Cross Cultural Advertising Essay Example | Topics and Well Written Essays - 2000 words

Cross Cultural Advertising - Essay Example ds that generalize their approach to a distinctive market place.’ This contextualizes this study, consequently augmenting the fact that advertising has relied on culture to deliver a message effectively. This is what entails the whole concept of Cultural Advertising. Furthermore, the current element of globalization has resulted in the industry adjusting accordingly, and this necessitated the need to move from a cultural based advertising platform to a cross-cultural one. This has been facilitated by the developments in social media that makes it possible to share content widely and rapidly among consumers. As much as this seems to be a noble idea, it has raised questions regarding the effect of designing advertisements across platforms. In light of this, the controversy generated raises the question, ‘Is cross-cultural advertising bringing a unified message or a unified culture into a society?’ The affirmative power of advertising is brought into this research th rough previous studies, and this facilitates the learning of how culture influences advertising and focusing on the advertising strategies and techniques used. This enables the proper adaptation into a country’s culture. Additionally, it brings to light the individualistic structuring of the American/European culture and the collective or communal Asian culture. Another factor to consider is the way that previous studies focused on the means rather than the consequences on the society. To this end, the subsequent research proposal will put emphasis on the following: In consideration of the research, the first assumption that can be made is that a cross-cultural advertising approach is an obstacle to a society’s endemic culture. Studies have confirmed that most consumers have had some form of opposition and negative reactions to the cross-cultural approach to advertising, thereby supporting this assumption. Therefore, this strengthens the understanding that the strategy is not particularly

Second-Impact Syndrome In High-School Athletics Research Paper

Second-Impact Syndrome In High-School Athletics - Research Paper Example Many studies focusing on organ damage during competition focus on short-term, immediate damage due to blunt-force trauma with a limited time window, and minimal long-term followup to control for the possibility of lasting symptoms or lingering health problems as a result. (Cantu, 2003) Thus, there is still considerable need to examine and quantify a risk of death that would otherwise be dismissed; and to characterize this threat through a variety of statistics. Second-impact syndrome (SIS), a term originating in 1984, is described by a Dr. David Cifu and other colleagues as a "situation in which an individual sustains a second head injury before the symptoms from the first head injury have resolved." (Cifu, 2010) The second trauma for an athlete is likely to occur days to weeks following the first, in high risk sports. Loss of consciousness (syncope) is not necessary for dangerous complications to set in. (Bey, 2009) an impact which may seem of little consequence at first, wherein the athlete may seem to be only momentarily dazed can have a profound effect. But the effects of this second impact may result in cerebral edema/swelling and herniation, creating a slow bleed within the skull. This hidden crisis can trigger a seemingly healthy athlete to suffer fainting and fatality within minutes. (Bey, 2009) Dr. Cifu reports a mere 17 cases of confirmed SIS (Secondary Injury System) that have been dignified with descriptions in the medical liter ature. Much work still remains to describe the true pathophysiology and medical risks of SIS. (Cifu, 2010) Although Bey and colleagues have identified 35 apparent cases of the condition over a course of 13 years of examinations of football players. (American) Although similar corroborating injuries are not universally reported, even among higher-risk sports; such as Australian football which claims eight times the frequency of concussions as the American game. (Bey, 2009) Â   Certain young athletes may not comprehend or recognize the warning signs of concussions or may believe that minor injuries do not constitute a risk sufficient to stop them from playing. A medically-reviewed guide in the New York Times as well as Mayo Clinic sources have compiled a list of early warning signs to assist with recognition of the dangers and symptoms, which can range from mild to severe. (New York Times, 2011) They can include: 1. Altered consciousness, feelings of drowsiness, difficulty in awakeni ng, or similar deficits. 2. Confusion, ‘spaced-out' feeling, clouded thinking. 3. Headache. 4. Loss of consciousness 5. Amnesia, either retrograde or anterograde concerning of events before the injury or immediately after it. 6. Nausea and/or vomiting. 7. Visual hallucinations; such as flashing lights. 8. Fugue states or "lost time". (New York Times, 2011) 9. Ringing in the ears is another possibility according to Mayo Clinic sources. (Mayoclinic.com 2011) In many cases, minor concussions - while dangerous will still allow time for the patient to receive medical attention. But secondary insults are still a risk. Before SIS becomes a factor medical intervention should be a possibility. (Mutlu et al. 2003) Worth noting are certain warning signs that indicate immediate danger in regards of emergency symptoms of a concussive injury. Young athletes or indeed anyone suffering head injuries should seek immediate medical assistance at the onset of: 1.) Changes in level of alertness an d

The object of grammar Essay Example for Free

The object of grammar Essay Two types of grammar: normative, theoretical. Two parts of grammar: morphology, syntax. Grammar is a branch of Linguistics which studies the grammatical structure of language. The grammatical structure covers the rules of changing words and rules of arranging the forms of words into phrases and sentences. Grammar may study the gr. Structure of a language in different aspects. So? We distinguish: historical grammar which describes the str. of words, phrases, sentences in the process of their historical development; comparative gr. which deals with comparison of gr. systems of different languages; descriptive gr. analyses the gr. system of a language as it exists at a certain period of time. Grammar is divided into 2 types: Normative and Theoretical. Normative (Practical) Grammar gives rules how to build correct forms of words and syntactical constructions. It teaches to write and speak correctly. Theoretical (Scientific) Grammar describes the language as a system, studies the components of that system and relations between them. Theoretical gr. explains and analyses the most difficult phenomena of a language. It gives different concepts of these phenomena and helps linguists to be guided in linguistic literature in order to form a certain opinion of this or that theoretical form. Grammar is divided also into 2 parts: Morphology and Syntax. Morphology is a part of Grammar which studies the most characteristic features of classes of words. These classes are called parts of speech. Morphology studies not a single word, but the whole classes. Syntax is a part of Grammar which studies phrases and sentences, their structure, classification and combinations. Syntax is a system of 2 levels-that of phrases, that of sentences. It may be said that, in a way, morphology is more abstract than syntax, as it does not study connections between words actually used together in sentences, but connections between forms actually found in different sentences. In another way, however, morphology would appear to be less abstract than syntax, as it studies units of a smaller and more compact kind, whereas syntax deals with larger units, whose types and varieties are hard to number.

Worldwide Impact Of Magical Realism English Literature Essay

Worldwide Impact Of Magical Realism English Literature Essay Imagine a world where flowers rain from the sky and people can transform into animals at will, a place in which time flows unpredictably and the fantastic seems unremarkable to observers. This is the chimeric, phantasmagorial realm of the magical realist genre of literature. Magical realism, as seen in the works of Gabriel Garcia Marquez, is a reflection of the Latin American postcolonial culture and has greatly influenced world literature for the last century, despite a complicated history and chronic nominal confusion. The history of magical realism is complex and multinational. To understand it, one must understand the history of the term itself. The phrase magic realism was coined by Franz Roh, a German art critic, in his 1925 book Post-Expressionism, Magic Realism: Problems of the Most Recent European Painting (Bowers 9) to describe the post-expressionist art of certain contemporary German painters (Bowers 9-10). This original magical realist movement featured a detailed, clear depiction (Bowers 9; Zamora 24) of, in Rohs words, the strange, the uncanny, the eerieaspects of everyday reality (Baker). In 1949, a second, similar term, marvelous realism, first appeared in Cuban author Alejo Carpentiers seminal essay On the Marvelous Real in America, describing the extraordinary idiosyncrasies that make up the everyday reality of Latin American life (Bowers 14-16; Feinstein). Finally, the more familiar term magical realism was first used by Angel Flores in his 1955 essay, Magical Realism in Spanish American Fiction, in which Flores contends that the genre has its roots in the romantic realism of Spanish-language literature (Bowers 17-18). Soon after this essay was published, the 1960s saw the beginning of a decades-long flowering of Latin American literature and of magical realism. During this Latin American Boom, an emerging continent-wide desire to develop a distinctly Latin American culture catalyzed a creative explosion led by Garcia Marquez of Colombia, Carlos Fuentes of Mexico, Mario Vargas Llosa of Peru, Jose Donoso of Chile, and Julio Cortazar of Argentina that perfected the genre (Bowers 17-18; Feinstein). Neither magical realisms authors nor its origins are confined to Latin America, however. It was largely influenced by the Romantic and Surrealist movements in Europe, and important precursors include quasi-surrealist German writer Franz Kafka, sixteenth-century Spanish author Miguel de Cervantes, and Italian surrealist painter Giorgio de Chirico (Bowers 18). Among the first genuine magical realists was German author G ¨unter Grass, author of The Tin Drum (Bowers 19). Modern magical realists hail from such nations as the United States, India, Japan, Canada, Nigeria, and Italy, including noted authors Toni Morrison and Salman Rushdie (Bowers 18; Cowan 4). Perhaps because of this complicated history, there is a general consensus that there is no general consensus on how to precisely define magical realism (Baker). This can be attributed in part to confusion over the precise meanings of and distinctions between the terms magic realism, magical realism, and marvelous realism (Bowers 2). However, the styles features are less nebulous and readily identifiable. According to Flores, the essence of magical realist fiction is that, time exists in a kind of fluidity and the unreal happens as part of reality. Wendy B. Faris gives an irreducible element of magic as its most important criterion (Faris, The Question 102), in addition to a strong presence of the world we know (Faris, Ordinary Enchantments 7). This corresponds to the realism portion of magical realisms name.In general, the supernatur al coexists with the mundane, and neither character nor narrator express any feeling that such fantastic occurrences are out of place (Baker). This all creates what Adam Feinstein eloquently calls a rich, often disturbing world that is both familiar and dreamlike(Feinstein 15). Briefly, magical realist fiction presents magical events in a realistic manner. Magical realism can best be understood through examples from its authors. Gabriel Garcia Marquez, the Colombian author of the novels, One Hundred Years of Solitude and Love in the Time of Cholera, and winner of the 1982 Nobel Prize in Literature, has come to typify the genre, and even all of modern Latin American literature (Bowers 3). Fuentes calls magical realism the personal stamp of only one: Gabriel Garcia Marquez (Faris, The Question 108), and Michael Wood refers to him as the undisputed master of the magical realist voice that tells of fantasies in deadpan prose (Wood 10). Garcia Marquezs work is full of examples of magical realism. For instance, in his short story, Light is Like Water, the light from a common house fixture acts in such a way that children can sail boats on it (Faris, The Question 114), and household objects [] [fly] with their own wings through the kitchen sky (Faris, Ordinary Enchantments 12). But all subsequent examples will be taken from what is arguably his most famous work, One Hundred Years of Solitude, the story of the Buendia family. The erraticism and ambiguity of time can be seen in the example of Pilar Ternera, who, upon turning 145, [gives] up the pernicious custom of keeping track of her age and [] [goes] on living in the static and marginal time of memories, in a future perfectly revealed and established, beyond the futures, disturbed by the insidious snares and suppositions of her cards. (Garc ´Ãƒâ€žÃ‚ ±a M ´arquez 394) Similarly, a rain shower lasts for nearly five years; insomnia can erase the past; a room exists where it is always a Monday in the month of March (Faris, Ordinary Enchantments 23); and, after he dies, Melqu ´Ãƒâ€žÃ‚ ±ades Buend ´Ãƒâ€žÃ‚ ±a begins to chronicle the history of the town of Macondo, both recording and predicting the towns events (Faris, Ordinary Encantments 10). In another example of magical realism, yellow butterflies, relentlessly swarming and invasive, accompany Mauricio Babilonia to his trysts with Meme Buend ´Ãƒâ€žÃ‚ ±a (Garc ´Ãƒâ€žÃ‚ ±a M ´arquez 285-287); despite being magical, they are vulnerable to an insecticide bomb, demonstrating the realist component (Faris, Ordinary Enchantments 18-19). And, during the funeral of Jos ´e Arcadio Buend ´Ãƒâ€žÃ‚ ±a, tiny yellow flowers rain from the sky, carpeting the streets (Garc ´Ãƒâ€žÃ‚ ±a M ´arquez 144). The fantastical elements of magical realism can be explained in part by the cultural situation that existed at the time of the genres nascence. Magical realisms duality might be considered to be a residue from the colonial occupation of the Latin American continent. The European conquerors imposed their own culture on that of the conquered, resulting in the coexistence of two conflicting world views-European rationalism and ancient native spiritualism (Baker). In the words of Stephen Slemon, the two oppositional systems [] each [work] toward the creation of a different kind of fictional world from the other (Faris, The Question 102). Magical realism can also be seen as a form of resistance to colonial ideologies, a discursive system that challenge[s] the restrictions of a circumscribed colonial space (Baker). It honors native tradition by frequently giv[ing] voice [] to indigenous myths, legends, and cultural practices and simultaneously serve[s] a decolonizing role, one in which new voices have emerged, an alternative to European realism (Faris, The Question 103). The fact that magical realist authors often hail from transitional, third-world countries supports this hypothesis (Cowan 6). But now the magical realist tradition appears to be dying. Magical realism has been victimized by modernization and unification in Latin America, and the need to develop a distinct Latin American writing style no longer persists (Feinstein). Only a few writers like Isabel Allende still practice it (Cowan 6; Feinstein). Also, recent magical realist work is a testament to the change in the landscape of the continent, infused with urban elements and modern issues. (Feinstein). And, unfortunately, the magic is increasingly being used as an instrument of lazy deus ex machina instead of an element in an alternate world, resolving plot conflicts rather than creating them (Khair). Thus, the future of magical realism looks dim. Even if the magical realist movement has lost its  ´elan vital, it has been an important player in the history of twentieth-century literature, spearheaded by fountainheads of creativity like Gabriel Garc ´Ãƒâ€žÃ‚ ±a M ´arquez. Although the remnants of European hegemony led to it being most prominent in Latin America, over the course of its rich history, magical realism has left a permanent impact on worldwide literature.

How Holography Works :: Holography Holograms Physics

To develop and understanding of how holograms work, one first needs a basic understanding of light and its wave-like properties. First, we will consider investigate the concepts of diffraction and an interference pattern. Consider, for a moment, a person threw a rock into a pond. At the point where the rock hit the water, waves would form and would move away from the source of the wave (the rock) in a spherical shape. This is what a wave looks like when the wave is being emitted from a single point. Now, consider a water wave that is traveling through a small slit in a wall. The waves would emerge form that slit like it would from a point source (the rock). The waves travel through the slit and emerge in a spherical pattern. Now, lets take the next step. Lets say instead of just one slit, two slits were put in the wall. Waves would emerge from each point in a spherical pattern. But this time, the system is more complicated. Because the waves are emerging in spherical patterns, the waves begin to intersect with each other and form an interference pattern. Every wave has crests and troughs. A crest can be thought of as the high point of a wave and a trough can be thought of as the low point of a wave. Every wave can be expressed a sin function, that is, it is periodic. These crests and troughs occur at regular intervals in the wave. So, when these waves from the two slits in the wall start intersecting, the crests and troughs start intersecting with each other; this is known as an interference pattern. If the periods of the waves are lined up, or rather the waves are in phase with each other, the crests and troughs of the two waves overlap and reinforce each other. That is, it looks like there is a wave that is twice as large as one of the original waves at a particular point of intersection; this is known as constructive interference. Now, lets consider a point of intersection where the crest of one wave is present where the trough of the other wave is present. These two waves at this point are out of phase and are experiencing destructive interference. The water would actually look calm at this point, because the waves, in a sense, cancel each other out.

Ethics Choice in the Workplace Essay

Ethics and corporate social responsibility (CSR) becomes one of key point to evaluation business value. â€Å"In today’s highly interconnected, global, and transparent world, corporations are finding that social responsibility is essential to fundamental business strategy† (Trevino & Nelson, 2010, page 332). The main purpose of this paper is to offer readers an overview and concept about the role of ethics and social responsibility in food industry. Besides that, some ethical problems of organizations, stakeholder perspective on the firm and some recommendations are listed. Ethics Choice in the Workplace Regarding to corporate ethics and CSR are exposed, both consumers and governments are focusing their attention on corporate social responsibility practices (Maloni & Brown, 2006). Ferrell, Geoffrey & Ferrell (2011, p.38) stated, â€Å"business ethics as the principles and standards that determine acceptable conduct in business organizations†. The behavior of acceptability is confirmed by many stakeholders of organizations such as customers, suppliers, employees, government regulators, owners as well as community. Ethics and social responsibilities are influent to business strategy and setting in recently. White (2012) claimed social responsibilities manage on decision making from top level to bottom line of firms. Ethics and Social Responsibilities are being evaluated as a key successful factor to measure organization outcomes. Ethics Issues in Business In order to identify certain situations that affected by various environmental and individual factors as ethical or unethical decision (Bommer, Gravander & Tuttle,1987). The identification is impacted by bias, principles, concepts and definitions of social group or community. These standards are different from geographies, races, languages, time, etc. According to Ferell et all, 2011, ethics is related to organizations’ culture, financial status and business objective. Plenty of ethical issues in business can be classified into their relative behavior as abusive and intimidating behavior, conflicts of interest, fairness and honesty, communications, and business associations. Abusive and Intimidating Behavior Actions in working environment caused other people physical threats, being annoying, harshness, or even though bypassing some individual opinions. Abusive can be considered as a distraction or disruption of the workplace (Ferell et all, 2011). Intensity of voice, situation of speaking and used words are factors to be determined to abusive or un-abusive. Conflicts of interest This kind of conflicts occurs quite frequently in reality. For instance, managers could make decisions either to reinforce their power or enhance benefit to shareholders. A CEO will keep confidential a bad financial status to board of director sometimes. The conflict is often among employees because they use the same resources. Un-transparency of gifts may effect to outcome decisions to be an illegal or un-ethical behavior. Fairness and Honesty Fairness and honesty is the most important of business ethics and create general values of decision makers (Ferell et all, 2011). For instance, some newspapers claimed there are some exceed ingredients in power milk caused harmfulness to children health 2 years ago. In addition, Microsoft window software is still being cracked very popularly in China and Vietnam in particular even though people knew these products are protected by copyright law. Communications Communication is one of effective tools to bring product ideas and images to consumers. However, some organizations transferred to community incorrect information about their products. Under-weight or over-weight harmful of ingredients, food safety and hygiene are the most of improper announcement in advertising and labels. Furthermore, there is lack of information to compare differences or similarities between products (Ferell et all, 2011). For example, many people does not know how differentiated among Uniliver’s detergents: OMO, Viso, and Suff. Business Relations This ethical behavior is relevant to business relations to customers, suppliers, bosses vs. their staff and others in their workplace that create to ethical concerns. Managers take advantages on legitimate and authority roles to supervise their staff. Sometime they play Lording games to reinforce their power (Mintzberg, 1985). In reality, commission and gifts are used very popularly on Sales and Marketing. In Vietnam, gifts are considered as traditional requirement on national holidays. Corporate Social Responsibility (CSR) Corporate Social Responsibility â€Å"means that organizations should take responsibility for their impact on society and the environment† (Castka & Balzarova, 2007, p.297). Every organization should build and adopt their owned CSR plans. There are four dimensions or four faces of social responsibility: economic, legal, ethical, and philanthropic (which sometimes call voluntary, altruistic or humanitarian) (Ferell et all, 2011) and (Geoffrey, 2001). Economic Responsibilities. Business organizations are groups to conduct goods or service to satisfy consumers as well as create jobs for community (Geoffrey, 2001). Firms should pay fair to workers, look for new resources, technical innovation and celebrate a friendly and fairly working environment. Therefore, economic responsibility â€Å"is to be profitable for principles by delivering a good quality product at a fair price is due to customers† (Geoffrey, 2001, p. 3). Novak (1996, p. 139-145) defined seven economic responsibilities. There are to (1) satisfy customers with goods and services of real value, (2) make a reasonable return on the funds entrusted to the business corporation by its investors, (3) create new wealth which reduce poorness as their wages rises, (4) create new jobs to enhance worker incomes, (5) defeat envy by generating people values and creations that can improve their conditions, (6) promote ingenuity and invention, (7) diversify the interest s of the republic. Legal responsibi lities. Legal behavior is obeying the law by playing rules and policies of the game. The business laws are passed by the society and community. The laws tell organizations what should or should not be done. However, the laws often provide a minimum level or a floor of moral that â€Å"might be followed involuntarily out of fear of punishment rather than voluntarily out of internal moral conviction† (Geoffrey, 2001, p. 4). Ethical responsibilities. Ethical duties overcome limitations of legal responsibilities. They include moral, doing what is right, just, fair and avoiding harm to society and community even if preventing harm caused by others (Smith & Quelch, 1993). This behavior shows how wealth the organization affects non-economic aspects of society, such as benefit to employees, how closely working environment is, as well as natural environment. Altruistic responsibilities This kind of responsibilities display in the forms of voluntary service, association and giving, offer over of legal of society floor principles. Over the half of century, business increasingly has been judged not only by its economic and its ethical performance, but also by its social contributions (Geoffrey, 2001). Conclusion By understanding deeply Ethics and Corporate Social Responsibility, businesses can adopt not only get higher profit or outcomes but also be interested to society, community and natural environment. For the time being, we can expect to hear more about social responsibility and much of what of our companies do to give a hand to build our society around us.

Case Review: Linear Technology Essay

Linear Technology was based out of Silicon Valley and founded in 1981. The company specialized in design, manufacture and marketing of analog integrated circuits. Linear enjoyed a diversified customer base, with 33% of its business coming from the communications sector, 27% from computers, 6% from automotive, and 34% from various other applications. With their focus on the analog segment of the IC sector, which was characterized by custom designed products, it was imperative that Linear hires and retains talented people who were accustomed to out-of-the-box thinking and who could readily develop innovative techniques and products that would keep them competitive. Going IPO in 1986, Linear operated with a modest CAPEX. Additionally they enjoyed low obsolescence of equipment and techniques. This combined with their low R&D expenses led to margins that exceeded that of competing digital IC products. This is supported by Linear’s 7th seat positioning on the Philadelphia Stock Exchange Semiconductor Index (SOX). Linear’s net income was at its highest in 2001, when global technology spending was at its highest, and its lowest sales the following year. They still maintained positive cash flows and strong margins; this was accomplished through various mechanisms such as cost cutting aided by their variable cost structure. As of 2003 Q3, Linear was emerging out of the recession with strong financials. However, top line sales and net income remained lower than their high point in 2001. Due to political unrest throughout the World, the future of the tech industry remained unclear. Year over year growth in 2003 when compared to 2002 was good, but the company didn’t see a clear path to reaching 2001 levels. At the same time, they didn’t want to sacrifice margins in new markets like Asia. By 1992 Linear’s management was comfortable in their ability to sustain future cash flows, having been cash flow positive since IPO, and began issuing dividends of $.00625 per share (payout ratio: 15%). In 2002 LLTC  continued issuing dividends, despite the higher payout ratio (27.24%), as they didn’t want to lose favor with investors. It is likely that Linear viewed dividends as a way to stay in the portfolio of mutual funds and EU investors who strongly favored dividend-paying stocks. Simultaneously, Linear also began to buy back shares when interest rates were low or/and when market valuation of Linear stock was low. They were skeptical about paying out all or more of their cash in dividends as this could signal lack of growth potential. It is notable that many institutional investors held Linear stock, largest among which was Janus Capital. Linear wanted to be sure to send positive signals to their investors. With a large cash balance ($1.5 billion) and no debt, Linear was at a crossroads – they needed to know what to do with their cash. Their options were: 1) Invest in new projects, 2) Payout via dividends and/or repurchases, and 3) Save it for future investments in innovation and diversification. In this p per, we will analyze three different approaches in deciding Linear’s payout for Q3. Approach – 1 Cent Dividend Increase The analysis below assumes the decision to repurchase 165.7 million in stock will not be adjusted. The decision to be made is to either raise our dividend by one cent per share, or leave the third quarter dividend of .05 per share intact. Payout Decision Historically Linear has not increased dividends in Q3, so a conservative approach for the board would be to approve the continuation of the dividend policy from Q2. Continuing the status quo of .05 per share, the payout ratio would adjust to 27.48 percent of Net Income. Increasing dividend by one cent per share would increase the YTD payout ratio to approximately 29.31 percent for the three quarters (Exhibit 1), a modest increase. At $0.06 dividend per share, the total Q3 dividend payout will be $18.7 million, which will still be considered small by our institutional investors, given our large cash position. The adoption of the 1-cent increase will provide a full offering of 215.70 million dollars back to our investors in the form of dividends and stock repurchases as shown below: Paying the additional 1-cent would still be consistent with our long-term dividend strategy, but the total package will not be aligned with the requests of some of our largest investors. Available Cash to Distribute At this point it is important to note that the firm will be paying out more to the shareholders via share buybacks and dividends, than the firm has available to the equity holders through its operations. This overpayment holds true if the firm holds the dividend at .05, or increases it to .06. The firm has generated a total of 207.5 million FCFE dollars, but would be choosing to payout a total of 215.7 million given the decision to increase the dividend by one cent. Staying committed to the .05 dividend reduces this figure by only three million. Cash Needs and Agency issues Surplus cash to address any unforeseen needs will readily be available by adopting the conservative one-cent increase plan. Increasing the dividend to .06 includes holding on to almost 100 percent of a very large cash position, and therefore provides little pressure to identify such future cash needs. Signaling Linear’s sales are trending upward since the 2002 decline, but the immediate future is still not clear. The adoption of this conservative plan would continue their strategy of consistently signaling a message of safety and consistency of cash flows to their investors, yet provide options for our turbulent times. Other uses for this cash such as improved employee incentives, training, and workplace improvements should also be considered. Other Considerations The drawback for adopting the conservative plan without addressing the concerns of Janus and other like-minded investors could signal that they are not quite ready to suggest that their recent troubles are behind them. If we do choose this plan, a carefully crafted message to address investor concerns should be communicated to investors as quickly as possible. Additionally, other approaches such as one-time share buybacks and special dividends should be considered to address the concerns of Janus and other firms that share their view on Linear’s current cash position. We address these in Approach 2, 3 outlined in the sections that follow. Approach – 2 Payout all of Linear Technology’s Cash 1 In this section, we consider an alternate payout strategy in which Linear returns all of its 1.5 billion to its shareholders, by either (a) Paying a special dividend of $5.01 per share, or (b) Repurchasing about 50 million shares. (a) Special Dividend of $5.01 per share One goal of the special dividend will be to show investors that Linear is in a good position and to buy shares from Linear Technology is not comparable with the risk normally associated with the purchase of shares from technology companies. Additionally it signals to the market that Linear is serious about sharing its wealth with its shareholders. With these higher overall payouts, Linear Technology can reach investors that have specific income goals. Share price In case of a dividend announcement, demand for shares will rise. If investors know that a certain dividend amount will be paid, the share price increases by that amount (Law of One price). In this case, the current share price is $30.87 and dividend announced will be $5.01; hence the share price cum dividend can be expected to increase to $35.88. 1 Exhibit 4 shows calculations for numbers presented in this section Firm value Depending on the time until the dividend is paid, not the whole amount of dividend is added to the share price. If there is still a certain period of time until the dividend is paid, only the net present value of the dividend will be added to the share price. It also can be said that the closer the payment of the dividend gets, the more the amount of the total dividend payment is added to the normal share price. That also means that consequently the market value of equity also will rise. At the day ex-dividend day the share price will drop below the level of the pre-announcement day because the dividend as driver of the rising demand had been paid. The additional value of $5.01 that was is not part of the share value any more. The dividend, as part of the equity, is paid to the shareholder. Therefore, the dividend policy as a whole will not be a decisive factor in the firm’s value. Payout ratio However, in this scenario the payout ratio becomes a ridiculously high 945% (Exhibit-4), which is very high compared to peers. (Exhibit 2) Signaling By deploying capital through an increased dividend versus a share repurchase, management is signaling that Linear’s stock is fairly valued in the market. However, If Linear increases its dividend too much say by giving out all the cash as dividends, management could signal to the market that it believes the company’s growth is slowing and there are no new positive NPV projects for the company to invest in. However, this may help send a positive signal that the company is confident about generating positive cash flows for its operational and investment needs. Since profits of Linear Technology this quarter was far lower than that last year, a huge special dividend may help the investors regain faith in the company. Agency problems Increasing dividend is also a good way to reduce agency costs. With large amount of cash balance in hand, managers’ control over the capital becomes larger. Paying dividend to the investors is an efficient way to get additional monitoring of the capital, and thus make it less attractive to managers to invest the money in projects that will reduce the benefits of the shareholders. Tax Clientele With this very high dividend, the company may attract more European and/or mutual fund investors, but it may generally upset Institutional investors who do not have tax exemptions. Also, the announcement of a dividend may prompt older and poorer investors to buy more of Linear’s stock. (b) Share repurchase Share price and Shares outstanding Linear can repurchase 50.7 (16.23% of common shares) million common shares by spending all of its cash. When they do that, the number of outstanding shares will be 261.7 million. Historically, the stock price of companies has risen following a share  repurchase announcement as it can boost EPS. In this case EPS increases to $0.65. (Exhibit-4) Signaling By deploying all of its capital towards share repurchases, management can signal the market that its stock very undervalued. Linear has had a positive cash flow over the years and they have an opportunity with a net cash of $1.5 billion to bridge the supposed valuation disconnect by accelerating share repurchases. In summary, if the company goes out with a big stock buyback or special dividend, it will send a signal to investors that the company, is no longer a growth company, and stock value may decrease Approach – 3 Payout 50% of Linear Technology’s Cash2 Considering that management does not have a good line of sight into the future at this point, paying out all of Linear’s cash may be a risky move. Hence, in this section we look at a less aggressive approach that lies between preserving their cash balance (Approach 1) and paying out all of their cash (Approach 2). In evaluating this approach, we have assumed that Linear will need to keep up its quarterly dividend at $0.05, and the remainder of the cash after accounting for this quarterly dividend is available for either a special dividend or a share repurchase. The following section analysis the effect of paying out 50% of the remaining cash reserves either in the form of a special dividend of $2.51 or by repurchasing 25.35 million shares. EPS and Share Price If we were to repurchase shares using 50% of the cash, the EPS will increase from 0.55 to 0.59 close to the 2002 numbers of 0.62. Using a price/earnings ratio of 56.53 in 2003 (Exhibit-3), we can estimate the share price to increase to 33.65 with this increased EPS, cum dividend. If we were to pay out a special dividend of $2.51 per share instead, the share price cum dividend could be estimated to be a closely comparable $33.38 (Exhibit-5). EPS will be 0.55, very close to Q2 levels (0.54). Payout Ratio The dividend payout ratio in the case of the special dividend will be close to 486.3% (Exhibit-4) which is once again much higher than all of Linear’s peers (Exhibit-2). In contrast, with a share repurchase, the payout ratio remains at level consistent with previous quarters at 27.5%. 2 Exhibit 4 shows the calculations for numbers presented in this section Firm value and Shareholder wealth Repurchases will help alleviate some of the dilution of the EPS arising out of options awarded to employees and managers, considering that Linear’s incentives for all employees include stock options. On the other hand, dividends will help distribute the wealth more evenly among all investors, while repurchases cause an uneven distribution as the shareholders who do not sell will see a drop in book value of the shares, from $5.01 to $3.23 (rough approximation based solely on cash assets – Exhibit 5. Tax Clientele With the new rules that stipulate equal taxation rate of 15% for Capital gains and OIC, there are no quantifiable advantages one way or the other with respect to the decision to payout either in the form of a special dividend or repurchases. There may however, be some psychological impacts to be considered depending on preferences of the shareholders. For example, if the vast majority of shareholders belong to the older demographic, they may prefer it if the stock paid dividends. Signaling Linear’s investors are used to getting a dividend, and seeing periodic repurchases. Additional payouts of cash help increase ROE and reduce shareholders’ risk premium. At current low interest rates on cash (as of 2003), paying out at least some of the cash balance appears to be in the best interests of the shareholders. Though high payouts may signal that the company is lacking growth potential, it helps send a positive message that the company is keen on sharing its wealth. This message of being a â€Å"cash-cow† is better compared to the image of a company that is hoarding its wealth. Peers A quick look at Maxim’s financials indicates that they have started sharing their cash with their shareholders – in 2002 their cash returned was over 200% of their FCFE (Exhibit-2), and their cash reserves reduced by 455 million. They appear to have used that cash in repurchases in an effort to concentrate their wealth among a smaller number of shareholders, at the same  time they managed to increase their top line numbers significantly, even compared to 2000. By sharing half their cash with their shareholders, Linear will be able to put itself on par with this close competitor. Agency issues and other considerations One time special dividends don’t need to be kept up, so are essentially similar to repurchases in that respect. However, repurchases help boost EPS and prevent dilution, both of which have longer-lasting effects. In this respect a repurchase may be better than a dividend. As far as agency issues go, retaining 50% of the cash position may not provide as much incentive to work harder on identifying positive NPV projects, as expending 100% of the cash, but will work much better than retaining almost all of the cash as in Approach 1. Our Recommendation for Linear Our recommendation to Linear is to maintain status quo with respect to dividends – pay the quarterly dividend of $0.05 per share, and to buy back 25.35 million shares using half the cash balance. Dividends consistent with previous quarters of 2003, are recommended to avoid any adverse market reactions, while the company works on figuring out their strategy to increase top line sales and earnings to the 2000-2001 levels or better. Cancelling the dividend altogether or paying less than last quarter is not an option, as this would be perceived very negatively by the market. Historically, Linear has never increased dividends in the Q3 compared to Q2; hence it is safe to maintain a dividend of 5 cents per share as in Q3. Additionally, as shown in Exhibit-2, Linear already pays more dividends compared to peers, including their close competitor Maxim. Paying out all of the cash may deprive the company of the required levels of liquidity. Given that the analog semiconductor industry requires constant innovation and considering opportunities for new ventures such as entering the Asian market, it is safe to assume that the company should keep some cash reserves to account for unknowns. Linear is well aware that they need to expand their business and find ways to increase top line numbers, so keeping some cash, and supplementing it with capital from debt or/and equity markets is worth looking into. This forms the basis of our reasoning for recommending the use of only 50% of the cash balance to repurchase shares. Additionally, by repurchasing shares, Linear will be able to still sufficiently signal to the market that the stock is undervalued. At the same time, by maintaining some of the cash balance, they additionally signal the existence of profitable positive NPV projects for Linear to pursue. Considering the industry characteristics, and the stagnation reached in top line revenues, Linear will need to look at innovation and new markets, both of which could bring dramatic increases in growth. In light of this, we are convinced that the EPS boosting effect of a share repurchase is more valuable to Linear at this point, than the effects of an equitable distribution of shareholder wealth via special dividends.