Hydrogen Fuel Cells

Hydrogen Fuel Cells There are many reasons to look for new cleaner forms of energy. Fossil fuels, being non-renewable, will eventually run out. Pollution from burning fossil fuels destroys our environment. Hydrogen fuel cells could be used many places where fossil fuels are currently being used. Using hydrogen as a form of energy can not only reduce our dependence on imported oil, but also benefit the environment by reducing emissions of greenhouse gases and pollutants that affect our air quality. (“Hydrogen Production. “)

Hydrogen is not an energy source, it is an energy carrier. It can store and deliver energy but must still be produced from compounds that contain it. Hydrogen can be produced using diverse, domestic resources including fossil fuels, such as coal (with carbon sequestration) and natural gas; nuclear; and biomass and other renewable energy technologies, such as wind, solar, geothermal, and hydroelectric power. (“Hydrogen Production. “) The fact that there are many different ways to produce hydrogen makes it more appealing as a source of energy.

Although it can be produced at large plants to be distributed to smaller locations, it could also be produced right at refueling stations or power sites. Hydrogen fuel cells convert the energy in hydrogen to electricity. They are much more efficient at converting the energy source than other methods. The gasoline engine in a conventional car is less than 20% efficient in converting the chemical energy in gasoline into power that moves the vehicle, under normal driving conditions. (“Hydrogen Fuel Cells. ) Hydrogen fuel cell vehicles use electric motors and are much more energy efficient. They use 40-60 percent of the fuel’s energy. This would correspond to more than a 50% reduction in fuel consumption when compared to a conventional vehicle with an internal combustion engine. Fuel cells are also much quieter, have fewer moving parts, and are well suited to a variety of applications. A single fuel cell is made of an electrolyte in between two electrodes, an anode and a cathode. Plates on the sides of the cell help to distribute gases.

There are several kinds of fuel cells, but Polymer Electrolyte Membrane (PEM) fuel cells—also called Proton Exchange Membrane fuel cells—are the type typically used in automobiles. (“How They Work: PEM Fuel Cells. ”) In this type of fuel cell, hydrogen molecules are separated into protons and electrons. The electrons are then used as electricity to power motors and other electronic devices. Two challenges to the mainstream adoption of fuel cells are high cost and improving durability. Fuel cell systems need to offer competitive cost compared to current technologies.

Ongoing research is focused on identifying and developing new materials that will reduce the cost and extend the life of fuel cell stack components including membranes, catalysts, bipolar plates, and membrane-electrode assemblies. (“Hydrogen Fuel Cells. “) This research along with providing ways to mass produce these technologies with lower costs will help bring fuel cells into the mainstream. Works Cited “How They Work: PEM Fuel Cells. ” Fuel Economy. Web. 24 Jan. 2010. . “Hydrogen Production. ” US Department of Energy. Web. 24 Jan. 2010. . “Hydrogen Fuel Cells. ” US Department of Energy. Web. 24 Jan. 2010. .

Learning in a Mechanistic Organization

MECHANISTIC ORGANIZATIONS Metaphors create a method of thinking, it compares items of deferent characteristic showing similarities but not differences, recently shadow chancellor George Osborne criticising Gordon Brown, he said ’Gordon is a man with an overdraft, not a plan’ (Metro, October 28, 2008). Here we can see that the word overdraft is used to describe some of the present characteristics of Gordon Brown in relation to spending.

Various metaphors have been used by different writers to show the structure of organisations, examples include: machine, organismic and brain metaphor as used by “Morgan in Images of organisation”, I shall be talking more of machine metaphor in this easy. Bureaucracy is the term used to describe organisation that operates as if they are machine. Wikipedia. rg defines Bureaucracy “as the structure and set of regulations in place to control activity, usually in large organisations and government” I will love to refer to bureaucracy as doing as you are told without asking questions, just follow instructions and laid down procedures. Machine organisations have hierarchical structure, and information flow mainly from the top to other parts. Employees are not empowered to take decisions, they are expected to obey and carry out order. Workers feelings and needs are not considered, achievement of set goals is paramount.

In machine like organisations learning is only one sided and not an organisation wide commitment. The origin of mechanistic organisation can be traced back to Frederick the Great of Prussia (1740) work transformed the army by introducing many reforms and very stringent rule and regulations that must be obeyed without questioning thereby creating a machine like army. Adam smith, (1776) praised division of Labour at work and increased specialisation Max Weber another management theorist supported the mechanisation of organisations.

He is known as the father of bureaucracy. Henry Fayol, and other classical management theorist including F. W. Mooney and Col. Lyndall Urwick, They believe that management is a process of planning, organisation, commanding, coordination and control. (Morgan 1997) Fredrick Taylor, another management theorist invented the principle of scientific management showing five simple management principles: 1. Shift all responsibility for the organisation of work from the worker to the manager. Managers think, plan, and design work, while the workers does the implementation, 2.

Use scientific method to determine the most efficient way of doing work. Design worker’s task accordingly, specifying the precise way in which the work is to be done, 3. Select the best person to perform the job thus designed, 4. Train the worker to do the work effectively, 5. Monitor worker performance to ensure that appropriate work procedures are followed and that appropriate results are achieved. (Morgan 1997) McDonalds, Burger King, Greggs, and most fast-food outlets are perfect examples of Taylor’s principles.

Other examples include car / automobile manufacturing companies like: Honda, Toyota, Ford, Mitsubishi, London borough of Hammersmith and Fulham, British high commission in Nigeria, etc Mechanistic forms of organisation have many advantages and some very serious disadvantages. Organisations such as McDonald’s DHL, Ford, FEDEX, aircraft maintenance departments, finance offices (HM customs inland revenue) are good examples of the success of mechanistic model of organisation.

The advantages of mechanistic organisation will include the fact that It designs task to be performed on a straightforward bases, very effective in stable environment, encourages mass production (that is producing exactly the same product repeatedly), and allows for precision of work. Despite the above advantages, Morgan 1997, found that mechanistic model are difficult to adapt to changing circumstances (not innovative), Can become bureaucratic, Can lead to clash of interest, and Can be very dehumanising.

In my view mechanistic organisation does not encourage learning and learning can only be effective when individuals and group in organisation are encouraged and empowered to thing and take informed decisions as required in their day to day work. Bertalanffy started the idea of viewing organisation as organism (living thing), examples of the use of organic metaphor to understand organisational behaviour include: “Corporate DNA” (Baskin, 1998), the notion of a “living company” (de Geus, 1997), attempt by Microsoft to develop “digital nervous system” (Gates, 1999) and Generic algorithms for process management (Husbands, 1994).

In comparism with mechanistic metaphor, the organismic organisation is adaptable to changing environmental factors, allows the full use of human potentials, jobs are designed to encourage personal growth and responsibility, decision making process is decentralised and communications flows throughout the organisation. Organismic model view organisation as an open system in constant exchange with the environment, hence organisations can learn effectively from the environment by monitoring changes in the environment and redesigning its offering in other to remain competitive (survival).

Example Tesco store as an open system must be in constant touch with the environment in other to find out (by conducting research) the changes in taste of its customer and designing a means to march these change by supplying needed goods and services. The human brain is divided into compartment and it is highly sophisticated flexible, resilient and very inventive. In comparing organisations with the brain, Morgan point out that organisational survival and functioning depends on the processing of information.

The aim of liking an organisation to the brain is to encourage managers to structure organisation to be able to learn as fast as the brain. This brings me to the idea of a learning organisation, Peter Senge (1990) identified five disciplines of a learning organisation: System think, Personal mastery, mental models, Building a shared vision, and Team learning. Workers are encourage to thing of the whole system instead of their individual job, this kind of activity will encourage team building and the sharing of knowledge as most of the knowledge in organisation rest in individual minds (tacit knowledge).

Cybernetic theories believe that a learning organisation should have the capacity to scan and anticipate change in the wider environment to detect significant variations, develop an ability to question, challenge, and change operating norms and assumptions, allow an appropriate strategic direction and pattern of organisation to emerge, be skilled in double-loop learning, to avoid, getting trapped in single-loop processes, especially those created by traditional management control systems and the defensive routines of organisational members (Morgan, 1997).

From the foregoing I will conclude by the fact that the structure of an organisation will affect the level of learning that can be achieved and since it has been establishes that for organisations to survive and remain competitive the rate of learning must be greater or equal to the level of activities in the environment (Ravans, 1992), it is therefore recommended that organisation should be structured in the form that achieves the highest possible learning bearing in mind that there is no one best structure of an organisation it all depends on the nature of its operations and the environment. REFERENCES: Burns, T. and G. M.

Stalker, The Management of Innovation. London: Tavistock, 1961 Chris Argris. Organisational learning, Blackwell publishers Inc. 1992 David Buchannan and Huczynski, Organisation Behaviour: an introductory text, 3rd edition, 1997 Derek Rollinson. Aysen Broadfield, David J. Edwards, Organisational Behaviour and Analysis, 1998 Gareth Morgan, Images of Organisation, Sage Publications, India. 1997 Ivancevich Matteson, Organisational Behaviour and Management, 5th edition, 1999 Robert Kreitner and Angelo Kinicki, Organisational Behaviour, 2nd edition, 2002 Ralph D. Stacey, Strategic Management and Organisational Dynamics, 3rd edition, 2000

Roles and Responsibilities of Organizational Managers and Leaders of the Mcdonald’s Corporation

Management MGT330 Roles and Responsibilities of Organizational Managers and Leaders of the McDonald’s Corporation Leadership and management at the McDonald’s Corporation refer both to those entities that does the leading and to the process of leading. Leadership has been centralized and is somewhat controversial in the process of the movement of most organizations. Despite any claims of contrary in the roles of leadership, there is substantial evidence that leadership is positively related to along range of individual and organizational outcomes.

The management leadership teams are responsible and initiating decisions that help the organization succeed and adapt in competitive environments. The management of McDonald’s uses a strategy of give and take, by working with others leaders to create a shared sense of purpose and direction. The implementation of influence process at the McDonald’s Corporation moulds the objectives of the organization, and motivate to the definition of the organization culture inside the corporation. Frequently shared but are also different, the roles and responsibilities of management and leadership are structured by change and growth.

The McDonald’s Company has always utilized four functions of management throughout its history. Management uses these functions to increase sales, remain the market leader, and expand rapidly. By leveraging their enormous strengths McDonald’s has emerged as a global leader and in essence, change the way we eat. *Management and L*eadership Indifference Management and Leadership must go hand in hand collaborate success. They are not the same thing, but they are necessarily complementary and linked. Any effort to take one essence from the other is likely to generate more problems than it solves.

The manager’s job is to first, plan, organize and sum it up with coordination. Differences between management and leadership in the McDonald’s corporation are management deals with the planning and organizing in the restaurant. Making sure that the operation of the store is being followed according the restaurants policies and procedures. The majority of McDonald’s restaurants are franchises. The owner of the store is the leader. Management is expected to carry out whatever visions the leader has decided for the operation of the store. Ray Kroc, the man that is esponsible for the franchises chains vision was to make sure that every store operates the same. Most of them do not work at the store they come by to make sure the operation process of the store is running smoothly and to decide what changes need to be made to the store for improvement. At most of the McDonald’s restaurants, after an employee has been successfully working there a few months he is usually promoted to a team leader and from there on an assistant or store manager. The leaders at McDonald’s may not necessarily have any knowledge of the store.

The only skills that they may have are what they learned from the classes that they must take prior to owning the franchise. Leaders always have new ideas for the organization. Many people believe that McDonald’s would not have been as successful if Ray Kroc did not have leadership and business sense (Boone, 2009). *Healthy Organizational C*ulture Management at McDonald’s has long to analyze among leaders that organization’s culture can be a valuable tool because it gives understanding of what the organization is all about.

Management has pressed leadership to present an organization in which personnel would love to work and be happy about that choice. A good look into McDonald’s organization culture could be gathered by examining the arrangement and examining its reward systems or the feel of the organization’s physical design. Management has implemented several of these assessment criteria. The founder of McDonald’s, Ray Kroc is humanized and memorialized for all to see his organizational tools. McDonald’s Hamburger University is clearly a powerful socialization and trainingtool.

Management also notices the importance of togetherness so The Ronald McDonald Center was created to emphasize the importance of community. Also, a main picture was painted on the emphasis of “value, cleanliness, service and quality” letting know future cultures what McDonalds does well and major factor to focus on. Management has stated that there are no reliably quick and easy ways to identify the cultural assumptions of people in organizations. Management and leadership recommend listening to stories, collecting archival data, talking to people, and observing personnel (Tarkio, 2007).

Support of the F*our *Functions of Management Strategies Conclusion McDonald’s has lasted from decade to decade, through the good, and the bad. Management has prevailed to give McDonalds an iconic edge in the world. Management and leadership have collaborated through their difference to maintain a positive outlook for the company. The process produced a healthy organizational culture of different symbols of culture togetherness. Any positive movement in the McDonald’s is given credit to the implemented four fictions of management.

From test to trial, the heart of the company is its ability to manage, led and implement new strategies that promote fast quality food at a low price with a friendly smile. Reference Boone, J. (2009). Thinking made easy: good management is essential in achieving. Retrieved Tarkio, R. (2007). Identifying organizational culture. Retrieved January 7, 2010 from http://www. en. articlesgratuits. com/identifying-organizational-culture-id1523. php Williams, G. (2005, April 11). Diversity at mcDonald’s: a way of life. Nation’s Restaurant News. Retrieved from http://cDonalds Corporation Web site: http://mcd. mobular. net/mcd/90/8/10/

Financial Analysis of Exxon Mobil Corporation

Introduction This report consists of financial analysis of Exxon Mobil Corporation and it is based on the company annual report for the fiscal year ended December 31, 2006, on the company’s official documents placed at their website and on other appropriate sources. For convenience and simplicity, in this report the terms ExxonMobil, Exxon, Esso and Mobil, as well as terms like Corporation, Company, their and its, are sometimes used as abbreviated references to specific affiliates or groups of affiliates.

This report doesn’t include calculation of share’s fair value and potential of its growth in comparison with current market price, but analysis based recommendation for Exxon Mobil shares is made in the report conclusion. Company overview Exxon Mobil Corporation, formerly named Exxon Corporation, was incorporated in the USA in 1882. Mobil Corporation became a wholly-owned subsidiary of Exxon Corporation in 1999, and Exxon changed its name to Exxon Mobil Corporation (Exxon Mobil Form 10-K for US Securities and exchange commission). It’s an integrated oil and gas company with several divisions and hundreds of affiliates over the world.

Divisions and affiliated companies of ExxonMobil operate or market products in the United States and most other countries of the world. Their principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. Exxon Mobil is a major manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. Exxon Mobil also has interests in electric power generation facilities.

Affiliates of Exxon Mobil conduct extensive research programs in support of these businesses. Nowadays the company has the largest energy resource base of any non-government company, and it’s the world’s largest non-government natural gas marketer and reserves holder. Consumers know the best of its brand names: Exxon, Mobil and Esso. Exxon are the world ‘s largest fuels refiner and manufacturer of lube basestocks used for making motor oils. It has refining operations in 26 countries, 42 000 retail services stations in more than 100 countries and lubricants marketing in almost 200 countries and territories.

The company markets petrochemical products in more than 150 countries. Ninety percent of its petrochemical assets are in businesses that are ranked number 1 or number 2 in market position. Industry overview According to PFC Energy report (January 2007, www. pfcenergy. com) Exxon Mobile Corporation tops the list of biggest publicly traded companies in the oil and gas industry based on 2006 year-end market capitalization. The company competes on its traditional markets with other the world’s biggest listed energy groups like US based Chevron and ConocoPhillips, Europe’s BP and Royal Dutch Shell.

Regardless of the fact that the mentioned above companies are really huge, they are not the rule makers on international oil market and lose their positions very rapidly. After the surge in crude oil prices since 2002, a new group of oil and gas companies has risen on the scene. These companies identified by Financial Times (Hoyos C. , 2007) are Saudi Aramco, Russia’s Gazprom, CNPC of China, NIOC of Iran, Venezuela’s PDVSA, Brazil’s Petrobras and Petronas of Malaysia. Most of them are state-owned. They control almost one-third of the world’s oil and gas production and more than one-third of its total oil and gas reserves.

In contrast, Exxon Mobil, Chevron, BP and Royal Dutch Shell together produce about 10 per cent of the world’s oil and gas and hold just 3 per cent of reserves. The real world biggest company is Saudi Aramco, which after 2002 launched its most ambitious expansion programme and aims to boost production capacity from 11 million barrels a day – or 13 per cent of today’s world global consumption – to 12. 5m b/d and then 15m b/d. As it was mentioned before the recent years world energy consumption grew, and the prices for oil and gas increased significantly.

There are two primary factors influenced the market of energy: population and economic output (Exxon Mobil, www. exxonmobil. com). According to International Energy Agency (International Energy Agency, www. oilmarket. org) global oil product demand will rise up from 84. 5 mb/d in 2006 to 86. 1 mb/d in 2007, and in forecast for 2030 will grow 1. 8% per year. The world oil prices are forecasted to decline from $68 per barrel in 2006 to $49 per barrel in 2014, then rise to $59 per barrel in 2030 ($95 per barrel on a nominal basis).

Total world liquids consumption rises to 118 million barrels per day in 2030. Analysis of Profitability General analysis The analysis of Exxon Mobil was performed on its consolidated financial statements in accordance with US GAAP, where all affiliates with more 50% control were included. The company didn’t have discontinued operations in the reported report, so all activities were continuing operations. Figure 1 IndicatorsUnit 200620052004Change 06/05Change 06/05, %Change 05/04, % Total turnoverUSD m377 635370 680298 0356 9551. 9%24. % Operating revenueUSD m365 467358 955291 2526 5121. 8%23. 2% Net profitUSD m39 50036 13025 3303 3709. 3%42. 6% Profitability%11. 68%10. 80%9. 29%8. 2%16. 3% Capital EmployedUSD m123 855121 291112 6302 5642. 1%7. 7% Return on Capital Employed%32. 2%31. 3%23. 8%02. 9%31. 5% Source: Exxon Mobil Corporation financial statements The Corporation’s total turnover inclusive sales-based taxes, income from equity affiliates and other incomes grew up in 2006 on 1. 9% (or $6 955 million) to $377 635 millions. The operating revenue increased by 1. % (or $6 512 million) to $365 467 millions (please see Exxon Mobil Corporation financial statements attached as Appendix 1). The growth rate of revenues dropped significantly in 2006 from increase in 2005. As the company production volumes were increased at the same rate these years, the main reason is a change in world gas and oil prices. Net income in 2006 of $39 500 million was the highest ever for the Corporation, up $3 370 million from 2005. The company states that net income for 2006 included a $410 million gain from the recognition of tax benefits related to historical investments in non-U.

S. assets. It should be stated that Exxon Mobil management is quite good in expenses control. They decrease SG expenses in 2006 and reduced total number of employees all this period. As it can be seen above average capital employed also rose up, as a result of significant growth of company assets. ROCE increased from 31. 3% to 32. 2% due to increase in net profits. Exxon Mobil’s results in comparison with other traded oil and gas giants show a very good position of the company (Figure 2). The corporation has greatest capitalization and rates highly among the investors.

Profitability level of company is slightly less than average level of industry, but this difference exists only because of impact of rapidly growing companies like PetroChina and others based in developing countries. ExxonMobil’s profit exceeds its opponents’ profit from developed countries. Figure 2 Company nameMarket Capitalization USD Bil. % Share price change YoYTurnover USD Bil. EmployeesNet Profit margin % Exxon Mobil Corporation449. 336377 63582 10010. 74 PetroChina253. 67390 283446 29021. 68 Royal Dutch Shell225. 915316 361108 0008. 45 BP218. 4274 31697 0008. 25 Chevron Corporation160. 730203 72162 5008. 77 ConocoPhillips118. 224183 46338 4008. 62 Industry weighted average234. 930212 172122 76211. 05 Source: Reuters, www. investors. reuters. com Analysis per segments Exxon Mobil operates in three main segments: upstream, downstream and chemical. Upstream segment consists of exploration, gas and oil production. Downstream is a refining and petroleum product sale. Chemical segment includes production of olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products.

The company provides following figures with breakdown per segments in its financial statement: Figure 3 SegmentEarnings After Income TaxesAverage Capital EmployedReturn on Average Capital Employed 200620052006200520062005 UpstreamUSD m%USD m%USD m%USD m%%% United States5 16813. 16 20017. 213 94011. 413 49111. 537. 146 Non-U. S. 21 06253. 318 14950. 243 93135. 839 77034. 047. 945. 6 Total26 23066. 424 34967. 457 87147. 253 26145. 545. 345. 7 Downstream United States4 25010. 83 91110. 86 4565. 36 6505. 765. 858. 8 Non-U. S. 4 20410. 64 08111. 317 17214. 018 03015. 424. 522. 6 Total8 45421. 47 99222. 23 62819. 324 68021. 135. 832. 4 Chemical United States1 3603. 41 1863. 34 9114. 05 1454. 427. 723. 1 Non-U. S. 3 0227. 72 7577. 68 2726. 78 9197. 636. 530. 9 Total4 38211. 13 94310. 913 18310. 814 06412. 033. 228 Corporate and financing4341. 1- 154-0. 427 89122. 824 95621. 300 Total39 500100. 036 130100. 0122 573100. 0116 961100. 032. 231. 3 Source: Exxon Mobil Corporation financial statements All sectors’ indicators were heightened in 2006. The only upstream sector based in the United States reported decline in profit. Otherwise it was compensated by steady growth in Non-US divisions of the segment.

More than 50% of net income was gained in Non-US upstream sector. The total income increase was based by half on growing oil and gas production outside the USA. Upstream earnings for 2006 totaled $26 230 million, an increase of $1 881 million from 2005, including a $1 620 million gain related to the Dutch gas restructuring in 2005. Higher liquids and natural gas realizations were partly offset by higher operating expenses. Total oil-equivalent production increased by 7 percent. Liquids production of 2,681 kbd (thousands of barrels per day) increased by 158 kbd from 2005.

Production increases from new projects in West Africa and increased Abu Dhabi volumes were partly offset by mature field decline, entitlement effects and divestment impacts. Natural gas production of 9,334 mcfd (millions of cubic feet per day) increased 83 mcfd from 2005. Higher volumes from projects in Qatar were partly offset by mature field decline. Downstream earnings totaled $8 454 million, an increase of $462 million from 2005 including a $310 million gain for the 2005 Sinopec share sale and a special charge of $200 million related to the 2005 Allapattah lawsuit provision.

Stronger worldwide refining and marketing margins were partly offset by lower refining throughput. Petroleum product sales of 7,247 kbd decreased from 7,519 kbd in 2005, primarily due to lower refining throughput and divestment impacts. Chemical earnings totaled $4 382 million, an increase of $439 million from 2005, including a $390 million gain from the favorable resolution of joint venture litigation in 2005 and a $150 million gain for the 2005 Sinopec share sale. Increased 2006 earnings were driven by higher margins and increased sales volumes.

Prime product sales were 27,350 kt (thousands of metric tons), an increase of 573 kt. Forecast of profitability The oil and gas business is fundamentally a commodity business. This means the operations and earnings of the Corporation and its affiliates throughout the world may be significantly affected by changes in oil, gas and petrochemical prices and by changes in margins on gasoline and other refined products. Oil, gas, petrochemical and product prices and margins in turn depend on local, regional and global events or conditions that affect supply and demand for the relevant commodity.

Generally, the above figures absolutely clear prove correct choice of Exxon Mobil management of strategic direction of development. The development of new fields in Africa, states of Persian Gulf, former countries of Soviet Union and Asia improves the company indicators. The leading position of petroleum retailer in the US and other countries should be kept and expanded. So, the forecast for a short-term period is the corporation profitability will be on the same level. Assumptions and limitations The company performance analysis was made on shot period of time, when the oil and gas markets grew and the prices were at high historical levels.

The changes in business environment may cause a deterioration of financial position of the corporation. Prediction should be done more thoroughly. As the most of sales of Exxon Mobil are made on US and developed countries market with their susceptibility for stagnation. The corporation reports consolidated statements and almost doesn’t disclosure information about its affiliates. It’s very likely that Exxon Mobil may be forced to sell the shares of most profitable subsidiaries by the local authorities in developing countries and to leave the projects in spite of investments.

The Group benefits from its worldwide operations as weak exchange rate of US dollar in recent years overstates the revenues in other currencies. Analysis of Risk Liquidity, working capital and gearing ratios, which is influenced the investor decisions, for Exxon Mobil are following: Figure 4 RatioDescriptionUnit of measurement20062005Change, % Current ratioCurrent assets / Current liabilitiestimes1. 551. 58-2% Quick ratio (Acid-test)Current assets minus stocks/ Current liabilitiestimes1. 331. 38-4% Stock holding periodStocks * 365 / cost of salesdays12. 6110. 315% Debtor collection period Debtors * 365 / Revenuedays27. 9727. 063% Creditors payment periodTrade creditors * 365 / Cost of salesdays45. 9842. 369% Working cycle periodStocks turnover + Debtors turnover – Creditors turnoverdays- 5. 40- 4. 3624% Interest coverProfit before interest and taxations / Interesttimes103. 06119. 82-14% Exxon Mobil short-term liquidity in 2006 decreased: current ratio and quick ratio reduced from 1. 58 to 1. 55 and from 1. 38 in 2005 to 1. 33 in 2006 correspondingly. The normative value for current ratio is between 1:1 and 2:1 depending of industry, for acid-test ratio – 1:1.

Therefore the company has no solvency problems and moreover because current ratio isn’t too high the company has quite strong working capital management. Stock holding period grew by 15% from 11 to 12 days as stocks increased. Debtor collection period increased by 3% from 27 to 28 days also. Both trends had a negative impact on decreasing working capital cycle. Creditor payment period increased from 42 to 46 days and caused a decline of working cycle period from -4 day to -5 days. The negative values of this indicator allow saying the corporation is not in need for working capital to be financed long term.

Company’s interest cover ratio dropped by 14% from 120 times in 2005 to 103 times in 2006 in connection with increase in borrowings and offsets by profit before interest and taxes growth. According to interest cover ratio the company earns quite enough profit in order to serve borrowings. Figure 5 Cash Flow Cash Flow ChangesUnit of measurement20062005Change, % Net cash inflow from operating activitiesUSD m49 28648 1382. 38% In spite of increase in profit in 2006 Exxon Mobil’s cash flow from operating activities changed only on 2. 38%.

The main reason is significant decrease in accounts and other payables. Risk Forecast In spite of decrease in some ratios Exxon Mobil still has a very high margin of safety. Main indicator of low risk is negative values of working cycle period. It shows that company has very favorable conditions of supplies. Take into account that significant changes in business environment are unlikely to happened, at least for a short term period a positive forecast of the company liquidity and cash flow may be granted. Critical Analysis of Company Disclosure

The company annual report contents a lot of information and formed opinion that Exxon Mobil is number one in oil and gas industry. There is no any information about more powerful competitors like Saudi Aramco. The corporation does not pay any attention to risks of possible restrictions on the ability to do business with certain countries, or to engage in certain areas of business within a country. There is nothing about expropriation or forced divestiture of assets, unilateral cancellation or modification of contract terms, and de-regulation of certain energy markets.

Conclusion The revenues and profit of Exxon Mobil are growing already four years on end and are at highest level. The management invested huge amounts in exploration of new oil and gas fields. It helped to increase the reserves significantly. The growth of production was caused by the corporation participation in development of new fields in Africa, states of Persian Gulf, former countries of Soviet Union and Asia. The “downstream” segment of the company is a world leader of refining and as oil production rate ncreases growth rate of processing capacities Exxon Mobil may reckon on subsequent growth in sales volumes and level of profitability. Answering the questions with the world famous method of Warren Buffett (Buffet M. , 2004) it can be stated that the company is opened to public; it has stable growth of financial indicators and good perspectives in long term period. So, in accordance with above mentioned an overall recommendation is to buy Exxon Mobil shares. Buffet M. , Clark, D. (2004), Buffettology: the Previously Unexplained Techniques That Have Made Warren Buffett the World’s Most Famous Investor.

Energy Information Administration Office of Integrated Analysis and Forecasting U. S. Department of Energy, International Energy Outlook 2007, www. eia. doe. gov Exxon Mobil Corporation Annual report for the year ended December 31, 2006, www. exxonmobil. com Exxon Mobil Corporation Form 10-K, www. exxonmobil. com Hoyos C. , The new Seven Sisters: oil and gas giants dwarf western rivals, The Financial Times, March 11 2007, www. ft. com International Energy Agency, Oil market report, www. oilmarketreport. org PFC Energy report, January 2007, www. pfcenergy. com

Cyber Crime

Cyber Crime |Ms. Palak Patel | |Lecturer, | |BCA Dept-SK Patel,BPCCS, | |Gandhinagar-382023, India. | Abstract Large-scale commercial, industrial and financial operations are becoming ever more interdependent, and ever more dependent on IT.

At the same time, the rapidly growing interconnectivity of IT systems, and the convergence of their technology towards industry-standard hardware and software components and sub-systems, renders these IT systems increasingly vulnerable to malicious attack. This paper is aimed particularly at readers concerned with major systems employed in medium to large commercial or industrial enterprises. It examines the nature and significance of the various potential attacks, and surveys the defence options available. It concludes that IT owners need to think of the threat in more global terms, and to give a new focus and priority too their defence.

Prompt action can ensure a major improvement in IT resilience at a modest marginal cost, both in terms of finance and in terms of normal IT operation. The term ‘cyber crime’ is a misnomer. This term has nowhere been defined in any statute /Act passed or enacted by the Indian Parliament. The concept of cyber crime is not radically different from the concept of conventional crime. Both include conduct whether act or omission, which cause breach of rules of law and counterbalanced by the sanction of the state.

Before evaluating the concept of cyber crime it is obvious that the concept of conventional crime be discussed and the points of similarity and deviance between both these forms may be discussed. The increased dependence on IT and communication technology for dynamic and fast business solutions has its own side effect. The effect of digital information technologies upon our world certainly poses endless benefits for the citizens of our growing global village. The dark side of it, not surprisingly, is the misuse of Information Technology for criminal activities. Cyber Crimes are a new genus of crimes, which use omputers and networks for criminal activities. Cyber Crimes are any illegal activities committed using computer. Target of the criminal activity can be a computer, network or operations. In another sense, criminal activity can be against a person, an organization or a government. A generalized definition of cyber crime may be “ unlawful acts wherein the computer is either a tool or target or both”(3) The computer may be used as a tool in the following kinds of activity- financial crimes, sale of illegal articles, pornography, online gambling, intellectual property crime, e-mail spoofing, forgery, cyber defamation, cyber stalking.

The computer may however be target for unlawful acts in the following cases- unauthorized access to computer/ computer system/ computer networks, theft of information contained in the electronic form, e-mail bombing, data didling, salami attacks, logic bombs, Trojan attacks, internet time thefts, web jacking, theft of computer system, physically damaging the computer system. The difference between traditional crimes and cyber crimes is that cyber crimes can be transactional in nature which limits the law enforcement agencies ability to catch the culprit and put them behind the bars.

Anybody who is having a computer and internet connection can inflict damage to a remote system or network and can remain anonymous. The anonymity on the net is a real problem faced by law enforcement agencies. Another issue is the jurisdiction in cyber crimes. A crime in one country may not be treated as a crime in another country. If a crime is transactional which law can be applied? We can classify this type of crimes into three categories. 1. Crimes done on net – which is possible only because of the existence of Net. 2.

Crimes done using net – which are traditional crimes which can be easily done using the net. 3. Crimes done using computers – which are traditional crimes done using computers and its accessories? Conventional Crime- Crime is a social and economic phenomenon and is as old as the human society. Crime is a legal concept and has the sanction of the law. Crime or an offence is “a legal wrong that can be followed by criminal proceedings which may result into punishment. ”(1) The hallmark of criminality is that, it is breach of the criminal law.

Per Lord Atkin “the criminal quality of an act cannot be discovered by reference to any standard but one: is the act prohibited with penal consequences”. (2) A crime may be said to be any conduct accompanied by act or omission prohibited by law and consequential breach of which is visited by penal consequences. Cyber Crime Cyber crime is the latest and perhaps the most complicated problem in the cyber world. “Cyber crime may be said to be those species, of which, genus is the conventional crime, and where either the computer is an object or subject of the conduct constituting crime” (13). Any criminal activity that uses a computer either as an instrumentality, target or a means for perpetuating further crimes comes within the ambit of cyber crime”(12) A generalized definition of cyber crime may be “ unlawful acts wherein the computer is either a tool or target or both”(3) The computer may be used as a tool in the following kinds of activity- financial crimes, sale of illegal articles, pornography, online gambling, intellectual property crime, e-mail spoofing, forgery, cyber defamation, cyber stalking.

The computer may however be target for unlawful acts in the following cases- unauthorized access to computer/ computer system/ computer networks, theft of information contained in the electronic form, e-mail bombing, data didling, salami attacks, logic bombs, Trojan attacks, internet time thefts, web jacking, theft of computer system, physically damaging the computer system. Distinction between Conventional Crime and Cyber Crime- There is apparently no distinction between cyber and conventional crime.

However on a deep introspection we may say that there exists a fine line of demarcation between the conventional and cyber crime, which is appreciable. The demarcation lies in the involvement of the medium in cases of cyber crime. The sine qua non for cyber crime is that there should be an involvement, at any stage, of the virtual cyber medium. Rise of cyber crimes The increased dependence on IT and communication technology for dynamic and fast business solutions has its own side effect.

The effect of digital information technologies upon our world certainly poses endless benefits for the citizens of our growing global village. The dark side of it, not surprisingly, is the misuse of Information Technology for criminal activities. Cyber Crimes are a new genus of crimes, which use computers and networks for criminal activities. Cyber Crimes are any illegal activities committed using computer. Target of the criminal activity can be a computer, network or operations. In another sense, criminal activity can be against a person, an organization or a government.

The difference between traditional crimes and cyber crimes is that cyber crimes can be transactional in nature which limits the law enforcement agencies ability to catch the culprit and put them behind the bars. Anybody who is having a computer and internet connection can inflict damage to a remote system or network and can remain anonymous. The anonymity on the net is a real problem faced by law enforcement agencies. Another issue is the jurisdiction in cyber crimes. A crime in one country may not be treated as a crime in another country. If a crime is transactional which law can be applied ?

We can classify this type of crimes into three categories. 1. Crimes done on net – which is possible only because of the existence of Net. 2. Crimes done using net – which are traditional crimes which can be easily done using the net. 3. Crimes done using computers – which are traditional crimes done using computers and its accessories? Reasons for Cyber Crime Hart in his work “The Concept of Law” has said ‘human beings are vulnerable so rule of law is required to protect them’. Applying this to the cyberspace we may say that computers are vulnerable so rule of law is required to protect and safeguard them against cyber crime.

The reasons for the vulnerability of computers may be said to be: 1. Capacity to store data in comparatively small space- The computer has unique characteristic of storing data in a very small space. This affords to remove or derive information either through physical or virtual medium makes it much easier. 2. Easy to access- The problem encountered in guarding a computer system from unauthorised access is that there is every possibility of breach not due to human error but due to the complex technology.

By secretly implanted logic bomb, key loggers that can steal access codes, advanced voice recorders; retina imagers etc. that can fool biometric systems and bypass firewalls can be utilized to get past many a security system. 3. Complex- The computers work on operating systems and these operating systems in turn are composed of millions of codes. Human mind is fallible and it is not possible that there might not be a lapse at any stage. The cyber criminals take advantage of these lacunas and penetrate into the computer system. 4. Negligence- Negligence is very closely connected with human conduct.

It is therefore very probable that while protecting the computer system there might be any negligence, which in turn provides a cyber criminal to gain access and control over the computer system. 5. Loss of evidence- Loss of evidence is a very common & obvious problem as all the data are routinely destroyed. Further collection of data outside the territorial extent also paralyses this system of crime investigation. Cyber Criminals The cyber criminals constitute of various groups/ category. This division may be justified on the basis of the object that they have in their mind.

The following are the category of cyber criminals- 1. Children and adolescents between the age group of 6 – 18 years – The simple reason for this type of delinquent behaviour pattern in children is seen mostly due to the inquisitiveness to know and explore the things. Other cognate reason may be to prove them to be outstanding amongst other children in their group. Further the reasons may be psychological even. E. g. the Bal Bharati (Delhi) case was the outcome of harassment of the delinquent by his friends. 2. Organised hackers- These kinds of hackers are mostly organised together to fulfil certain objective.

The reason may be to fulfil their political bias, fundamentalism, etc. The Pakistanis are said to be one of the best quality hackers in the world. They mainly target the Indian government sites with the purpose to fulfil their political objectives. Further the NASA as well as the Microsoft sites is always under attack by the hackers. 3. Professional hackers / crackers – Their work is motivated by the colour of money. These kinds of hackers are mostly employed to hack the site of the rivals and get credible, reliable and valuable information.

Further they are even employed to crack the system of the employer basically as a measure to make it safer by detecting the loopholes. 4. Discontented employees- This group include those people who have been either sacked by their employer or are dissatisfied with their employer. To avenge they normally hack the system of their employee. Mode and Manner of committing cyber crime: 1. Unauthorized access to computer systems or networks / Hacking- This kind of offence is normally referred as hacking in the generic sense.

However the framers of the information technology act 2000 have no where used this term so to avoid any confusion we would not interchangeably use the word hacking for ‘unauthorized access’ as the latter has wide connotation. 2. Theft of information contained in electronic form- This includes information stored in computer hard disks, removable storage media etc. Theft may be either by appropriating the data physically or by tampering them through the virtual medium. 3. Email bombing-

This kind of activity refers to sending large numbers of mail to the victim, which may be an individual or a company or even mail servers there by ultimately resulting into crashing. 4. Data diddling- This kind of an attack involves altering raw data just before a computer processes it and then changing it back after the processing is completed. The electricity board faced similar problem of data diddling while the department was being computerised. 5. Salami attacks- This kind of crime is normally prevalent in the financial institutions or for the purpose of committing financial crimes.

An important feature of this type of offence is that the alteration is so small that it would normally go unnoticed. E. g. the Ziegler case wherein a logic bomb was introduced in the bank’s system, which deducted 10 cents from every account and deposited it in a particular account. 6. Denial of Service attack- The computer of the victim is flooded with more requests than it can handle which cause it to crash. Distributed Denial of Service (DDoS) attack is also a type of denial of service attack, in which the offenders are wide in number and widespread. E. g. Amazon, Yahoo. 7.

Virus / worm attacks- Viruses are programs that attach themselves to a computer or a file and then circulate themselves to other files and to other computers on a network. They usually affect the data on a computer, either by altering or deleting it. Worms, unlike viruses do not need the host to attach themselves to. They merely make functional copies of themselves and do this repeatedly till they eat up all the available space on a computer’s memory. E. g. love bug virus, which affected at least 5 % of the computers of the globe. The losses were accounted to be $ 10 million.

The world’s most famous worm was the Internet worm let loose on the Internet by Robert Morris sometime in 1988. Almost brought development of Internet to a complete halt. 8. Logic bombs- These are event dependent programs. This implies that these programs are created to do something only when a certain event (known as a trigger event) occurs. E. g. even some viruses may be termed logic bombs because they lie dormant all through the year and become active only on a particular date (like the Chernobyl virus). 9. Trojan attacks- This term has its origin in the word ‘Trojan horse’.

In software field this means an unauthorized programme, which passively gains control over another’s system by representing itself as an authorised programme. The most common form of installing a Trojan is through e-mail. E. g. a Trojan was installed in the computer of a lady film director in the U. S. while chatting. The cyber criminal through the web cam installed in the computer obtained her nude photographs. He further harassed this lady. 10. Internet time thefts- Normally in these kinds of thefts the Internet surfing hours of the victim are used up by another person.

This is done by gaining access to the login ID and the password. E. g. Colonel Bajwa’s case- the Internet hours were used up by any other person. This was perhaps one of the first reported cases related to cyber crime in India. However this case made the police infamous as to their lack of understanding of the nature of cyber crime. 11. Web jacking- This term is derived from the term hi jacking. In these kinds of offences the hacker gains access and control over the web site of another. He may even mutilate or change the information on the site.

This may be done for fulfilling political objectives or for money. E. g. recently the site of MIT (Ministry of Information Technology) was hacked by the Pakistani hackers and some obscene matter was placed therein. Further the site of Bombay crime branch was also web jacked. Another case of web jacking is that of the ‘gold fish’ case. In this case the site was hacked and the information pertaining to gold fish was changed. Further a ransom of US $ 1 million was demanded as ransom. Thus web jacking is a process where by control over the site of another is made backed by some consideration for it.

Classification: The subject of cyber crime may be broadly classified under the following three groups. They are- 1. Against Individuals a. their person & b. their property of an individual 2. against Organization a. Government c. Firm, Company, Group of Individuals. 3. Against Society at large The following are the crimes, which can be committed against the followings group Against Individuals: – i. Harassment via e-mails. ii. Cyber-stalking. iii. Dissemination of obscene material. iv. Defamation. v. Unauthorized control/access over computer system. vi. Indecent exposure vii. Email spoofing iii. Cheating & Fraud Against Individual Property: – i. Computer vandalism. ii. Transmitting virus. iii. Netrespass iv. Unauthorized control/access over computer system. v. Intellectual Property crimes vi. Internet time thefts Against Organization: – I. Unauthorized control/access over computer system ii. Possession of unauthorized information. iii. Cyber terrorism against the government organization. iv. Distribution of pirated software etc. Against Society at large: – i. Pornography (basically child pornography). Ii. Polluting the youth through indecent exposure. iii. Trafficking iv.

Financial crimes v. Sale of illegal articles vi. Online gambling vii. Forgery The above mentioned offences may discussed in brief as follows: 1. Harassment via e-mails- Harassment through e-mails is not a new concept. It is very similar to harassing through letters. Recently I had received a mail from a lady wherein she complained about the same. Her former boy friend was sending her mails constantly sometimes emotionally blackmailing her and also threatening her. This is a very common type of harassment via e-mails. 2. Cyber-stalking- The Oxford dictionary defines stalking as “pursuing stealthily”.

Cyber stalking   involves following a person’s movements across the Internet by posting messages (sometimes threatening) on the bulletin boards frequented by the victim, entering the chat-rooms frequented by the victim, constantly bombarding the victim with emails etc. 3. Dissemination of obscene material/ Indecent exposure/ Pornography (basically child pornography) / Polluting through indecent exposure- Pornography on the net may take various forms. It may include the hosting of web site containing these prohibited materials. Use of computers for producing these obscene materials.

Downloading through the Internet, obscene materials. These obscene matters may cause harm to the mind of the adolescent and tend to deprave or corrupt their mind. Two known cases of pornography are the Delhi Bal Bharati case and the Bombay case wherein two Swiss couple used to force the slum children for obscene photographs. The Mumbai police later arrested them. 4. Defamation It is an act of imputing any person with intent to lower the person in the estimation of the right-thinking members of society generally or to cause him to be shunned or avoided or to expose him to hatred, contempt or ridicule.

Cyber defamation is not different from conventional defamation except the involvement of a virtual medium. E. g. the mail account of Rohit was hacked and some mails were sent from his account to some of his batch mates regarding his affair with a girl with intent to defame him. 4. Unauthorized control/access over computer system- This activity is commonly referred to as hacking. The Indian law has however given a different connotation to the term hacking, so we will not use the term “unauthorized access” interchangeably with the term “hacking” to prevent confusion as the term used in the Act of 2000 is much wider than hacking. . E mail spoofing- A spoofed e-mail may be said to be one, which misrepresents its origin. It shows it’s origin to be different from which actually it originates. Recently spoofed mails were sent on the name of Mr. Na. Vijayashankar (naavi. org), which contained virus. Rajesh Manyar, a graduate student at Purdue University in Indiana, was arrested for threatening to detonate a nuclear device in the college campus. The alleged e- mail was sent from the account of another student to the vice president for student services. However the mail was traced to be sent from the account of Rajesh Manyar. 15) 6. Computer vandalism- Vandalism means deliberately destroying or damaging property of another. Thus computer vandalism may include within its purview any kind of physical harm done to the computer of any person. These acts may take the form of the theft of a computer, some part of a computer or a peripheral attached to the computer or by physically damaging a computer or its peripherals. 7. Transmitting virus/worms- This topic has been adequately dealt herein above. 8. Intellectual Property crimes / Distribution of pirated software- Intellectual property consists of a bundle of rights.

Any unlawful act by which the owner is deprived completely or partially of his rights is an offence. The common form of IPR violation may be said to be software piracy, copyright infringement, trademark and service mark violation, theft of computer source code, etc. The Hyderabad Court has in a land mark judgement has convicted three people and sentenced them to six months imprisonment and fine of 50,000 each for unauthorized copying and sell of pirated software. (16) 9. Cyber terrorism against the government organization

At this juncture a necessity may be felt that what is the need to distinguish between cyber terrorism and cyber crime. Both are criminal acts. However there is a compelling need to distinguish between both these crimes. A cyber crime is generally a domestic issue, which may have international consequences; however cyber terrorism is a global concern, which has domestic as well as international consequences. The common form of these terrorist attacks on the Internet is by distributed denial of service attacks, hate websites and hate emails, attacks on sensitive computer networks, etc.

Technology savvy terrorists are using 512-bit encryption, which is next to impossible to decrypt. The recent example may be cited of – Osama Bin Laden, the LTTE, and attack on America’s army deployment system during Iraq war. Cyber terrorism may be defined to be “ the premeditated use of disruptive activities, or the threat thereof, in cyber space, with the intention to further social, ideological, religious, political or similar objectives, or to intimidate any person in furtherance of such objectives” (4) Another definition may be attempted to cover within its ambit every act of cyber terrorism.

A terrorist means a person who indulges in wanton killing of persons or in violence or in disruption of services or means of communications essential to the community or in damaging property with the view to – (1) Putting the public or any section of the public in fear; or (2) Affecting adversely the harmony between different religious, racial, language or regional groups or castes or communities; or (3) Coercing or overawing the government established by law; or (4) Endangering the sovereignty and integrity of the nation

And a cyber terrorist is the person who uses the computer system as a means or ends to achieve the above objectives. Every act done in pursuance thereof is an act of cyber terrorism. 10. Trafficking Trafficking may assume different forms. It may be trafficking in drugs, human beings, arms weapons etc. These forms of trafficking are going unchecked because they are carried on under pseudonyms. A racket was busted in Chennai where drugs were being sold under the pseudonym of honey. 11. Fraud & Cheating

Online fraud and cheating is one of the most lucrative businesses that are growing today in the cyber space. It may assume different forms. Some of the cases of online fraud and cheating that have come to light are those pertaining to credit card crimes, contractual crimes, offering jobs, etc. Recently the Court of Metropolitan Magistrate Delhi (17) found guilty a 24-year-old engineer working in a call centre, of fraudulently gaining the details of Campa’s credit card and bought a television and a cordless phone from Sony website.

Metropolitan magistrate Gulshan Kumar convicted Azim for cheating under IPC, but did not send him to jail. Instead, Azim was asked to furnish a personal bond of Rs 20,000, and was released on a year’s probation. We can classify this type of crimes into three categories. 1. Crimes done on net – which is possible only because of the existence of Net. 2. Crimes done using net – which are traditional crimes which can be easily done using the net. 3. Crimes done using computers – which are traditional crimes done using computers and its accessories?

Section 2(1) (I) of the Information Technology Act, 2000 defines a computer as any “electronic magnetic, optical or other high-speed data processing device or system which performs logical, arithmetic, and memory functions by manipulations of electronic, magnetic or optical impulses, and includes all input, output, processing, storage, computer software, or communication facilities which are connected or related to the computer in a computer system or computer network”.

Let us look at the different categories of cyber crimes. Crimes done on net Whenever you are connected to the net there is a possibility that you are being watched by somebody – be it your organization, law enforcement agencies or cyber criminals. The major types of crimes which will affect organizations are (I)Hacking (ii)Identity Theft / phishing (iii)Denial of Service attacks (iv)Virus / Worm Attacks (v)IPR Violations (vi)Stealing Trade Secrets (vii)Website Defacement (viii)Cyber Vandalism / Cyber Terrorism

Even though hacking is supposed to be the most frequently talked about subject, studies shows that it is virus attacks which has caused the major financial losses ( about US$ 42M in 2005) followed by unauthorized access causing damage and theft of proprietary info (about US$30M in 2005). A recent case in US says that hackers from India (Chennai) indicted for online brokerage intrusion scheme that victimised customers and brokerage firms. (www. cybercrime. gov). this shows that what hackers can do on financial institutions which in turn will affect the financial stability of a country.

The suspects have done identity theft and hacking into computer to change information. Cyber Terrorism is another concern by the security experts across the world. In past, Indian industry, government, and service sectors which form the Critical Infrastructure in the country were not fully connected on the network. But in very near future all will be connected. Protection of critical infrastructure will become one main area of concern. Crimes done using net These types of crimes were existing in our society but were difficult to execute.

For example, stalking was one of the oldest method of intimidating somebody to destroy his/her peace of mind and draw the victim to the criminals intentions. But due to the proliferation of internet, this became very easy to execute. Computers and internet provided the criminals an easy way of doing old crimes. (1)Cyber Stalking (2)Identity Theft (3)Defamation (4)Spamming (5)Internet Fraud (6)Extortion (7)Trafficking (8)Gambling (9)Narcotics (10)Pornography (11)Distribution of pirated software Crimes done using computers

These are also traditional crimes, execution of which was made very easy by computers. Forging an official document is now very easy to the extend that if you get an original you can create forged documents which looks like original one by scanning and editing. (1) Document Forgery a. Official Documents b. Certificates c. Stamp Paper d. Counterfeit Currency / stamps (2)Morphing Images (3)Software Theft Prevention of Cyber Crime: Prevention is always better than cure. It is always better to take certain precaution while operating the net. A should make them his part of cyber life.

Saileshkumar Zarkar, technical advisor and network security consultant to the Mumbai Police Cyber crime Cell, advocates the 5P mantra for online security: Precaution, Prevention, Protection, Preservation and Perseverance. A netizen should keep in mind the following things- 1. To prevent cyber stalking avoid disclosing any information pertaining to one. This is as good as disclosing your identity to strangers in public place. 2. Always avoid sending any photograph online particularly to strangers and chat friends as there have been incidents of misuse of the photographs. 3.

Always use latest and up date anti virus software to guard against virus attacks. 4. Always keep back up volumes so that one may not suffer data loss in case of virus contamination 5. Never send your credit card number to any site that is not secured, to guard against frauds. 6. Always keep a watch on the sites that your children are accessing to prevent any kind of harassment or depravation in children. 7. It is better to use a security programme that gives control over the cookies and send information back to the site as leaving the cookies unguarded might prove fatal. 8.

Web site owners should watch traffic and check any irregularity on the site. Putting host-based intrusion detection devices on servers may do this. 9. Use of firewalls may be beneficial. 10. Web servers running public sites must be physically separate protected from internal corporate network. Adjudication of a Cyber Crime – On the directions of the Bombay High Court the Central Government has by a notification dated 25. 03. 03 has decided that the Secretary to the Information Technology Department in each state by designation would be appointed as the AO for each state.

Conclusion: Capacity of human mind is unfathomable. It is not possible to eliminate cyber crime from the cyber space. It is quite possible to check them. History is the witness that no legislation has succeeded in totally eliminating crime from the globe. The only possible step is to make people aware of their rights and duties (to report crime as a collective duty towards the society) and further making the application of the laws more stringent to check crime.

Undoubtedly the Act is a historical step in the cyber world. Further I all together do not deny that there is a need to bring changes in the Information Technology Act to make it more effective to combat cyber crime. I would conclude with a word of caution for the pro-legislation school that it should be kept in mind that the provisions of the cyber law are not made so stringent that it may retard the growth of the industry and prove to be counter-productive.

Self Assessment of Hr Competencies

I would like to think of myself as more of an advanced HR professional versus a strategic expert, even though that is what the test indicated. Organizational design, communication, performance management, selection, staffing, retention, rewards, compensation, training, development, coaching, consulting, employee relations and conflict resolution was some of my strongest competencies. Back in 1993 I joined a small employee benefits firm which specialized in Section 125 plans and the administration. I was to open a retirement plan administration division; I started with the organizational design of the area.

In completing this task I needed to understand the business acumen and also take into consideration and customer goals. I designed the business strategies to focus on volume and customer service and not necessarily the cost of services or pricing. I was looking to accumulate as many clients as possible in a short time period. In the first year I communicated a few new policies, one was performance measurement. I used the self assessment and supervisory observation with a one-on-one evaluation which address performance and improvement; I also added the desire for return feedback.

Because we appeared to have a satisfactory way to judge performance we needed to address selection, staffing and retention of new and existing staff members. In the development stages of my original business plan, I decided what jobs would be available and then designed jobs descriptions and designed a compensation packages for each position. The second policy was communicated to the managers the guideline for staffing. Because we had a variety of technical needs, we were looking for specialist.

I put together a guide that gave them sample advertisements for human capital, with ads that were target specific to the KSAO we were looking for; I also outlined the advertising mediums established by the organization to use. This allowed the managers to have approved material to use immediately, rather than waiting for approval. This reduced understaffing during the critical tax season, which much of our work would focus. I set up a system that had pre approved technical communication letters and forms that were used by the staff to speed up the process.

If a communication letter or form was needed to be sent to a client it must go through the review process unless it has been pre approved. The more things we had pre approved the more productive the staff could be in day to day operations. This expedited response time for many issues that seemed to be standard issues across the client base. It was important to align the HR with the needs of the clients; the process is in a continual development stage. The compensation package that was put together addressed the reward system as well, at the end of each fiscal year we would evaluate the performance of the individual for the previous 12 months.

We developed a scorecard method, depending upon where your value was, would depend upon the annual bonus, which ranged from $2,500 to $10,000. The compensation package and bonus system was tied directly into training and development. If the staff logged in a specific number of hours in training programs set up by the different departments and outside organizations that offer web seminars, and off sight seminar. The internal training was set up to highlight regulatory issues as well; we had sexual harassment, team building and time management seminars.

The training was offered randomly enough to fit ever employees schedule and it was always on company time. I didn’t experience much coaching and consulting on my part other than I conducted seminars to help other organizations train their employees in the art of selling our product, this was because we were not a selling third party administrator. If a large brokerage firm for example needed to train their brokers on closing big pension deals, they would call on our organization to do free seminars. Obviously this was very smart on our part because we would also acquire business from them selling more effectively.

The internal structure of our organization ran well and we didn’t have much conflict resolution or employee relations problems. One thing I did well within the organization was future planning, looking into the future to implement change before you need to, being more proactive than reactive. The changes in the industry are easy to spot if you know what you are looking for. Our organization was process oriented; we utilized one side of the business to cross sell the other side, building a bridge between the two divisions of the organization.

Both groups shared the vision for growth within the organization, with guidance the divisions worked towards the same goal, overall success. Some of the other competencies I displayed were unquestionable integrity, leadership courage and an excellent sense of judgment. In the first year the new division broke even, this gave me credibility with the shareholders and employees. However I never had the pleasure of the global prospective, I did understand and appreciate diversity. Please see Appendix A for further comments on competency and where I would like to improve.

Ryanair Strategy

Journal of Air Transport Management 15 (2009) 195–203 Contents lists available at ScienceDirect Journal of Air Transport Management journal homepage: www. elsevier. com/locate/jairtraman Pricing strategies of low-cost airlines: The Ryanair case study Paolo Malighetti a, *, Stefano Paleari a, Renato Redondi b a b Department of Economics and Technology Management, University of Bergamo– Universoft, Viale Marconi 5, Dalmine 24044, Italy Department of Mechanical Engineering, University of Brescia – Universoft, Via Branze, 38 – 25123 Brescia, Italy a b s t r a c t Keywords: Dynamic pricing Low-cost Ryanair Fares

We analyse the pricing policy adopted by Ryanair, the main low-cost carrier in Europe. Based on a year’s fare data for all of Ryanair’s European ? ights, using a family of hyperbolic price functions, the optimal pricing curve for each route is estimated. The analysis shows a positive correlation between the average fare for each route and its length, the frequency of ? ights operating on that route, and the percentage of fully booked ? ights. As the share of seats offered by the carrier at the departure and destination airports increases, fares tend to decrease. The correlation of dynamic pricing to route length and the frequency of ? ghts is negative. Conversely, as competition increases discounts on advance fares rise. O 2008 Elsevier Ltd. All rights reserved. 1. Introduction In recent years, the entry of low-cost carriers has totally revolutionised the air passenger transport industry. The low-cost business model was introduced by Southwest in the US at the beginning of the 1970s. However, it was only in the 1990s that the phenomenon spread worldwide. Ryanair was one of the ? rst airlines in Europe to adopt the low-cost model in 1992. Easyjet, Ryanair’s main low-cost competitor, was founded in 1995.

Although the phenomenon is relatively recent, the stunning results obtained by low-cost carriers urge academics to study the reasons for their success. The reduction of costs lies at the core of the low-cost business model, which aims to offer lower fares, eliminating some comfort and services that were traditionally guaranteed (hence the de? nition of ‘‘no frills’’, often employed to refer to low-cost ? ights). The use of an on-line booking system, the suppression of free in-? ight catering, the use of secondary airports connected through a pointto-point network, and the use of homogeneous ? ets are only a part of the innovative choices made by low-cost airlines. Many studies have analysed low-cost businesses, highlighting the keys to lower costs (Alamdari and Fagan, 2005; Doganis, 2006; Franke, 2004), and the role played by entreprership (Cassia et al. , 2006). The containment of costs is only one of the reasons for the success of a low-cost carrier. Alertness to ‘‘latent demand,’’ characterised by the passenger’s willingness to pay elastic prices, which is not the attitude of the so-called ‘‘traditional’’ passenger, is among the key factors. In the airline business, the maximisation of the pro? s obtained from each ? ight is strictly related to the maximisation of revenues, because many of the costs incurred are essentially ? xed, at least in the short term. Pricing has always represented an important factor in the carriers’ choices, driving the adoption of different strategies by low-cost and full-cost carriers. Full-cost carriers choose price discrimination techniques based on different fare classes, complex systems of discounts with limited access, customer loyalty schemes, and overbooking techniques. Low-cost carriers instead use ‘‘dynamic pricing’’.

Because of dynamic pricing, it is now common for people to buy air tickets to European destinations for less than V10. 00 (airport taxes excluded). This paper deals with the pricing policies of low-cost carriers, offering a detailed analysis of Ryanair, the main developer of the low-cost model in Europe. Generally speaking, fares tend to increase until the very last moment before the closing of bookings. If it is assumed that Ryanair aims to maximise its pro? ts, it is to be expected that travellers are prepared to bear higher costs more easily as the date of ? ight approaches.

We aim to identify the competitive and contextual factors that drive the choice of the average fares, and their relative dynamics. In details, our analysis will focus on Ryanair’s pricing policies in correlation with the features of its airport network. The results show that the fare policy is clearly innovative relative to traditional pricing strategies, and that the fares are in? uenced by the competitive economic context in which the route is offered. 2. State of the art This study refers to two main ? elds of literature, namely the analysis of the low-cost business model and the study of dynamic pricing techniques.

The main point of interest is the extraordinary * Corresponding author. E-mail address: paolo. [email protected] it (P. Malighetti). 0969-6997/$ – see front matter O 2008 Elsevier Ltd. All rights reserved. doi:10. 1016/j. jairtraman. 2008. 09. 017 196 P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 performance of the major low-cost carriers, especially when compared with the trend, and the average pro? tability, of the air transport industry in general. Researchers have extensively examined the cost-effective policy, which so clearly permeates the lowcost business model.

Franke (2004) and Doganis (2006) have focused in particular on the cost bene? ts that low-cost carriers can derive from their operational choices. Their studies show that there is no single driving element responsible for the competitive advantage. Rather, all the choices made contribute to the production of cost bene? ts. Gudmundsson (2004), using a longitudinal survey approach, studies factors explaining the success probability of the ‘‘new’’ airlines and ? nds that productivity and brand image focus are signi? cantly related to ? nancial non-distress, whilst market power (market-share) focus is signi? antly related to ? nancial distress. A ? rst mover competitive advantage could explain why the most successful airlines seem to be able to maintain their market leadership in the short and medium term, are the ones that gave rise to the phenomenon, as witnessed by the likes of Southwest in the USA and by Ryanair and Easyjet in Europe. It is clear that, a good lowcost strategy can never be replicated in all its detailsdand this could account for the carriers that succeeded as well as for those that did not. Alamdari and Fagan’s (2005) study quanti? d the impact of the deviation from the original low-cost business model. The importance of the different strategic choices made by carriers suggests investigating other elements of the low-cost business model. Revenue analysis is an important element that has been less studied. Indeed, the generation of revenues is one distinctive aspect differentiating low-cost from full-cost airlines policies. Piga and Filippi (2002) have analysed the pricing policies of the low-cost business model in comparison with the pricing strategies of the full-cost airlines.

Coherent choices seem to be essential in pricing policies as well. For instance, the widespread use of the Internet for the sale of tickets tends to decrease price dispersion. This phenomenon may in part be attributed to the ‘‘ef? ciency of electronic markets,’’ as de? ned by Smith (Smith et al. , 2000). The success of the low-cost model is based on a fragile balance between fare levels, load factors and operating costs. The structure of revenues and the determination of prices are nearly as important as the minimisation of costs in the equation of pro? ts.

Indeed, an excellent pricing strategy for perishable assets results in a turnover increase, ceteris paribus, which can be quanti? ed between 2% and 5%, according to Zhao and Zheng’s (2000) study. The analysis of fare levels and policies aims to understand the key factors in the achievements of low-cost carriers, including the effects of the competitive interaction between carriers (Pels and Rietveld, 2004). The price choices and the ability of the airlines to understand the characteristics of the demand, in either a condition of monopoly or a competitive context, are decisive in the balance of the business model itself.

Fare dynamics must be taken into account in a thorough evaluation of market competitiveness, and of the bene? ts travellers have achieved through deregulation. This paper analyses the pricing strategies adopted by Ryanair against the characteristics of the context in which it operates, including the degree of competitiveness. First, the study deals with the demand curve derived from Ryanair’s prices. The analysis starts from the microeconomic principles of dynamic pricing. Generally speaking, airlines deal with perishable goods sold in different time steps, ith the aim to maximise pro? ts. The offer of seats on a ? ight can be compared to the sale of ‘‘perishable assets’’ with pre-determined capacity in conditions of negligible marginal costs. The themes investigated by the relevant literature are dynamic pricing and yield management. Zhao and Zheng (2000) have determined the minimum conditions required for optimal dynamic pricing. Because the price trend is in? uenced by demand, one part of the literature focuses on optimal pricing policies by using speci? c functional forms to represent demand and customer bene? ts.

For example, it is quite typical to use an exponential demand curve (Gallego and Van Ryzin, 1994) and a mechanism ‘‘of customer arrival’’ into the market with a probability similar to a Poisson process. The studies mentioned above presuppose a continuous optimal price function. Other studies are more likely to hypothesise the existence of a limited range of prices (Wilson, 1988). The present study adopts a continuous function, because Ryanair offers a wide range of prices. The study of price dynamics raises interesting questions. Many travellers have probably noticed that prices often tend to increase as the ? ght date approaches. According to McAfee and te Velde (2006), in the period preceding the ? ight date, the price trend mainly depends on the trade off between the option of waiting for a potential lower price, and the risk of seats becoming unavailable. In this case, the functional form of the demand curve, together with its adjustment over time, also help to determine a series of minimum prices. This study analyses the range of actual prices on all of Ryanair’s routes. It aims to validate some of the assumptions made in the literature through a thorough study of this wide empirical sample.

The estimated demand curve makes it possible to make inferences about the trend of bookings and the curve relating to the fully booked aircraft. Stokey’s (1979) studies determined an optimal constant ? lling curve in a context of monopoly. Similar results can be obtained by using a demand with functional forms belonging to the family of continuous functions presented by Anjos et al. (2005). For such functions, when dealing with goods that are to be sold by a given deadline, it is possible to de? ne and implement the optimal pricing strategy.

The reference curves adopted in this study belong to the Anjos family of curves. The structure of demand, which guides the optimisation choices of the carrier, is in? uenced by the presence of competitors, and the passengers’ opportunities to opt for a substitute service. Classical studies, starting from Borenstein’s (1989) analysis, have mainly focused on the airlines’ average fare level, showing the undeniable in? uence exercised by the competitive structure on the fares of fullcost airlines. Such competitive structures are exempli? ed by a fare premium correlated to the dominance of the hub of reference.

Alderighi et al. (2004) have pointed out that full-cost airlines tend to decrease fares on routes also operated by low-cost carriers. The in? uence of the competitive structure on the pricing strategies of low-cost carriers has been less studied, as far as we know. Pels and Rietveld’s (2004) studies have examined the evolution of fares on the London–Paris route; traditional behavioural models do not seem to apply here, given the mixture of direct and indirect competition. It is not clear whether the presence of other airlines can critically affect the pricing strategies of low-cost carriers. Pit? ld (2005) has analysed the routes originating from Nottingham East Midlands airport in 2003, when it was possible to observe low-cost airlines in direct competition. The results showed a weak in? uence of the competitive structure on prices. The historical pattern of fares offered by each airline seems to play a more important role, as would be expected in a situation of price leadership. In a study examining the London–Berlin and London–Amsterdam routes, Barbot (2005) found that the low-cost and full-cost markets coexist on totally separate levels, so that low-cost carriers compete ‘‘only’’ among themselves, as do full-cost carriers.

The approach we have adopted here focuses on the different behaviours assumed by carriers according to the distinctive characteristics of the routes they operate. We aim to identify the competitive and contextual factors that drive the choice of the average fares, and their relative dynamics. P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 197 3. Methodological aspects The literature on low-cost carriers highlights the important role played by dynamic pricing. It is assumed that once the ? ights have been scheduled, the marginal costs incurred in relation to the number of passengers are practically null.

It follows that the maximisation of pro? ts is strictly dependent on the maximisation of the revenue function. Let the reference unit of time be the single day. 1 Considering T days, the revenue R can be expressed as This study considers the functional form of demand as proposed by Anjos et al. (2005), where the demand for air tickets depends on price levels, and on the time interval between the purchase date and the ? ight date, according to qi ? AeAa$pi F? i? where i?? 1; K; T? (6) R ? T X i? 1 pi qi (1) where pi is the ? ight price on the day i of the year, and qi is the number of seats booked on the same day.

The optimal pricing strategy results from the maximisation of the previous expression, under the binding limit of the aircraft’s capacity, which can be expressed as T X i? 1 where A and a are two constants, and F(i) is a function positively correlated to the time period between the purchase date and the ? ight date. In this case, the function of demand is subject to an exponential decrease as the advance purchasing time increases. An advance booking is less useful because people are less sure of their plans far in advance. Given the functional form of the demand in expression (6), it is possible to identify the optimal ricing strategy by substituting the following form for pi in expression (5). pi ? m ? 1 a$F? i? (7) qi Q (2) where Q is the capacity, that is, the total number of seats available on the aircraft. For the purposes of this study it is assumed that, for the speci? c route and type of customers availing themselves of low-cost ? ights, the operator is not a price-taker. We hypothesise that the competitive structure and the level of market and product differentiation enable the operators to modify the price variable. The maximisation problem can be solved through a ‘‘lagrangian’’.

The multiplier m can be viewed as the extra charge assigned to the fully booked ? ights. 2 In the next section, some F(i) forms will be tested on Ryanair’s actual prices. The parameters of the price function will be estimated by minimising the quadratic error compared to the actual prices. The underlying assumption is that Ryanair operates by maximising its revenues, and using a demand function similar to function (6). Therefore, the accuracy that may be obtained using the model for the estimation of prices enables assessment of the validity of the forms of the demand curves.

Through the substitution of the optimal price expression (7) in the expression (6), we have L ? T X i? 1 pi qi ? m Q A T X i? 1 ! qi (3) qi ? AeA1 (8) where m represents the Kuhn–Tucker’s multiplier, which takes into account the aircraft limit of capacity. It follows that m QA T X i? 1 ! qi ? 0 Expression (8) implies that, following the application of the optimal price, the expected demand is steady over time. If the quantity sold over a certain time span is greater than the steady expected quantity, the operator may decide to raise the price.

Similarly, the operator may decide to reduce the price in order to gain demand when demand is scarce. In the empirical calculations, two functions are used for the estimation of prices. The ? rst expression is If the limit of capacity is reached, m > 0; if not, m ? 0. In order to determine the optimal price pi at the speci? c time i, the derivative of the expression (3) with respect to pi must equal zero, thus obtaining T vq X vL j pj A m ? qi ? ? 0 vpi vpi j? 1 pi ? m ? 1 a$? 1 ? b$i? (9) where i?? 1; K; T? (4) This expression can be held valid even if the markets on the different days are not ‘‘separated. ’ In this case, for example, the fare during one period can modify the quantity of available seats in a successive period, that is, vqj/vpi s 0 with i s j. In line with many of the studies analysed in the literature, for the purpose of this study, it is assumed that the markets for the purchase of air tickets are separated in time, that is vqj/vpi ? 0 with i s j. A later development of this study will eliminate this hypothesis in order to verify the possible interaction between the demands of the different periods. Here, expression (4) is simpli? ed in the following optimal conditions: here i is the number of days between the advance reservation and the ? ight date. The form of the optimal price is a hyperbola with the price going up as the ? ight date approaches. This functional form makes it impossible to obtain price reductions as the ? ight date approaches. A more complete functional form is pi ? m ? 1  p?  a$ 1 ? b$i ? g$i2 ? q i (10) vq qi ? ?pi A m? i ? 0 vpi where i?? 1; K; T? (5) In this case, the price may decrease as the departure date approaches. The degree of accuracy of both functional forms will be discussed in the next section. The hypothesis is that Ryanair has tailored a pricing strategy for speci? routes. In other words, it is assumed that Ryanair holds speci? c values for the parameters in (9) and (10) for each individual route. An estimation of the parameters of the price functions is made for each route using data from the 90-day period before the ? ight date. 1 Demand and prices are assumed to be ? xed over the single day. 2 Fully booked ? ights have no available seats on the day before departure. 198 P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 Table 1 Variation of the network operated by Ryanair between July 2005, and June 2006.

Variable Number of served airports Number of daily ? ights (average) Number of routes Percentage of routes with daily ? ight frequency Percentage of routes with more than a daily ? ight frequency Percentage of routes with no daily ? ight frequency 7/1/2005 95 650. 2 442 70. 1% 23. 6% 6. 3% 6/30/2006 111 820. 7 594 70. 8% 3. 4% 25. 8% 4. Sample and descriptive analysis 4. 1. Reference data Our database includes the daily fare for each route3 operated by Ryanair over the 4 months prior to the ? ight. The study examined all the ? ights scheduled by Ryanair from 1st July, 2005, until 30th June, 2006.

The database enables (1) a comparison between the fares for the different routes, and (2) tracing the fare variation for each individual route as the ? ight date approaches. 4. 2. Characteristics and evolution of the network operated by Ryanair Ryanair’s network is characterised by a very dynamic and steady expansion. A comparison between the data gathered as of 1st July, 2005, and later on 30th June, 2006, gives a clear picture of the dimensions of the phenomenon: in July, 2005, Ryanair served 95 airports, increasing to 111 one year later; over the same period, routes expanded by 34. %, reaching the total number of 594 (see Table 1). Nonetheless, 25 routes that were operated in July 2005 were then cancelled; 6 routes saw their ? ight frequency halved; and the frequencies of 16 other routes were each decreased by more than 10%. Ryanair operates on many low-frequency routes, 70. 8% of the overall network being made up of routes with only one single ? ight per day. By and large, it may be said that Ryanair serves its routes daily. However, in 2005–2006 this trend changed, as the number of routes with no guaranteed daily ? ight increased from 14 to 77.

An estimation of Ryanair’s ASK4 (Available Seat Kilometres) distribution is made possible by the information available about the scheduled ? ights, and the distance between the departure and arrival airports. From a geographical point of view (see Fig. 1), Ryanair’s main business focuses on the connection between England, Ireland, and the rest of Europe (44. 2% of the routes, and 49% of the ? ights start at British or Irish airports). The major ? ow (measured in ASK) is between Italy and England (14. 6%) (see Table 2). Apart from the British Isles, the main ? ow is between Italy and Spain (3. 1% of the whole business).

The domestic routes play a relatively small role, accounting for less than 5% of the scheduled air traf? c, in terms of numbers of both ? ights and routes. Italy is the only place besides the British Isles in which Ryanair operates domestic routes. The signi? cant increase in new routes and markets occurred in a surprisingly balanced way. The geographic distribution in 2006 is approximately the same as in 2005, with only a slight decrease in service to the UK (Table 3). Ryanair’s network comprises mainly short-length journeys, with all its routes ranging between 200 km and 2000 km and with a median value of 1040 km (as shown in Fig. ). The distribution proves symmetrical with respect to the median value, forming a bell-shape histogram with the exception of two peak levels at 450 and 1800 km. Fig. 3 shows the percentile distribution of ticket prices with respect to advance booking in days. It is understood that prices may vary according to other parameters as well, for example, route speci? city. Yet the role played by advance reservation in Ryanair’s pricing policy is so signi? cant that average ? gures also provide important information about Ryanair’s pricing strategies. For D% 16. 8 26. 2 34. 4 instance, the ? ures demonstrate that in 75% of cases (75th percentile in Fig. 3) the price5 does not exceed V50 for bookings made at least 20 days earlier than the actual date of ? ight. On the contrary, during the last week prior to the ? ight all prices increased sharply, with ticket prices exceeding V75 within 3 days of the date of ? ight in 50% of the cases, and topping V200 in 5% of the cases. The impression of a steady increase in prices as the date of ? ight approaches is veri? ed only on average. As a matter of fact, Ryanair makes sure to provide ‘‘special offer’’ periods in which fares reach their lowest.

Such periods do not seem to have any particular recurrence in terms of length and time. When restricting the analysis to ? ights operated on the same route only, it is not possible to mark a speci? c period for promotions. Indeed, most routes show a slight increase in prices, or at least a steady upward trend similar to most of the percentiles shown in Fig. 3. Fig. 4 shows the average price trend on the Rome Ciampino–London Stansted route (one with high-frequency service), while Fig. 5 shows the exact price on speci? c dates. Fig. compares two price trends pertaining to two dates, neither of which falls on a holiday (such as a bank holiday or a religious festival). No steady price trend can be observed in either case: over the 90 days leading to the ? ight date, lower fares are offered as the departure day approaches, but this occurs in the two cases during different periods of time, with different lengths and intensities. If it is assumed that this phenomenon may occur often in Ryanair’s pricing policy, it may be inferred that the expectations of the passengers should admit a probability (p) for the price to fall in the ollowing days. Thanks to the database at our disposal, we were able to investigate the recurrence of special offers in Ryanair’s pricing policy. For each individual ? ight we calculated the percentage of days on which the price offered was lower than any other previous price. Data were gathered per route, and analysed according to the pattern of distribution of the percentages. Fig. 6 shows the distribution by percentiles on the Rome Ciampino–London Stansted route. On this route, 50%6 of the ? ights monitored (‘50th percentile’ in Fig. ), do not show any downward price trend within 30 days of the date of ? ight. In the case of 30-day advance bookings, 25% of cases (75th percentile curve) were recorded with at least 6 following days on which prices were lower than the one recorded on the day, whilst 2. 5% of cases recorded at least 18 days in a row with lower prices. The data gathered do not provide information about the actual number of seats booked for each single ? ight. Conclusions on volumes are drawn in the empirical analysis (Fig. 10). Nevertheless, the data show whether the ? ghts were fully booked in the 24-h period before the scheduled departure date. As a matter of fact, Ryanair makes use of a non-refundable ticket policy and no 3 At the beginning of July 2005, the total number of routes was 442, while by the beginning of July, 2006, it had risen to 594. The de? nition of route is to be intended here as directional. Outbound and inbound routes between two airports are thus considered as two different routes. 4 ASK (Available Seat kilometres) accounts for the number of seats available on a ? ight multiplied by the route’s length (in kilometres). Unless otherwise stated, the price mentioned throughout this work refers to the ‘‘net’’ fare indicated on Ryanair’s website, which excludes other cost categories such as airport taxes, security fees and credit/debit card handling fees. 6 Referred to 691 out of 1382 ? ights monitored on the route analysed. P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 199 Table 3 Distribution of Ryanair’s ? ights considering their country of origin and their variation. Situation as of 1/7/2005 Routes AT BE CZ DE DK ES FI FR HU IE IE (domestic) IT IT (domestic).

LT LV NL NO PL PT SE SK UK UK (domestic) Fig. 1. Distribution of Ryanair’s ? ights and served airports (as of 30th June, 2006). Total 5 11 1 41 2 52 3 30 – 50 69 (6) – 4 5 5 1 3 17 – 143 (10) 442 Daily ? ights (average) 6. 0 16. 6 1. 0 50. 6 2. 7 65. 3 3. 0 40. 1 – 91. 8 94. 4 (10. 0) – 4. 0 5. 7 6. 3 1. 0 4. 0 23. 0 – 234. 8 (21. 5) 650. 2 Flight share 0. 9% 2. 6% 0. 2% 7. 8% 0. 4% 10. 1% 0. 5% 6. 2% – 14. 1% 14. 5% (1. 5%) – 0. 6% 0. 9% 1. 0% 0. 2% 0. 6% 3. 5% – 36. 1% (3. 3%) 100% Situation as of 6/30/2006 Routes 5 16 1 48 2 61 3 46 1 80 (2) 78 (6) 3 6 6 7 18 7 20 4 183 (14) 594 Flights (average) 6. 0 21. 1. 0 61. 5 2. 9 75. 1 3. 4 55. 3 1. 0 123. 7 (6. 0) 108. 0 (12. 0) 3. 0 6. 6 6. 7 8. 3 19. 4 8. 0 26. 0 5. 0 278. 1 (25. 4) 820. 7 Flight share 0. 7% 2. 6% 0. 1% 7. 5% 0. 3% 9. 2% 0. 4% 6. 7% 0. 1% 15. 0% (0. 7%) 13. 2% (1. 5%) 0. 4% 0. 8% 0. 8% 1. 0% 2. 4% 1. 0% 3. 2% 0. 6% 33. 9% (3. 1%) 100% overbooking procedures, which means that when a ? ight is fully booked the website shows the unavailability of seats. For each individual ? ight, we calculated the fully booked ? ight ratio (where fully booked ? ights are de? ned for our purposes as those with no available seats in the last 24 h before departure).

Fig. 7 shows the distribution of routes according to the fully booked ? ights ratio. The same period was monitored for all routes and covered all of the months considered in the analysis. The ? gures highlight the unquestionable ability to ? ll all seats available on the different routes, with most of Ryanair’s routes being declared fully booked 10–20 times out of 100. 5. Empirical analysis In the empirical analysis, we applied Eq. (9) to estimate the price trends for each individual route. The equation was obtained from an exponential demand function subject to Ryanair’s pro? maximisation, and showed that, as the date of ? ight approaches, the price trend tends to resemble a hyperbola driven by parameters a and b, where a indicates the highest price level that may be reached during the last days before the scheduled departure date. The lower a is, the higher the fare will be the day before departure. Parameter b indicates instead a decrease in the fares that is directly proportional to the increase in the number of advance booking days before departure. A low b will show a steady price trend as the number of advance booking days increases. On the contrary, a high b indicates a signi? antly discounted fare, with respect to the highest fare ever offered, on advance purchases. Finally, parameter m shows the average surcharge in the cases of ? ights characteristically fully booked on the day before the scheduled departure. These parameters were calculated for all routes for which fares dating back to at least three months before the actual date of ? ight were available. 550 out of the 594 monitored routes have been taken into consideration. The remaining routes had been only recently introduced, were monitored for less than three months, and consequently were not taken into account.

The parameter estimates were carried out by minimising the standard error of the predicted fares for each individual route. Table 2 Main ? ows between nations operated by Ryanair (as of 30th June, 2006). Rank 1 2 3 4 5 6 7 8 9 10 Country pairs England – Italy England – Spain England – Ireland England – France England – Sweden England – Poland England – Germany Ireland- Spain Italy – Spain Italy – Germany ASK (daily average) 22,301,303 19,538,299 11,175,029 10,620,722 6,754,428 6,160,721 5,353,365 5,228,941 4,796,374 4,680,690 % 14. 6 12. 8 7. 3 6. 9 4. 4 4. 0 3. 3. 4 3. 1 3. 1 Fig. 2. Route distribution according to route length (as of 1st July, 2006). 200 P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 Fig. 5. Prices on the Rome Ciampino–London Stansted route for two speci? c dates. Fig. 3. Fares trend distribution according to advance booking in days. The distributions of parameters a and b are shown in Figs. 8 and 9 respectively. The distribution of parameter a shows a higher frequency of routes with parameter a levels around 0. 008–0. 01, with a maximum average price higher than V100.

Parameter b shows the maximum relative frequency with levels slightly above zero; the frequency then decreases as parameter b gets higher. Some routes show a signi? cant higher b level: approximately 50% of the routes register a b level greater than 0. 1. In these cases, the purchase of the ticket three months before departure captures a price less than one tenth of the highest fare, which may occur just a few days before the date of ? ight. The pattern of distribution of parameter b suggests the presence of a cluster of routes characterised by very different dynamic pricing intensity.

Yet tests carried out by gathering routes according to the potential presence of competitors do not highlight any signi? cant differences among the clusters. It is important to note that routes in competition with one another are characterised by speci? c features, such as a high concentration of service areas with a high GDP (Gross Domestic Product). For this reason, we use regression models to help isolate the effects of each individual variable. After obtaining the parameters of the optimum price demand curve, it is possible to estimate the average number of daily bookings for each individual route using Eqs. 6) and (8). Fig. 10 shows, for the high-frequency Rome Ciampino–London Stansted route, the average ticket price, the estimated price as calculated with Eq. (9), and on the far right, the estimated number of daily bookings. Thanks to the optimal pricing strategy employed, the number of daily bookings remains steady as the date of ? ight approaches, in accord with Stokey’s (1979) study. A series of reasons may explain why the estimated and the actual price do not perfectly overlap. First of all, the demand curve cannot be accurately known on a daily basis, and there may be more or fewer bookings than expected on some days.

If the actual bookings outnumber expectations, carriers are likely to raise prices in order to deter further bookings, and thus restore the optimum situation. Secondly, operational reasons make Ryanair’s fares subject to a discrete rather than constant variation, so that Ryanair’s decision to raise its fares results in increases through small increments (generally V5. 00). Finally, the parameters were predicted by considering every single ? ight on every single route, with the aim to provide an extensive amount of data. Nevertheless, it is most likely that both time of the day and day of the week signi? antly affect pricing strategies. Thanks to the broad database at our disposal, it will be possible with a future development of the analysis to estimate these parameters according to day of the week and time of the day as well. Following the estimation of the price curve levels and the ‘‘? ight-? lling’’ function for each route, a regression analysis has been carried out, aiming to study the possible determinants in Ryanair’s pricing strategies. The ? rst regression analyses the ‘‘temporal’’ average price as a dependent variable.

This is the arithmetic mean of prices offered on a speci? c route over a period from three months prior to departure up to the day before. If the ? ight-? lling curve proves optimal, which means that the expected number of average daily bookings is steady over time (Stokey, 1979), the weighted price average against the total number of purchased tickets will equal the temporal average price. The explanatory variables employed are basically of two kinds: route speci? c variables, and airports and linked areas speci? c variables. The route speci? variables include route length and daily frequency, percentage of fully booked ? ights, number of carriers in Fig. 4. Average price trend on the Rome Ciampino–London Stansted route according to different daily departure times. Fig. 6. Percentage of remaining booking days with fares lower than the price applied on the speci? c date. P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 201 Fig. 7. Distribution of number of routes by fully booked ? ights percentage. Fig. 9. Distribution of the number of routes according to coef? cients b estimated by analysing ? ght fares. direct competition on the route, and the overall taxation level to which ticket fares are subject. Information about the GDP generated by the areas connected and their population density may instead be ranked among the airport and hinterland areas speci? c variables. In addition, two other variables were put into place in order to reckon Ryanair’s importance in the departure and arrival airports: Ryanair ASK/ Departure ASK and Ryanair ASK/Destination ASK. Such variables were calculated as the ratio between the total ASK provided by Ryanair on a speci? route and the total ASK provided by the departure and destination airports. The results of the regression analysis are shown in Table 4. The most signi? cant variable affecting the average price for each route is quite predictably the route length. Of similar importance are the variables referring to demand, such as route frequency and percentage of fully booked ? ights, which show positive coef? cients. This con? rms that the higher the demand (both in terms of percentage of fully booked ? ights and daily route frequency), the higher the average prices.

Regarding the variables conveying Ryanair’s importance in the departure and destination airports, it is interesting that, on average, the greater the importance of Ryanair, for example in its role as main connecting carrier of minor airports, the lower will be the fare. The offer of the discounted fares appears as an incentive to use secondary airports. Moreover, the price correlated positively with the population density of the destination airport. An interpretation of the variables concerning the GDP of the areas connected proves more dif? cult.

The results seem to outline a strategy that fosters demand in high GDP areas. It follows that Ryanair’s strategy is keen to attract the latent demand for extra ? ights typical of the middle class, which is particularly concentrated in high GDP areas. Middle class passengers may be prepared to spend their money on leisure trips, while still being quite sensitive to price changes. A positive correlation was also found between Ryanair’s average price and the overall taxation level on the route, which incidentally could be seen as a proxy variable of the service level provided by the airport.

Finally, the presence of competitors does not seem to heavily impact the average price, which con? rms once more the complexity and diversity of forms that characterise competitiveness in the air transport industry. As we will see in the following pages, the analysis suggests that it is rather the dynamic pricing that is more likely to be affected by competitiveness. While it may be said that the average price can provide important information on the single route, it no doubt cannot satisfactorily illustrate how the price might change in the three months before the actual date of ? ght. In order to study the variables on which dynamic pricing depends, a regression analysis was carried out using parameter b as a dependent variable estimated on the single routes. The results are shown in Table 5. Length and route frequency are signi? cant variables with negative coef? cients. This means that the price trend will acquire steadiness as the route becomes longer, and more frequently travelled. In other words, Ryanair grants fewer discounts on long haul and high-frequency routes, despite advance purchase. A steady price trend may be partly justi? d when considering that Ryanair needs to cover fuel costs, and will try to do so on advance purchases as well. As regards the discounts offered, it seems that Fig. 8. Distribution of the number of routes according to coef? cients a estimated by analysing ? ight fares. Fig. 10. Comparison between the daily average price and the estimated price on CIA–STN route. 202 Table 4 Determinants of the average price. Variable Length Route frequency Ryanair ASK/departure ASK Ryanair ASK/destination ASK Overall taxation Departure GDP Destination GDP % Of fully booked ? ghts Departure population density Destination population density Total number of competitors Constant Adjusted R2 ? 0. 5668 P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 Table 6 Determinants of the percentage of fully booked ? ights on single routes. Coef? cient (std error) 0. 021 0. 100 A9. 013 A8. 822 0. 298 A0. 71 A 10A03 A0. 46 A 10A03 24. 116 0. 43 A 10A03 0. 001 0. 038 1. 849 (0. 0010) (0. 0496) (3. 4414) (3. 2156) (0. 1119) (0. 0002) (0. 0002) (7. 4912) (0. 0008) (0. 0008) (0. 5403) (2. 6235) Statistic T 19. 98*** 2. 02*** A2. 62*** A2. 74*** 2. 7*** A2. 71*** A1. 74*** 3. 22*** 0. 52*** 1. 74*** 0. 07*** 0. 71*** Variable Length Route frequency Ryanair ASK/departure ASK Ryanair ASK/destination ASK Overall taxation Departure GDP Destination GDP Total number of competitors Constant Adjusted R2 ? 0. 1441 Coef? cient (std error) A0. 03 A 10A03 (7. 810 A 10A03) 0. 25 A 10A03 (0. 0003) 0. 062 (0. 0253) 0. 015 (0. 0238) 0. 92 A 10A03 (0. 829 A 10A03) 5. 07 A 10A06 (1. 72 A 10A06) 8. 30 A 10A06 (1. 71 A 10A06) 0. 006 (0. 0039) 0. 050 (0. 0192) Statistic T A3. 49*** 0. 68*** 2. 46*** 0. 65*** 1. 11*** 2. 94*** 4. 88*** 1. 55*** 2. 60*** nly minor discounts will be given on routes characterised by a high level of demand, because more frequent ? ights are provided. A negative coef? cient is also given for the percentage of fully booked ? ights, though its level of signi? cance is very low. The degree of importance of the departure airport is directly correlated to parameter b, which means that if Ryanair plays a dominant role in the departure airport, average prices are lower, and signi? cant discounts are more likely on tickets purchased in advance. The variable representing the number of competitors operating on the same route is positive, and bears a high level of signi? ance. This means that ? erce direct competitiveness on the same route does not lead to a decrease in average ticket prices, but rather induces Ryanair to grant greater discounts on advance bookings. The next section of the empirical analysis examines the determinants of one variable that has already been analysed in the previous regressions, namely the percentage of fully booked ? ights. The results of the relative regression analysis are shown in Table 6 (only explanatory variables which have registered a higher level of signi? cance have been listed).

Generally, short-haul routes from dominated airports present a higher percentage of fully booked ? ights. Also the GDPs of the areas linked with the airports contribute to an increase in the percentage of fully booked ? ights. All the analyses of variables were based on the optimum price function de? ned by Eq. (9), which has been drawn by considering an exponential demand curve with respect to price and advance purchasing time, as shown in Eq. (6). In the event that prices do not vary over time, the utility of potential customers tends to diminish, as tickets are booked well ahead of departure date.

The relative optimal price function is thus steady, and does not decrease as the date of ? ight approaches. This does not mean that special fares are not likely to be offered on speci? c routes. As a matter of fact, when the number of bookings does not meet expectations, the carrier is more likely to reduce prices in order to encourage people to book tickets, aiming to maintain Ryanair’s ? ight-? lling strategy. Yet, the effects correlated to demand variability do not seem, on average, to affect the price trend, consequently a downward course is unlikely.

The unlikelyhood of a downward course seems however to clash with some of the price trends observed on a number of Ryanair’s routes. Fig. 11 shows the average price for the Rome Ciampino– Shannon route, where it clearly reaches its lowest level between 50 and 60 days before the date of ? ight. A similar trend has also been recorded on other routes, although the downward trend observed as the date of ? ight approaches is not clear-cut and does not affect the average upward price trend that is typical of the last month before the scheduled departure.

In order to improve the statistical model, we used a demand curve equation with a different dependence with respect to advance booking, which led to the optimal price shown in Eq. (10). This kind of formulation presents a higher level of generality with respect to the previous analyses, and can be speci? cally obtained when coef? cients g and q equal zero. Hypothesising that prices are not subject to variation, from the previous assumption it may be inferred that the utility of potential customers does not present a steady increase as the date of ? ight approaches.

In other words, we admit to the possible existence of an optimal point in time when tickets are offered at a minimum price, as shown in Eq. (10). This new model was tested on all the routes analysed earlier in order to verify the actual improvement of price estimations. This has been con? rmed by the results, especially in the period between 60 and 90 days before the date of ? ight. In particular, the new estimates indicated that in 391 routes out of 550, the optimal purchasing period during which prices are at their lowest falls within 90 days from the scheduled departure date.

Fig. 12 shows the distribution of the optimal purchasing periods for the 391 routes. On average, the optimal purchasing period occurs between 50 and 70 days before the date of ? ight, as shown below. Table 5 Determinants of the dynamic pricing level (b coef? cient). Variable Length Route frequency Ryanair ASK/departure ASK Ryanair ASK/destination ASK Overall taxation Departure GDP Destination GDP % Of fully booked ? ights Departure population density Destination population density Total number of competitors Constant Adjusted R2 ? 0. 3756 Coef? cient (std error) A0. 22 A 10A03 (0. 16 A 10A03) A0. 15 A 10A03 (0. 0007) 0. 111 (0. 0524) 0. 042 (0. 0490) 3. 26 A 10A03 (0. 0017) 1. 65 A 10A06 (4. 040 A 10A06) 2. 95 A 10A06 (4. 088 A 10A06) A0. 078 (0. 1142) A0. 01 A 10A03 (0. 012 A 10A03) A0. 01 A 10A03 (0. 012 A 10A03) 0. 016 (0. 0082) 0. 326 (0. 0400) Statistic T A13. 50*** A2. 04*** 2. 13*** 0. 86*** 1. 91*** 0. 41*** 0. 72*** A0. 69*** A0. 81*** A0. 99*** 2. 03*** 8. 17*** Fig. 11. Comparison between the daily average price and the estimated price for the Rome Ciampino–Shannon route. P. Malighetti et al. / Journal of Air Transport Management 15 (2009) 195–203 203 ositively correlated to the dynamic pricing intensity. This means that direct competition on the same route does not lead to a decrease in average ticket prices, but rather induces Ryanair to grant greater discounts on advance bookings. While this paper represents a ? rst step in this direction, other factors should be analysed still in-depth, such as the temporal setting of the ? ight (namely time of day and day of the week). For instance, an improved measurement of the competitive pressure can be made through the analysis of the fares applied by Ryanair’s competitors. We leave it for future research.

Acknowledgements We wish to thank William Morrison and all the participants at the ATRS conference in Berkeley for their useful comments and ideas. We gratefully acknowledge the ? nancial contribution by ` MiUR (Ministero dell’Universita e della Ricerca) within program number 2005099094. References Alamdari, F. , Fagan, S. , 2005. Impact of the adherence to the original low-cost model on the pro? tability of low-cost airlines. Transport Reviews 25, 377–392. Alderighi, M. , Cento, A. , Nijkamp, P. , Rietveld, P. , 2004. The entry of low cost Airlines. Timberg Institute Discussion Paper, TI 2004-074/3.

Anjos, M. , Cheng, R. , Currie, C. , 2005. Optimal pricing policies for perishable products. European Journal of Operational Research 166, 246–254. Barbot, C. , 2005. How low cost carriers complete amongst themselves and with full cost carriers. 9th Air Transport Research Society Conference, Rio de Janeiro. Borenstein, S. , 1989. Hubs and high fares: dominance and market power in the U. S. airline industry. The RAND Journal of Economics 20, 344–365. Cassia, L. , Fattore, M. , Paleari, S. , 2006. Entrepreneurial Strategy. Emerging Business in Declining Sector. Edward Elgar, Cheltenham. Doganis, R. 2006. The Airline Business, second ed. Routledge, London. Franke, M. , 2004. Competition between network carriers and low-cost carriersretreat battle or breakthrough to a new level of ef? ciency? Journal of Air Transport Management 10, 15–21. Gallego, G. , Van Ryzin, G. , 1994. Optimal dynamic pricing of inventories with stochastic demand over ? nite horizons. Management Science 40, 999–1020. Gudmundsson, S. V. , 2004. Management emphasis and performance in the airline industry: an exploratory multilevel analysis. Transportation Research E 40, 443–446. McAfee, P. R. , te Velde, V. , 2006.

Dynamic pricing in the airline industry. In: Hendershott, T. J. (Ed. ), Handbook on Economics and Information Systems. Elsevier, Amsterdam. Pels, E. , Rietveld, P. , 2004. Airline pricing behaviour in the London–Paris market. Journal of Air Transport Management 10, 279–283. Piga, C. , Filippi, N. , 2002. Booking and ? ying with low cost airlines. International Journal of Tourism Research 4, 237–249. Pit? eld, D. E. , 2005. A time series analysis of the pricing behaviour of directly competitive ‘low-cost’ airlines. International Journal of Transport Economics 32, 15–38. Smith, D. , Bailey, J. Brynjolfsson, E. , 2000. Understanding digital markets: review and assessment. In: Kain, E. (Ed. ), Understanding the Digital Economy. MIT Press, Cambridge. Stokey, N. L. , 1979. Intertemporal price discrimination. The Quarterly Journal of Economics 93, 355–371. Wilson, C. A. , 1988. On the optimal pricing policy of a monopolist. Journal of Political Economy 96, 164–176. Zhao, W. , Zheng, Y. , 2000. Optimal dynamic pricing for perishable assets with non homogeneous demand. Management Science 46, 375–388. Fig. 12. Distribution of the optimal purchasing periods of time for 391 routes. 6.

Conclusions and future developments This work has provided an in-depth analysis of the pricing strategies of low-cost carriers. We focus on the features of the demand curve, hypothesising Ryanair’s ability to maximise its pro? ts. The price equation is obtained from an exponential demand function subject to Ryanair’s pro? t maximisation, and shows that, as the date of ? ight approaches, the price trend tends to resemble a hyperbola. The empirical analysis is based on an original database of Ryanair’s fares, made available on Ryanair’s website, for each individual route operated during the year starting the 1st July, 2005.

We estimate the price trends for each individual route over the 3 months prior departure, in terms of the average fares and the dynamic pricing intensity. In general dynamic pricing intensity is strong in almost all the ? ights. However the phenomena is complex in terms of determinants. We ? nd positive correlation between fares and route length, route frequency and the percentage of fully booked ? ights. Length and route frequency are also signi? cant variables with negative correlation to the dynamic pricing intensity. Ryanair grants fewer discounts on long haul and high-frequency routes, despite advance purchase. We ? d a negative correlation between the Ryanair’s importance in the departure and arrival airports and offered fares. The offer of the discounted fares appears as an incentive to use secondary airports. However, if Ryanair plays a dominant role in the departure airport, not only average prices are lower, but also signi? cant discounts are more likely on tickets purchased in advance. This indicates the importance for the carrier to ful? l its capacity. Surprisingly, the presence of competitors does not seem to heavily impact the average price. However, the variable representing the number of competitors operating on the same route is

Web Security

What is a secure site? Traditionally when you hear someone say ‘Our website is Secure’ they imply that their website uses SSL (Secure Sockets Layer) and that the traffic is encrypted (The little lock in your browser usually appears) unfortunately Encryption doesn’t make a website secure. Sure encryption makes sure that nobody can sniff your session (see what you’re doing), but if the site you’re submitting personal data to contains a Vulnerability an attacker can still steal your data. Some sites contain logo’s saying ‘Secured by XXX’ (XXX being a vendor name) but you can’t trust these one bit.

Rather then paying for a security monitoring service a website owner could easily just copy the image and save a few thousands dollars doing it. Unfortunately not everyone knows how to secure a website and some blind trust is needed in order to perform some everyday tasks. To ease your mind there are some rules that certain types of sites must follow in order to remain active. Security Web Security Guard is an application developed by Crawler that prevents the user from entering potentially dangerous Web sites that may cause adware, viruses, spyware, or spam.

Web Security Guard informs of potentially dangerous websites by displaying information and user reviews before entering websites. It uses a database of web site ratings and reviews provided by the users. Crawler Toolbar comes with Web Security Guard keeping it up to date and providing combined search results from major Internet search engines. When a computer connects to a network and begins communicating with others, it is taking a risk. Internet security involves the protection of a computer’s internet account and files from intrusion of an unknown user. 1] Basic security measures involve protection by well selectedpasswords, change of file permissions and back up of computer’s data. Security concerns are in some ways peripheral to normal business working, but serve to highlight just how important it is that business users feel confident when using IT systems. Security will probably always be high on the IT agenda simply because cyber criminals know that a successful attack is very profitable. This means they will always strive to find new ways to circumvent IT security, and users will consequently need to be continually vigilant.

Whenever decisions need to be made about how to enhance a system, security will need to be held uppermost among its requirements. Internet security professionals should be fluent in the four major aspects: ? Penetration testing ? Intrusion Detection ? Incidence Response ? Legal / Audit Compliance Anti-virus Some apparently useful programs also contain features with hidden malicious intent. Such programs are known as Malware, Viruses, Trojans,Worms, Spyware and Bots. Malware is the most general name for any malicious software designed for example to infiltrate, spy on or damage a computer or other programmable device or system of sufficient complexity, such as a home or office computer system, network, mobile phone, PDA, automated device or robot. ? Viruses are programs which are able to replicate their structure or effect by integrating themselves or references to themselves, etc into existing files or structures on a penetrated computer.

They usually also have a malicious or humorous payload designed to threaten or modify the actions or data of the host device or system without consent. For example by deleting, corrupting or otherwise hiding information from its owner. ? Trojans (Trojan Horses) are programs which may pretend to do one thing, but in reality steal information, alter it or cause other problems on a such as a computer or programmable device / system. ? Spyware includes programs that surreptitiously monitor keystrokes, or other activity on a computer system and report that information to others without consent. Worms are programs which are able to replicate themselves over a (possibly extensive) computer network, and also perform malicious acts that may ultimately affect a whole society / economy. ? Bots are programs that take over and use the resources of a computer system over a network without consent, and communicate those results to others who may control the Bots. The above concepts overlap and they can obviously be combined. The terminology is evolving. Antivirus programs and Internet security programs are useful in protecting a computer or programmable device / system from malware.

Such programs are used to detect and usually eliminate viruses. Anti-virus software can be purchased or downloaded via the internet. Care should be taken in selecting anti-virus software, as some programs are not as effective as others in finding and eliminating viruses or malware. Also, when downloading anti-virus software from the Internet, one should be cautious as some websites say they are providing protection from viruses with their software, but are really trying to install malware on your computer by disguising it as something else. Anti-spyware

There are two major kinds of threats in relation to spyware: Spyware collects and relays data from the compromised computer to a third-party. Adware automatically plays, displays, or downloads advertisements. Some types of adware are also spyware and can be classified as privacy-invasive software. Adware often are integrated with other software. Email Security A significant part of the Internet, E-mail encryption is an important subset of this topic. Browser choice Almost 70% of the browser market is occupied by Internet Explorer[1]. As a result, malware writers often exploit Internet Explorer. Often malware exploit ActiveX vulnerabilities.

Internet Explorer market share is continuously dropping (as of 2009; see list of web browsers for statistics) as users switch to other browsers, most notably Firefox, Opera and Google Chrome. Basic Ways To Increase Web Security Now that you know a bit about what can be done to your website by the bad guys, here are some ways to fight them off. Keep Code Up to Date There is no better protection than keeping your code up to date. Outdated versions of WordPress, old installs of PHP and MySQL, even old browsers, all of these are security issues because most updates to software these days are security patches.

It is a rat race between those who want the Web to work and those who want to abuse it to make a quick buck or to steal your identity. So please help the good guys by upgrading whenever a new version is out. Don’t Stay Logged In, and Don’t Entice Others to Either Staying logged in while not using a system is dangerous. Other websites you surf to can check that you are logged in and then clickjack you to make you do something you don’t mean to or aren’t aware of. This is especially dangerous with social media because everything you do will be sent to all your friends and probably replicated by them. It is a snowball effect.

In my perfect world, no form has a “Keep me logged in” option, which of course would be a nuisance to end users. I would love to see a clever, usable solution to this problem. I use a Flex client for Twitter, not a browser, which means I am not vulnerable even on websites with clickjacking and cross-site request forgery (the latter only if people do not abuse the API to phish my followers; see the presentations at the end of this article for a demo of that). Use Clever Passwords, and Entice Users to Do the Same Even on bullet-proof systems, one attack vector is users whose passwords are very easy to guess.

I change my passwords every few weeks, and I take inspiration from a book I am reading or a movie I have just seen. I also replace some characters and with numbers to make dictionary attacks harder. There are two ways to crack a password (other than social engineering, which is making you tell me your password by tricking you or phishing): brute force and dictionary attacks. Brute force entails writing a loop that tries all of the different options (much like playing hangman), which can take ages and uses a lot of computing power. Dictionary attacks use a dictionary database to attempt common words instead of going letter by letter.

Say I am reading a Sherlock Holmes book or have just seen the new screen adaptation, my password could be Sh3rl0ckW4t50n or b4sk3rv! ll3. That may be a bit hardcore for most people but is generally a good idea. Another strategy is to take a sentence that you can memorize easily and string together the initial letters. For example, “I like to buy food for my dog and to walk with it” would beIl2bffmda2wwi or even Il2bffmd&2wwi. So, if you build a new Web product that needs authentication, and you really need to build your own log-in system rather than use Google, Yahoo, Facebook Connect or OpenID which might be a good idea), please do not allow users to use passwords like “password” or the not-much-safer “password1. ” Recently, a list of passwords banned by Twitter leaked onto the Web, shown here as the full code. This is a good idea (the list, that is, not the leak). What To Do On Your Server Even if you are not a server expert, that’s no excuse for running an insecure server. Here are some things to make sure of. Turn Off Folder Listing As explained earlier, allowing people to navigate your folders (i. e. path traversal) is a bad idea. Testing whether your server has path traversal turned on is easy: 1.

Create a new folder on the server; for example, pathtest. 2. Add some files to the folder. But do not add index. html, index. php, default. aspxor whatever else your server uses as the default file name. 3. Check the folder in your browser; for example, by going tohttp://example. com/pathtest/ 4. If you can see a listing, contact your server admin to turn that off! Harden Your PHP If you have a server with PHP, be aware that you are in control of a powerful tool. The worst oversight someone could make is to allow any parameter that comes in from the URI to become a global variable.

This is turned off by default on PHP installs in version 4. 2. 0 and onward, but your configuration may have changed. In fact, some tutorials recommend that you turn it on for a script to work: this is a very, very bad idea. You can easily test if globals are enabled: 1. Create a new file named test. php. 2. Add the following code to it: 3. Upload the file to your server. 4. Browse to the file, and send a parameter called ouch; for example:http://example. com/test. php? ouch=that+hurts 5. If your browser shows “*that hurts*”, then your server has globals registered. . Contact your server admin to get this fixed! Why is this important? Well, in our explanation of XSS earlier, we talked about attackers being able to add code to your page using the URI parameters in your script. If you don’t turn off globals, any variable you use and write out could become an attack. Even worse, consider the following code: if($_POST[‘username’] == ‘muppet’ && $_POST[‘password’] == ‘password1’) { $authenticated = true; } if($authenticated) { // do something only admins are allowed to do } If this is checkuser. hp and global registering is on, then an attacker could call this in the browser as http://example. com/checkuser. php? authenticated=true and could work around the whole user checking; his authentication as$_GET[‘authenticated’] automatically turns into $authenticated. Turn Off Error Messages A lot of servers are set up to show you error messages when the browser encounters a problem. These messages often look cryptic, but they are a great source of information for attackers. Creating an error and seeing what the server spits out is one of the first steps in checking the folder structure of a server.

Funnily enough, error pages stating “File XYZ could not be found” were one of the first XSS attack opportunities, because you could look for a file named alert(document. cookie),. Automatically Checking PHP for Security Issues Uploading PHPSecInfo to a folder is a pretty handy way to perform a quick audit of your PHP server’s security. Opening it in your browser gives you a detailed checklist of common security flaws and how they should be fixed. But never leave this on a live server because it gives attackers a lot of details about your set-up! What To Do On Your Server

Even if you are not a server expert, that’s no excuse for running an insecure server. Here are some things to make sure of. Turn Off Folder Listing As explained earlier, allowing people to navigate your folders (i. e. path traversal) is a bad idea. Testing whether your server has path traversal turned on is easy: 1. Create a new folder on the server; for example, pathtest. 2. Add some files to the folder. But do not add index. html, index. php, default. aspxor whatever else your server uses as the default file name. 3. Check the folder in your browser; for example, by going tohttp://example. om/pathtest/ 4. If you can see a listing, contact your server admin to turn that off! Harden Your PHP If you have a server with PHP, be aware that you are in control of a powerful tool. The worst oversight someone could make is to allow any parameter that comes in from the URI to become a global variable. This is turned off by default on PHP installs in version 4. 2. 0 and onward, but your configuration may have changed. In fact, some tutorials recommend that you turn it on for a script to work: this is a very, very bad idea. You can easily test if globals are enabled: 1.

Create a new file named test. php. 2. Add the following code to it: 3. Upload the file to your server. 4. Browse to the file, and send a parameter called ouch; for example:http://example. com/test. php? ouch=that+hurts 5. If your browser shows “*that hurts*”, then your server has globals registered. 6. Contact your server admin to get this fixed! Why is this important? Well, in our explanation of XSS earlier, we talked about attackers being able to add code to your page using the URI parameters in your script. If you don’t turn off globals, any variable you use and write out could become an attack.

Even worse, consider the following code: if($_POST[‘username’] == ‘muppet’ && $_POST[‘password’] == ‘password1’) { $authenticated = true; } if($authenticated) { // do something only admins are allowed to do } If this is checkuser. php and global registering is on, then an attacker could call this in the browser as http://example. com/checkuser. php? authenticated=true and could work around the whole user checking; his authentication as$_GET[‘authenticated’] automatically turns into $authenticated. Turn Off Error Messages A lot of servers are set up to show you error messages when the browser encounters a problem.

These messages often look cryptic, but they are a great source of information for attackers. Creating an error and seeing what the server spits out is one of the first steps in checking the folder structure of a server. Funnily enough, error pages stating “File XYZ could not be found” were one of the first XSS attack opportunities, because you could look for a file named alert(document. cookie),. Automatically Checking PHP for Security Issues Uploading PHPSecInfo to a folder is a pretty handy way to perform a quick audit of your PHP server’s security.

Opening it in your browser gives you a detailed checklist of common security flaws and how they should be fixed. But never leave this on a live server because it gives attackers a lot of details about your set-up! What To Do To Your Code Because you likely do not have much to do with your server let’s focus on things you do have full control of. HTML HTML is pretty safe. It is simply converted into text—no interaction with the server or calculations—so not much can go wrong. That said, you should always use HTML for what it’s for: ? HTML structures your content.

HTML is not a database to store information. The reason it is not is because you cannot rely on HTML content to stay unchanged. Anyone could use browser debugging tools to mess around with your HTML and change the content. So you run into security issues with JavaScript solutions that rely on data in the HTML and don’t check the server for what that data is allowed to be. ? HTML is fully visible. Don’t use comments in the HTML to store sensitive information, and don’t comment out sections of a page that are not ready yet but that point to parts of an application that are in progress. Hiding things doesn’t make them go away. Even if you hide information with CSS or JavaScript, some people can get it anyway. HTML is not there to give your application functionality; that should always happen on the server. A wonderful example of insecure HTML was the drop-down menu on the website of a certain airline. This menu let you define the seating class you wanted to fly in as the last step before printing your voucher. The website rendered the HTML of the drop-down menu and commented out the sections that were not available for the price you had selected: Economy

Economy Plus The server-side code did not check to see whether you were eligible for a first-class ticket; it simply relied on the option not being available. The form was then sent via JavaScript. So, all you had to do to get a first-class ticket for the price of an economy seat was use FireBug to add a new option to the form, select the value you wanted and send it off. CSS CSS is not really capable of doing much to the document and cannot access the server… for now. One problem with CSS is background images that point to URIs. You can inject code by somehow overriding these.

The same applies to the @importproperty for other style sheets. Using expression() in Internet Explorer to make calculations (or, as in most cases, to simulate what other browsers can already do) is dangerous, though, because what you are doing in essence is executing JavaScript inside a CSS block. So, don’t use it. CSS changing a lot now, and we are giving it more power than ever before. Generating content with CSS, animation, calculations and font embedding all sound absolutely cool, but I get a prickly feeling in the back of my neck when I look at it right now. Attack vectors have two features: they have the ower to change the content of a document, and they are technologies that are not proven and are changing constantly. This is what CSS 3 is right now. Font-embedding in particular could become a big security issue, because fonts are binary data that could contain anything: harmless characters as well as viruses masquerading as a nice charset. It will be interesting to see how this develops. JavaScript JavaScript makes the Web what it is today. You can use it to build interfaces that are fun to use and that allow visitors to reach their goals fast and conveniently.

You can and should use JavaScript for the following: ? Create slicker interfaces (e. g. auto-complete, asynchronous uploading). ? Warn users about flawed entries (password strength, for instance). ? Extend the interface options of HTML to become an application language (sliders, maps, combo boxes, etc. ) ? Create visual effects that cannot be done safely with CSS (animation, menus, etc. ) JavaScript is very powerful, though, which also means that it is a security issue: ? JavaScript gives you full access to the document and allows you to post data to the Internet. You can read cookies and send them elsewhere. ? JavaScript is also fully readable by anyone using a browser. ? Any JavaScript on the page has the same rights as the others, regardless of where it came from. If you can inject a script via XSS, it can do and access whatever the other scripts can. This means you should not try to do any of the following in JavaScript: ? Store sensitive information (e. g. credit card numbers, any real user data). ? Store cookies containing session data. ? Try to protect content (e. g. right-click scripts, email obfuscation). Replace your server or save on server traffic without a fallback. ? Rely on JavaScript as the only means of validation. Attackers can turn off JavaScript and get full access to your system. ? Trust any JavaScript that does not come from your server or a similar trusted source. ? Trust anything that comes from the URI, HTML or form fields. All of these can be manipulated by attackers after the page has loaded. If you usedocument. write() on unfiltered data, you expose yourself to XSS attacks. In other words, AJAX is fun, but do not rely on its security.

Whatever you do in JavaScript can be monitored and logged by an end user with the right tools. Housekeeping One very important part of security is keeping your server clean. If you have old, insecure code lying around, it won’t matter whether your main website is hardened and up to date with the best security measures. Your server is as vulnerable as its weakest and least-maintained code. Check what you have on your server from time to time, and delete or move things that you are not interested in any more or couldn’t be bothered to maintain.

Instead of deleting code, you could move it to a repository such as Google Code or GitHuband redirect the old folder to it. It is also not a good idea to use the same server to test things and run a live product. Use one server as a test platform for playing around and another for grown-up stuff. It is especially important to have a different domain for each to protect your cookies. Web Security: Are You Part Of The Problem? Website security is an interesting topic and should be high on the radar of anyone who has a Web presence under their control.

Ineffective Web security leads to all of the things that make us hate the Web: spam, viruses, identity theft, to name a few. The problem with Web security is that, as important as it is, it is also very complex. I am quite sure that some of you reading this are already part of an network of attack computers and that your servers are sending out spam messages without you even knowing it. Your emails and passwords have been harvested and resold to people who think you need either a new watch, a male enhancement product or a cheap mortgage.

Fact is, you are part of the problem and don’t know what you did to cause it. The reason is that security experts don’t like to talk too much in public about what they do and where the issues lie; and sadly enough, they can also come across as arrogant in their views. This could be the result of people not taking security seriously and not following the most basic advice, such as using passwords that are clever, not “password” or “letmein. ” Another reason is those tutorials that show you how to “do something in five minutes” and conveniently neglect to mention the security implications of their advice.

If it sounds too easy to be true, it probably is. A perfect example of this is PHP solutions that use a file for data storage and ask you to make it writable to the world. This is easy to implement, but it means that any spammer can write to this file. URIs: The Main Way To Attack A Web Service The address of any document (i. e. file on the Internet) is its Uniform Resource Identifier (URI). This is what you enter in the browser bar to access the document and what you embed into code to point to the document.

For example, my website address is http://icant. co. uk, and the document you see when you open it in a browser is http://icant. co. uk/index. php (the server automatically redirects to that document). The logo image resides at the URIhttp://icant. co. uk/iconslogo. png, and the image of me pointing at you is on a totally different server and has the URIhttp://farm4. static. flickr. com/3172/3041842192_5b51468648. jpg. All of these URIs are okay for you to access. Some URIs, though, contain information that should not be accessible to the outside world.

For example, the /etc/passwordfolder on a server contains password and user information that should not leak to the Internet. Every URI can also contain parameters. These are instructions you can send to the script located at that URI and that are appended to the URI starting with a ? and separated by ampersands. If you want to search for puppies on Google, for example, you can use the URI http://www. google. com/search? q=puppies, and if you want to begin your search after the first 50 results, you can usehttp://www. google. com/search? q=puppies=50.

Free Jazz

FREE JAZZ The origins of Jazz date back to early 20th century and even late 19th century in New Orleans, although it is known that the jazz movement started also in some northern states such as Chicago. The West African Black folk music traits clashed with European light music of the late 18th century and formed: “the syncopated rhythms of Ragtime and minor chord voicing characteristic of the Blues. ” In other words, Jazz was formed mostly from Blues scales. In the early days of Jazz, it was played in small marching bands and solo by some people.

When Louis Armstrong stepped into the Jazz world, he became one of the most influential players in the Jazz world, especially with his perfection in Improvisation which is still a great part of Jazz: “Through his clear, warm sound, unbelievable sense of swing, perfect grasp of harmony, and supremely intelligent and melodic improvisations, he taught us all to play jazz. —Wynton Marsalis. ” After the early 20th Century, Jazz started to evolve with an enormous speed and branched into many categories. One of these categories, Free Jazz, is still around today emerging all around the world.

Free Jazz emerged in the 1950s, was at its peak in the 1960s, and it remained a part of jazz, which is still popular today. Its emergence was mostly by the African-Americans, like all the other jazz styles. It was a reaction against the interest of white people into Soul Jazz and other music genres which were around in the 1950s. “Many free [pic]jazz musicians regard [pic]the music as signifying in a broadly religious way, or to have gnostic[1] or mystical connotations, as an aid to meditation or self-reflection, as evidenced by Coltrane’s Om album, or Charles Gayle’s Repent” (Bookrags. om). Its development was the outcome of many artists such as Ornette Coleman, Eric Dolphy, Cecil Taylor, Bill Dixon, and many more. The main feature of Free Jazz is that there are no rules to how you play. In fact the major and the most important part of Free Jazz is improvisation. Musicians do not have to follow any rules, such as chord progression. Instead they play random notes which they desire. They even do not follow any tempos or meters while they are improvising. However, although we said that there are no rules, the Free Jazz Musicians still follow some chords nd harmonies; they do not play the notes on their instrument randomly (e. g. Playing Low F, then high E, at a very high speed). The reason is obvious: The music would not sound any good if the musicians didn’t even use chords or harmonies. Free Jazz musicians often use chromatic intervals and harmonies, and some also use atonality “while playing in microtones[2], overtones[3], multiphonics[4], and tone clusters[5]” (Britannica). Also while performing the piece, it tends to go smooth without any breaks in between, along with the balance of improvisation (which is “not going mad” while improvising).

The earliest records of music using Free Jazz was done by Lennie Tristano, which was a famous pianist at that time. Although he had no real influence on what would come after him, he was the first person who ever used “improvisation/tools of Free Jazz” in music. In the late 1950s, with the arrival of Ornette Coleman in to the music world, the Free Jazz era had truly begun. In fact, his “Free Jazz” named album was used as the name of the new jazz era. Afterwards, in the 1960s, saxophonists John Coltrane, Eric Dolphy and pianist Cecil Taylor began composing their own music in the Free Jazz world.

In the peak of Free Jazz, it also had another name which was “Energy Music” which symbolized Free Jazz’s improvisation, “in which dense sound textures were created from furiously generated note sequences,” which means that powerful complicated sounds (with feelings) were created from energetically played notes that come one after another, in certain orders (which is, like I said, what Free Jazz is). In the mid 1960s, Coltrane and Pharaoh Sanders created new styles by using soaring runs, distorted wails[6] and shrieks[7].

After them, Albert Taylor broke the rules even further in Free Jazz: He played solos with unfixed pitches, multiphonics honks, and overtone “blasts. ” The drummers also played a major part in Free Jazz as they also improvised without caring about tempo or meters. Since percussion plays a major part in modern music, it is also heard a lot in most jazz pieces. Until this date Free Jazz has been an instrumental genre with a very low amount of voices. This was because it was hard to improvise the notes along with the lyrics.

Beyond U. S. A, Free Jazz also emerged in Europe and Japan. Peter Brotzmann, Evan Parker, Conny Bauer, etc. are the well known Free Jazz musicians of Europe. Europe approached Free Jazz with enjoyment and separated it even further from the other styles of Jazz. Some European and Japanese musicians even came to U. S. A and got immersed into the Free Jazz world. Other than this, some U. S. Free Jazz musicians combined African, India, and Middle Eastern folk music and created a “world influenced” Free Jazz.

As we can see, Free Jazz had been a very distinctive development in the jazz world and had influenced musicians, not just in the U. S. but also around the world. In fact, it is so distinctive that it can be easily separated by other types of jazz. There are also a lot of Free Jazz players around to world who played with their respective instruments and contributed to the jazz and Free Jazz world. Bibliography: Origins of Jazz: Scholastic, ed. “History of Jazz. ” History of Jazz | Black History in America |. Scholastic. 2 Oct. 2008 . “Jazz Timeline – Including first cousin, The Blues. ” Jazz Timeline. A Passion for Jazz! 12 Oct. 2008 . Free Jazz: “Free Jazz. ” Free jazz::Supplemental Information. Britannica Online Encyclopedia. 14 Oct. 2008 . “Free Jazz. ” Free jazz Summary. BookRags. 14 Oct. 2008 . Definitions looked up from: www. webster. com Book Sources: Jost, Ekkehard. Free Jazz. New York: Da Capo P, Incorporated, 1994. Yanow, Scott. Jazz : A Regional Exploration. New York: Greenwood Group, Incorporated, 2005. ———————– 1] An adherent of gnosticism: The thought and practice especially of various cults of late pre-Christian and early Christian centuries distinguished by the conviction that matter is evil and that emancipation comes through gnosis. [2] A musical interval smaller than a halftone. [3] One of the higher tones produced simultaneously with the fundamental and that with the fundamental comprise a complex musical tone [4] Simultaneous notes played on one instrument [5] A dissonant group of closely spaced notes played at the same time. [6] To make a sound suggestive of a mournful cry [7] To utter a sharp shrill sound

Japanese Automobile Industry Analysis

Case Study: Industry Analysis and the Process of Proving Hypotheses – Japanese Automobile Industry 1. Market life cycle phase is different by region due to different population size, technology development and global economy situation. The implications are the volume of the productions and growth rate. 2. The cost factors of an automobile manufactured are supplier component cost, in-house development cost, advertising cost and etc. The costs of automobiles sold to customer will be marketing cost, storage cost and etc. . To be able to reach the economies of scale, the production volume must be high. The automobile companies that have the major market share will have the advantage in economies scale. For example, they will incur less advertising cost compare to lower volume production’s company. 4. Japanese automobile industry has to consider the export automobile oversea when the domestic market matured in end of 1980s. All of the three markets are important to the Japanese automobile industry. The most important market will be Asia.

The Asia market is growing. Yes. It is said `dumping` in the sense of selling the automobiles oversea is hardly profitable. But it is a must since the domestic market is mature and exporting oversea can cover parts of the fixed cost. It is also an act of Japanese automobile industry to test the oversea market with expected loss in mind. 5. Japanese automobile market is using the market segmentation of product differentiation. They offer different types of cars to satisfied the different needs of customers.

The ways to differentiate are the level of luxury, size of car and etc. 6. No. The relationship between Japanese automobile assembler and components supplier is loosing over the years. It is hard for the automobile assembler to control the cost from the second or third tier of component supplier. The cost only can be lowered when the component supplier reach economies of scale in higher volume and following the steps of automobile assembler to move the plants to oversea for lower labor cost production.