Using Industry Average Multiples For Valuation Finance Essay

Using Industry Average Multiples For Valuation Finance Essay Valuation of equity shares of a company is an important exercise and is performed on multiple occasions, be it investment decision in a particular company, merger, acquisition, restructuring, public issue, etc. Using industry average multiple is a common practice, especially when an unlisted security is to be valued. The study looks at eight industries and attempts to derive (a) which is the most stable industry average multiple by using the statistical tool coefficient of variation and (b) which would be the most important financial performance parameter, which could be driving multiple of a particular security within the industry by using statistical tool of coefficient of correlation. Executive Summary A company will get valued/re-valued on multiple occasions such as raising capital, sale of business, swap of shares, issue of stock options, etc. Valuation of publicly traded securities is quite straightforward and often regulated for different events, while valuation of thinly traded or un-traded securities requires some special approaches. There are three main approaches to security valuation such as discounted cash flows, asset based valuation and comparables. Comparables are regarded as one of the most useful and practical method. Ideal approach within comparables is to find out a publicly traded company which is exactly like the company being valued and adopt an appropriate multiple as valuation metric. Finding such a company is a challenge. Even if a company is financially alike, many non-financial factors such as general market reputation, stock liquidity, etc. could be influenced its valuation of a particular stock. Experts often use industry average multiples to counter this anomaly. They could be used on a stand-alone basis or along-with a set of exact comparables. The articles analyses the concept of industry multiples in eight industries: Private sector banks, Public sector banks, General food processing, Agri Inputs, Edible Oil, Rice, Sugar, Plantations (tea, coffee, flowers) and Auto-components and tries to answer two questions: Which is the most appropriate industry average multiple? The criterion used is co-efficient of variation. Multiples used are Market Capitalisation (MCap) / Profit After Tax, Enterprise Value (EV) / Earnings Before Interest Taxes Depreciation and Ammortisation (EBITDA), MCap/Book Value, MCap/Sales Which factor is the major driver of a multiple in a particular industry? The author has calculated co-efficient of correlation between different multiples and factors like revenues, 5 year revenue growth, margins, total assets, provisions, Return on Equity (ROE), Net worth. EV/EBITDA was the most stable multiple followed by Mcap/PAT (similar to P/E ratio). Revenue, net-worth and margins were important drivers. Keywords: Industry average multiple, valuation, market capitalization, book value, coefficient of variation/correlation Background There are many situations wherein a company will get valued/re-valued such as raising capital, sale of business, swap of shares, issue of stock options, etc. While, valuation is easy and fairly regulated (SEBI, the regulator in India has defined how a security is to be valued for different purposes) for a publicly traded company, valuation of a thinly traded or un-traded securities requires some special approaches. At times, analysts also value a well-traded company to determine whether it is value fair or if there is any possible up-side. Different approaches to valuation are as described below: Comparables Asset Value EBITDA PAT Book Value Sales, etc. Equity Value DCF Figure 1 Different valuation methods Asset Value: Asset based approaches such as book value (asset less liabilities as reflected in books of accounts) and realizable value (market value of asset less liabilities) are more relevant when the company/vehicle is wound-up or dissolved in any manner. Discounted Cash Flow (Discounted Cash Flow to the Firm): Discounted cash flow is, theoretically, the best valuation method. The company calculates its projected financial performance. These projections and their assumptions are vetted against market factors, expert opinions. Once the parties are confident with projections, cash flows of the company (called Cash Flow to the Firm) are calculated as follows: EBIT X (1-Tax Rate) Less Working Capital Changes Less Capital Expenditure Add Depreciation. An important component of DCF based valuation is the Terminal Value. Last year in the projection period is capitalized as: Cash flow in terminal year X (1+ perennial growth rate) / (WACC perennial growth rate). This is again discounted to calculate present value of terminal cash flow. This approach is well recognized, but is not widely used due to the following limitations: The model involves a number of assumptions (i) Entire set of assumptions going into calculation of financial projections, (ii) Market risk premium, (iii) Long term growth rate, etc. which makes it very subjective. The method does not work with firms which have un-utilised assets, are in the process of re-structuring, which do not have positive operating cash flows, etc. Comparables: One of the most preferred methods of valuing a company is comparing it with a publicly traded company of similar nature called relative valuation. It is also the most intuitive method we practice it in pricing almost everything real estate, items of daily usage, etc. In relative valuation, the value of an asset is derived from the pricing of comparable assets, standardized using a common variable such as earnings, cash flows, book value or revenues. (Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, by Ashwath Damodaran, Wiley Finance) A publicly traded peer is identified and compared to the company under consideration in terms of various valuation parameters like Price to Earnings, Price to Book, Price to Sales, Enterprise Value / EBITDA which ever is applicable and accordingly the value of the company/security under consideration can be calculated, e.g. If a comparable company is traded at 15 times its earnings, the earnings of the company under consideration are multiplied by 15 to calculate its value. The approach is fairly simple, however, the challenge lies in finding an exact comparable. There can be many differentiating factors, and some of them could be quite stark. The pricing of the publicly traded peer would also be influenced by many non-objective factors like: general market perception, promoter reputation, adverse market rumors, low liquidity in specific stock, low level of public holding, etc. In light of these, many analysts and industry experts use industry-average multiples, on a stand-alone basis as well as to moderate/rationalize multiples of an individual or group of comparables. This brings us to the questions which the article intends to ponder over: Which bench-mark should be used? Every industry has two or three popular benchmarks, which appropriately capture financial and operative strengths, such as the tea gardens are valued at certain times of their sales, so are football clubs. Manufacturing industries are valued at certain time of their EBITDA or PAT as the case may be. However, if an industry average is to be used, high degree of variability in the multiple will compromise its reliability. Another question is what drives a companys valuation. The range in multiples in many industries tends to be quite high. Some tangible financial factor could be an important driver/differentiator for a company. Which would be the driver in a particular industry? The article attempts to answer these questions via an exercise on 214 companies in 8 different industries. The author has: Chosen 8 industries based on his past work experience Selected different publicly listed companies in each industry Derived their multiples and financial parameters from various databases Checked the variability of industry averages of multiples by using the statistical tool co-efficient of variation to answer the first question (most reliable benchmark) Run correlation between a particular industry relevant bench-mark such as 5 year growth, margins, etc. and the multiple e.g. correlation between P/E ratios and book size in banking industry to answer the second question. The breakup of companies across industries is as follows: Table 1 Sectors and number of companies used in analysis Industry No of companies Private sector banks 14 Public sector banks 23 General food processing 16 Agri Inputs 8 Edible Oil 17 Rice 7 Sugar 17 Plantations (tea, coffee, flowers) 17 Auto-components 85 Total 214 The following multiples were used: Market Capitalisation (MCap) / Profit After Tax, Enterprise Value (EV) / Earnings Before Interest Taxes Depreciation and Ammortisation (EBITDA), MCap/Book Value, MCap/Sales. Mcap/PAT is similar to more commonly used Price to Earnings per share (P/E), and Mcap/Book Value is similar to Price to Book value per share (P/B). The following financial performance parameters were selected for analysis: Revenues of latest available financial year, 5 year revenue growth, margins (PAT margin for banks and EBITDA margins for others), total assets, provisions, Return on Equity (ROE), Net worth Analysis Private Sector Banks The following banks were analysed within private sector banks: HDFC Bank Ltd., ICICI Bank Limited, Axis Bank Limited, IndusInd Bank Limited, Yes Bank Ltd, Federal Bank Limited, ING Vysya Bank Limited, The Jammu Kashmir Bank Limited, Karur Vysya Bank Ltd., South Indian Bank Limited, City Union Bank Ltd., Karnataka Bank Ltd, Development Credit Bank Ltd., Lakshmi Vilas Bank Limited. Table 2 Results of private sector banks Banks (private) Multiple Parameter Mcap/PAT Mcap/Assets Mcap/Sales Mcap/Book Value Mean 8.40 0.09 0.88 1.19 StdEv 5.43 0.08 0.82 0.93 Coeff of Variation 0.65 0.99 0.93 0.78 Correlation between multiple parameter Revenue 0.10 0.08 0.09 0.09 Past 5 year growth 0.20 0.34 0.36 0.48 Margin 0.32 0.59 0.61 0.63 Total Assets 0.07 0.06 0.06 0.07 Provisions -0.05 -0.10 -0.09 -0.07 ROE 0.01 0.32 0.34 0.43 Net Worth 0.18 0.18 0.18 0.16 MCap/PAT, similar to Price to Earnings showed maximum stability. Margin (calculated as PAT/Revenue) showed maximum correlation with MCap/PAT, followed by high growth rate. The MCap/Book value Price to Book in popular parlance and Return On Equity showed the maximum correlation across all multiples and parameters. Margin and ROE showed maximum correlation with MCap/PAT. Public Sector Banks Public sector banks tend to have different operating objectives and are often valued differently compared to private sector banks. Mcap/PAT of public sector banks is 5.41 v/s 8.40 as observed in private sector banks. The following public sector banks were analysed: Indian Overseas Bank, Andhra Bank, Corporation Bank, Central Bank Of India, UCO Bank, Dena Bank, Bank of Maharashtra, State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Mysore, United Bank of India, Punjab Sind Bank. Table 3 Results of public sector banks Banks (public) Multiple Parameter Mcap/PAT Mcap/Assets Mcap/Sales Mcap/Book Value Mean 5.41 0.04 0.45 0.69 StdEv 1.36 0.01 0.15 0.16 Coeff of Variation 0.25 0.29 0.32 0.23 Correlation between multiple parameter Revenue 0.34 0.61 0.65 0.60 Past 5 year growth -0.05 0.12 0.13 0.07 Margin -0.46 0.79 0.81 0.76 Total Assets 0.31 0.62 0.70 0.63 Provisions 0.44 0.51 0.50 0.46 ROE -0.64 0.57 0.57 0.69 Net Worth 0.29 0.70 0.75 0.65 Public sector banks showed a different trend in variability of multiples. The book value multiple seems to show the least variation around mean as compared to Mcap/PAT observed in private banks. Within the book value multiple, margins show the highest correlation of 0.76 followed by ROE, 0.69. Food processing Food processing falls into manufacturing domain. EV/EBITDA multiple is introduced in place of the Total Assets multiple is relevant to the banking and NBFC company wherein income is primarily driven by book size. EV/EBITDA is one of the most popular multiples in manufacturing sector. It captures the operating strength of a company (EBITDA) v/s Enterprise Value. Enterprise value is a debt and cash neutral metric, calculated by Market Capitalisation + Debt Cash. Table 4 Results of food processing (general) Food Processing Multiple Parameter Mcap/PAT EV/EBITDA Mcap/Sales Mcap/Book Value Mean 18.50 9.39 0.97 4.21 StdEv 14.09 6.64 1.61 7.36 Coeff of Variation 0.76 0.71 1.65 1.75 Correlation between multiple parameter Revenue 0.39 0.64 0.49 0.75 Past 5 year growth -0.34 -0.27 -0.17 -0.14 EBITDA Margin 0.02 0.20 0.57 0.26 ROE 0.50 0.80 0.75 0.90 Net Worth 0.06 0.31 0.34 0.34 EV/EBITDA shows the lowest variation around mean (0.71). ROE is the most important driver for this multiple (0.8 correlation), followed by revenue. The following companies were considered for analysis in food processing: Hatson Agro Products REI Agro, Heritage Foods, KSE Limited, Nestle India Ltd., Glaxo SmithKline, Britannia Industries, Zydus Wellness, DFM Foods Ltd., Vadilal Industries, Himalya International, ADF Foods, Anik Industries, Srinivasa Hatcheries, Flex Foods, Bambino Agro, Foods and Inns, Tasty Bite Eatables, Freshtrop Fruits, Temptation Foods, Chordia Food Products. Vadilal Enterprises, Sita Shree Food Products, Simran Farms, Venkys (India), Waterbase. The companies belonged to multiple sub-sectors like dairy, poultry, consumer goods, ice creams, frozen food, etc . Agri Inputs Agri inputs included seed, special fertilizers and some special input companies in food processing industries. The larger fertilizer companies, which fall more into chemicals domain were not considered. The following companies were anlysed: Sukhjit Starch Chemicals, Narmada Gelatines, Sakuma Exports, Vidhi Dyestuffs, Saboo Sodium Chloro, Kaveri Seed, Advanta India, Basant Agro Tech. In agri inputs also, EV/EBITDA showed maximum stability, followed by MCap/PAT. EBITDA margin showed highest correlation with EV/EBITDA. Table 5 Results of specialised agri inputs Agri Input Multiple Parameter Mcap/PAT EV/EBITDA Mcap/Sales Mcap/Book Value Mean 11.27 8.53 0.98 1.68 StdEv 9.64 5.11 1.28 1.87 Coeff of Variation 0.86 0.60 1.30 1.11 Correlation between multiple parameter Revenue -0.36 0.25 0.04 0.11 Past 5 year growth -0.18 0.25 0.26 0.40 EBITDA Margin -0.88 -0.08 0.71 0.11 ROE 0.02 -0.03 0.40 0.48 Net Worth 0.33 0.66 0.48 0.53 Edible Oil: Edible oil is a special segment within food processing. The sector is characterized by high level of imports, benchmarking with international prices, low regulations compared to commodities like rice and pulses, etc. The following companies were anlysed: Ruchi Soya Industries, Sanwaria Agro Oils, Rasoya Proteins, Gujarat Ambuja Exports, Jayant Agro-Organics, JVL Agro Industries, Vippy Industries Limited, Vimal Oil Foods, Raj Oil Mills, BCL Industries, Hind Industries, Kriti Nutrients, Vijay Solvex, Sam Industries, Modi Naturals, Natraj Proteins, Poona Dal Oil Industries Table 6 Results of edible oil Edible Oil Multiple Parameter Mcap/PAT EV/EBITDA Mcap/Sales Mcap/Book Value Mean 11.10 6.43 0.21 1.53 StdEv 9.77 4.18 0.27 2.20 Coeff of Variation 0.88 0.65 1.31 1.44 Correlation between multiple parameter Revenue 0.43 -0.12 -0.12 -0.03 Past 5 year growth -0.28 -0.36 0.99 -0.20 EBITDA Margin -0.01 -0.03 0.51 0.16 ROE -0.20 -0.12 0.58 0.61 Net Worth 0.38 -0.14 -0.11 -0.04 EV/EBITDA showed the maximum stability, however, none of the parameters showed any reasonable correlation with the parameter. EV/EBITDA was followed by Mcap/PAT with 0.88 coefficient of variation. This factor showed relatively higher correlation with revenue followed by Net Worth. Rice Rice is also a typical sector within food processing. Most of the publicly traded rice companies have focused on basmati rice. Basmati is a famous variety of aromatic rice and has large export market in the middle east, Europe and US. The following companies were analysed: Khushi Ram Behari La, Usher Agro, LT Food, Lakshmi Energy and Foods, Emmsons International, Chaman Lal Setia Exports, GRM Overseas. The sector showed better stability of Mcap/PAT followed by Mcap/Book Value. Within Mcap/PAT EBITDA margin showed the highest correlation at 0.86. Table 7 Results of rice Rice Multiple Parameter Mcap/PAT EV/EBITDA Mcap/Sales Mcap/Book Value Mean 6.12 7.94 0.16 0.68 StdEv 2.27 3.95 0.13 0.30 Coeff of Variation 0.37 0.50 0.83 0.44 Correlation between multiple parameter Revenue 0.42 0.68 0.16 0.17 Past 5 year growth -0.70 0.47 -0.92 -0.98 EBITDA Margin 0.86 -0.60 0.59 -0.25 ROE -0.77 0.12 0.11 0.73 Net Worth 1.00 -0.17 0.55 -0.30 Sugar: Sugar is one of the largest organized sectors in agri processing. The sector has many large companies like Renuka Sugars, Bajaj Hindustan, etc. The sector also has some typical features like minimum procurement price, cyclical production, concentrated production in Asia and South America, etc. The following companies were analysed: E.I.D. Parry, Bajaj Hindusthan, Bannari Amman Sugars, Triveni Engineering, Andhra Sugars, Dhampur Sugar Mills, KCP Sugar, Ponni Sugars (Erode), Ugar Sugar Works, Dalmia Bharat Sugar, Thiru Arooran Sugars, Sri Chamundeswari, Piccadily Agro, Vishnu Sugar Mills, Kesar Enterprises, Piccadily Sugars, Indian Sucrose EV/EBITDA showed lowest co-efficient of variation (0.44). The multiple showed highest correlation with net worth, followed by revenue. Table 8 Results of sugar Sugar Multiple Parameter Mcap/PAT EV/EBITDA Mcap/Sales Mcap/Book Value Mean 14.38 6.90 0.35 0.80 StdEv 14.79 3.07 0.20 0.39 Coeff of Variation 1.03 0.44 0.56 0.48 Correlation between multiple parameter Revenue -0.01 0.20 0.00 0.19 Past 5 year growth -0.26 -0.04 -0.42 0.23 EBITDA Margin -0.51 -0.43 0.49 0.18 ROE -0.65 -0.69 0.44 0.61 Net Worth -0.01 0.44 0.08 0.01 Plantations Tea and Coffee are another specialized area in agri and food industries. The sector has stakes of many large FMCG companies like Tata Tea, Unilever, etc. This sector also has special policies, farming conditions, competitive factors. For the purpose of this analysis, flowers have also been analysed together with tea and coffee. The following companies for part of this analysis: Karuturi Global, Neha International, Pochiraju Industries, Tata Global Beverage, McLeod Russel India, Tata Coffee, CCL Products India, Warren Tea, Dhunseri Petrochem, Goodricke Group, Jayshree Tea, Assam Company India, Harrisons Malayalam, Russell India, United Nilgiri Tea, Joonktollee Tea, Diana Tea. Here also, EV/EBITDA showed minimum coefficient of variation, followed by Mcap/Sales. Revenue and net worth showed the highest correlation with EV/EBITDA. Table 9 Results of plantation (tea, coffee, flowers) Plantation (tea, coffee flowers) Multiple Parameter Mcap/PAT EV/EBITDA Mcap/Sales Mcap/Book Value Mean 15.17 9.60 1.09 1.13 StdEv 13.19 5.70 0.81 0.87 Coeff of Variation 0.87 0.59 0.75 0.76 Correlation between multiple parameter Revenue 0.22 0.33 0.09 0.27 Past 5 year growth -0.47 -0.38 -0.19 -0.43 EBITDA Margin -0.34 -0.42 0.20 -0.11 ROE -0.37 -0.27 0.20 0.54 Net Worth 0.18 0.29 0.16 0.21 Auto components Auto components industry comprises of a large number of specialized players focusing on different segments of auto industry. Major segments and their composition in total industry size are: Engine parts 31% Drive transmission and steering parts 19% Body and Chassis 12% Suspension and braking parts 12% Equipments 10% Electrical parts 9% Miscellaneous 7% The industry is estimated at USD 43.5 billion in FY 2011-12. (Auto Components Manufacturers Association of India) The following companies were anlaysed in the industry: Bosch, Cummins India, Exide Industries, Motherson Sumi Systems, WABCO, Amtek India, Kirloskar, Amtek Auto Limited, Federal-Mogul, Sundram Fasteners, Wheels India, Shanthi Gears, NRB Bearings, Automotive Axles, Mahindra Forgings, Commercial Engineers, Banco Products, Jamna Auto Industries, Fairfield Atlas, Gabriel India, Lumax Industries, Sundaram-Clayton, India Motor Parts, Saint-Gobain, Steel Strips Wheels, Setco Automotive, Minda Industries, Suprajit Engineering, Rane Holdings, ZF Steering Gear, Munjal Showa, Sona Koyo Steering, Munjal Auto, Lumax Auto Technology, Autoline Industries, India Nippon, FIEM Industries, L. G. Balakrishnan, Subros, Pricol, Hindustan Composites, Ucal Fuel Systems, Rane Madras, Rico Auto Industries, Jay Bharat Maruti, Shivam Autotech, Omax Autos, IST, Bimetal Bearings, Rane Engine Valves, REIL Electricals, Rane Brake Lining, Precision Pipes, Automotive Stampings, Harita Seating, JMT Auto, Alicon Castalloy, JBM Auto, Bharat Gears, Menon Pistons, Talbros Automotive, Triton Valves, Aunde India, Clutch Auto, Pix Transmissions, Bharat Seats, Lakshmi Precision, Menon Bearings, Simmonds Marshall, Kar Mobiles, IP Rings, Jay Ushin, Gujarat Automotive, Competent Automobile, Lumax Automotive Systems, Autolite India, ANG Industries, Hindustan Hardy, Raunaq Automotive, Remsons Industries, Porwall Auto Components, Spectra Industries, Kew Industries, Jagan Lamps, Coventry Coil-O Matic. In this industry again, EV/EBITDA is the most stable multiple. EV/EBITDA shows maximum correlation with revenue and net-worth. Table 10 Results of auto-components Auto Components Multiple Parameter Mcap/PAT EV/EBITDA Mcap/Sales Mcap/Book Value Mean 12.47 6.04 0.67 1.62 StdEv 13.09 4.65 0.93 1.67 Coeff of Variation 1.05 0.77 1.40 1.03 Correlation between multiple parameter Revenue 0.19 0.35 0.18 0.31 Past 5 year growth -0.04 0.05 -0.05 0.09 EBITDA Margin 0.03 0.06 0.47 0.12 ROE -0.31 0.04 0.21 0.45 Net Worth 0.13 0.35 0.30 0.24 Inferences: The most stable multiples across different industries and their respective coefficients of correlations with different financial parameters were as follows: Table 11 Summary of trends Coefficient of variation Correlation Industry Co-efficient of Variation Multiple Highest Correlation Second highest Correlation Private sector banks 0.65 MCAP/PAT Margin 0.32 Past 5 year growth 0.20 Public sector banks 0.23 P/B Margin 0.76 ROE 0.69 General food processing 0.71 EV/EBITDA ROE 0.80 Revenue 0.64 Agri Inputs 0.60 EV/EBITDA Net worth 0.66 Revenue 0.25 Edible Oil 0.88 MCAP/PAT Revenue 0.43 Net worth 0.38 Rice 0.37 MCAP/PAT Net worth 1.00 EBITDA margin 0.86 Sugar 0.44 EV/EBITDA Net worth 0.44 Revenue 0.20 Plantations (tea, coffee, flowers) 0.59 EV/EBITDA Revenue 0.33 Revenue 0.29 Auto-components 0.77 EV/EBITDA Revenue 0.35 Revenue 0.35 *In edible oil, lower coefficient was observed in EV/EBITDA. P/E was chosen because EV/EBITDA showed no correlation with any of the parameters studied. Co-efficient of variation was minimum in public sector banks and highest in auto-components. Industry multiple of public sector banks, hence, stands as the most reliable industry multiple among the industries observed. The co-efficient would be high if there is considerable heterogeneity within the industry in terms of size, profitability, product portfolio, promoter background, etc. Earnings based multiples EV/EBITDA and P/E showed minimum coefficient of variation in all industries, except public sector banks, which showed Mcap to Book Value as the most stable multiple. Considering the correlations observed with the most stable multiple, we can infer that: net margins are the main drivers of multiples in banks (both public and private) among the parameters observed, ROE was most influential in food processing and edible oil plantations and auto-components seem to be driven by revenue vis-Ã  -vis other parameters observed and agri inputs, rice and sugar were influenced by net-worth of respective companies. The following table shows the maximum correlation observed in a particular industry. Table 12 Maximum correlations across industries Industry Maximum Correlation Relationships Private sector banks 0.63 ROE and Mcap/Book Value Public sector banks 0.81 PAT Margin and Mcap/Book Value General food processing 0.90 ROE and Mcap/Book Value Agri Inputs 0.71 EBITDA margin and Mcap/Sales Edible Oil 0.99 5 year growth and Mcap/Sales Rice 1.00 Net-worth and Mcap/PAT Sugar 0.61 ROE and Mcap/Book Value Plantations (tea, coffee, flowers) 0.54 ROE and Mcap/Book Value Auto-components 0.47 EBITDA margin and Mcap/Sales ROE and Mcap/Book Value showed highest correlation in four out of nine industries, followed by EBITDA margin and Mcap/Sales. The results were quite intuitive a company generating higher returns on invested capital (ROE), or a company operating at a higher margin should be valued more than its peers. Table 13 Results of general correlation analysis Parameter Mcap/PAT

DropBox Case Essay

Dropbox was created in 2007 and launched to the public a year later. It was founded by Drew Houston and Arash Ferdowski; who were classmates together at MIT in the early 2000’s. The created a product that allows you to sync you computers together by using a cloud to share files between the different computers. At the time of creation there were existing products in the market but they believed that they created a product that would simplify the process as well as make it secure and reliable for the customers. Their plan was to differentiate themselves form their competitors based off these factors. For a customer of Dropbox it allows them to easily and reliably share files between their computers or devices. They believed that the existing products were unreliable and would only allow u to share a certain amount of files. Their product would be reliable and easy to use for the customers. They would also get a free 2G worth of space or could but additional space if they needed to. This is something seen by a few competitors but not all of them. They also created a product that can be used for both business and personal use. Dropbox will do something that also differentiates itself form their competitor. They will use Amazons server to provide the customers space the store files. This will be rented from Amazon and will drastically decrease the amount of money they spend to provide space. Owning their own servers will be costly to purchase and maintain for Dropbox. They also only hired engineers to their company in the early going to be able to continue to improve the technology they are providing. To keep improving their product they offered beta testers the opportunity to test the product and see how they like it. They also listened to their customers after the launched to see what they liked and did not like. This led them to develop a feature of the product that allows the customer to provide feedback to the company. They also observed users using the product to see if it fit the needs of a  basic user, which turned out to be very beneficial to the company. Dropbox launched their product in 2008. While the product was still in beta it began to gain customers through various websites and technological competitions for startup companies. This allowed Dropbox to get their name out there to the people who most likely are already using similar products or have the need for this product. When they launched the product they used the freemium business model where they offered free use for up to 2G of space and you could pay a premium for more space. They wanted to grow rapidly in the market to gain as big of market share as possible in the shortest amount of time. They also found great success from word of mouth referrals and viral marketing campaigns. Dropbox’s biggest problem they needed to solve early on was their customer acquisition rate. They found that in the early going to cost about 300 dollars per customer they had pay. This was due to the amount of free space given away to the amount that people were paying for. This does not set them up to be successful financially if it didn’t improve. Dropbox was able to figure this out and lower their costs but utilizing more word of mouth referrals. Dropbox was fortunate enough to have backers that supported their company in the early going with enough money to keep the company going until they could gain the following needed to decrease costs. They have a greater opportunity for profit then most of their competitors because of their use of Amazon’s server instead of buying and maintaining their own, especially with the decreasing rate of renting server space.

Understanding the Effective Primary Science Learning

In my experience the enthusiasm and appetency for acquisition of kids in their primary old ages is matchless which makes primary learning a truly fulfilling and honoring experience. However, high-quality instruction and good thought-out course of study development in these early old ages is important to kids ‘s success. With mentions to my ain experiences and through a critical analysis of the available literature, this paper will discourse how possible course of study development will heighten effectual primary learning with a specific focal point on the topic of scientific discipline. It will besides discourse some of the troubles in interpreting these constructs into pattern and see ways to get the better of these obstructions. Bettering a immature individuals ‘ apprehension of scientific discipline is cardinal to the authorities ‘s committedness to promote more kids to analyze scientific discipline. A good scientific discipline instruction is non merely of import for scientific literacy subsequently in life but by go oning to analyze scientific discipline throughout school, students open themselves up to a universe of possibilities ( Teachernet, 2009:1 ) . This committedness was ab initio exemplified through the debut of a National Curriculum in 1989 which asserted that compulsory scientific discipline instruction be brought into the primary sectors in England and Wales for the first clip. Science was placed alongside English and Mathematics in what became known as ‘the nucleus ‘ ( Sharp, J et Al. 2009:247 ) . However, from the beginning, it became clear that many schools had troubles in presenting the National Curriculum efficaciously. The course of study was viewed as excessively normative and overladen and hindered instructors ‘ ability to be originative and give adequate attending to the demands of kids with larning troubles. Assessment processs were besides debatable with a figure of instructors objecting to the National Curriculum trials ( DCSF, 2009:28 ) . To rectify the jobs associated with the National Curriculum there have been several alterations and reappraisals of it since its initial execution. For illustration, Sir Jim Rose ( Alexander and Flutter, 2009:3 ) was invited to set about an ‘Independent reappraisal of the primary course of study ‘ with a position to doing some recommendations which will inform the new primary course of study to be introduced from September 2011. Indeed, a figure of writers have proffered suggestions for course of study development, the comparative virtues of which will be discussed in the undermentioned paragraphs. Harmonizing to the Rose Review ( DCSF, 2009:9 ) the course of study that primary kids are taught must let them to bask childhood and develop the indispensable accomplishments and cognition which are the foundations for secondary instruction and ulterior life. To accomplish this, the new course of study must be informed by an apprehension of the meshing ways in which kids learn – physically, intellectually, emotionally, socially, and spiritually between the ages of 5 and 11. In add-on, a well-planned, dynamic course of study acknowledges that primary kids â€Å" love to be challenged and engaged in practical activities ; and they readily empathise with others through working together and through experiences in humanistic disciplines, literature, spiritual instruction and much else. Primary kids must non merely larn what to analyze, they must besides larn how to analyze, and therefore go confident, self-restraining persons † . Although the topic of scientific discipline ( and most other topics ) has antecedently been content-driven, in position of the above paragraph it is possibly non surprising that recent course of study developments seem to be embracing a more holistic attack equilibrating ‘content ‘ with ‘process ‘ and concentrating on accomplishments development every bit good as the acquisition of cognition. This recent development is likely to hold been influenced by instructors concern that because the bing course of study has so much prescribed content they do non hold clip to learn it in deepness, or for kids to consolidate their acquisition. Consequently, a cardinal demand of this reappraisal is to cut down overload by â€Å" reexamining the current programmes of survey so that schools have greater flexibleness to run into students ‘ single demands and construct on their anterior acquisition † ( DCSF, 2009:10 ) . A greater focal point on ‘process ‘ enables kids to go more involved in hands-on activity and practical work and encourages kids to research their ain and others ‘ thoughts. Concept function, group work, utilizing computing machine plans, function drama, field work and authorship are besides of import vehicles for assisting kids develop their ain thoughts ( Wynne, 1999:14 ) . Indeed, promoting echt collaborative group activity is of import to accomplishing the sort of interchange that encourages thoughts ( Barnes, 1976, cited in Wynne, 1999:58 ) . Harmonizing to Barnes ( 1976:31 ) â€Å" Talk and authorship provide agencies by which kids are able to reflect upon the bases upon which they are construing world and thereby change them † . Henderson ( 1994, cited in Wynne, 1999:58 ) has suggested several schemes for advancing group coaction and category treatment, including: groups researching a subject and showing their findings ; groups be aftering an probe and sharing their thoughts. Another recommendation made by the Rose Review ( DCSF, 2009:46 ) can enable greater flexibleness for instructors, increase enjoyment and better acquisition development for students. Harmonizing to Ofsted and the QCA study ( DCSF, 2009:12 ) some of the most effectual acquisition occurs when connexions are made between topics. This is supported by Millar and Osborne ( 1998, cited in Sharp and Grace, 2004:313 ) who assert that uranology for illustration, can supply the ‘explanatory narratives ‘ that integrated whole sets of science-related every bit good as modern-day and historical instance surveies, and these narratives provide a cross-curricular tool for doing those constructs more memorable. A little rural Shropshire primary school is a specific illustration of successful cross-curricular activity in schools. In this school the environment was often used for a broad scope of out-of-door chases, such as field surveies of home grounds, forestry direction, and the landscape which brought together elements of geographics, scientific discipline and history ( DCSF, 2009:42 ) . My school excessively uses the out-of-doorss creatively for turning and analyzing workss and this has proved to be a really gratifying and successful acquisition experience for students. Cassop Primary School ( DCSF, 2009:48 ) is besides an first-class illustration of a school which has been able to unite topics to the enjoyment and advancement of students and lend significantly to the environment. The school is the first wind-powered school in the UK and its environmental programme has helped to heighten acquisition in scientific discipline and engineering and environmental apprehension so that â€Å" students are able to explicate clearly the scientific discipline underpinning the engineering, while as a focal point for larning they develop accomplishments in question, concluding and creativeness † . This enables kids to set up good attitudes to larning ( DCSF, 2009:49 ) and facilitates the ability to larn non merely what to analyze, but besides how to analyze as portion of a rewarding procedure. Another recommendation is to utilize drama in a productive and meaningful manner to heighten kids ‘s cognition of scientific discipline. The Rose reappraisal received many petitions from parents to supply more chances for exploratory, well-structured drama. Based on strong grounds, the interim study highlighted the importance of larning through drama for immature kids and proffered that the intents of drama in advancing acquisition should be made expressed and chances made to carry through them in the primary course of study ( DCSF, 2009:93 ) . It is of import to observe that these schemes are improbable to be implemented efficaciously without the full engagement of parents themselves. The Rose Review ( DCSF, 2009:17 ) asserts that kids thrive best when parenting, the course of study and teaching method are all of high quality and has observed a figure of illustrations of instructors and parents partaking in informal treatment about kids. The Cambridge Review ( Alexander and Flutter, 2009:20 ) besides recommends that kids themselves should hold a say in course of study design and planning. Lambeth Children and Young People ‘s Services suggested that the course of study needs to promote a more meaningful and relevant course of study, including our apprehension of how kids learn, and inquiring for their position and input in design. Gilbert et Al. ( 1982, cited in Sharp and Grace, 2004:313 ) support this position and assert that serious consideration should be devoted to understanding kids ‘s involvement and motive in the different content countries of scientific discipline. So far, this assignment has explored some of the schemes recommended by authorities and their part to the acquisition and development of kids through scientific discipline. However, there are a figure of obstructions within the instruction system which can smother the passage from policy to pattern and these will be discussed in the undermentioned paragraphs. Harmonizing to Roden ( 2000:31 ) ten old ages on from the execution of the National Curriculum there does look to hold been some important betterments. Children are accomplishing expected criterions of scientific discipline, as measured by public presentations on SAT ‘s trials and teacher appraisal at the terminal of Key Stage 2. However, in 2009, England has a statutory National Curriculum for the primary stage with non-statutory elements, which combines three nucleus topics, two of which ( mathematics and English ) are capable to separate agreements in chase of the ‘standards ‘ docket and take up half of the available instruction clip in structured lessons. The other seven statutory foundation topics and three non-statutory foundation topics are expected to be accommodated for during the other half of available instruction clip ( Alexander and Flutter, 2009:5, 6 ) . In contrast to daily literacy and numeracy lessons speaking half of the available instruction clip, NAIGS estimated that clip devoted to scientific survey now equated to merely 1.5 hours a hebdomad at Key Stages 1 and merely 2 hours at KS2. This instruction tended to be limited to afternoon slots with small learning support ( Alexander and Flutter, 2009:30 ) . Therefore, although the increased focal point on cross-curricular activiti es may let instructors to pass more clip on scientific chases within a tight timeframe, it can be really hard to guarantee that kids are provided with a good balance of both ‘process ‘ and ‘content ‘ oriented work particularly given the increased focal point on SATs.. Indeed, Hollins and Whitby ( 1998, cited in Roden, 2000:34 ) point out that although ‘process ‘ and ‘content ‘ are supposed to be given equal weighting, recent statutory educational duties have encouraged the usage of didactic methods of learning to the hurt of question acquisition which reduces chances for kids to widen their apprehension. Appraisal at Key Stage 1 and KS2 relies to a great extent on instructor appraisal which holds equal position with pronounced Standards Attainment Tests ( SATs ) . The focal point within SATs requires callback of factual information which has led to ‘teaching to the trials ‘ ( Roden, 2000:34 ) and I know I have been guilty of holding done the same thing myself because kids merely would non make good in trials otherwise. Another concern is the deficiency of assurance that primary instructors frequently have in learning scientific subjects. In a national study of 514 primary instructors in Scotland primary instructors were less confident about learning scientific discipline than about all other course of study countries and felt that their ain apprehension was non sufficient plenty to promote conceptual development in students ( Holroyd, 1996:323 ) . Newton and Newton ( 2009:45 ) , in their survey of 16 concluding twelvemonth pupils on a degree class taking to measure up instructor position in the UK besides found that constructs of school scientific discipline lessons were narrow, focused on chiefly practical probes of affair of fact, and included misconceptions. The analysis so far, has shown that although there are a figure of possible course of study developments which could lend to the academic development of the kid and heighten their enjoyment of acquisition, the limited sum of clip allowed for learning scientific discipline, the force per unit area to accomplish high criterions in assessment trials, and the deficiency of assurance and cognition of scientific topics characterised by some instructors, can impede the passage from policy to pattern. However, there are some schemes that can be implemented in order to get down to get the better of the challenges encountered by primary scientific discipline instructors and these will be explored in the undermentioned paragraphs. Harmonizing to Wilson et Al. ( 2004:20 ) the impression that a more originative and ambitious attack will ensue in greater accomplishment in SATs was the footing of an Oxford Brookes University undertaking. It was felt that giving kids chances to build their ain apprehension would increase their enthusiasm for scientific discipline and assist them prosecute in the scientific procedure. This has clear resonance with ‘Excellence and Enjoyment ‘ ( DfES, 2003:1 ) a scheme for primary schools which opens with the words: â€Å" Children learn better when they are excited and engagedaˆÂ ¦.when there is joy in what they are making, they learn to love acquisition † . The undertaking involved 16 schools and two key instructors within each school. The cardinal countries that the undertaking focused on were: More focussed recording by the kids ; increased clip spent in treatment and argument of scientific thoughts ; more chances for practical probe ; and an increased accent on developing kids ‘s higher order thought ( Wilson et al. 2004:21 ) . The more focussed recording has released clip in lessons for making scientific discipline and treatment of the large thoughts which leads to further development of scientific cognition and accomplishments. In ‘Challenges in primary scientific discipline ‘ ( Coates and Wilson, 2003, cited in Wilson et Al. 2004:21 ) a short ‘bright thoughts ‘ slot into primary scientific discipline lessons is suggested. Promoting the kids to ‘think, brace and so portion ‘ for this slot encourages them to take clip to believe and improves deepnesss to their replies. As a consequence of the undertakings recommendations, 13 of the 16 schools showed a important addition in the per centum of kids accomplishing degree 5. Nationally, the per centum of kids achieving degree 5 in 2003 increased by 3 per cent, but 11 of the participating schools showed an addition much greater than this ( Wilson et al. 2004:21 ) . In decision, this assignment has critically assessed the available literature on possible course of study development for the sweetening of kids ‘s acquisition in primary scientific discipline. Recent reappraisals have recommended that primary scientific discipline learning be less content-led and more process-driven, advance the advantages of cross-curricular instruction and promote greater flexibleness in ‘what ‘ and ‘how ‘ scientific discipline is taught. There are a figure of illustrations to exemplify the effectivity of these attacks in primary schools. However, there are besides a figure of troubles associated with seeking to practically implement these schemes in an educational environment whereby many instructors lack the assurance and accomplishments to learn scientific discipline efficaciously, which still allocates limited clip for the instruction of scientific discipline and puts force per unit area on instructors to guarantee that students à ¢â‚¬Ëœ perform good in content-driven appraisal trials. The Oxford Brookes Project does propose some ways for scientific discipline instructors to believe creatively in this comparatively constricted environment and these have proved successful at developing the ‘whole ‘ kid and bettering academic attainment. However, such efforts are likely to stay bit-by-bit unless the position of scientific discipline is raised to be that of English and Mathematics ; clip is ring-fenced to supply adequate chance for practical work ; assessment trials place greater accent on appraisal accomplishments ; and more preparation is made available for instructors to better their scientific cognition and assurance.

Government Intervention Vs. Self Regulation - 874 Words

Business Ethics: Government Intervention vs. Self-Regulation Wealth brings power and power can at times bring corruption. In today’s economy where individuals are no longer the concern when it comes to wealth, the global attention is drawn to corporations who hold the majority of our wealth. This calls for us to take cetain measures that can ensure the existence of a socially responsible behavior amongst all corporations, and these measures could be introduced in many forms, quite possibly the most favorable currently being government intervention. However, government intervention is not always the best method for ensuring social responsibility and ethical behavior amongst corporations. A much better alternative is a self-regulatory economy along with a combination of freedom and transparency in order to ensure responsible behavior in corporations, in addition to an increase in efficiency and flexibility in regards to resources and innovation. 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