The International Free Trade in NAFTA Countries

Introduction Economic integration has been achieved by Canada, Mexico and United Sates of America through international trade activities. The countries involved have made it possible by removing barriers for the movement of goods and services.Advertising We will write a custom essay sample on The International Free Trade in NAFTA Countries specifically for you for only $16.05 $11/page Learn More The trading environment is characterized by â€Å"trade agreements, trade policies and trade barriers† (Bergstrand, 1989). â€Å"The North American Free Trade Agreement is an extension of free trade agreement that existed between the US and Canada in 1988. The United States law is considered as a congressional-executive agreement under international law† (Bergstrand, 1989). NAFTA is the world’s biggest free trade area. It has enhanced the economic growth for the citizens and improved their living standards. Furthermore, this trading block is recognized by the world as a stable foundation that enhances the prospect development of the countries involved (Arndt Alex, 2001). There were doubts as to the effect NAFTA had on the level of employment in the United States. Due to the level of globalization achieved, the American companies would gain by moving the production units to Mexico, which has plenty of cheap labor. â€Å"This would encourage movement of capital from the United States to Mexico and Canada† (Arndt Alex, 2001). Canada was seen to offer new market for American goods and vice versa (Arndt Alex, 2001). Effects of economic Integration The integration has both positive and negative impacts on the environment. It has brought up reduced poverty levels in some parts of Canada and strengthened competitive capacity of the member states. There has also been a notable increase in the Gross Domestic Product of both the countries, especially after the economic crisis of 1994-1995. This activity has further given birth to a breed of elite business leaders (Arndt Alex, 2001). Even though Canada was not severely affected by the integration, Mexican farmers felt reduction in food prices. This is attributed to cheap imports from United Sates. The workers found themselves unemployed after termination of their duties in the manufacturing industries as well as assembly lines. In addition to this NAFTA has led to the high level of inequality in Canada, United States and Mexico (Arndt Alex 2001). Economists argue that such integration has not been able to reduce poverty substantially in Mexico and they operate on an economic roundabout. â€Å"In order to benefit from this integration, Canada has had to provide tax breaks to Americans, fewer environmental regulations and reduced social security payments† (Arndt Alex 2001). The situation was quite tough in Mexico as the employees would not be allowed to form or join unions (Arndt Alex 2001).Advertising Looking for essay on business ec onomics? Let's see if we can help you! Get your first paper with 15% OFF Learn More NAFTA’s Influence On trade â€Å"The globalization of activities between the three countries did not lead to change of trade, except from the few industries that included textile and apparel; in this case, the laws were formulated to favor the United States firms which preferred the Mexican manufacturer to Canadians† (Bergstrand, 1989). â€Å"The World Bank report indicated that NAFTA imports were of roughly the same amount to non-NAFTA exports† (Bergstrand, 1989). On Agriculture The three nations did not negotiate on how to handle agricultural matters. They only signed separate agreements. â€Å"Canada signed an agricultural agreement with the United States, putting in tariff quotas and noteworthy restraints on their products† (Bergstrand, 1989). Mobility of persons â€Å"According to the Department of Homeland Security Yearbook, in fiscal year 2006, 64,633 Cana dians got access to work in the United States courtesy of NAFTA† (Burfisher, Sherman Karen, 2001). Canadian authorities estimated that 24,830 United States citizens had been given permission to work in Canada as at December, 2006. Most of them had gained access through NAFTA (Bergstrand, 1989). Controversies and Criticism Some of the controversies in the North American Trade Agreement include: Dispute in Canada The Canadian government cannot cap the sale of Mexican and American products in the country at any one given moment. This implies that the government can control its trade even in the future. This provision is applicable to Canada’s natural resources like rivers and lakes. â€Å"This creates fears as to the possibility of damaging Canadian ecosystem and water supply† (Bergstrand, 1989). Other doubts originated from the negative effects NAFTA has on the law making process in Canada. Additive import was barred by the federal government of Canada. Under the NAFTA agreements, an American Company filed a suit arguing its additive was not a danger to the health of human beings and animals. It argued that the ban was causing huge damages to their company.Advertising We will write a custom essay sample on The International Free Trade in NAFTA Countries specifically for you for only $16.05 $11/page Learn More â€Å"Furthermore, an argument on Canada’s resolution to enforce a duty of 27 percent on lumber imports on Canadian softwood, was to end being resolved Stephen Harper, the new Prime Minister of Canada who negotiated with the United States† (Burfisher, Sherman Karen, 2001). A resolution was achieved July 1, 2006. In addition, domestic resistance in Canada led to shelving the settlement policy (Burfisher, Sherman Karen, 2001). Canada introduced numerous motions with the view to removing the duty. The US responded to their loss of the plea from NAFTA panel, arguing they were not satisfied by th e decision. â€Å"This had no effect on the countervailing anti-dumping and duty orders† (Helpman Paul, 1985). Business Integration It was a challenge to enjoy the mutual gains among the three states because of war for the first four years. At the end, the huge differences arose in the worldviews towards NAFTA. Some of the difficulties faced by the governments before rational talk of NAFTA could be made possible include: â€Å"The level of understanding the United States had with the world; the governments had to wait for normalization with one another, with much attention to United States change in foreign policy agenda. Secondly, the view of the population on Canada and Mexico enabled countries were to be terms with the change in order to connect with the United States. Finally, economic dissimilarity posed another major challenge as all the three nations had their own share of economic inequalities† (Burfisher, Sherman Karen, 2001). As globalization process took i ts guided shape, NAFTA presented win-win conditions to the three nations with its own problems too. It has enhanced international trade and ensured business and market integration is achieved. Bilateral alternatives between Mexico and Canada indicated that massive cooperation resulted between the south and north of NAFTA (James Masaru, 2000). Recently, they have shown significant cooperation and progress. The mention of Fox government also builds up tension among the member states. Problems arose especially in Unite States as it sought to match its foreign policy with that of other countries. This finally gave rise to mutual understanding among NAFTA members.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More It is worth noting that such activity concern the two countries, America and Canada. In the year 2006, they both held their federal elections. This creates two aspects of difficulties. â€Å"The triumph by Canada’s conservative party can be interpreted as a swing backs to the United States of America, hence a failure to the Mexicans. If Mexico won, the North America’s interest could decrease drastically† (James Masaru, 2000). The US and Canada have enhanced their cultural accommodation for the past two decades. This has been a daunting task but finally it is boring fruits as more employees freely move to work from one country to another. Market Integration Market integration is defined as trade between different countries. â€Å"It arises when the flow of goods and services, factors of production outside the country or between the trading countries is founded on same terms and conditions as within the countries† (Helpman Paul, 1985). Canada is able to t ake advantages of economies of scale, competition and trade allowing the customers to benefit from reduced prices of various products (Helpman Paul, 1985). Conclusion The international market in NAFTA countries has changed since its inception. It has mapped the economic, social and political growth of the Mexican, American and Canadian people. According to Helpman Paul (1985), the triumph in the agriculture trade between Canada and US can now be measured, which is beneficial in building the relationship between the two countries and their neighbors in the future (Bergstrand, 1989). References Arndt, S., Alex, H. (2001). North American Trade after NAFTA: Part I, Part II, and Part III. Claremont Policy Briefs . Bergstrand, J. H. (1989). The Generalized Gravity Equation, Monopolistic Competition, and the Factor Proportions Theory of International Trade. Review of Economics and Statistics . Burfisher, M. E., Sherman, R., Karen, T. (2001). The Impact of NAFTA on the United States. Jo urnal of Economic Perspectives , 15:125-44. Helpman, E., Paul, K. (1985). Market Structure and Foreign Trade. Cambridge: MIT Press. James, W. E., Masaru, U. (2000). NAFTA Trade with East Asia: Rules of Origin and Market Access in Textiles, Apparel, Footwear, and Electrical Machinery. ASEAN Economic Bulletin . This essay on The International Free Trade in NAFTA Countries was written and submitted by user Giselle Marsh to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

TRAVELCOMFORT BUSINESS PLAN

TRAVELCOMFORT BUSINESS PLAN Executive Summary TravelComfort UK, Incorporated is a start-up travel agency that specializes in small and escorted luxury touring packages for its selective clients.Advertising We will write a custom essay sample on Travelcomfort business plan specifically for you for only $16.05 $11/page Learn More The agency is strategically located in Hill Gate Notting, London- to better serve its customers across the UK. This location has of late experienced rapid growth in the number of discriminating or selective luxury tour clients. TravelComfort is a partnership between 4 experienced travel scholars named as Josh Foster, Rochelle Night, Mike Manning and Joshua Awozele. The first 2, other than sitting on the board are also the company’s Chief Executive and Operations Manager respectively. The last 2 do not have additional managerial roles. The first 2 have had extensive training in travel business, especially in sales and marketing to oversee the operations of this new venture. Their knowledge will thus be useful in this starting period. Other than the 2 managerial staff, and the additional 2 board members, the company intends to use an independent sales force of 6 individuals to keep its overhead expenses low hence increasing its sales returns. The owners feel that this will be the surest way of maintaining profitability and its subsequent expansion in this highly competitive travel service industry.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More In addition, the company will make use of the 4 marketing mix to market itself to its customers as well as establishing best relationships with agent travel firms. More so, to ensure that it achieves its profitability and expansion outcomes, the management intends to source for a long-term loan of UK pounds 60,000 from Standard Chartered Bank to finance its required start-up capital of appro ximately  £120,000. The company is characterized by a strong commitment to customer value, service and specialized luxury tour needs; characteristics that set it apart from other UK travel agencies thus constituting its best attractions and unique selling points. Market Research of the UK travel industry A research article by Tassiopoulos highlighted that though there had been a major trend towards responsible and ethical consumptions across UK’s consumer markets, the demand for services in the UK travel industry had risen to match those in other sectors, with tourism given as an example.1 This increase has also coincided with increases in consumer expectations across the country. To expound on this, this plan went ahead to stress that in each holiday, a significant and a growing number of travellers in the UK were looking for better and high quality products. As such, the experiences provided by tour and travel firms should be able to enable the traveller’s access à ¢â‚¬Ëœreal’ living cultures within or without their nations. Nonetheless, previous researches highlighted that though UK travellers had accustomed themselves to taking shorter trips in most cases, at the same time, they expected to derive more value from such short trips.2Advertising We will write a custom essay sample on Travelcomfort business plan specifically for you for only $16.05 $11/page Learn More A scholarly study by Pfister and Tierney summarized the above notions by arguing that nowadays, holidays spender’s across the UK preferred ‘real’ holidays that were characterized with a lot of authenticity.3 These expectations contradicted the scenarios dating 10 years back in this same country. Supporting the above frameworks, Page and Connell combined their findings to assert that in the UK, there has emerged a growing interest in the pursuit of more adventurous forms of travel agencies.4 For instance, the demand for the market has of lately shifted to those agencies that offer specialized travel and tour services such as land based expeditions of the nature of the Graham Land as well as skiing activities. On the other hand, drawing inferences from the Independent on Sundays, the authors of this plan established that the recent economic recession has been a blessing to the UK tour travel industry. This is for the reason that the ever increasing economic recession has increased costs of overseas holidays by a high of 10%- 7% more than domestic holidays.5 This in return has meant that more Britons have preferred to spend their holidays in their country as a budgetary precaution. TravelComfort will strategically position itself to maximise on this great opportunity. To add, Hogson went ahead to review statistics that also revealed that the travel and tourism industries across the UK had for years pursued profits within flexible, unrestricted and fast-moving environments.6 This, according to Robinson had led to most travel agencies failing to establish monitoring systems and formal objectives. They instead chose to seize each opportunity as it came their way without considering its long term effect.7Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More To address this, TravelComfort has established and stated its mission statements. This will in turn assist it to achieve its outcomes since the mission statements will be used as statements of guidance and reference. Specific Target Market The stiff competition in the UK tour and travel industry has created the impetus to clearly understand the specific and the ever changing needs of the differentiated customer groups.8 TravelComfort has studied the market and identified UK citizens especially the retired or working couples who would like to go for adventure as constituting its key target market. Other than those, the company will emphasis on corporate travellers (business conference travellers) and any other travellers from any part of the world. Unique Selling Points These were comprised by the following brief features, concepts and benefits that our clients were happy to associate with our branding. In line with the above, TravelComfort has positioned itself to cater for speciali zed clientele group in the UK. As such, the company will offer small-group, budgetary and luxury modes of adventure travel. These will mainly target UK clients with a small global market presence also targeted in the plan. TravelComfort seeks to have a competitive advantage over its rivals by small but more exclusive packaged tours. These will enable our few clients to receive immediate personal or special attention from our travel hosts. As we expand, we intend to cultivate this niche of one-on-one contact to catch and retain on all our potential clients. The company will also provide accurate, first-hand and instant information concerning all its services to its customers. This can be achieved through mass-messaging or emailing service to registered clients. Market size/growth trends According to the statistics by the UK Office for National Statistics, the financial year ending February 2011 saw a total of 84.6 million travellers visit or depart from UK (visitors to UK were 29.6 m illion while visits abroad by the region’s citizens was 55.0 million).9 This number of travellers a combined drop of 6% compared to the previous year. The reason cited for the drop in the number of visitors was the bad weather. Table 1 showing the number of visitors entering or leaving the UK (Souce: UK Office for National Statistics, 2011). Despite the reduction in the number of travellers, the projected market growth for the UK travel industry stands at 10%. Of the total market size, TravelComfort aims to garner at least 5% of the market by the end of second year of operation. Competitive Environment At present, competition has been intense in the retail travel agency industry in Europe.10 As such TravelComfort will face stiff competition from both external and internal travel agencies. In the case of internal competitors, the company will compete with Thomson Travel Group-UK’s largest tour operator and Going Places-UK’s second largest travel agency.11 Other than the two, internal competitors will also include online travel agencies such as eDreams, Ebookers, Expedia, Iglue, LastMinute and Key2Holidays amongst others. External competitors will comprise of CN Travel Touristic Group- Germany’s largest travel agency and TravelPlanners from USA amongst others. Of late, the UK travel industry has been characterised by constant fluctuations both in service quality and sum of service providers.12 We intend to capitalize on this and broaden our market share. The competitive edge of our company will see us attract and retain customers through provision of up-to-date and accurate information. The company will also offer competitive discounted prices to win on repetitive customers. More so, the company will make use of IT and avail online tickets to its clients. To achieve on the above, the company will rely on the efforts of its experienced founders and personnel. These have great experience in luxury retailing, offering travel, achieving high-net-worth and offering and providing personalized services. Company Description TravelComfort is a full-service travel agency offering full-line travel planning for all its customers. The agency links all business, recreational and adventure travellers with travelling and accommodation firms. As was earlier highlighted, this agency is a partnership between Josh Foster, Rochelle Night, Mike Manning, and Joshua Awozele-who cofounded the agency in January of 2012. The company is located at Office Complex, Nottingham Hill Gate- London. The objectives of the company are as follows: To achieve a profitable status within the first year To garner a 5% market share within the first 2 years To increase its workforce to 20 by the second year (January 2012) and appoint a full-time Business Manager to enhance sales operations Expand the company’s corporate sales by  £ 85,000 each month. This is to happen by the 6 month of the agency’s operation. Services provided The compa ny will provide primary travel services that include, but unlimited to, hotel arrangements, bus and airline ticketing, car rental arrangements, conference planning, charter and tour services, student or employee-tour services and vacation packages. If these services are sold online, the agency will attain a sales margin of 10%. However, this is expected to rise to 15% if they are sold through agents. Marketing Plans/Strategies The company will make use of the four aspects of marketing mix to sell its services to its customers. These are: Pricing strategies The company will offer competitive rates to make its services affordable to all classes of people. In addition, the company will offer a 10% discount to the second ticket purchased by the same consumer. This will attract repetitive consumers to the agency thus increasing its market share. Promotion/Advertising strategies These will focus on the following: Buying ‘space’ in the UK daily newspapers for promotional adve rts on the agency’s services Creating a website where clients will be able search and review their services. The site will then allow them to make online reservations. This site will also be hyper-linked to social networking sites and other travel sites Distributing brochures or posters to strategic places to sell company services Product/ Service strategies The company has already achieved this strategy by incorporating a variety of services within service line. Distribution strategies The company intends to distribute some of its operations for instance, by using agents to market its services. Operational plans TravelComfort will ‘purchase’ its services from the above listed service companies using the following procedure: The company’s Operation’s Manager (Mr Night) will be tasked with negotiating with service industries on the awarding of service agency contacts. In this case, the agency will target to be awarded a commission of 10% on each tic ket (in this case service) sold. The company will then strive to sell more to improve on its profitability. The company intends to sell its services by using its other six sales-representative employees. These employees will improve service efforts by delivering tickets and making telephone follow-ups on their return. These will garner repeat sales and businesses. Besides their coordination, the 2 partners will perform initial sales management until the hiring of the Business Development Manager. Sales forecast The company targets to have sold services worth  £2,516,430 by end of 2012 and  £4, 50,100 by end of 2013 and 8,000,000 in the third year of 2014. This plan is based on the service arrangements to be increased between the agency and its partners. The following table 2 summarises the sales, gross and net profit’s highlights. The values are all in ‘0000 TravelComforts Projected Highlights Sales G/P margin Net Profit Margin Yr 1  £250  £80  £15 Y ear2  £450  £125  £45 Yr 3  £800  £225  £12 To achieve the forecasted sales above, the following sales programs are to be implemented: Issuing sales awards to those sales representatives who will be the top four in terms of highest grossing sales Issuing awards to employees who excel in delivering exemplary tour services to Travel comfort clients. This will create a scenario of retaining and attracting clients hence increasing the sales. The firm intends to implement e-commerce by allowing on-site ticket sales and registration through its Computerised Reservation System. This will ease the process of acquiring or accessing the firm’s services hence increasing the number of discriminative clients. Related to the above, the management intends to position customer care agents in its London office to carry out the role of selling tickets through the phone mode. The firm’s marketing and ticketing services are also to be re-distributed across key attraction points (a scenario commonly called sales retailing) across London to win on the potential passers-by who can top up as its customers. For instance, off-site sales are to be carried out at hired sites. For instance, the management plans to engage stadium managers across the UK to catch on the increased spectator audience. This is so because the management carried an earlier research that proved that spectators in the VIP ticketing category were likely to form a special group for the specialized tour services across London. Break-even analysis The levels of sales need to service all personal requirements and costs will be calculated as follows: Sales (required to break even) =  £ (Business Survival Budget/Drawings + Overheads/Operating Expenses) Sales=  £300,000 +  £400,000=  £700,000 TravelComfort’s Monthly Break-even points Figure1 depicting the break-even analysis From the above figure, it is projected the company will break even half-way through the third month. At this time, the company will have required to have sold an estimated â‚ ¬ 700,000 meet its personal requirements (drawings) and all its costs comfortably. Key Personnel Mr. Josh Foster- Company’s Chief Executive Mr. Foster is one of the co-founders of the agency. Having graduated with a distinction in Business Management, Sales and Marketing, he will spearhead the company’s growth. His strength to multi-task across dynamic environments will see him represent the agency at key stakeholder conferences. He will also spearhead the agency’s expansion module. Mr. Rochelle Night-Operations Manager Mr. Night will coordinate all agency operations. His leadership skills will ensure that a link exists between the sales representatives and the customers. He intends to maximise on his supervisory role at Easyjet Travel Agency to implement his new duties. Other than the two above, the following also topped up as Travel Comfort’s board members: Critical risks of the venture The following risks were identified as potential risks associated with this venture. Emerging travel agency businesses that were likely to cause stiff competition. The financial crisis that was likely to cause shifts in consumer demands (consumers were likely to reduce on their leisure expenditures). The company was likely to lose contact with some of foreign customers. Contingency planning The following measures will be implemented to safeguard the performance of the venture if sales reduce by more than 5% as projected. The management will carry out reviews to determine if the forecasts were realistic. If they were not, new estimates will be forecasted based on the sales statistics at hand. In this case, the last trading period’s actual results will be projected for achievable targets to be determined. If the forecasts were real, the management will review its budget to obtain a realistic one. In this case, the management will determine the expenses to be r educed and the margins to e improved. In this case the pro-forma revenues will be decreased by a realistic percentage based on the conditions facing the company. Having implemented the above, the company will carry out the following actions to improve on its performance: Carry out an aggressive promotion to increase its service awareness. Establish reward schemes for its sales team to motivate them in reaching more consumers. For instance, by rewarding employees who surpass a weekly target of  £ 20,000 with a 15% commission Likewise, the company willl try to re-negotiate its contracts with its partners. In this case, the management will point out the difficulties facing the travel agency and request a re-view of the engagements on mutual basis. Offering/ Funding The following table summarized the company’s start-up summary Item(s) Description Total amount Expenses Office supplies, rent, consultant’s fees, utilities, insurance, internet charges, website creation charges, communication bill etc  £80,000 Assets Furniture, cash, computers etc  £ 120,000 Owners’ Contributions Primarily cash  £ 150,000 Loans/ Borrowing From Standard Chartered Bank  £ 200,000 Total start-up funding  £ 550,000 Financial Plan Profit Loss Account The following is the profit and Loss account (projected for the first three years). Note: All figures are in  £. Year1 Year 2 Year 3 Sales (Direct and Indirect) 2,516,430 4,110, 345 5, 815,100 Less cost of sales 1, 910, 000 3, 515, 650 4, 910, 000 Gross profit 606,430 594,695 905, 100 Less Expenses 450,130 480,520 520,000 Pre-tax net income 156, 300 114,175 385, 100 Taxes Paid 18,900 11, 600 41, 200 Net income 137,400 102,575 343,900 Pro-forma Balance Sheet The following balance sheet has also been projected for the first three years. Balance Sheet (projected for the 1st three years) Note: All figures are in  £. Year 1 Year 2 Year 3 Total Current Assets 450,000 4 20, 500 455, 100 Total Long-term Assets 150,000 214,000 139, 900 Total Assets 600,000 634,100 595,000 Current liabilities 250,000 242, 100 245,000 Long-term liabilities 200,000 112,000 0 Total Liabilities 450,000 354, 100 245,000 Total Capital 150,000 280,000 350,000 Total Capital and Liabilities 600,000 634,100 595,000 Reference List Doganis, R, Flying off course: the economics of international airlines, 3rd edition, Routledge, Newyork, 2002. Hogson, A, The travel and tourism industry: strategies for the future, CABI Publisher, Oxford, 1987. Horne, S J, Swarbrooke, Leisure marketing: a global perspective, Butterworth-Heinemann, UK, 2005. Independent on Sundays, Recession ‘is good news for UK travel industry’, 2008. Web. Needham, A, Business for higher awards, Heinemann, UK, 1999. Evans, N, Strategic management for travel and tourism, Butterworth-Heinemann, UK. Page, S Connell, J, Tourism: A modern synthesis, 2nd edn., PublisherCengage Learning EMEA, Stamford, 2006. Pfister, R Tierney, P, Recreation, event, and tourism businesses: start-up and sustainable operations, Human Kinetics, Leeds, UK, 2008. Plunkett, J W, Plunketts airline, hotel travel industry Almanac 2007: Airline, hotel travel industry market research, statistics, trends leading companies, Plunkett Research, Ltd., Texas, 2006. Robinson, P, Operations Management in the Travel Industry, CABI, Oxford, 2009. Tassiopoulos, D, New tourism ventures: an entrepreneurial and managerial approach, Juta and Company Ltd, Cape Town, South Africa, 2009. UK Office for National Statistics, Travel and tourism: Overseas visits still subdued, 2011, retrieved https://www.ons.gov.uk/. Footnotes 1 D Tassiopoulos, New tourism ventures: an entrepreneurial and managerial approach, Juta and Company Ltd, Cape Town, South Africa, 2009, p.309. 2 J W Plunkett, Plunketts airline, hotel travel industry Almanac 2007: Airline, hotel travel industry market research, statistics, trends leading co mpanies, Plunkett Research, Ltd., Texas, 2006, p.62. 3 R Pfister, P Tierney, Recreation, event, and tourism businesses: start-up and sustainable operations, Human Kinetics, Leeds, UK, 2008. 4 S Page J Connell, Tourism: A modern synthesis, 2nd edn., Cengage Learning EMEA, Stamford, 2006, p.81. 5 Independent on Sundays, Recession ‘is good news for UK travel industry’, 2008. 6 A Hogson, The travel and tourism industry: strategies for the future, CABI Publisher, Oxford, 1987. 7 P Robinson, Operations management in the travel Industry, CABI, Oxford, 2009, p. 254. 8 A Needham, Business for higher awards, Heinemann, UK, 1999, p.19. 9 UK Office for National Statistics, Travel and tourism: Overseas visits still subdued, 2011. 10 S, Horne J, Swarbrooke, Leisure marketing: a global perspective, Butterworth-Heinemann, UK, 2005, p. 233. 11 R Doganis, Flying off course: the economics of international airlines, 3rd edition, Routledge, Newyork, 2002, p.159. 12 N Evans, Strategic man agement for travel and tourism, Butterworth-Heinemann, UK, pp. 172-177.

Behavioral finance Coursework Example | Topics and Well Written Essays - 1750 words

Behavioral finance - Coursework Example To establish the influence of cognitive, affective and social aspects on investment decision making, and the role of psychological and social factors in financial market behaviour, this essay discusses what might cause perceptions of risk to be inaccurate,. Risk is an amalgamation of the probability or frequency of occurrence of a distinct hazard and the magnitude of the consequences of the occurrence (Botterill & Mazur, 2004, p.1). It defines how often a particular harmful event is expected to occur and consequences that such an occurrence is expected to cause. In terms of investments, risk may be defined on the basis of the amount of loss expected to be incurred when an adverse occurrence happens or is expected to happen frequently. Therefore, perceptions of risk are constructed on the basis of individual beliefs, societal perceptions and expert perceptions. Most people perceive risk as a possibility of bad outcome, whenever a choice is made. Therefore, in many instances, risk taking is not regarded as a potentially positive activity. However, there are instances, though few, where risk taking is perceived as a positive activity, with the potential of creating benefits to an investor. There are significant gaps between perceived risk and measurable probabilities of risk. The evident widely acknowledged differences between perceived risk and actual risk suggests that in most cases; perceptions of risk are inaccurate. This is evident when significant differences are recorded in terms of what is perceived and what actually happens in terms of real investment risks (Botterill & Mazur, 2004, p.3). Therefore, various people understand and respond to risk in various ways, based on psychological and social factors surrounding them. One of the factors that influence perception of risk, and most probably leads to an inaccurate perception of risk is the