A Rise in Reverse Mortgages - Essay Example

?Decision-Making: Summary Report Highlights a Rise in Reverse Mortgages” The influence of decision making on borrowing has been discussed in the article. Evidently, marketing strategies have been developed in such way as to impact the decision-making of potential borrowers – people of the older generation. That is why advertising features celebrity figures and contains false appeals to government aid. The people born in the period just after the World War 2, the so-called “baby-boomers”, are about to transform a part of the financial industry. Specifically, this is reverse mortgages – such loan in which homeowners of the older generation borrow against their home’s value (Wyatt, 2012). Reverse mortgages have drastically grown if to compare it with the 1990s. This is explained by the fact that for most American citizens, home is the most valuable asset. The reverse mortgages are convenient as they do not suggest the borrower should pay anything until the house is sold or the borrower dies. In addition, owners of homes are able to take cash out of homes to add to their retirement income. Homeowners who borrowed this way are obliged to pay property taxes and pay for homeowners’ insurance while they have the loan. The amount of people who borrow in a lump sum has risen and equals 70 per cent now. So, people risk being short of cash when they have health problems in case they took the money without really needing it. Many people borrow because they are misled by false marketing information that features celebrities and supports advertising with false claims that reverse mortgaging is a kind of government benefit. Reference Wyatt, E. (2012). Report Highlights a Rise in Reverse Mortgages. The New York Times June 28, 2012. Retrieved on July 2, 2012 from http://www.nytimes.com/2012/06/28/business/economy/report-highlights-a-rise-in- reverse-mortgages.html?scp=1&sq=market%20decision%20making&st=Search Forecasting: Summary #2 “Overconfidence Suggested in Supreme Court Predictions” The problem of forecasting is the subject of this article’s discussion. It is clear that forecasting may often be based on insufficient premises. Therefore, too much fuss over something may does not necessarily mean that the forecasts will be correct. While the real course of action in the issue of Supreme Court’s decision regarding individual mandate in relation to the healthcare bill is still unknown and hard to predict, numerous bettors suggest the Supreme Court overturn the mandate when voting. This trend which has been supported by as many as 74 per cent of Intrade bettors is the opposite to the earlier one, which could be observed before oral arguments on the issue in March (Silver, 2012). Such huge shift in sentiment is evidently unjustified since the value of the information owned by traders is rather debatable. Indeed, oral arguments have certain power for predictions, thus, power is limited besides the evidence is ambiguous. Roughly chances are balanced, while the questions posed by individual justices are indicative of possible overturn of the mandate. Another possible way out of this situation is that the Supreme Court will not decide to rule on the mandate. However, it is hard to read the Supreme Court. Reference Silver, N. (2012). Overconfidence Suggested in Supreme Court Predictions. The New York Times June 27, 2012. Retrieved on July 4, 2012 from http://fivethirtyeight.blogs.nytimes.com/2012/06/27/overconfidence-suggested-in- supreme-court-predictions/?scp=3&sq=market%20forecasting&st=Search. Linear Programming: Summary #3 “Big A.T. & T. Computer for Complexities” The problem of linear programming application to the sphere of big business is discussed below. The article shows how back in 1988, first successful attempts to use complex algorithms to solve business problems were made. Today the use of software is an indispensable part of any business, even the smallest one. A new powerful computer system was announced to be about to enter the U.S. market by the American Telephone and Telegraph Company. It was designated to immediately solve the problems of “traveling salesman”, which require corporate planners to focus on thousands of variables (Markoff, 1988). The problems were named after the mathematical concept which deals with traveling salesmen planning their routes in the most effective manner. The cost of the new software plus the computer itself is up to $9 million. This product has not been designed for the mass market, but focuses on a select group of users represented by corporations. The program was developed in the field of linear programming and is based on Karmarkar Algorithm. The latter surpasses traditional linear programs in that it needs ten or even hundred times less time to examine a large number of variables. Reference Markoff, J. (1988). Big A.T. & T. Computer for Complexities. The New York Times March 13, 1988. Retrieved on July 4, 2012 from http://www.nytimes.com/1988/08/13/business/big-at-t-computer-for- complexities.html?scp=2&sq=Linear%20programming&st=Search Inventory Management: Summary #4 “The Markets: Stocks; technology Shares Against Hit Hard; Nasdaq Loses 3, 92%”. The applications of inventory management offer a highly effective way of stock management. While it ensures stock security, in this article, it seems the inventory management has had flaws in managing technology stocks above all as the value dropped. There was a broad drop observed the day before that in technology stocks. It came along with the fall of Nasdeq composite index. The shares in biotechnology lost the most. The necessity of a pullback for Nasdeq was articulated. The index has witnessed steady decline. The companies that can lead the index higher are Hewlett-Packard, AT&T, as well as Intel. If to apply this situation to the context of the whole United States, the rise in short-term interest rates will predictably be observed reaching as high as quarter-of-a-percentage point (Gilpin, 2000). Reference Gilpin, K. (2000). The Markets: Stocks; technology Shares Against Hit Hard; Nasdaq Loses 3, 92%. The New York Times March 21, 2000. Retrieved on July 4, 2012 from http://www.nytimes.com/2000/03/21/business/the-markets-stocks-technology-shares- again-hit-hard-nasdaq-loses-3.92.html Summary #5 “The Times Square CBGB That Never Was” Successful location choice affects the profits, as well as how the business will run in general. In this article, the location has been successful in terms of its geographic position within the city (close to the subway station); it required a lot of remodeling. Thus, it is hard to say whether that was the best location for crowds of people expected to visit the club. The legendary CBGB club, founded by late Hilly Kristal, had been on the verge of reopening in Times Square before it closed in October 2006. The matter was in 2004-2005 the club existed under the threat of closure to the lengthy dispute with its landlord. Having lost his hope to settle the issue, Mr. Kristal started looking for other adequate location for his club. While three locations had been chosen as potential sites, the location in the center of Times Square was thought the most attractive due to its proximity to the subway station. The challenge to undertake was remodeling an old movie theater into a music venue (Brown, 2012). While the task would have seemed impossible for many people, Kristal did not stop at such musings. The only thing that appeared to prevent Kristal from embodying his plan into the reality was the extension by the landlord of the lease by 1 year, so he could use the same building for a year more. Reference Brown, S. (2012). The Times Square CBGB That Never Was. The New York Times 28 June 2012. Retrieved on July 4, 2012 from http://eastvillage.thelocal.nytimes.com/2012/06/28/bizarro-cbgb-here-are-the-plans- for-a-club-in-times-square/?scp=1&sq=market%20location%20choose&st=Search Capacity: Summary # 6 “Ford Motor, Citing Europe’s Woes, Says Foreign Losses to Triple in Quarter” It has been observed that the Ford Motors Company has excessive capacity, which actually means manufacturing capacity exceeds the demand in the European market. In the situation when there can be found more unused capacity that is actually demanded, capacity management should be a priority. This will most likely mean reducing capacity and restructuring the business, so that new market capabilities are addressed. This will not necessarily mean making no or low profits, the company marketing campaign just needs to cater for customer wants and demands. Economic hardships in Europe impact negatively the Ford Motor Company taking away a big part of its profits. While the company had remained almost unaffected by the economic trouble unlike its serious rivals, now it faces handling international losses. The Ford Motor Company announced that in the second quarter, its total losses on the international arena would triple and Europe will be above all accountable for this huge loss. Out of $190 million lost in the international operations in the first quarter, $149 million were in Europe (Vlasic, 2012). Shortly after this forecast was published, the shares of Ford fell by 3 per cent. Anyway, Ford suffered considerably less than General Motors which is about to close one plant in Europe. Yet, Ford now faces the same dilemma of plant capacity as did General Motors and other companies including Fiat. While the company’s CFO Mr. Shanks mentioned the excessive capacity of Ford in Europe, he still acknowledges that the future policy will aim to reorganize the production process in such way that one of working 5 plants in Europe is closed. South America and Asia have been mentioned as areas of pressure for the company. Thus, North America is the only region where the corporation has had steady profits. Reference Vlasic, B. (2010). Ford Motor, Citing Europe’s Woes, Says Foreign Losses to Triple in Quarter. The New York Times 28 June 2012. Retrieved on July 4, 2012 from http://www.nytimes.com/2012/06/29/business/ford-sees-overseas-losses-triple-this- quarter.html?_r=1&scp=1&sq=market%20capacity%20planning&st=Search Lean Operations: Summary #7 “Market Place; Southwest Airlines Earns Praise for Its Profitable Ways” The example of the airline company discussed in the article offers an insight into how lean operations helped the business save considerable sums. It illustrates how popular the company has become thanks to its lean operations and lean thinking in comparison with traditional business thinking and strategies. The customer is ready and willing to get cheaper services which, in their turn, require less effort and less capital on the part of the company. The focus on lean operations plus providing a minimal amount of passenger amenities has been the driver of success of Southwest Airlines, the company which has earned its profits in the last three years. A multitude of start-up airlines started to imitate Southwest Airlines, but this does not pose any considerable threat, according to an analysts. The possibility is unlikely that these start-up firms become successful in competition with Southwest Airlines (McDowell, 1993). Back in 1993, Southwest Airlines was the only large carrier that had made profit the previous year, and did not support a hub-and-spoke system and did not transfer the luggage of its passengers to the connecting flight. Besides, Southwest Airlines did not provide meals and did not give the possibility of reserving seats (McDowell, 1993). Southwest is turning into a prestigious company to fly with in the States. It accounts for the majority of the United States continental flights, despite its fifth rank in the number of passengers and eighth rank in revenues. The company is sometimes said to be worth copying even by the Bog Three Carriers (McDowell, 1993). Reference McDowell, E. (1993). Market Place; Southwest Airlines Earns Praise for Its Profitable Ways. The New York Times 28 June 1993. Retrieved on July 4, 2012 from http://www.nytimes.com/1993/06/28/business/market-place-southwest-airlines-earns- praise-for-its-profitable- ways.html?scp=6&sq=market%20lean%20operation&st=Search Quality Control: Summary #8 “Johnson & Johnson” It seems quality control flaws are one of the major issues with Johnson & Johnson. Given adequate quality control practice, the products would have been of good quality and need not have been recalled from the market. That would certainly save a lot. Johnson & Johnson, one of the States’ most influential brands, faces a complex challenge of regaining its trustful image in the American market. Alex Gorsky has been appointed the company new chief executive following Mr. Weldon’s retirement. The major challenges to handle named by him are as follows: redesigning the ways it brings medicines to the market, expansion into the global markets, as well as regaining the customer confidence (“Johnson & Johnson”, 2012). These tasks are especially important after the series of product recalls, government inquiries, and problems in manufacture which plagued the company in the recent years. The company’s reputation was heavily undermined with the huge $1.2 billion fine for hiding the risks of taking the drug Risperdal, which include diabetes risk, the risk of a heart stroke, and gaining weight. Reference Staff writer (2012). Johnson & Johnson. The New York Times. April 26, 2012. Retrieved on July 4, 2012 from http://topics.nytimes.com/top/news/business/companies/johnson_and_johnson/inde x.html?scp=5&sq=market%20quality%20control&st=Search Read More