Perspectives Assignment Example | Topics and Well Written Essays - 750 words

Perspectives - Assignment Example It looks at how one thing relates to the other branches of the society. For example, how industrial or capitalistic relations coordinate with the economic, political and social relations of the said society. In the unitary perspective, any form of disagreement is viewed as very disruptive, unwanted and generally irrational (Waiganjo & Ng’ethe, 2012). This is because it is bound to spoil the state of tranquility that exists in this setting, which in normal cases is almost like a family. Conflicts are therefore solved through discussions, since the relationship here is taken to be mutually exclusive (Gordon, 2014). This essentially locks out the need for trade unions which usually should have taken this role of negotiation. As a result, the trade unions force themselves into the setup. In case they successfully do, they are in most cases pushed to the periphery of the organization since they are not really needed. Job regulation is perceived to be very mutual, where the needs, skills and requirements of the employee balance with those of the employer. As a result, employees enjoy their jobs and minima sackings or job discontinuities are observed. In the pluralist setup, conflicts and disagreements between the management and the employees is assumed to be a very normal occurrence. The leadership realizes that it has rival allegiances and attachments from its employees and an equilibrium has to be established (Michael, 1999).As a result negotiation and intensive arbitration are deemed necessary hence the need for trade unions, which are seen as essential for the rights of employees. They serve to agitate for the rights of the employees. Meanwhile, both parties are required to tread in a flexible manner, in order to avoid hard line stances that might scamper any negotiation attempt. Job regulation is maintained since the needs of the employee almost balance with the targets of the employer, and in case they don’t, trade

Tesco in India Essay Example | Topics and Well Written Essays - 2000 words - 7

Tesco in India - Essay Example The various segments of this research paper comprise a brief study of cross-cultural management, impact of cultural diversity on international firms and a relevant analysis of cross-cultural scenario related to TESCO’s store location, possible conflicts and methods of resolving. In the contemporary business world where every organisation wants a global presence, cultural variation is no more a new aspect. Cultural diversity in terms of behaviour, language and communication is observed in different areas of management (Kottak, 2011). This cultural variation stems from the involvement of employees with different cultural backgrounds (Triandis, 2001). Multi-national companies are currently expanding to as many countries as possible and this has brought cultural differences in the workplace (Chevrier, 2003). For a management to operate successfully, it is necessary that the workforce interact with each other without considering background, religion, cultural and linguistic differences. This is why a number of multi-national companies with workers from different parts of the world are working successfully in Middle East and western countries (Kawar, 2012). However, there are examples of failure of multi-national companies such as, Nestle, who was unsuccessful to sell baby food in impoverished market of Africa because their assumptions went wrong (HSBC, 2012). To understand the concept of cross-cultural approach, it is important to understand the term ‘culture’. One’s culture is inculcated since childhood as a result of influence from parents, family members, teachers, playmates and neighbourhoods (Harrison and Huntington, 2000). Culture is an integration of values, tradition, ethics, language, religion, life style and verbal and non-verbal expressions. It conditions one’s intellect and behaviour pattern. Culture is classified as generic culture and local culture. While local culture is a set of

Theories of Merger and Takeover Waves

Theories of Merger and Takeover Waves Merger Wave The American economy experienced two great takeover waves in the postwar period, first in the 1960s and the second in the 1980s. Both waves had a deep affect on the structure of corporate America. The main trend in the 60s was diversification and conglomeration. In contrast the 1980s takeover reversed the previous process and brought US corporations back to specialization. In this respects, the last thirty years were a roundtrip for corporate America. This paper is an overview of the salient features of the two takeover waves. 1.1 The 1960s Conglomerate Merger Wave The merger wave of the 1960s was the major since the turn of the century (Stigler, 1968). A typical characteristic of the 1960s transaction was a friendly acquisition, frequently for stock, of a smaller private or public firm which was outside the acquiring firms main line of business. During this period unrelated diversification was widespread among the large companies. Rumelt (1974) has reported that the fraction of single business companies in the Fortune 500 decreased from 22.8% in 1959 to 14.8% in 1969. Further, the portion of conglomerates with no dominant businesses increased to 18.7% from 7.3%. There was also a considerable move to diversification among companies that retained their core business. The driving force behind the 1960s wave was high valuations of company stocks and large corporate cash flows. However the management was unwilling to pay out the high cash flows as dividends, and on the other hand able to issue equity at attractive terms therefore, turned their atte ntion to acquisitions (Donaldsoni. 1984).Dividends were considered as a complete waste, and acquisitions as a very attractive way to conserve corporate wealth. There are two sets of arguments used to explain why companies diversify. The first set argues that firms diversify to increase shareholder wealth. A number of authors have discussed different aspects of diversification that can potentially raise shareholder wealth. Williamson (1970), suggest that firms diversify to beat imperfections in external capital markets. Through diversification, managers create internal capital markets, which are less prone to asymmetric information problems. Lewellen (1971), argues that conglomerates can carry on higher levels of debt since corporate diversification reduces earnings variability. if conglomerate firms are more valuable than companies operating in a single industry If the tax shields of debt increase. Shleifer and Vishny (1992), state that conglomerates may have a higher debt capacity since they can sell assets in those industries that suffer the least from liquidity problems in bad states of the world. Finally, Teece (1980) argues that divers ification leads to economics of scale. The second set of arguments states diversification as a product of the agency problems between shareholder and managers. Amihud and Lev (1981) argue that managers follow a diversification strategy to protect the value of their human capital. However, Jensen (1986) suggests that companies diversify to increase the private benefits of managers. Similarly, Shleifer and Vishny (1989) suggest that managers diversify because they are better at managing assets in other industries. Thus, diversifying will make skills more indispensable to the firm. 1.2 The 1980s Merger Wave Form a longer historical perspective, Golbe and White (1988) presented time series evidence of U.S. takeover activity from the late 1800s to the mid-1980s. Their findings have suggested that takeover activity above 2 to 3 percent of GDP is unusual. However, the greatest level of merger activity occurred around 1980s, at roughly 10 percent of GNP. By this measure, takeover activity in the 1980s is historically high. The size of the average target in the 1980s had increased extremely from the modest level of the 60s. By 1989 28%, of Fortune 500 companies were acquired and many transactions, particularly the large ones, were hostile. Further the medium of exchange in takeovers was cash rather than stock, they were characterized by heavy use of leverage. Firms were purchased by other firms by leveraged takeovers by borrowing rather than by issuing new stock or using solely cash on hand. Other firms restructured themselves, borrowing to repurchase their own shares. The 80s was also characterized by latest forms of control changes, which included bustup takeovers. Bustup takeovers involved the sell off of a substantial fraction of the targets assets to other firms. (Bhagat, Shleifer, and Vishny, 1990; Kaplan, 1997). 2 Merger Motives The following sections will explain the motive behind the two merger waves. 2.1 Managerial Motives Agency theory predicts that unless managers are strictly monitored by large block of shareholders they will certainly act out of self-interest. Amihud and Lev (1981) have provided proof that unless closely monitored by large block shareholders managers will attempt to reduce their employment risk through diversification. Lane et al.(1998) in this study have reexamined Amihud and Lev findings about agency theory Using a sample of 309 US firms that diversified between 1962 1970, from the Federal Trade Commission (FTC) Statistical Report on Mergers and Acquisitions (1976). This study falls in the third broad category[1] of agency studies. However this analysis only examines the strategic behaviors of managers when they are not under siege and are also not in a situation, in which their interests are clearly in conflict with those of shareholders. Specifically, firms without large block shareholders are expected to engage in more unrelated acquisitions and show higher levels of diversif ication than firms with large block shareholders (Jensen and Meckling (1976)) Using Multiple Regression, the study found no evidence for the standard agency theory predictions that management controlled firms are linked with strategically lower levels of diversification and lower levels of returns than are firms with large block shareholders. It was found that Ownership structure and diversification are largely independent constructs. Thus, managers may be are worthy of more trust and autonomy than what the agency theorists have prearranged for them. Rather than seeking to restrict managerial discretion through extreme oversight, a more balanced approach by principals is needed. Some safeguards are essential as conflicts of interests between managers and shareholders do arise in certain situations, therefore, the assumption that such conflicts dominate the day-to-day management is not realistic. Matsusaka,(1993) takes a deep look at the astonishingly high pre-merger profit rates of target companies during the conglomerate merger wave. The main goal of the study is to assess how important was managerial discipline as a takeover motive. The analysis uses an extensive data set of 806 manufacturing sector acquisitions that took place in 1968, 1971 and 1974. The sample was collected from New York Stock Exchange listing statements. Sample of 609 observations was taken from 1968, 117 from 1971, and 129 from 1974. The results did not differ in any vital way by year, so observations from the three periods were pooled. Because antitrust enforcement was strict in the late 1960s and early 1970s, it was safely assumed that the sample mergers were not motivated to increase market power Ravenscraft and Scherer (1987). This allowed the investigation to focus on a narrow set of merger motives. Profitability[2] throughout the study was measured as a rate of return on assets. The theory identified two basic characteristics of mergers motivated to discipline target management. First it wsa observed that the target was underperforming its industry and the only reason to discipline the managers was that they were not maximizing profit. It could be because of incompetence that they were pursuing their own objectives. The second, the target company had publicly traded stock and the only posibility to discipline management was by electing an appropriate board of directors. In this situation a takeover was necessary to effect a change as the diffused stock ownership resulted in free-rider problems. Owners can remove bad managers of privately owned firms, as they are closely held. The problem occurs in large publicly traded firms with diffuse ownership. The statistical results revealed that both public and private targets had extremely high profit rates prior to acquisition compared to their size classes and industries. Therefore, takeovers were not motivated to discipline target managers during the conglomerate merger wave. The second finding of the study is that public targets were not as particularly profitable as private targets. It was also found that the largest public targets had the lowest profit rates. A credible interpretation of the evidence is that managerial discipline may have been significant for just a small set of acquisitions that involved large publicly-traded targets. Matsusaka (1993) leaves the bigger question unexplained. Why buyers time and again sought high profit targets during the merger wave. There is a simple clarification, that high quality assets are generally favored to low quality assets, as high quality assets are more expensive. In addition to explaining why firms seek high-profit targets, an asset complementarity theory implies that firms tend to divest their low-profit divisions Palmer and Barber (2001) have determined the factors that led large firms to participate in the1960s wave. The theoretical approach, of the study conceptualizes corporate elites (managers and directors) as actors. However it is assumed that these actors have interests which have arisen from positions held in organizational and institutional environments, and from multidimensional social class structure. Often Acquisitions are deviant and innovative ways by which corporate these elites can increase their status and wealth. Corporate elite diversify to the extent that their place in the class structure provides them with the capacity and interest to augment their wealth and status in this way. The authors have examined how the firms top directors and managers class position influenced its tendency to employ diversification in the 1 960s. More specifically the following arguments on social status[3] have been tested empirically. Firstly, Firms run by top managers who attended an exclusi ve secondary school or whose family was listed in a metropolitan social register were less likely than other firms to complete diversifying acquisitions in the 1960s. Secondly, Firms run by top managers who were Jewish were more likely than other firms to complete diversifying acquisitions in the 1 960s. Thirdly, Firms run by top managers situated in the South or west were more likely than other firms to complete diversifying acquisitions in the 1960s. The study selected a sample of the largest 461 publicly traded U.S. industrial corporations from the Federal Trade Commissions Statistical Report on Mergers and Acquisitions (1976), between January 1, 1963, and December 31, 1968. This particular time period was chosen because as the merger wave took off at the end of 1962 and crested in 1968. The results of the study were found through count and binary regression models. The findings of the study are consistent with that of Zeitlin (1974). According to him top managers capacities and interests are shaped by their social class position. Corporate elite members differ in their social class position. It is this variation that influences the behavior of the firms they command. The results indicate that social club memberships and upper-class background influenced a firms propensity to complete diversifying acquisitions in the 1960s. Network embeddedness and status influenced acquisition likelihood in opposite directions. Corporations that were run by chief executives who were central in social networks but marginal with respect to status were more likely than other firms to complete diversifying acquisitions in the 1960s. Therefore, individuals with high status had small interest in adopting innovation. Corporate elites can inhibit the spread of an innovation when it threatens their interests. As observed by Hayes and Taussig (1967), One must never under estimate the moral suasion that the business and financial communities can bring to bear on those who engage in practices of which they disapprove. In this respect, the analysis provides additional evidence that intraclass conflict shaped corporate behavior during the 1960s merger wave. It seemed that in the 1960s, it was not concentrated ownership but, ownership in the hands of capitalist families that reduced a firms tendency to complete diversifying acquisitions. Further, as predicted by agency theory , concentrated ownership would lower acquisition rates most when in the hands of the CEO or other top managers, as opposed to outsiders, However it was found the reverse to be the case. Overall, there was very little support for any of the agency theory in the 1960s merger wave. Further, the results provided no support for several of the class-theory hypotheses. Firms headquartered in the South or West run or by Jewish CEOs did not have a greater propensity to complete diversifying acquisitions during the 1960s. The process of diversification of American firms reached its height during the merger wave of the late 1960s. Matsusaka(1993)evaluated the 1960s merger wave. In an attempt to do so the author has proposed a number of explanations that drove managers to diversify during the conglomerate merger wave. There are reasons to suspect that managers may have pursued a diversification strategy even when it impaired the shareholder. They may have entered new lines of business to protect their organization-specific human capital or establish themselves. On the other hand, they may have been pursuing size as an end and because of strict antitrust opposition to horizontal and vertical mergers they had to expand by buying into unrelated industries. The study has evaluated whether manager were diversifying for their own advantage or in the interest of shareholders returns .To do so the author inspected the effect of diversification on the value of his firms equity. Thus, if the value of a firm declined upon announcement of an acquisition, then its management was not acting to maximize shareholder wealth. One explanation for conglomeration stated in the study, stems from Managerial-Discipline theory. Firstly, Firms were taken over to discipline or replace their bad managers ie â€Å"Managerial-Discipline. Secondly, Managerial Synergy theory states that the bidder management wanted to work with target management, not replace it. In this case the acquirer management believed that the target management would complement to their skills. Therefore firm that had Managerial-discipline problem were likely to have had low profits, and on the other hand managerial-synergy targets were likely to have had high profits. Another explanation is that buyers were motivated by earnings-per- share (EPS) manipulation. This explanation states that conglomerates have a high price-earnings ratio (P/E). [4] Therefore the bidder management was bootstrapping, by buying firms with low P/Es. Construction of the dataset began with a list of mergers from the sample of 1968, 1971 and 1974 .The sample was identified from the takeovers from New York Stock Exchange listing statements and the results were presented through regression. The announcement-period return to the bidders shareholders was measured through dollar return, [5] .Regression of the dollar-return measure found that the return to a diversification acquisition was significantly positive. On average their shareholders enjoyed an $11.0 million value increase in value when bidders made a diversification acquisition,. This rejects the hypothesis that diversification hurt shareholders and is thus inconsistent with the idea that diversification was driven by managerial objectives. On the other hand, bidders who made related acquisitions cost their shareholders $6.4 million on average. Thus, the hypothesis that the markets reaction was the same to related acquisitions and diversification is rejected, suggesting that there was a market premium to diversification. Using descriptive statistical summaries it was found that both diversifying and horizontal buyers preferred to buy firms that were profitable. For both type of acquisitions the average operating profit was more than 5% in excess of the targets industry average. Therefore fame of high-profit targets argues against the importance of a managerial-discipline motive for both types of acquisition and in favor of a managerial-synergy motive. This is because Managerial-discipline takeovers should have been directed at low-profit firms, whose profitability needed improved. The motive was Managerial-synergy as the targets were takeovers were high- profit firms, this is because synergy-motivated managers were looking for good partners Matsusaka(1993). Another factor linked to the managerial theories is whether or not the targets management was retained.Top management is said to have been retained if it meet the following criteria. Firstly It was reported in the Wall Street Journal that the acquired firms management would continue to operate under the new management. Secondly, it was indicated in the buyers listing statement that the targets management would be retained. Lastly, when the merger took place at least one of the top three executives of the target firm was still managing the firm three years later from when the merger took place. According to the above mentioned definitions, 61.8% of the managers in the sample were retained and only 3.5% of the acquisitions fell in the Replaced category. The main finding is that buyers earned significantly positive announcement-period returns during the conglomerate merger wave when they made diversifying acquisitions. The hypothesis that conglomerates were driven by empire building or some other managerial objective can be rejected because such explanations imply value decreases to unrelated acquisitions. Another explanation of the conglomerate merger wave is that mergers were driven by an accounting trick rather than expected efficiencies. Therefore, investors watched EPS; when the EPS went up they bid up the price of the stock. According to this argument, Conglomerates, tended to buy companies with lower P/E ratios than their own in order to increase their EPS and boost their stock prices. There was no evidence that firms earned positive returns which inflated EPS in this way. The study indicated that early conglomerators earned significantly positive returns simply because they were first. They may have gained some rents to organizational innovation. Possibly the men who built the first conglomerates had a unique talent for diversification, which the market rewarded. Hubbard, Palia (1999), have examined the likelihood that internal capital markets were formed to alleviate the information costs associated with the less well-developed external capital markets of the time; that is, whether they were expected to create value by the external capital markets in the 1960s.In this paper, the authors have inspected a form of cross-subsidization that occurs when a financially unconstrained bidding firm takes over a financially constrained target firm and as a result forms an internal capital market.The study examined whether the external capital markets expected that the formation of internal capital markets in the 1960s were value-maximizing for the bidding firm. However, existing research has argued that internal capital markets can be value-enhancing. As argued by Geneen(1997), the financing and budgeting expertise that a firm possesses is not necessarily related to its degree of diversification. Accordingly, the internal capital market hypothesis for all acquisitions is tested. The study also tests the bootstrapping explanation for conglomeration in the 1960s, which takes place when firms with a high price-earnings ratio (P/E) took over low P/E target firms and fooled the stock market with an increased combined earnings-per-share. In the 1960s, external capital markets were less developed in terms of company-specific information production than in later years. The authors have classified company-specific information into two general categories. Firstly, production information; and secondly, financing and budgeting expertise. However, in this study information-intensive activities were introduced. This was because; it assists the manager to internally allocate capital across divisions of a diversified firm. It was suggested that diversified firms were perceived by the external capital markets to have an informational advantage, because external capital markets were less well developed at that time. Comparing it to the current decade, there was less access by the public to computers, data- bases, analyst reports, and other sources of company-specific information. Not only this there was less large institutional money managers and the market for risky debt was illiquid. The authors selected a sample of 392 acquisitions that occurred during the period from 1961 through 1970. Diversifying acquisitions were defined as those in which the bidder and target do not share any two- digit SIC code Matsusaka(1993), and related acquisitions as those in which they do share a two-digit SIC code. Further the Wall Street Journal was used for announcement date as the event date. Four measures of abnormal returns to the conglomerate bidding firm were calculated. These measures are as follows. Firstly, the usual percentage returns or the cumulative abnormal returns from five days before to five days after the event date. Secondly the percentage returns until date of last revision or the cumulative abnormal returns from five days before to five days after the date of the last revision (Lang et al. (1991)). Thirdly, the dollar returns or the percentage return times the market value of the bidder six days before the announcement (Malatesta(1983); Matsusaka(1993)). Lastly , the investment return defined as the change in the value of the bidder divided by the purchase price (Morck et al. (1990)). Tobins r ratio[6] is used as a proxy for a firms capital market opportunities. The evidence from these measures is mixed. Positive abnormal returns for all four measures were shown for related acquisitions. On the other hand, two of the four measures had shown statically significant positive abnormal returns for diversifying acquisitions in. Not only that diversifying acquisitions do not significantly earn less than related acquisitions in two of the four measures. Thus, evidence suggests, the capital markets believed acquisitions to be generally good for bidder shareholders during the 1960s. More significantly, it was found that when financially unconstrained buyers acquired constrained target firms, highest bidder returns were earned. Further, bidders generally retain target management, signifying that management may have provided company- specific operational information and the bidder on his part also provided capital budgeting expertise. Therefore, external capital markets expected information benefits from the formation of the internal capital markets. The study found no evidence in support of the bootstrapping hypothesis, as the coefficient on the dummy variable[7] was not statistically different from zero. This result is consistent with Matsusaka, (1993), who also finds no evidence for bootstrapping.Therefore, firms merged to form their own internal capital markets as there was a deficiency of well-developed external capital markets in the 1960s. Some firms apparently had an information advantage over the external capital markets and were expected to produce value in an internal capital market. In the 1960s diversified acquisitions were rewarded by financial markets, the informational advantage that acquiring firms appeared to possess was likely to be in the capital budgeting, allocation process and operational aspects of each division. Bidder firms generally retained the target management as it would facilitate them running the operational part of each target firm. The Motives discussed in the above mentioned articles are appealing; however evidence from the stock market suggests that shareholders preferred their firms to diversify. Using a data set from the 60s and early 70s, Matsusaka (1993) reported that, when the company announced an unrelated acquisition, the stock price of the bidder increased on average of $8 million. However, on the announcement of a related acquisition, the bidding firms stock price fell by $4 million. The difference between the two returns is quite significant. Thus it appears that investors fully believed that unrelated acquisitions benefited their firms relative to the alternatives. Thus the managers just did what the stock market told them to do that is to diversify. Evidence from 1980s stock market suggested that shareholders, again, liked what was happening. Shleifer, and Vishny (1992) found that in the 1980s, stock prices of the bidding firms rose when they bought other firms in the same industry, and fell with unrelated diversification. It is clear that the market disapproved unrelated diversification. Therefore it does not astonish that, in light of such market reception, managers stopped diversifying and did what the stock market directed them to do. 2.2 Legal Motives Matsusaka (1996) investigated whether the antitrust enforcement of the 1960s led firms to take on the diversification goal, by preventing them from expanding within their own core industries. If correct, diversification should have occurred more less frequently when small firms merged than when large firms merged since small mergers were less likely to have attracted antitrust attention. Further the author examined the diversification patterns in the United Kingdom, Canada, Germany, and France in the late 1960s and early 1970s, where none of these countries had legal restrictions on horizontal growth similar to those in the Unites States. The US Clayton Antitrust Act was the antitrust legislation in the postwar period (1950 Celler-Kefauver amendment to Section 7). The act, prohibited mergers that would substantially lessen competition, or tend to create a monopoly. This new law was used by the antitrust authorities and the courts to limit the number of mergers between vertically related and firms in the same lines of business. The strictness of the antitrust environment in 1968 is illustrated by the observation that in the earlier 12 years, all antitrust cases that reached the Supreme Court had been resolved in support of the government. The study indicates the following two implications. Firstly, large horizontal mergers were more liable to have been challenged on antitrust grounds than small horizontal mergers. Secondly mergers between unrelated firms were unlikely to have been blocked, regardless of size. Firms diversified in 1960s, since antitrust authorities prevented them from expanding in their home industries. Later when antitrust policy became less rigid in the 1980s, firms expanded horizontally, leading them to refocus on their core business. Stigler (1966) was perhaps the first to present evidence on the antitrust hypothesis, concluding that, the 1950 Merger Act has had a strongly adverse effect on horizontal mergers by large companies. The author selected a sample of 549 mergers (that took place in 1968) from the New York Stock Exchange. Results of the study were reported through Logit regressions .It was found that bidders were as likely to have entered new industries when they made small acquisitions as when they made large acquisitions, and small buyers were as likely to have diversified as large buyers. Further the total number of diversification acquisitions concerning small companies was high.Though, according to the antitrust hypothesis; diversification should have been widespread primarily in large mergers where same industry acquisitions were prohibited by tough antitrust enforcement. Secondly assembled international evidence indicated that diversification took place in many industrialized nations in the 1960s and 1970s, although restrictions against horizontal combinations were unique to the United States. Yet, most other industrialized Western nations[8] experienced diversification merger waves and general movements toward diversification in their largest companies (Chandler (1991)).Thus most of the evidence, is not consistent with the antitrust hypothesis, signifying that other explanations for corporate diversification should be emphasized not the anti trust hypothesis. Scholes and Wolfson (1990) state, that the changes in U.S. tax laws[9] in the 1980s had obvious affect on the desirability of mergers and acquisitions. However such transactions were not only motivated by tax factors but also non tax factors[10]. Tax laws can have number of affects on mergers and acquisitions , which can include the following capital losses, presence of tax-attribute carry forwards such as net operating losses , investment tax credits, and foreign tax credits, among others, that might be cashed in more quickly and more fully by way of a merger; the desire to step up the tax basis of assets for depreciation purposes to their fair market value; the desire to sell assets to permit a change in the depreciation schedule to one that is more highly accelerated. The authors in this study have examined the effect of changes in tax laws passed in 1980s on merger and acquisition activity in the United States. The authors selected the annual values of mergers and acquisitions from 1968 through 1987 in nominal dollars. The data source for nominal values was W. T. Grimm and Company for 1968-85 and Mergers Acquisitions (1987-88, rev. quarterly) for 1986 and 1987. Using time series analysis it was found that the dollar volume of merger activity between 1980-1981 increased from $44.35 billion to $82.62 billion (86%) in nominal terms. The percentage increase was approximately twice as large as the next largest percentage increase in annual merger and acquisition activity over the 1970-86 periods. There was spectacular increase in merger activity that began with the passage of the Economic Recovery Tax Act of 1981, however this was not the only merger wave that occurred in that time frame. Unusual merger activity was also witnessed in the 1960s. The termination of 1960s wave was accompanied by quite a few regulatory events that depressed such transactions. Firstly, the Williams Amendments had en larged the cost and difficulty of effecting tender offers. Secondly the issuance of Accounting Principles Board Opinions 16 and 17, forced many acquiring firms to boost depreciation expense, goodwill amortization and cost of goods sold. Thirdly the Tax Reform Act of 1969, made transferability of tax attributes (net-operating-loss carry forwards) more restrained. Therefore there was a sudden decline in merger activity from the peak in 1968. Relative to the tax benefits when the non tax benefits of the transaction were small, current management were the most efficient purchasers, as they had an advantage along the hidden information dimension. Therefore 1981 act had increased the incidence of cases in which non tax benefits were less than the common tax benefits of mergers and acquisitions. As a result, there was an increase in the number of transactions involving management buyouts. The annual dollar value of unit management buyouts between 1978-80 increased by a factor of 3, and by a factor in excess of 20 for the period 1981-86. The antitrust proposition mentioned above is appealing as one of the most important reason for diversification, during the 60s and 70s, which simply disallowed mergers of firms in the same industry, regardless of the effects of these mergers o Theories of Merger and Takeover Waves Theories of Merger and Takeover Waves Merger Wave The American economy experienced two great takeover waves in the postwar period, first in the 1960s and the second in the 1980s. Both waves had a deep affect on the structure of corporate America. The main trend in the 60s was diversification and conglomeration. In contrast the 1980s takeover reversed the previous process and brought US corporations back to specialization. In this respects, the last thirty years were a roundtrip for corporate America. This paper is an overview of the salient features of the two takeover waves. 1.1 The 1960s Conglomerate Merger Wave The merger wave of the 1960s was the major since the turn of the century (Stigler, 1968). A typical characteristic of the 1960s transaction was a friendly acquisition, frequently for stock, of a smaller private or public firm which was outside the acquiring firms main line of business. During this period unrelated diversification was widespread among the large companies. Rumelt (1974) has reported that the fraction of single business companies in the Fortune 500 decreased from 22.8% in 1959 to 14.8% in 1969. Further, the portion of conglomerates with no dominant businesses increased to 18.7% from 7.3%. There was also a considerable move to diversification among companies that retained their core business. The driving force behind the 1960s wave was high valuations of company stocks and large corporate cash flows. However the management was unwilling to pay out the high cash flows as dividends, and on the other hand able to issue equity at attractive terms therefore, turned their atte ntion to acquisitions (Donaldsoni. 1984).Dividends were considered as a complete waste, and acquisitions as a very attractive way to conserve corporate wealth. There are two sets of arguments used to explain why companies diversify. The first set argues that firms diversify to increase shareholder wealth. A number of authors have discussed different aspects of diversification that can potentially raise shareholder wealth. Williamson (1970), suggest that firms diversify to beat imperfections in external capital markets. Through diversification, managers create internal capital markets, which are less prone to asymmetric information problems. Lewellen (1971), argues that conglomerates can carry on higher levels of debt since corporate diversification reduces earnings variability. if conglomerate firms are more valuable than companies operating in a single industry If the tax shields of debt increase. Shleifer and Vishny (1992), state that conglomerates may have a higher debt capacity since they can sell assets in those industries that suffer the least from liquidity problems in bad states of the world. Finally, Teece (1980) argues that divers ification leads to economics of scale. The second set of arguments states diversification as a product of the agency problems between shareholder and managers. Amihud and Lev (1981) argue that managers follow a diversification strategy to protect the value of their human capital. However, Jensen (1986) suggests that companies diversify to increase the private benefits of managers. Similarly, Shleifer and Vishny (1989) suggest that managers diversify because they are better at managing assets in other industries. Thus, diversifying will make skills more indispensable to the firm. 1.2 The 1980s Merger Wave Form a longer historical perspective, Golbe and White (1988) presented time series evidence of U.S. takeover activity from the late 1800s to the mid-1980s. Their findings have suggested that takeover activity above 2 to 3 percent of GDP is unusual. However, the greatest level of merger activity occurred around 1980s, at roughly 10 percent of GNP. By this measure, takeover activity in the 1980s is historically high. The size of the average target in the 1980s had increased extremely from the modest level of the 60s. By 1989 28%, of Fortune 500 companies were acquired and many transactions, particularly the large ones, were hostile. Further the medium of exchange in takeovers was cash rather than stock, they were characterized by heavy use of leverage. Firms were purchased by other firms by leveraged takeovers by borrowing rather than by issuing new stock or using solely cash on hand. Other firms restructured themselves, borrowing to repurchase their own shares. The 80s was also characterized by latest forms of control changes, which included bustup takeovers. Bustup takeovers involved the sell off of a substantial fraction of the targets assets to other firms. (Bhagat, Shleifer, and Vishny, 1990; Kaplan, 1997). 2 Merger Motives The following sections will explain the motive behind the two merger waves. 2.1 Managerial Motives Agency theory predicts that unless managers are strictly monitored by large block of shareholders they will certainly act out of self-interest. Amihud and Lev (1981) have provided proof that unless closely monitored by large block shareholders managers will attempt to reduce their employment risk through diversification. Lane et al.(1998) in this study have reexamined Amihud and Lev findings about agency theory Using a sample of 309 US firms that diversified between 1962 1970, from the Federal Trade Commission (FTC) Statistical Report on Mergers and Acquisitions (1976). This study falls in the third broad category[1] of agency studies. However this analysis only examines the strategic behaviors of managers when they are not under siege and are also not in a situation, in which their interests are clearly in conflict with those of shareholders. Specifically, firms without large block shareholders are expected to engage in more unrelated acquisitions and show higher levels of diversif ication than firms with large block shareholders (Jensen and Meckling (1976)) Using Multiple Regression, the study found no evidence for the standard agency theory predictions that management controlled firms are linked with strategically lower levels of diversification and lower levels of returns than are firms with large block shareholders. It was found that Ownership structure and diversification are largely independent constructs. Thus, managers may be are worthy of more trust and autonomy than what the agency theorists have prearranged for them. Rather than seeking to restrict managerial discretion through extreme oversight, a more balanced approach by principals is needed. Some safeguards are essential as conflicts of interests between managers and shareholders do arise in certain situations, therefore, the assumption that such conflicts dominate the day-to-day management is not realistic. Matsusaka,(1993) takes a deep look at the astonishingly high pre-merger profit rates of target companies during the conglomerate merger wave. The main goal of the study is to assess how important was managerial discipline as a takeover motive. The analysis uses an extensive data set of 806 manufacturing sector acquisitions that took place in 1968, 1971 and 1974. The sample was collected from New York Stock Exchange listing statements. Sample of 609 observations was taken from 1968, 117 from 1971, and 129 from 1974. The results did not differ in any vital way by year, so observations from the three periods were pooled. Because antitrust enforcement was strict in the late 1960s and early 1970s, it was safely assumed that the sample mergers were not motivated to increase market power Ravenscraft and Scherer (1987). This allowed the investigation to focus on a narrow set of merger motives. Profitability[2] throughout the study was measured as a rate of return on assets. The theory identified two basic characteristics of mergers motivated to discipline target management. First it wsa observed that the target was underperforming its industry and the only reason to discipline the managers was that they were not maximizing profit. It could be because of incompetence that they were pursuing their own objectives. The second, the target company had publicly traded stock and the only posibility to discipline management was by electing an appropriate board of directors. In this situation a takeover was necessary to effect a change as the diffused stock ownership resulted in free-rider problems. Owners can remove bad managers of privately owned firms, as they are closely held. The problem occurs in large publicly traded firms with diffuse ownership. The statistical results revealed that both public and private targets had extremely high profit rates prior to acquisition compared to their size classes and industries. Therefore, takeovers were not motivated to discipline target managers during the conglomerate merger wave. The second finding of the study is that public targets were not as particularly profitable as private targets. It was also found that the largest public targets had the lowest profit rates. A credible interpretation of the evidence is that managerial discipline may have been significant for just a small set of acquisitions that involved large publicly-traded targets. Matsusaka (1993) leaves the bigger question unexplained. Why buyers time and again sought high profit targets during the merger wave. There is a simple clarification, that high quality assets are generally favored to low quality assets, as high quality assets are more expensive. In addition to explaining why firms seek high-profit targets, an asset complementarity theory implies that firms tend to divest their low-profit divisions Palmer and Barber (2001) have determined the factors that led large firms to participate in the1960s wave. The theoretical approach, of the study conceptualizes corporate elites (managers and directors) as actors. However it is assumed that these actors have interests which have arisen from positions held in organizational and institutional environments, and from multidimensional social class structure. Often Acquisitions are deviant and innovative ways by which corporate these elites can increase their status and wealth. Corporate elite diversify to the extent that their place in the class structure provides them with the capacity and interest to augment their wealth and status in this way. The authors have examined how the firms top directors and managers class position influenced its tendency to employ diversification in the 1 960s. More specifically the following arguments on social status[3] have been tested empirically. Firstly, Firms run by top managers who attended an exclusi ve secondary school or whose family was listed in a metropolitan social register were less likely than other firms to complete diversifying acquisitions in the 1960s. Secondly, Firms run by top managers who were Jewish were more likely than other firms to complete diversifying acquisitions in the 1 960s. Thirdly, Firms run by top managers situated in the South or west were more likely than other firms to complete diversifying acquisitions in the 1960s. The study selected a sample of the largest 461 publicly traded U.S. industrial corporations from the Federal Trade Commissions Statistical Report on Mergers and Acquisitions (1976), between January 1, 1963, and December 31, 1968. This particular time period was chosen because as the merger wave took off at the end of 1962 and crested in 1968. The results of the study were found through count and binary regression models. The findings of the study are consistent with that of Zeitlin (1974). According to him top managers capacities and interests are shaped by their social class position. Corporate elite members differ in their social class position. It is this variation that influences the behavior of the firms they command. The results indicate that social club memberships and upper-class background influenced a firms propensity to complete diversifying acquisitions in the 1960s. Network embeddedness and status influenced acquisition likelihood in opposite directions. Corporations that were run by chief executives who were central in social networks but marginal with respect to status were more likely than other firms to complete diversifying acquisitions in the 1960s. Therefore, individuals with high status had small interest in adopting innovation. Corporate elites can inhibit the spread of an innovation when it threatens their interests. As observed by Hayes and Taussig (1967), One must never under estimate the moral suasion that the business and financial communities can bring to bear on those who engage in practices of which they disapprove. In this respect, the analysis provides additional evidence that intraclass conflict shaped corporate behavior during the 1960s merger wave. It seemed that in the 1960s, it was not concentrated ownership but, ownership in the hands of capitalist families that reduced a firms tendency to complete diversifying acquisitions. Further, as predicted by agency theory , concentrated ownership would lower acquisition rates most when in the hands of the CEO or other top managers, as opposed to outsiders, However it was found the reverse to be the case. Overall, there was very little support for any of the agency theory in the 1960s merger wave. Further, the results provided no support for several of the class-theory hypotheses. Firms headquartered in the South or West run or by Jewish CEOs did not have a greater propensity to complete diversifying acquisitions during the 1960s. The process of diversification of American firms reached its height during the merger wave of the late 1960s. Matsusaka(1993)evaluated the 1960s merger wave. In an attempt to do so the author has proposed a number of explanations that drove managers to diversify during the conglomerate merger wave. There are reasons to suspect that managers may have pursued a diversification strategy even when it impaired the shareholder. They may have entered new lines of business to protect their organization-specific human capital or establish themselves. On the other hand, they may have been pursuing size as an end and because of strict antitrust opposition to horizontal and vertical mergers they had to expand by buying into unrelated industries. The study has evaluated whether manager were diversifying for their own advantage or in the interest of shareholders returns .To do so the author inspected the effect of diversification on the value of his firms equity. Thus, if the value of a firm declined upon announcement of an acquisition, then its management was not acting to maximize shareholder wealth. One explanation for conglomeration stated in the study, stems from Managerial-Discipline theory. Firstly, Firms were taken over to discipline or replace their bad managers ie â€Å"Managerial-Discipline. Secondly, Managerial Synergy theory states that the bidder management wanted to work with target management, not replace it. In this case the acquirer management believed that the target management would complement to their skills. Therefore firm that had Managerial-discipline problem were likely to have had low profits, and on the other hand managerial-synergy targets were likely to have had high profits. Another explanation is that buyers were motivated by earnings-per- share (EPS) manipulation. This explanation states that conglomerates have a high price-earnings ratio (P/E). [4] Therefore the bidder management was bootstrapping, by buying firms with low P/Es. Construction of the dataset began with a list of mergers from the sample of 1968, 1971 and 1974 .The sample was identified from the takeovers from New York Stock Exchange listing statements and the results were presented through regression. The announcement-period return to the bidders shareholders was measured through dollar return, [5] .Regression of the dollar-return measure found that the return to a diversification acquisition was significantly positive. On average their shareholders enjoyed an $11.0 million value increase in value when bidders made a diversification acquisition,. This rejects the hypothesis that diversification hurt shareholders and is thus inconsistent with the idea that diversification was driven by managerial objectives. On the other hand, bidders who made related acquisitions cost their shareholders $6.4 million on average. Thus, the hypothesis that the markets reaction was the same to related acquisitions and diversification is rejected, suggesting that there was a market premium to diversification. Using descriptive statistical summaries it was found that both diversifying and horizontal buyers preferred to buy firms that were profitable. For both type of acquisitions the average operating profit was more than 5% in excess of the targets industry average. Therefore fame of high-profit targets argues against the importance of a managerial-discipline motive for both types of acquisition and in favor of a managerial-synergy motive. This is because Managerial-discipline takeovers should have been directed at low-profit firms, whose profitability needed improved. The motive was Managerial-synergy as the targets were takeovers were high- profit firms, this is because synergy-motivated managers were looking for good partners Matsusaka(1993). Another factor linked to the managerial theories is whether or not the targets management was retained.Top management is said to have been retained if it meet the following criteria. Firstly It was reported in the Wall Street Journal that the acquired firms management would continue to operate under the new management. Secondly, it was indicated in the buyers listing statement that the targets management would be retained. Lastly, when the merger took place at least one of the top three executives of the target firm was still managing the firm three years later from when the merger took place. According to the above mentioned definitions, 61.8% of the managers in the sample were retained and only 3.5% of the acquisitions fell in the Replaced category. The main finding is that buyers earned significantly positive announcement-period returns during the conglomerate merger wave when they made diversifying acquisitions. The hypothesis that conglomerates were driven by empire building or some other managerial objective can be rejected because such explanations imply value decreases to unrelated acquisitions. Another explanation of the conglomerate merger wave is that mergers were driven by an accounting trick rather than expected efficiencies. Therefore, investors watched EPS; when the EPS went up they bid up the price of the stock. According to this argument, Conglomerates, tended to buy companies with lower P/E ratios than their own in order to increase their EPS and boost their stock prices. There was no evidence that firms earned positive returns which inflated EPS in this way. The study indicated that early conglomerators earned significantly positive returns simply because they were first. They may have gained some rents to organizational innovation. Possibly the men who built the first conglomerates had a unique talent for diversification, which the market rewarded. Hubbard, Palia (1999), have examined the likelihood that internal capital markets were formed to alleviate the information costs associated with the less well-developed external capital markets of the time; that is, whether they were expected to create value by the external capital markets in the 1960s.In this paper, the authors have inspected a form of cross-subsidization that occurs when a financially unconstrained bidding firm takes over a financially constrained target firm and as a result forms an internal capital market.The study examined whether the external capital markets expected that the formation of internal capital markets in the 1960s were value-maximizing for the bidding firm. However, existing research has argued that internal capital markets can be value-enhancing. As argued by Geneen(1997), the financing and budgeting expertise that a firm possesses is not necessarily related to its degree of diversification. Accordingly, the internal capital market hypothesis for all acquisitions is tested. The study also tests the bootstrapping explanation for conglomeration in the 1960s, which takes place when firms with a high price-earnings ratio (P/E) took over low P/E target firms and fooled the stock market with an increased combined earnings-per-share. In the 1960s, external capital markets were less developed in terms of company-specific information production than in later years. The authors have classified company-specific information into two general categories. Firstly, production information; and secondly, financing and budgeting expertise. However, in this study information-intensive activities were introduced. This was because; it assists the manager to internally allocate capital across divisions of a diversified firm. It was suggested that diversified firms were perceived by the external capital markets to have an informational advantage, because external capital markets were less well developed at that time. Comparing it to the current decade, there was less access by the public to computers, data- bases, analyst reports, and other sources of company-specific information. Not only this there was less large institutional money managers and the market for risky debt was illiquid. The authors selected a sample of 392 acquisitions that occurred during the period from 1961 through 1970. Diversifying acquisitions were defined as those in which the bidder and target do not share any two- digit SIC code Matsusaka(1993), and related acquisitions as those in which they do share a two-digit SIC code. Further the Wall Street Journal was used for announcement date as the event date. Four measures of abnormal returns to the conglomerate bidding firm were calculated. These measures are as follows. Firstly, the usual percentage returns or the cumulative abnormal returns from five days before to five days after the event date. Secondly the percentage returns until date of last revision or the cumulative abnormal returns from five days before to five days after the date of the last revision (Lang et al. (1991)). Thirdly, the dollar returns or the percentage return times the market value of the bidder six days before the announcement (Malatesta(1983); Matsusaka(1993)). Lastly , the investment return defined as the change in the value of the bidder divided by the purchase price (Morck et al. (1990)). Tobins r ratio[6] is used as a proxy for a firms capital market opportunities. The evidence from these measures is mixed. Positive abnormal returns for all four measures were shown for related acquisitions. On the other hand, two of the four measures had shown statically significant positive abnormal returns for diversifying acquisitions in. Not only that diversifying acquisitions do not significantly earn less than related acquisitions in two of the four measures. Thus, evidence suggests, the capital markets believed acquisitions to be generally good for bidder shareholders during the 1960s. More significantly, it was found that when financially unconstrained buyers acquired constrained target firms, highest bidder returns were earned. Further, bidders generally retain target management, signifying that management may have provided company- specific operational information and the bidder on his part also provided capital budgeting expertise. Therefore, external capital markets expected information benefits from the formation of the internal capital markets. The study found no evidence in support of the bootstrapping hypothesis, as the coefficient on the dummy variable[7] was not statistically different from zero. This result is consistent with Matsusaka, (1993), who also finds no evidence for bootstrapping.Therefore, firms merged to form their own internal capital markets as there was a deficiency of well-developed external capital markets in the 1960s. Some firms apparently had an information advantage over the external capital markets and were expected to produce value in an internal capital market. In the 1960s diversified acquisitions were rewarded by financial markets, the informational advantage that acquiring firms appeared to possess was likely to be in the capital budgeting, allocation process and operational aspects of each division. Bidder firms generally retained the target management as it would facilitate them running the operational part of each target firm. The Motives discussed in the above mentioned articles are appealing; however evidence from the stock market suggests that shareholders preferred their firms to diversify. Using a data set from the 60s and early 70s, Matsusaka (1993) reported that, when the company announced an unrelated acquisition, the stock price of the bidder increased on average of $8 million. However, on the announcement of a related acquisition, the bidding firms stock price fell by $4 million. The difference between the two returns is quite significant. Thus it appears that investors fully believed that unrelated acquisitions benefited their firms relative to the alternatives. Thus the managers just did what the stock market told them to do that is to diversify. Evidence from 1980s stock market suggested that shareholders, again, liked what was happening. Shleifer, and Vishny (1992) found that in the 1980s, stock prices of the bidding firms rose when they bought other firms in the same industry, and fell with unrelated diversification. It is clear that the market disapproved unrelated diversification. Therefore it does not astonish that, in light of such market reception, managers stopped diversifying and did what the stock market directed them to do. 2.2 Legal Motives Matsusaka (1996) investigated whether the antitrust enforcement of the 1960s led firms to take on the diversification goal, by preventing them from expanding within their own core industries. If correct, diversification should have occurred more less frequently when small firms merged than when large firms merged since small mergers were less likely to have attracted antitrust attention. Further the author examined the diversification patterns in the United Kingdom, Canada, Germany, and France in the late 1960s and early 1970s, where none of these countries had legal restrictions on horizontal growth similar to those in the Unites States. The US Clayton Antitrust Act was the antitrust legislation in the postwar period (1950 Celler-Kefauver amendment to Section 7). The act, prohibited mergers that would substantially lessen competition, or tend to create a monopoly. This new law was used by the antitrust authorities and the courts to limit the number of mergers between vertically related and firms in the same lines of business. The strictness of the antitrust environment in 1968 is illustrated by the observation that in the earlier 12 years, all antitrust cases that reached the Supreme Court had been resolved in support of the government. The study indicates the following two implications. Firstly, large horizontal mergers were more liable to have been challenged on antitrust grounds than small horizontal mergers. Secondly mergers between unrelated firms were unlikely to have been blocked, regardless of size. Firms diversified in 1960s, since antitrust authorities prevented them from expanding in their home industries. Later when antitrust policy became less rigid in the 1980s, firms expanded horizontally, leading them to refocus on their core business. Stigler (1966) was perhaps the first to present evidence on the antitrust hypothesis, concluding that, the 1950 Merger Act has had a strongly adverse effect on horizontal mergers by large companies. The author selected a sample of 549 mergers (that took place in 1968) from the New York Stock Exchange. Results of the study were reported through Logit regressions .It was found that bidders were as likely to have entered new industries when they made small acquisitions as when they made large acquisitions, and small buyers were as likely to have diversified as large buyers. Further the total number of diversification acquisitions concerning small companies was high.Though, according to the antitrust hypothesis; diversification should have been widespread primarily in large mergers where same industry acquisitions were prohibited by tough antitrust enforcement. Secondly assembled international evidence indicated that diversification took place in many industrialized nations in the 1960s and 1970s, although restrictions against horizontal combinations were unique to the United States. Yet, most other industrialized Western nations[8] experienced diversification merger waves and general movements toward diversification in their largest companies (Chandler (1991)).Thus most of the evidence, is not consistent with the antitrust hypothesis, signifying that other explanations for corporate diversification should be emphasized not the anti trust hypothesis. Scholes and Wolfson (1990) state, that the changes in U.S. tax laws[9] in the 1980s had obvious affect on the desirability of mergers and acquisitions. However such transactions were not only motivated by tax factors but also non tax factors[10]. Tax laws can have number of affects on mergers and acquisitions , which can include the following capital losses, presence of tax-attribute carry forwards such as net operating losses , investment tax credits, and foreign tax credits, among others, that might be cashed in more quickly and more fully by way of a merger; the desire to step up the tax basis of assets for depreciation purposes to their fair market value; the desire to sell assets to permit a change in the depreciation schedule to one that is more highly accelerated. The authors in this study have examined the effect of changes in tax laws passed in 1980s on merger and acquisition activity in the United States. The authors selected the annual values of mergers and acquisitions from 1968 through 1987 in nominal dollars. The data source for nominal values was W. T. Grimm and Company for 1968-85 and Mergers Acquisitions (1987-88, rev. quarterly) for 1986 and 1987. Using time series analysis it was found that the dollar volume of merger activity between 1980-1981 increased from $44.35 billion to $82.62 billion (86%) in nominal terms. The percentage increase was approximately twice as large as the next largest percentage increase in annual merger and acquisition activity over the 1970-86 periods. There was spectacular increase in merger activity that began with the passage of the Economic Recovery Tax Act of 1981, however this was not the only merger wave that occurred in that time frame. Unusual merger activity was also witnessed in the 1960s. The termination of 1960s wave was accompanied by quite a few regulatory events that depressed such transactions. Firstly, the Williams Amendments had en larged the cost and difficulty of effecting tender offers. Secondly the issuance of Accounting Principles Board Opinions 16 and 17, forced many acquiring firms to boost depreciation expense, goodwill amortization and cost of goods sold. Thirdly the Tax Reform Act of 1969, made transferability of tax attributes (net-operating-loss carry forwards) more restrained. Therefore there was a sudden decline in merger activity from the peak in 1968. Relative to the tax benefits when the non tax benefits of the transaction were small, current management were the most efficient purchasers, as they had an advantage along the hidden information dimension. Therefore 1981 act had increased the incidence of cases in which non tax benefits were less than the common tax benefits of mergers and acquisitions. As a result, there was an increase in the number of transactions involving management buyouts. The annual dollar value of unit management buyouts between 1978-80 increased by a factor of 3, and by a factor in excess of 20 for the period 1981-86. The antitrust proposition mentioned above is appealing as one of the most important reason for diversification, during the 60s and 70s, which simply disallowed mergers of firms in the same industry, regardless of the effects of these mergers o

A Mesophilic Origin of Life Essay -- Biology Essays Research Papers

A Mesophilic Origin of Life Nearly all scientists agree that life on Earth began billions of years ago. Most will also agree that RNA appeared first and found a way to replicate itself, an essential step in the early stages of life. Without this ability of RNA, only short pieces of DNA could be copied and no enzymes could be created to copy longer strands which would be necessary for the formation of enzymes[1]. Beyond that, there is very little agreement about the origin of life, including what the original ancestor of all life was like. This has led to a significant amount of debating with very few answers. Scientists are still debating how life originated: was it a series of successive steps or a spontaneous gathering of the necessary materials? The problem with the second theory is that the odds of this happening are about the same as a tornado assembling a 747 aircraft in a junkyard.[2] As of now, we still have to ponder whether the ancestor of all life, or LUCA, was a single being or a community of organisms sharing genes. Another question entails whether the last universal common ancestor (LUCA) dwelled in a hot-water environment or a cooler place, possibly near the surface of the ocean. The experts are split almost evenly on this question and both sides present convincing evidence for their side of the argument, but we will focus primarily on the side that believes that LUCA was not thermophilic, and, in fact, lived in a cooler surrounding. This cooler surrounding would have likely been near the surface of the ocean rather than in the vicinity of a thermal vent near the ocean’s floor. The other side argues that Earth was warmer 3.5 billion years ago, when life is believed to have been spawned. This, c... ...more evidence, especially in RNA sequences, until an answer can be established. 1] Smith, Szathmary 1999 [2] DeDuve, 1991 [3] Whitfield, 2004 [4] Levy, Miller, 1998 [5] Vogel, 1999 [6] Brochier, Phillippe, 2002 Works Cited Brochier, C., and H. Philippe. 2002. A non-hyperthermophilic ancestor for Bacteria. Nature 417:244. DeDuve, Christian. 1991. Blueprint for a Cell: The Nature and Origin of Life 100-105. Levy, M., and S.L. Miller. 1999. The prebiotic synthesis of modified purines and their potential role the RNA world. Journal of Molecular Evolution 48:631-637. Smith, John Maynard., and Szathmary, Eros. 1999. The Origins of Life: From Birth to the Origins of Language 1-14. Vogel, G. 1999. RNA study suggests cool cradle of life. Science 283: 155-156. Whitfield, J. 2004. Born in a watery commune. Nature 427:674-676.

Marketing Mix for Beats by Dr. Dre Essay

MARKETING MIX A. PRODUCT – Dr. Dre Beats is a company that creates high-end quality headphones. It’s products allow listeners a full music experience with the capability of producing the songs as played from professional recording studios. Their target market is: Teens the youth with allowances to spend on the latest gadgets. The Generation Y, the people under this category are those who are all about what’s new, trendy, and value brand names. Tag-line : â€Å"People aren’t hearing all the music† – Dr. Dre – Products are: Headphones Earphones Speakers – Special Products founded in: HTC Phones ( It’s Built-in audio system; Dr. Beats Earphones) HP Laptops ( Audio of PCs and Monitors) Chrysler Cars (Car audio system) -Competitors: Jay-Z in partnership with Skull Candy for RocNation’s Aviator headphones. Ludacris in partnership with Signeo for Soul by Ludacris 50cent in partnership with SMS for SYNC/ SMA Audio 50 B. PRICE – Products ranges from $199 – $699. – It’s top-end pricing are determined from the quality materials used for the finishing product accompanied by a refined packaging. – Beats used a  similar price strategy of APPLE’S with’price skimming’ wherein they set the price of the product high upon entering the market before competitors show up. C. PLACE – They manufacture their products -> send to officially selected distributors per State/Country -> send to official retailers of State/Country. 12 Verified retailers of Dr. Dre Beats in Philippines: Abenson Ambassador Astroplus Automatic Center Cebu Circuit City Digital Hub Gadgets in Style PowerMac Center Saver’s Digital Hub Appliance Depot SM Appliance, Inc. Switch – Products can also be bought from Dr. Dre Beat’s official web-site and web-sites of official retailers. D. PROMOTION – Beats by Dr. Dre has proved their effective promotion by: advertisements in commercials, music videos, and the world wide web media (Facebook, Twitter, Tumblr, etc.) endorsements from popular celebrities, iconic musicians, and even athletes. – From their successful promotions Beats are branded not just as quality headphones but also as fashion accessories. E. PEOPLE – The founders: Dr. Dre – renowned modern music artist. Jimmy Lovine- famous producer of artists. Luke Wood- known as a musician, producer, and songwriter. – People behind: Monster Cable Sound Technology- audio company who are known for producing quality but overpriced HDMI cables. Robert Brunner – former design executive for Apple. F. PROCESS What can be found in Beats by Dr. Dre’s official web-site: Customer service/ Contact details. Product Manuals. Safe Buying Guide (to avoid buying of fraud products). Authorized Retailers (to find stores that legally sell legit products). All About the Company and the People behind it. All available products. Policies: Private and Return Policies. Sources: http://ph.beatsbydre.com/support/authorized-retailers,en_PH,pg.html http://business.time.com/2013/01/16/how-dr-dre-made-300-headphones-a-must-have-accessory/ http://ph.beatsbydre.com/on/demandware.store/Sites-beats-Intl-Site/en_PH/Default-Start http://monstercable2011.blogspot.com/

Economic impact of Tourism: Pacific Rim Essay

Introduction The Pacific Rim is a grouping of countries in the Pacific Ocean1 that start from the Korean peninsula down through south East Asia. Some of the common countries in this region are; Thailand, Hong Kong, Indonesia, Vietnam, Cambodia, Singapore, Malaysia, Brunei. The current economic situation has been gleam with poor performance from the main economic activity agriculture. To alleviate the situation we must look at tourism as a way of sustaining recommended economic growth. The Pacific Rim has a rich relationship with the tourism industry, with people all over the world highlighting the regions population for good hospitality. Countries like Indonesia and Thailand have used tourism to assist build formidable economies. Tourism within this region is mainly based on leisure along its warm beaches and historical and cultural tours. The average number of tourist in this region per country is relatively high ranging from 5 million in larger destinations like Indonesia to 1 million in Vietnam. Seasonality in the region has its Peak seasons set from July to Oct and Dec 15th to Jan 15th and low season from October to April. Economic Impacts of tourism Foreign exchange earnings International tourist coming to the area will bring in much needed foreign exchange into the local economy. The small pacific island of Samoa gained S $148. 7 million in foreign exchange through tourism in 2001 up S$ 109. 9 million $ the previous year according to their central bank2. The local government and tourist bodies should enforce that international tourists pay in U. S dollars or other stable world leading currency that can be used in stabilising the countries balance of payment. To maximise foreign exchange earnings efficiency, countries where imports are attained from should be targeted for tourism promotion, so as to allow influx of there currency. E. g. if most of the mechanical imports come from Switzerland the government usually has to source Swiss Francs. This can be done by targeting Swiss tourists. Rise in Gross National Product Tourism is an economic activity that provides to the GNP and per capita income of a country. In countries with rich tourist history it could provide up to 25% of the local economy. In 1994 Korea3 for instance set up a successful 5 year plan that help them achieve a U. S $ 500 million income from tourism this target was shifted to US $ 10 Billion for the year 2000. (ref) Increased revenue for the government Government income rises in form of taxes; this could range from a multiple of options; Visa fees; this is fee issued to passport holders of all or select countries to gain entrance into the country. This can income can be sort after at the entry port i. e. airports, harbour docks or International rail stations or at the Countries embassy/Consulate/ High commission in the country of tourist origin. The visa fees are usually categorised by the duration of stay, the frequency of return trips and reason for entry. 4 Value added tax: This is tax on all good, commodities and services acquired. This does not differ from local citizen to international tourist. Training levy: This is a tax that is common in developing countries, that is attached to the direct development of tourism. It is usually enforced by all registered hospitality organisation, at a nominal rate of approximately 2% this money is used to support hospitality schools country wide which ensure to the sustainability of quality service in the destination. Eco-tax: a fairly new concept that put a surcharge on all tourists going to an area, this income is used by the central or local government to support environmental conservation efforts in the area. It is commonly referred to as Balearic tax5 in European countries. It is important that the tax rate or amount collected off set the actual cost incurred in hosting the tourists. A generator of employment Opening up an area to tourism brings in new employment opportunities directly in the tourism and hospitality sector as well as feeder and supply industries. If the area is prospering thanks to tourism then all other sectors are likely to also get into an economic up swing, thus also providing more employment. Improvement of social services The tourism industry is a sector that depends on good infrastructure. The local area will profit from improved services like; Transport: Rail, Air, Water Health services: Hospitals and clinics Water and power supply: Clean sanitary water to international tourists standards, Good steady power supply, with an expanded network Communication; Repair and introduction of new communication mediums. This are initially introduced to serve the tourism industry but eventually trickled down to the local community. Tourism development may lead to an introduction of a wider array of goods and services that may be of a higher quality. This new economic sector could see the introduction of imported goods that will both improve household and commercial goods and services. Encourage business atmosphere The local business community will gain by getting the opportunity to invest in the new opportunities in tourism. Feeder business opportunities created, alternative trade that can flourish A prosperous community with improved social services creates an air of good business environment that will help improve the creativity and diversity of ideas. Economy opportunities created due to awareness (of the rest of the world) contact (by locals with foreign visitors) that tourism brings about. Tourist can turn into investors. Investors can come looking for opportunities once the region is opened up Offer alternative or/and assist traditional industries Ease over reliance on a traditional economic activity e. g. Agriculture, plus may also promote it. The hospitality industry has a large emphasis on culinary experience, thus there it also creates a high demand for agricultural products. By encouraging tourism one would also be encouraging the agricultural sector. This is in the condition that the farm produce can be utilised in the hospitality and that the tourism industry promotes local produce as opposed to importing. Promote time after harvest season when agriculture is at low season. One easy way of promoting the agricultural industry without clashing with tourism is by establishing agro-tourism. Agro tourism is tourism in which tourist’s board at farms or in rural villages and experience farming at close hand. This is a good way of using the agricultural layout to make additional income. New group of economically stable professionals in that are to stimulate growth As the tourism industry grows there will be the generation of financially advantaged locals and expatriate6 community that will create a new market segment that are economically powerful. Political Stability[WKK1] World’s economies are closely tied to political situations. If the new tourism developments are well initiated and the majority of country cross-section are prospering from it in one way or the other then the political situation is bound to be more stable. Prosperous citizens are less revolutionary. Conclusion and recommendations Payments to local companies, foreign exchange control. Local ownership. Top jobs should be open to locals. Tourism should not become the single most important economic activity. 1 Find a map of the region in the appendix 2 Refer to the Samoa information Website link 3 Information derived from: Marketing Korea as tourist destination by Gordon Waitt. University of Wollongong Australia. Tourism management Articles Vol. 17 No. 2. Pg 113-121 1996. 4 Refer to appendix of illustration of the different visa application fees as per the Indonesian government. 5 Tourism and environmental taxes. With special reference to â€Å"Balearic ecotax† by Teresa Palmer and Antoni Reira. University of Majorca Spain. Tourism management journal 24, 2003 6 Refer to XXXX academic journal for a indication of expatriate influx in the Pacific region. [WKK1]Good economy leads to political stability which comes back to an even better economy.

The Art of Being Lonely a Portrayal of the Lives of Chinese Women of the Post

The Art of Being Lonely a Portrayal of the Lives of Chinese Women of the Post Because of their being not ready for the shift from a WWII to the post-WWII environment and the change in values, Chinese women were highly susceptible and extremely vulnerable to the lures of the â€Å"New Shanghai,† which led the main character of Wang’s novel The Song of Everlasting Sorrow: A novel of Shanghai, Wang Qiyao, to the bitter realization of the fact that in any kind of relationship, be it between the ones in love with each other or between relatives, both parties are doomed to mutual misunderstanding and eventually being used, which means that at the end of the day, every single human being is lonely.Advertising We will write a custom essay sample on The Art of Being Lonely: a Portrayal of the Lives of Chinese Women of the Post-wwii Generation. Wang Anyi’s the Song of Everlasting Sorrow Analysis specifically for you for only $16.05 $11/page Learn More One of the many faces of loneliness, or, to be more exact, the necessity to comply with the false morals of the post-war Chinese society, shows clearly that, by trying to subvert to a new definition of freedom and equality without even questioning its meaning, people were trying to make up for the void inside. Mentioned at the very beginning of the novel, these false morals, however, do not portray the post-40s Chinese world as something to be shunned or ashamed of; instead, Anyi clarifies delicately that the give misconception stemmed from the clash of the Chinese culture and the European one. Nevertheless, the air of misunderstanding that contributes to distancing the characters from each other even more is expressed in a very graphic manner: â€Å"One exalts Ibsen’s Nora as a spiritual leader for having the courage to leave home while deep down inside idolizing Oriole in The Western Wing, who finds a strong man she can depend on for the rest of her life† (Anyi 15). Truly, one should not jump to conclusions concerning the mendacity of the post-war society; instead, the given phenomenon can be viewed as the willingness to comply with the progress of the West while trying to retain the traditional Chinese values. As a result, the Chinese people of the 1940s–1950s were luring themselves into thinking that they can live a better, more exciting and luxurious life according to the elitist standards of the New Shanghai, while not being able to part with the ideas that they had learned at their mother’s knees and have been living their entire life according to. Trying to follow the fashionable fads and finding that the latter offered them nothing but emptiness and false expectations, the Chinese people felt betrayed and lonely.Advertising Looking for essay on literature languages? Let's see if we can help you! Get your first paper with 15% OFF Learn More Speaking of the characters, neither the lead one, i.e., Wang, nor any of the supporting ones escape the clutches of lonesomeness. The given idea can also be traced in the story of some characters. For example, the following description of Mr. Cheng pretty much incorporates the history of the Chinese people’s fascination and the following disappointment in the distant 1940s: â€Å"In the 1940s photography was still a modern hobby, which naturally made Mr. Cheng a modern youth. [†¦] He was fickle in his interests, always tiring of the old and moving on to the new† (Anyi 78). The desire to follow the trend instead of relying on the traditional values leaves one roaming in search for another fad, feeling finally devoid of any substance. Needless to say, the atmosphere of rivalry and cunningness that the Hollywood is shot through does not give many reasons to hope for the characters to get more in tune with each other, either. By stressing the vulgarity of the Hollywood morals, as well as the shallowness of its actors and actresses, Anyi explains that the glamorous New Shanghai, which was practicall y trying to recapture the specifics of the Western culture, simultaneously paying zero respect to the traditional Chinese one, made the distance between the Chinese people even greater. As Anyi put it, â€Å"He [Mr. Chang] especially despised Hollywood movies and the women in them, who displayed nothing but feminine shallowness. Those Hollywood actresses were not fit to hold a candle to men playing female roles in Peking operas† (Anyi 108). Splitting into the traditional rural and the highly modernized urban parts, the Chinese community was becoming more disintegrated, which resulted in people distancing from each other.Advertising We will write a custom essay sample on The Art of Being Lonely: a Portrayal of the Lives of Chinese Women of the Post-wwii Generation. Wang Anyi’s the Song of Everlasting Sorrow Analysis specifically for you for only $16.05 $11/page Learn More It can be argued, though, that Anyi portrays a number of moments in which her characters interact with each other rather successfully; moreover, they seem to be completely in tune with each other and appear to be forming close friendship. However, at the end of the day, most of these relationships turn out to be based on the needs of one of the characters. Another argument against the idea of depressing theme filling Anyi’s work is that the author portrays very convincing development of relationships that are typically looked down at and even mentioned with a pinch of irony, e.g., friendship between two women. However, these relationships often turn out to be based on something as low as gossip: â€Å"If the longtang of Shanghai could dream, that dream would be gossip† (Anyi 9). Finally, it can be argued that the novel portrays not only the relationships in which one of the parties is necessarily the love interest of another one, but also the ones in which a man and a woman form a friendship, which is a rather original solution. Indeed, whe never seeing a female and a male character spending at least a chapter of a book having a talk, the readers will inevitably think them to be enamored with each other. To her credit, Anyi breaks this obnoxious clichà © by showing that the relationships between Mr. Cheng and Wang can take an unexpected turn and that there might be a strong emotional connection between them: â€Å"’If I had a sister†¦ and were able to choose what she was like,’ said Mr. Cheng. ‘I would pick someone just like you’† (Anyi 93).Advertising Looking for essay on literature languages? Let's see if we can help you! Get your first paper with 15% OFF Learn More However, the charming atmosphere of mutual trust and the reconciliation between two kindred spirits is shattered by the fact that they will actually never be able to become more than acquaintances. The last and the most important, in this conversation, one of the characters is far from being as serious as another; unlike Mr. Chang, Wang considers the atmosphere â€Å"playful† (Anyi 93) enough not to take Mr. Cheng’s words as something important. Thus, the given scene is shot through with the idea of loneliness as the only possible escape for the people of the post-WWII era. Therefore, every single sentence of Anyi’s novel rings with the idea of loneliness as the only option for the Chinese women of the post-WWI China, with its empty luxury and pointless attractions, which stress the distance between people taking part in it even more. Reminding of the fleetingness of life and the fact that reaching complete understanding between two people is practically impossi ble, Aniy’s novel offers its readers a bitter reconciliation with their fears. Aniy, Wang. The Song of Everlasting Sorrow: A Novel of Shanghai. n. d. Web.

The changing relation between America and Great Britain essays

The changing relation between America and Great Britain essays The changing relation between America and Great Britain Within the years of 1764 and 1774, the changing relationship between America and Great Britain was very obvious. The American colonies began to realize how little they really needed Britains support in politics and economics. The differing ideas of the colonies and their mother country, across the Atlantic, composed the perception towards the development of an independent nation guided under a new form of government. Monarchy in Britain was still the system of government, however, America had a new idea, the concept of republicanism. This depended on the citizens of the town to take part in matters and search for the most beneficial way of life. This ensured that the colonists would live fair. Republicanism grew to controlling situations and occurrence, which made the British Parliament appear useless to America. The Albany Plan of Union was highly rejected from the colonists though it suggested a smaller idea of government. Under this plan, a colonial legislature would elect delegates to a continental assembly. The Americans voiced that they were receiving too little authority (doc E). The people were beginning to have order when deciding who the leader was. The issues of Britain having rule over America became obvious to the colonists themselves. The Americas had no control over the handling of economics and trade across the ocean. The Currency Act of 1764 was issued to put a stop to the merchants being forced to accept paper money that was greatly depreciated in its value (doc D). The Stamp Act of 1765 was created and the colonists, again, were outraged and debated over the very authority of the Parliament itself. (doc G). They felt that British had the right to legislate the colonies but did have the right of taxing them. Even though they taxed things such as paper and tea, Britain also wanted the colonists to support the British troops by issuing the Quarteri...

Book Review of The Road by Cormac McCarthy

Book Review of 'The Road' by Cormac McCarthy Add the post-apocalyptic The Road to Cormac McCarthy’s growing list of masterpieces. It combines the terse but poetic meditations on the horrific depths of human depravity of his Blood Meridian with the taut, thriller writing found in his, No Country for Old Men. What separates The Road from his other works is McCarthy’s ability to capture moments of lyrical and emotional beauty in a father and son’s haunted relationship even as a silent cloud of death covers the world in darkness. Synopsis of  The Road A nameless man and his son trek to the coast in search of food, shelter, and some sign of life.Encounters with other humans are devastating affairs of cruelty, savagery, or despair.Even in a seemingly hopeless struggle for his son, the father notices moments that bring warmth.Though weary, moments of luck or providence seem to catch them before death’s grip can take hold.The Road doesn’t turn away from ultimate horror  but also doesn’t hide defiant love. Pros Sears its mark into your mind from the first sentence to weeks after you’ve put it down.Reveals the strength of a father’s love for his son in the bleakest of circumstances.Written by a master author who knows how to make every word count.Involves a post-apocalyptic world that is frighteningly realized. Cons Only recommended for aged and bold readers. Full Review of The Road â€Å"When he woke in the woods in the dark and the cold of the night he’d reach out to touch the child sleeping beside him.† A father and son are striving to survive in a wilderness that used to be a country that used to be the most prosperous nation on earth. All that is left is ash, floating and falling when the wind chooses not to breathe. This is the setting of The Road, a journey of survival only Cormac McCarthy could envision. McCarthy carves this world in a harsh, stark lyricism reserved for those who speak unflinching prophecy. Both the father and son are surrounded by a nightmare and are frightened by others when they sleep. They are always starving, always cautiously alert, only having a grocery cart with a few blankets and a gun with two bullets, either to protect against the cannibalistic humanity following their tracks or for the father to finish their lives before despair consumes them both. As they journey to the coast in search of something, the father tells the boy it is better to have nightmares because when you start dreaming, you know the end is near. McCarthy allows the reader to dream for them, striving on with them until a conclusion that whispers, under the pain and futility, of a sovereignty that is older than the destruction ever looming in the world. The Road is a brutally astonishing work. If your book discussion club is up for the dark themes, it is a book that will leave you wanting to discuss it with others. The movie adaptation is also available for those who prefer that medium. Check out our discussion questions for The Road to guide your exploration of the book further.

Task 3 Essay Example | Topics and Well Written Essays - 750 words

Task 3 - Essay Example Foremost, the Mughal Empire had collapsed and regional states had taken centre stage (Page, 2003). As a result, thirst for power by political contestants took center stage as they sought to consolidate power in coastal states through support from the Company administrators. Second, trade rivalries between the British and French prompted each one to build alliances with opponent political groups for purposes of extracting maximum benefits for their respective trade companies (Page, 2003). Furthermore, the personal ambitions of amassing wealth were at play in the company’s political involvement. However, one event proved vital in establishing company rule. It was the British victory over the French in Southeast India and consequent fomenting of their presence in Bengal (Page, 2003). Consequently, the company created Indian Sepoy armies that were used to gradually gain economic control over the expansive Indian territory and dismantling any forms of resistance (Page, 2003). The B ritish vision for India was one whereby the population was unified in speaking one language. Consequently, from 1818 to 1857, the company rule enforced social reforms and government policies based on British values. The company rule faced rebellion from the indigenous Hindus and Indians. It was known as the Sepoy rebellion of 1857. The rebellion was precipitated by several factors that were instigated by the British company. First, the Indians were offended by the apparent efforts by the British to convert them to Christianity. Second, the Indians were angered by the British efforts to instill social change by ending slavery and improving the social status of women in households. However, the boiling point arose when the Sepoy soldiers were forced to bite cartridges that were oiled with animal fat before loading them in their guns (Page, 2003). Apparently, the animal fat used was an affront to Hindu religion since it was derived from pig and cow fat. Consequently, the aggrieved Sepo ys rebelled against the British soldiers and the rebellion spurned across Central and Northern India (Page, 2003). However, the rebellion was defeated by the British army and the aftermath was burnt down villages, loss of innocent Indian lives and a wave of mistrust between the Indians and British. As a result, the British changed tact by removing the company rule and establishing a British Colony in India (Page, 2003). However, a wave of Indian nationalism led by rising middle class nationals started to agitate for Indian independence from Britain. One such movement was the Indian National congress that espoused political unity in the push for independence by 1914. B. Comparison of Tactics The Indian Independence Movement employed a non violent resistance against the British colonial rule. It was led by the revolutionary leader, Mahatma Gandhi. The movement preached a united and non violent Indian resistance against the British rule. Mahatma Gandhi drew his method of non violence f rom the philosophical tactics employed by Baba Ram Singh during the Kuka Movement of 1870s (Page, 2003).The resistance came after a backdrop of issues that the colonial government was perpetrating against the Indians. First, the British had divided the India into regions classified as the Princely states and British India (Page, 2003). The Britons had devised the partitioning as a tool for

Prison System in England and Wales Essay Example | Topics and Well Written Essays - 2000 words

Prison System in England and Wales - Essay Example Hence, the crux of this paper concerns the possible solution of prison crisis through the increase in number of prisons after analysing the major causes of the problem so as to examine the best possible solution of the problem in the truest sense. Effective management of prisons is one of the greatest issues confronting any country in the world. Number of prisoners is increasing in all parts of the world exacerbating the crisis in the form of inefficient management, prisoner suicides, aggression, deteriorating hygienic condition and ineffective provision of educational facilities to prisoners. The condition in the prisons of England and Wales is no different; rather it is worse than many developed countries in the world and the most significant issue behind this crisis happens to be massive overcrowding in prisons soaring at a rapid rate. The prisons in England and Wales are severely overcrowded. According to Press Release (2002), the number of people in prisons exceeded 71,500 in 2002, which was about 45,800 in the year 1992. This reveals that the number of people in prison had almost doubled within a span of just 10 years, which in itself was a record. Within Western Europe, the rate of increase in the number of prisoners is the highest, which stood at 134 per 100,000 in the year 2002, and reached 141 per 100,000 in 2004 (National Offender Management Service, 2005). Prisons have no choice but to admit more and more people as court commands people to be incarcerated every day against different criminal charges. According to Page (2003), the number of women prisoners in 1992 was 1300, while it reached 4000 in the year 2002. It shows that the number of women in prisons has risen by about 3 times during a single decade. The number of children under the age of 18 has also increased three times over the last decade. Moreover, the number of old prisoners over the age of 60 in the year 1989 was 345, which after ten years rose to 1000. This is an alarming condition and if it continues in the same direction there is a threat that it will cripple the entire criminal justice system in England and Wales (Press Release, 2002). This menace is further exacerbated with expected rise in the number of prisoners in future. The government opines that the number of prisoners in UK will reach 100,000 by the year 2010 (Page, 2003). If this prediction becomes true, the situation and environment in prisons will further be worsened, as the system is not capable to bear pressure of soaring prison population to such an extent. With the increasing number of prisoners to be fitted in the same number of prisons and cells, the prisoners are being located in narrow cells that are not designed for two or three persons at the same time. The number of beds, toilets and other facilities intended for a single person are to be shared by more than one. According to a report by House of Lords/House of Commons Joint Committee on Human Rights (2004), this surging number of prisoners has caused massive overcrowding in prisons and about 17000 prisoners happen to have been accommodated two in a cell designed for one. National Offender Management Service (2005, p16) states that, "the ten most overcrowded prisons in England in 2004 accounted for 5,900 out of the 18,400 prisoners required to share a cell in crowded conditions". The