyzes the dramatic dialogue and action of the Zeitoun family during the crisis of Hurricane Katrina. For long time New Orleans resident Abdulrahman and Kathy Zeitoun were dragged into an unexpected struggle with forces far beyond wind and water. We Learnt from Eggers novel, that Zeitoun and others are forced to get in a boat, then taken into custody and areRead MoreThe B ias and Suffering after Hurricane Katrina: Trouble The Water, and Zeitoun1450 Words  | 6 Pagesignoring residents during this time period is in the book Zeitoun by Dave Eggers. In this novel, a Syrian-American man named Abdulrahman Zeitoun, decides to stay in New Orleans, while his family flees from the storm, during the hurricane, in order to look over the various properties that he owns and takes care of throughout the city due to his career of being the founder of a contracting company. In the book, after the levees break, Zeitoun begins traveling the streets of his neighborhood by a canoeRead MoreThe Destruction Of Dignity By Dave Eggers1757 Words  | 8 PagesDignity Acclaimed writer , Dave Eggers, in his riveting novel Zeitoun retells the story of a New Orleans painter as he finds himself in the city following Hurricane Katrina. Throughout his harrowing journey throughout the aftermath, Eggers exhibits the horrifying results a disaster can have on the dignity of victims. There are countless examples throughout the novel of those who have been dispossessed of their dignity and humanity, and there is no better example than that of Zeitoun himself. Egger’s portrayal
Friday, December 13, 2019
E-bay Case Study Free Essays
At least 30 million people will buy and sell well over $20bn in merchandise (in 2003) – more than the gross domestic product of all but 70 of the world’s countries. More than 150,000 entrepreneurs will earn a full-time living selling everything from diet pills and Kate Spade handbags to  £30,000 BMWs and hulking industrial lathes. More automobiles, of all things, sell on eBay than even no. We will write a custom essay sample on E-bay Case Study or any similar topic only for you Order Now 1 US dealer AutoNation. So what does this add up to? ‘This is a whole new way of doing business,’ says Whitman. ‘We’re creating something that didn’t exist before. It wasn’t planned, but as users plunged into consumer electronics, cars, and industrial gear, eBay followed. Today, eBay has 27,000 categories, including eight with gross sales of more than  £1 billion each. eBay’s business model Value in eBay is created by proViding a virtual world ¬wide market for buyers and sellers and collecting a tax on transactions as they happen. The business model of eBay relies on its customers being the organisation’s product-development team, sales and marketing force, merchandising department, and the security department. The organisation, headed by Meg Whitman, was founded in 1995, when Pierre Omidyar launched a basic site called Auction Web. His girlfriend wanted to trade her collection of Pez dispensers, but Omidyar had a broader vision in mind, namely empowering everyday consumers to trade without the need for large corporations. He even wanted traders to be responsible for building the community and deciding how to build the website. It worked; soon he found himself answering e-mails from buyers and sellers during the day and rewriting the site’s software at night to incorporate their suggestions, which ranged from fiXing software bugs to creating new product categories. Some 100,000 messages from customers are posted per week in which tips are shared, system glitches are pointed out and changes are lobbied for. The COO, Brian Swette, is quoted as saying, ‘The trick is to keep up with what buyers and sellers want. We’ve had to constantly change how we run. We start from the principle that if there’s noise, you better listen.’ Currently the technology allows every move of every potential customer to be traced, yielding rich information. Structurally, the business model is realised through 5,000 employees, roughly half of whom are in customer support and a fifth in technology. A key role in eBay is ‘category manager’, a concept Whitman brought to eBay from her days in marketing giant PG. Category managers direct the 23 major categories as well as the 35,000 subcategories, from collectibles to sports gear, to jewellery and watches, and even jet-planes. Conventional companies might spend big money on getting to know their customers and persuading them to provide feedback, but for eBay such feed ¬back is often free and offered without the need for enticement. Even so some of the company’s most effective ways of getting user input do not rely on the Net and do not come free. eBay organises Voice of the Customer groups, which involve flying in a new group of about 10 sellers and buyers from around the country to its San Jose (Californian) every few months to discuss the in depth. Teleconferences are held for features and policies, however small a change involve. Even workshops and classes are held teach people how to make the most of the site. Participants tend to double their selling activity on after taking a class. The company is governed from both outside and The eBay system has a source of automatic control in the form of buyers and sellers rating each other on each transaction, creating rules and norms. There’s an educational system that offers classes around the country on how to sell on eBay. Both buyers and sellers build up reputations which are valuable, in turn encouraging further good behaviour in themselves and others. When that wasn’t quite enough, eBay formed its own police force to patrol the listings for fraud and kick out offenders, the Trust and Safety Dept, now staffed by several hundred eBay employees worldwide. They do every ¬thing from trolling the site for suspicious listings to working with law enforcement agencies to catch crooks. eBay also has developed software that recognises patterns of behaviour common to previous fraud cases, such as sellers from Romania who recently started selling large numbers of big-ticket items. eBay’s management Meg Whitman’s style and past has heavily influ ¬enced the management of eBay. When she joined the company in 1998, it was more of a collection of geeks, handpicked by the pony-tailed Omidyar, than a blue-chip – something which underpinned Omidyar’s recruitment of Meg. Meg, an ex-consultant, filled many of the senior management roles includ ¬ing the head of the US business, head of interna ¬tional operations and vice-president of consumer marketing with consultants. The result: eBay has become data and metric driven. ‘If you can’t measure it, you can’t control it’, Meg says. Whereas in the early days you could touch and feel the way the organisation worked, its current size means it needs to be measured. Category managers are expected to spend their days measuring and acting upon data within their fiefdom. Some measures are standard for e-business and include how many people are visiting the site, how many of those then register to become users, how long each user remains per visit, how long pages take to load and so on. A measure Meg likes is the ‘take rate’, the ratio of revenues to the value of goods traded on the site (the higher the better). She meas ¬ures which days are the busiest, directing when to offer free listings in order to stimulate the supply of auction items. Noise on the discussion boards is used to understand whether the community is in ‘supportive’ or ‘ready to kill you mood’ on a scale of 1 to 10. Normal for eBay is around 3. Category managers in eBay, unlike their counter ¬parts in Procter and Gamble, can only indirectly control their products. They have no stock to reorder once levels of toothpaste or washing-up liquid run low on the supermarket shelves. They provide tools to buy and sell more effectively. ‘What they can do is endlessly try to eke out small wins in their cate ¬gories – say, a slight jump in scrap-metal listings or new bidders for comic books. To get there, they use marketing and merchandising schemes such as enhancing the presentation of their users’ products and giving them tools to buy and sell better.’ Over and above this unusual existence, the work envir-onment can be tough and ultracompetitive, say ex-eBayers. Changes often come only after PowerPoint slides are exchanged and refined at a low level, even ¬tually presented at a senior level and after the change has been approved in a sign-off procedure which includes every department. An advance in the ways shoes could be searched for took ten months to happen. Aware that analysis can mean paralysis, Meg commissioned consultants (who else) to benchmark the rate at which change is indeed implemented in eBay. eBay was rated as average amongst the com ¬panies surveyed. Over time eBay has upgraded its ability to ensure the technology does not rule. Until the late 1990s, the site was plagued with outages, including one in 1999 which shut the site down for 22 hours courtesy of software problems and no backup systems. Former Gateway Inc. Chief Information Officer Maynard Webb, who joined as president of eBay’s technology unit, quickly took action to upgrade systems. Now the site is down for less than 42 minutes a month, despite much higher traffic. Meg is a leader who buys into the company in more ways than one. Having auctioned some $35,000 worth of furnishings in her ski condo in Colorado to understand the selling experience, she became a top seller among the company’s employees and ensured that her learning from the experience was listened to by fellow top execs. Meg is also known for listening carefully to her employees and expects her managers to do the same. As the business is as much, if not more, its customers, any false move can cause revolts within the community that is eBay. Most of all eBay tries to stay aware and flexible. Nearly all of its fastest-growing new categories emerged from registering seller activity in the area and quietly giving it a nudge at the right moment. For example, after noticing a few car sales, eBay cre ¬ated a separate site called eBay Motors in 1999, with special features such as vehicle inspections and shipping. Some four years later, eBay expects to gross some $1 billion worth of autos and parts, many of which are sold by professional dealers. The democratic underpinning of eBay, whilst easily embraced by customers, can, however, take some getting used to. New managers can take six months to understand the ethos. ‘Some of the terms you learn in business school – drive, force, commit  ¬don’t apply’, says former PepsiCo Inc. exec William C. Cobb, now senior vice-president in charge of eBay’s international operations. ‘We’re over here listening, adapting, enabling.’ How to cite E-bay Case Study, Free Case study samples
Thursday, December 5, 2019
Celebrity Endorsement in China free essay sample
The percentage of television commercials worldwide featuring a celebrity has increased to 17% during the past decade (White, 20014). Researches indicate that celebrity endorsements occur in greater frequencies in some Asian countries including Japan, Korean and China (Choi, Lee, amp; Kim, 2005). Celebrity endorsements in china Even though most of the modern advertising and marketing for consumer goods in china has a short history of only 25-30 years, celebrity branding becomes prevalent in the country (ref 2). China is an emerging market with many brands at its developing life-cycle targeting new markets and customers. So, strategy of targeting new customers has a huge impact on the nature of marketing communication. Some researches indicate that ads in developing markets focus on product attributes where a lot of consumption is still driven by the desire to acquire the biggest, brightest and most popular ( Ref 2). However, in a developing market with limited choices for many of the new product categories, brand awareness is also very important. A lot of researches have proven the effectiveness of using celebrity to enhance brand awareness. So, celebrity endorsements are somewhat powerful to drive new customers trying new things in emerging markets like China (Ogilvy, 2011). ACEs in China: celebrity endorsements are commonplace in China with many of these featuring athlete celebrity endorsements (ACEs) and 3 of top 5 ranked celebrities in China were athletes. For example, Yao, former Houston Rocket basketball star reported to have endorsement deals with Reebok, Apple, VISA, TAG Heater, Gatorade and McDolnalds’ (Ref 6). One research found that Chinese customers are considerably more receptive to ads featuring athlete celebrity celebrity endorsers, especially toward the information contained in these advertisements (Ref 6). Actually, China is home to one of the fastest growing sport industries in the world. One reason behind the rapid growing sports industry is the massive government funding and supports. Over-Exposure of Celebrity Endorsers in China: in China, those â€Å"hot celebrities†can accrue numerous, simultaneous endorsements. This over endorsements confuse consumer about which brand is endorsed by which celebrity (Ref 2). The movie star Jackie Chan has endorsed tons of products, some of which fail spectacularly. One Chinese newspaper called him a man who can destroy anything. Chan is believed to have at least two dozen endorsement contracts at present from an anti-hair-loss shampoo which allegedly contained carcinogens to even frozen dumplings. Although the Chan name has translated to big bucks at the box office, not every product he touches turns to gold (Ref 7). Many people question the effectiveness with over endorsements. Celebrity who endorse more than one product tend to decrease the impact and distinctiveness of each product relationship (Garland and Ferkins, 2003) there is another over-exposure Chinese ACE- Liu Xiang. Ogilvy tested consumer recall for Liu’s dozen endorsements including Nike, VISA, YiLi Diary and so on. They found that people could connect Liu with the product of Nike but they had single and low-double digit recognition rate with other endorsements (Ref 1). Some U. S. elebrities limit their product endorsements to enhance their aura of exclusivity, but experts said Chinas media market is still too small, and the country too big, to worry that Chan will suffer from overexposure. Generally, in a country of 1. 3 billion people, celebrities want as much exposure as possible, said Tiger Hou, an analyst for Entrgroup. com. Reasons behind the Greater Frequency of Celebrity Endorsements and Over-Endorsements in China: In dividualism VS collectivism: In china, the culture value of collectivism remains strong in people’s ideology (ref, 3). Zhang and Gelb found Chinese consumer prefer collectivistic appeals. Someone argues that a match between ads appeals and culture values can bring favorable attitudes toward the advertisements (Ref 5). So, the selection of celebrity endorsers may mirror the fundamental cultural orientations and values; On the other side, people with collectivistic background tends to use relationships with peers and superiors to avoid uncertainty and risks (Ref 4). Many customers view celebrity endorsements as a way of reassurance especially when many products and services qualities are still in doubt; Today, like never before, individualism and collectivism co-exist in china through different channels and across different age groups. During the widespread social, economic and cultural flux, celebrity endorsements serve not only for awareness and uncertainty avoidance, but bring alive some modern values. Actually, some celebrities are valued as aspiration role models for people to express and experience individualism in those collectivistic societies. High level power distance amp; cultural context: according to Hofstede’s power distance dimension theory(level of people’s acceptance to the unequal distribution of power including social status, prestige and wealth), the US represents one of the lowest scoring countries on Hofstede’s power distance index, while China rates higher (Hofstede, 1980). Consequently, Chinese respondents would more unquestioningly listen to the product opinions from celebrities. However, it by no means indicates Chinese will listen to the advices of all kinds of celebrities. Actually, china has a long history of looking down to those entertaining celebrities. So, people would accept some hot celebrities’ attractiveness but not their expertise. When it comes to the concept of cultural context, china belongs to the countries with high context culture comparing with most English speaking countries. Eastern advertising tends to be less direct and contain more soft sell appeals feature emotional image of persons because indirect, implicit and nonverbal communication styles. Beside the higher frequency and over-exposure with Chinese celebrity endorsements and the cultural values behind them, Chinese consumer’s perception of the effectiveness differs from the other countries. Many researches have revealed that the attractiveness, trustworthiness and expertise would not drive purchase intention in many conditions. Only expertise had a critical impact on purchase intention using a US sample ( ). However in collectivistic countries like Singapore and China, all three sources have significant impact on purchase intention (Pornpitakpan, 2003). Theory and concept with celebrity branding: Researchers continued to examine the effectiveness of celebrity branding at enhancing consumer’s attitudes toward advertisements and brand as well as purchase intent. However, most results are inconclusive and not correctly toward Chinese part. Source Credibility Model amp; Source Attractiveness Model. Celebrity will generate some trustworthy, attractive and likable feelings than an unknown people (Friedman, Termini, Washington). According to source credibility model, the effectiveness of celebrity endorsements depends on the â€Å"expertise†and â€Å"trustworthiness†of the celebrity (Dholakia amp; Sternthal, 1977). Trust is reflected in the confidence in the general believability of the endorser and message. But some results also indicate that 90% of those respondents felt that financial and publicity reasons drive celebrity to appear in advertisements (Abhilasha Mehta Ref 8). The source attractiveness model argue that the physical appeal of a celebrity influences the effectiveness of a advertising message (Baker amp; Churchill, 1976). But Ohanian pointed out most celebrities were attractive and hence the overall impact of this variable may be weak. Also, attractiveness may be only relevant for categories that are related to attractiveness (Ref 9). Still, many researches argue that credibility amp; attractiveness of celebrities can generate some favorable attitudes toward advertisements and brands. However, this effect can be a double edged sword in marketing. The prominence credibility and attractiveness decreases, the attitude towards the product suffers as well. Purchase Intent. It might be possible that â€Å"attractive†, â€Å"trustworthy†or â€Å"credible†source can facilitate the message-learning and acceptance process. But even highly credible sources have not been found to be that â€Å"influential†. So, even though attitude toward the products is more favorable, overall advertising effectiveness and purchase intent mixed (Ref 8). Actually, there are a lot of researches found no difference in purchasing intent between celebrity and non-celebrity branding. Petty, Cacioppo and Schuman found that the product was liked better with sports star endorsers, but intention to buy did not differ. As the above discussion illustrates, the findings related to purchase intent are inconclusive. So, someone argues that â€Å"appropriateness of celebrities†, â€Å"involvement levels†and even â€Å"cultural meanings†will also influence the persuasion of celebrity endorsements. Match-Up Hypothesis amp; Level of Involvement. It is not enough to know the degrees of â€Å"attractiveness†and â€Å"credibility†, kinds of â€Å"attractiveness†and â€Å"credibility†should also be measured. The product match-up hypothesis suggests that the higher the perceived fit between the celebrity’s image and the endorsed brand, the more persuasive the celebrity and the ad will be (Erdogan, 1999). According to the theory of â€Å"extended self†, consumer tends to consider their possession as reflective and as part of themselves. So, consumer compare perception of brands to their own value perception, then selects the brands that match the closest (Ref 9). Especially with a high-social-consequences-context, image congruence will have greater effects (Ref 10). Now, it’s an environment where consumers are increasingly cynical toward marketing messages. So, badly match-up lacking authenticity can only alienate the target audience (Ref 11). Level of involvement will also influence the effectiveness of celebrity endorsements. Theories related to â€Å"central route†and â€Å"peripheral route†indicate that the influence of celebrity is minimal under condition of high involvement when consumer will consider information diligently. However, in most purchasing situations, consumer followers central route as well as peripheral route (Ref 8). Both peripheral and central-route processing can be monitored by â€Å"means of capturing the thoughts and feelings†. The author argued that feelings and thoughts generated from the celebrity exposure in the ads would directly go to â€Å"intention to buy†(Ref 8) The differences in response to celebrity endorsement also vary across cultures, so a careful match between celebrity characteristics and cultural values can bring more favorable attitudes. Identification theory†is another critical element underlying celebrity endorsers. According to the identification theory, the individual might develop a sense of closer relationship with the endorser sharing racial similarity and ethnic identification and he or she will be more likely to adopt the attitude or behavior advocated by the celebrity (Ref 12). For example, consumers with various cultural backgrounds might identify with athlete spokesperson at different levels. n individualistic culture, consumers have higher levels of identification and greater levels of source credibility as athletes who has individual personality and compete in individual sports (eg, golf player). While people from collectivistic culture have higher levels of identification towards athletes who has many collectivistic characteristics(eg, cooperation, self-sacrifice for group profit, interdependence) (Ref 3). Problems with Celebrity Branding Celebrity has long been examined about its effectiveness on advertising ttitude, brand awareness and purchase intent because considerable amounts invested on celebrity endorsement. There are a lot of researches found no difference in buying intention between celebrity and non-celebrity branding. Even though celebrities can enhance brand awareness and bring favorable attitudes, but non-celebrity endorser’s image are easily created to fit with the brand’s imag e (Ref 13). On the other hand, the brand â€Å"owned†live or animated non-celebrity is nearly impossible for to endorse other brands, and thus avoid over-endorsements. Moreover, celebrity can transfer negative information to brand with negative publicities, so some company even use dead celebrities to endorse their brands. Besides above discussion, using celebrity also has certain risk of â€Å"Brand Eclipsing†, â€Å"Over-Endorsements†as well as â€Å"Transferring Negative Information†. â€Å"Brand Eclipsing†Ads featuring celebrities will also have risk of paying less attention to the brand. One problem is that many ads emphasize too much on celebrity rather than product. There are potentially other factors that affect the impact of timing, visibility and alchemy on the probability of eclipsing. So, media that have a time and audio component such as audio amp; video has greater possibility for brand to eclipse, because the inanimate of brand. Advertisers should measure the conditions under which eclipsing occurs, which may focus on the celebrity and his or her fame, visibility of focal brand, interaction between celebrity and the brand and the media as well (Ref 13). Over-Endorsement of Celebrity (Case Study of Chinese Hurdler Liu) Nowadays, those â€Å"hot celebrities†can haphazardly accrue numerous, simultaneous endorsements and some even go to competitors’ brands. The over-exposure of celebrity confuses consumer even makes them confused which brand is endorsed by which celebrity. However, celebrity who endorse more than one product tend to decrease the impact and distinctiveness of each product (Garland and Ferkins, 2003). On the other side, the effect of a celebrity endorsing multiple products is to reduce the celebrity’s credibility and likeability (Tripp, Jensen, and Carlso, 1994). In China, 40% of advertisements geared toward youths feature at least one celebrity. Personalities, such as former NBA basketball star Yao Ming, actor Jackie Chan and Olympic gold medalist Liu Xiang, are frequently featured in advertisements for a wide range of products and services as diverse as soft drinks, credit cards and life insurance (Ref 14) With the creation of 12 econds and 88 miracle in Lausanne in July 2006, Liu Xiang with healthy image of the sun, naughty, cheerful personality has become the darling of the sports sector the most sought after by the advertisers to become one of the Chinese sports with the highest income movement (Ref 17). until 2008 before the Beijing Olympics, Liu Xiang, the four years the endorsement of the brand 14, and most international brands, including cars, clothing, beverage, a nd communications, Liu Xiang’s advertising is full of our life’s basic necessities. The world-class hurdler Liu Xiang has a representation deal with Nike, so Nike tried nail down any issues related to the â€Å"Liu Xiang†name in or out of China. Nike filed for trademark protection in China for the â€Å"Liu Xiang†name but was rejected by the China Trademark Office. Nike then filed an appeal of the rejection with our old friends the Trademark Review and Adjudication Board (TRAB), which upheld the decision (Ref 16). Ogilvy and Millward Browns new findings arent entirely surprising, in this regard. As early as 2009, the China Market Research Group found similar results in a study. Looking at celebrity Liu Xiang, a Chinese star hurdler, the group set out to test consumer recall for Lius dozen or so endorsements. Results did not speak well to Lius partners: Nike was a lock, since people could make the connection between a star athlete and Nike products, but Visa, Cadillac and Yili, among others had single- and low-double-digit recognition rates as brands Liu Xiang represented. Furthermore, fewer than 20% said that an endorsement by Liu Xiang would make them buy products from any of the companies except Nike. Celebrity Endorsement in China Advertising, Brand, Brandmanagement, Celebrity, China, Endorsement, Liu, LiuXiangIntroduction The history of celebrity endorsement of products can date back to the 1760s in the western countries. In the US, 25% of all advertising features a celebrity (Shimp, 2003), which is an increases from the late 1970s, when 17% of advertising featured celebrities (Howard, 1979). Because there is an increasing realization of the high costs and risks with celebrity branding, advertisers begin to quantify and qualify the use of celebrities by evaluating their effectiveness under different conditions. Actually, celebrity endorsements are not just an American phenomenon. The percentage of television commercials worldwide featuring a celebrity has increased to 17% during the past decade (White, 20014). Researches indicate that celebrity endorsements occur in greater frequencies in some Asian countries including Japan, Korean and China (Choi, Lee, amp; Kim, 2005). Celebrity endorsements in china Even though most of the modern advertising and marketing for consumer goods in china has a short history of only 25-30 years, celebrity branding becomes prevalent in the country (ref 2). China is an emerging market with many brands at its developing life-cycle targeting new markets and customers. So, strategy of targeting new customers has a huge impact on the nature of marketing communication. Some researches indicate that ads in developing markets focus on product attributes where a lot of consumption is still driven by the desire to acquire the biggest, brightest and most popular ( Ref 2). However, in a developing market with limited choices for many of the new product categories, brand awareness is also very important. A lot of researches have proven the effectiveness of using celebrity to enhance brand awareness. So, celebrity endorsements are somewhat powerful to drive new customers trying new things in emerging markets like China (Ogilvy, 2011). ACEs in China: celebrity endorsements are commonplace in China with many of these featuring athlete celebrity endorsements (ACEs) and 3 of top 5 ranked celebrities in China were athletes. For example, Yao, former Houston Rocket basketball star reported to have endorsement deals with Reebok, Apple, VISA, TAG Heater, Gatorade and McDolnalds’ (Ref 6). One research found that Chinese customers are considerably more receptive to ads featuring athlete celebrity celebrity endorsers, especially toward the information contained in these advertisements (Ref 6). Actually, China is home to one of the fastest growing sport industries in the world. One reason behind the rapid growing sports industry is the massive government funding and supports. Over-Exposure of Celebrity Endorsers in China: in China, those â€Å"hot celebrities†can accrue numerous, simultaneous endorsements. This over endorsements confuse consumer about which brand is endorsed by which celebrity (Ref 2). The movie star Jackie Chan has endorsed tons of products, some of which fail spectacularly. One Chinese newspaper called him a man who can destroy anything. Chan is believed to have at least two dozen endorsement contracts at present from an anti-hair-loss shampoo which allegedly contained carcinogens to even frozen dumplings. Although the Chan name has translated to big bucks at the box office, not every product he touches turns to gold (Ref 7). Many people question the effectiveness with over endorsements. Celebrity who endorse more than one product tend to decrease the impact and distinctiveness of each product relationship (Garland and Ferkins, 2003) there is another over-exposure Chinese ACE- Liu Xiang. Ogilvy tested consumer recall for Liu’s dozen endorsements including Nike, VISA, YiLi Diary and so on. They found that people could connect Liu with the product of Nike but they had single and low-double digit recognition rate with other endorsements (Ref 1). Some U. S. elebrities limit their product endorsements to enhance their aura of exclusivity, but experts said Chinas media market is still too small, and the country too big, to worry that Chan will suffer from overexposure. Generally, in a country of 1. 3 billion people, celebrities want as much exposure as possible, said Tiger Hou, an analyst for Entrgroup. com. Reasons behind the Greater Frequency of Celebrity Endorsements and Over-Endorsements in China: In dividualism VS collectivism: In china, the culture value of collectivism remains strong in people’s ideology (ref, 3). Zhang and Gelb found Chinese consumer prefer collectivistic appeals. Someone argues that a match between ads appeals and culture values can bring favorable attitudes toward the advertisements (Ref 5). So, the selection of celebrity endorsers may mirror the fundamental cultural orientations and values; On the other side, people with collectivistic background tends to use relationships with peers and superiors to avoid uncertainty and risks (Ref 4). Many customers view celebrity endorsements as a way of reassurance especially when many products and services qualities are still in doubt; Today, like never before, individualism and collectivism co-exist in china through different channels and across different age groups. During the widespread social, economic and cultural flux, celebrity endorsements serve not only for awareness and uncertainty avoidance, but bring alive some modern values. Actually, some celebrities are valued as aspiration role models for people to express and experience individualism in those collectivistic societies. High level power distance amp; cultural context: according to Hofstede’s power distance dimension theory(level of people’s acceptance to the unequal distribution of power including social status, prestige and wealth), the US represents one of the lowest scoring countries on Hofstede’s power distance index, while China rates higher (Hofstede, 1980). Consequently, Chinese respondents would more unquestioningly listen to the product opinions from celebrities. However, it by no means indicates Chinese will listen to the advices of all kinds of celebrities. Actually, china has a long history of looking down to those entertaining celebrities. So, people would accept some hot celebrities’ attractiveness but not their expertise. When it comes to the concept of cultural context, china belongs to the countries with high context culture comparing with most English speaking countries. Eastern advertising tends to be less direct and contain more soft sell appeals feature emotional image of persons because indirect, implicit and nonverbal communication styles. Beside the higher frequency and over-exposure with Chinese celebrity endorsements and the cultural values behind them, Chinese consumer’s perception of the effectiveness differs from the other countries. Many researches have revealed that the attractiveness, trustworthiness and expertise would not drive purchase intention in many conditions. Only expertise had a critical impact on purchase intention using a US sample ( ). However in collectivistic countries like Singapore and China, all three sources have significant impact on purchase intention (Pornpitakpan, 2003). Theory and concept with celebrity branding: Researchers continued to examine the effectiveness of celebrity branding at enhancing consumer’s attitudes toward advertisements and brand as well as purchase intent. However, most results are inconclusive and not correctly toward Chinese part. Source Credibility Model amp; Source Attractiveness Model. Celebrity will generate some trustworthy, attractive and likable feelings than an unknown people (Friedman, Termini, Washington). According to source credibility model, the effectiveness of celebrity endorsements depends on the â€Å"expertise†and â€Å"trustworthiness†of the celebrity (Dholakia amp; Sternthal, 1977). Trust is reflected in the confidence in the general believability of the endorser and message. But some results also indicate that 90% of those respondents felt that financial and publicity reasons drive celebrity to appear in advertisements (Abhilasha Mehta Ref 8). The source attractiveness model argue that the physical appeal of a celebrity influences the effectiveness of a advertising message (Baker amp; Churchill, 1976). But Ohanian pointed out most celebrities were attractive and hence the overall impact of this variable may be weak. Also, attractiveness may be only relevant for categories that are related to attractiveness (Ref 9). Still, many researches argue that credibility amp; attractiveness of celebrities can generate some favorable attitudes toward advertisements and brands. However, this effect can be a double edged sword in marketing. The prominence credibility and attractiveness decreases, the attitude towards the product suffers as well. Purchase Intent. It might be possible that â€Å"attractive†, â€Å"trustworthy†or â€Å"credible†source can facilitate the message-learning and acceptance process. But even highly credible sources have not been found to be that â€Å"influential†. So, even though attitude toward the products is more favorable, overall advertising effectiveness and purchase intent mixed (Ref 8). Actually, there are a lot of researches found no difference in purchasing intent between celebrity and non-celebrity branding. Petty, Cacioppo and Schuman found that the product was liked better with sports star endorsers, but intention to buy did not differ. As the above discussion illustrates, the findings related to purchase intent are inconclusive. So, someone argues that â€Å"appropriateness of celebrities†, â€Å"involvement levels†and even â€Å"cultural meanings†will also influence the persuasion of celebrity endorsements. Match-Up Hypothesis amp; Level of Involvement. It is not enough to know the degrees of â€Å"attractiveness†and â€Å"credibility†, kinds of â€Å"attractiveness†and â€Å"credibility†should also be measured. The product match-up hypothesis suggests that the higher the perceived fit between the celebrity’s image and the endorsed brand, the more persuasive the celebrity and the ad will be (Erdogan, 1999). According to the theory of â€Å"extended self†, consumer tends to consider their possession as reflective and as part of themselves. So, consumer compare perception of brands to their own value perception, then selects the brands that match the closest (Ref 9). Especially with a high-social-consequences-context, image congruence will have greater effects (Ref 10). Now, it’s an environment where consumers are increasingly cynical toward marketing messages. So, badly match-up lacking authenticity can only alienate the target audience (Ref 11). Level of involvement will also influence the effectiveness of celebrity endorsements. Theories related to â€Å"central route†and â€Å"peripheral route†indicate that the influence of celebrity is minimal under condition of high involvement when consumer will consider information diligently. However, in most purchasing situations, consumer followers central route as well as peripheral route (Ref 8). Both peripheral and central-route processing can be monitored by â€Å"means of capturing the thoughts and feelings†. The author argued that feelings and thoughts generated from the celebrity exposure in the ads would directly go to â€Å"intention to buy†(Ref 8) The differences in response to celebrity endorsement also vary across cultures, so a careful match between celebrity characteristics and cultural values can bring more favorable attitudes. Identification theory†is another critical element underlying celebrity endorsers. According to the identification theory, the individual might develop a sense of closer relationship with the endorser sharing racial similarity and ethnic identification and he or she will be more likely to adopt the attitude or behavior advocated by the celebrity (Ref 12). For example, consumers with various cultural backgrounds might identify with athlete spokesperson at different levels. n individualistic culture, consumers have higher levels of identification and greater levels of source credibility as athletes who has individual personality and compete in individual sports (eg, golf player). While people from collectivistic culture have higher levels of identification towards athletes who has many collectivistic characteristics(eg, cooperation, self-sacrifice for group profit, interdependence) (Ref 3). Problems with Celebrity Branding Celebrity has long been examined about its effectiveness on advertising ttitude, brand awareness and purchase intent because considerable amounts invested on celebrity endorsement. There are a lot of researches found no difference in buying intention between celebrity and non-celebrity branding. Even though celebrities can enhance brand awareness and bring favorable attitudes, but non-celebrity endorser’s image are easily created to fit with the brand’s imag e (Ref 13). On the other hand, the brand â€Å"owned†live or animated non-celebrity is nearly impossible for to endorse other brands, and thus avoid over-endorsements. Moreover, celebrity can transfer negative information to brand with negative publicities, so some company even use dead celebrities to endorse their brands. Besides above discussion, using celebrity also has certain risk of â€Å"Brand Eclipsing†, â€Å"Over-Endorsements†as well as â€Å"Transferring Negative Information†. â€Å"Brand Eclipsing†Ads featuring celebrities will also have risk of paying less attention to the brand. One problem is that many ads emphasize too much on celebrity rather than product. There are potentially other factors that affect the impact of timing, visibility and alchemy on the probability of eclipsing. So, media that have a time and audio component such as audio amp; video has greater possibility for brand to eclipse, because the inanimate of brand. Advertisers should measure the conditions under which eclipsing occurs, which may focus on the celebrity and his or her fame, visibility of focal brand, interaction between celebrity and the brand and the media as well (Ref 13). Over-Endorsement of Celebrity (Case Study of Chinese Hurdler Liu) Nowadays, those â€Å"hot celebrities†can haphazardly accrue numerous, simultaneous endorsements and some even go to competitors’ brands. The over-exposure of celebrity confuses consumer even makes them confused which brand is endorsed by which celebrity. However, celebrity who endorse more than one product tend to decrease the impact and distinctiveness of each product (Garland and Ferkins, 2003). On the other side, the effect of a celebrity endorsing multiple products is to reduce the celebrity’s credibility and likeability (Tripp, Jensen, and Carlso, 1994). In China, 40% of advertisements geared toward youths feature at least one celebrity. Personalities, such as former NBA basketball star Yao Ming, actor Jackie Chan and Olympic gold medalist Liu Xiang, are frequently featured in advertisements for a wide range of products and services as diverse as soft drinks, credit cards and life insurance (Ref 14) With the creation of 12 econds and 88 miracle in Lausanne in July 2006, Liu Xiang with healthy image of the sun, naughty, cheerful personality has become the darling of the sports sector the most sought after by the advertisers to become one of the Chinese sports with the highest income movement (Ref 17). until 2008 before the Beijing Olympics, Liu Xiang, the four years the endorsement of the brand 14, and most international brands, including cars, clothing, beverage, a nd communications, Liu Xiang’s advertising is full of our life’s basic necessities. The world-class hurdler Liu Xiang has a representation deal with Nike, so Nike tried nail down any issues related to the â€Å"Liu Xiang†name in or out of China. Nike filed for trademark protection in China for the â€Å"Liu Xiang†name but was rejected by the China Trademark Office. Nike then filed an appeal of the rejection with our old friends the Trademark Review and Adjudication Board (TRAB), which upheld the decision (Ref 16). Ogilvy and Millward Browns new findings arent entirely surprising, in this regard. As early as 2009, the China Market Research Group found similar results in a study. Looking at celebrity Liu Xiang, a Chinese star hurdler, the group set out to test consumer recall for Lius dozen or so endorsements. Results did not speak well to Lius partners: Nike was a lock, since people could make the connection between a star athlete and Nike products, but Visa, Cadillac and Yili, among others had single- and low-double-digit recognition rates as brands Liu Xiang represented. Furthermore, fewer than 20% said that an endorsement by Liu Xiang would make them buy products from any of the companies except Nike.
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