Monday, October 22, 2012


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As I pulled to Carter Day Child Care Center I got the feeling that this school/daycare was on of small size. When I pulled up it took me about five minutes to find a parking spot. There were cars lined up all along the side walk, due to there being a ring making business across the street. There were a couple of houses on both sides of the street, there was also a little run down convenient store on the corner of the street that always seemed to be closed; it didn’t seem to much like a neighborhood to me.

When I entered the school/daycare there was a display of the students artwork hanging on the walls. On a table sat five carts with all the children’s names on them along with a sign in and out sheet. I was introduced to Wendy who is the head teacher. Wendy gave me a tour of all the classrooms form the infant room to the kindergarten classroom. As we went from classroom to classroom I noticed that the numbers were really low. There were eight infants, eight toddlers, nine in the busy bees, nine in the teddy bears, nine in the butterflies, and nine in the kindergarten classrooms. Each classroom had its own energy. It was very calm in the first three classrooms that I went into, but the last three classrooms were very loud and outgoing. In the kindergarten class there were only nine, but when I walked in it seemed like there were nineteen students. I quickly noticed the students who were the loud ones in the classroom; they ran up to me and began to ask question after question.

During my first visit I just took the time to sit, look, and listen so that I could get a feeling for the classroom. On my second visit the teacher let me decide what I wanted to do. She offered me to work one on one or with the whole group. I decided to work one week with the whole group and the opposite week one on one so that each student could get some personal time with me.

When I worked with the students as a group they taught me that it is very important to take the time and ask questions about themselves, families and their cultures. I realized it was important to do this, because Hispanic peoples celebrate birthdays differently from the Afro American people. One Hispanic student told me that it is a party for them and their parents, on the other hand one Afro American student told me that it is a party for them to invite their friends, get gifts and eat cake. This little example made me take a step back and realize that something as small as a birthday party may be celebrated differently across cultures.

When I worked with the students on an individual bases, I learned very quickly that these students learned best in different ways. I had one student that was learning through visuals, and by repeating things to her more than three times. This student had a problem understanding due to her primary language being Spanish and that being the only language spoken at home. When I worked with this student I used very colorful flash cards to help her learn the alphabet and her colors.

There was another student in the classroom that learned just by direction. When he was told to color the sock green he would do just that. It was an advantage to have this student in the classroom, because there were students that needed help in identifying objects and he was a big help. This student actually enjoyed helping the other students, though at times he was called the teachers pet.

The students in this class also learned through sensory. There was an area for the rice table, and the water table. The classroom was also center based learning with a math table, book area, dramatic area, block area, art center, and puzzle area. All the centers had advantages and disadvantages. The advantages were that all the students got the chance to play and work in groups. The students were also able to learn how to work together, and learn how to work out their own problems. The disadvantages were that some of the students always wanted to go to the same area day after day not giving themselves a chance to experience something different. The students always got into disagreements about the dramatic area. This was the area that caused the most problems. Every time the teacher would open the area the same three girls would go into the dramatic area and would always end up argue which would make the teacher close it so that nine of the other students would be able to get a chance that day.

When thinking about teaching a classroom of diverse students I would have to be prepared to expect there to be different learning styles in the classroom. I would also need to continue to volunteer in the diverse communities, so that I may get the sense of how the children learn, and how they get motivated. In some ways it may be easy to say that there is no way in being prepared, because all students are different and as a teacher you need to be trained well enough to adapt do the different students that will enter your class ever year.

There are different things that I have learned about social, cultural, and economic conditions that impact students learning. I have learned that students need to feel like they are in a safe and clean environment in order to learn properly. I have also learned that when learning it is important for a child to be social with other students. By being social a student can expand their self-esteem, attitude and group work won’t be a chore for them. In doing my service learning I have learned that due to culture students learn differently. I have learned that in the Hispanic culture the students learn their vowels before they learn the alphabet. There was also a student in the classroom that did not salute the flag or say grace due to his parent’s religion. One morning before breakfast I was asking him to fold his hands so that we may bless the food he just put his head down and would not say anything. He was to embarrassed so all the students began to yell out “he can’t say grace, his mom doesn’t let him”. After the other students began to yell out he said, “I can’t say it I don’t believe in God”. I have heard about these things before, but never thought I would come in contact with it. I felt so stupid, because learning about it and then being blind about it made me feel silly. I also learned that the economic condition play a big part in the classroom, because there were children in the classroom that would tease the other children about their cloths and shoes. When children are showing these types of behaviors it does have an effect on a student's learning, because instead of coming to school to learn the student is worrying about what the next student is going to say about their cloths.

Learning about yourself

The personal qualities that I possess are that I can relate to the children being that I grew up in a diverse, low-income family/community. Also the students knew that they could have fun with me, but when I met business I met business. The students all had respect for me because I respected them. Which I believe is very important in a classroom. They loved when I came each day. A personal quality that I have is being on time and ready to do the job. The students knew that I would be there at 8 a.m. and that I would leave at 10 a.m. everyday. I was only supposed to visit for fifteen visits, but I visited for two months straight for two hours per visit. I was dedicated and loved it.

I can say that there was nothing that I had to unlearn. I went into the classroom with an open mind expecting to get through to at least one of the nine students. The impact that I had on the students was of one that I did not expect. One of the students that I worked with went from not knowing how to write his name to writing it perfectly. It took a lot of time and practice. Working with this student taught me what patients really met. While working with the students on a day to day basis I got to learn about each of their personalities, and also learn some of their likes and dislikes in learning. I have learned that I could have an impact on a child without even knowing it. When it was my last day in my service learning some of the students cried while other grabbed hold of me and did not want me to go. As a group they made me a card and a giant poster with all their handprints on it. Not only I had an impact on the students, but also at the same time they had a huge impact on me.

Connections of the course

When reading the Banks book I learned about religion and how students may have different religious beliefs, and how to deal with them. Also the Banks book talked about gender issues in education. When I went into the classroom I tried to observe and see if the books findings were consistent with the children as far as maths. I did find that the boys in the class did better with maths and that the girls did better with writing. The reading about the Indian boy helped me to pay attention to the students who may have been quite, but at the same time not to continuously pick on that student, but to help that student in their learning by working one on one to see what they know and what they may need help in.

Finally, I would like to say that this service learning experience has been a great one for me. It has helped me make up my mind about going into teaching. The students in my classroom were all loving and outgoing at times; I had to remember that they were supposed to be like that at that age. The teacher that I worked with who was Bethany Lawson was wonderful, she help me get that full experience. This service learning was the best part of the class, because I got the chance to take what I had learned about diversity and put it to work.    

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“By blood and bones and belly, I’ve got a noble story I can tell 'ee.” I’ve done some thinking ye might say, and I’ve come to the conclusion that before ye need know anything of those traveling with me, ye must know something of myself. Being the strongest, and most handsome of the group (although the spirits I’m in and the spirits I’ve drunk might have more to say on that matter than would ye), I believe I’m as good of a man, if not a better one to start.

First, I am a Scot, and don’t let no man, or woman for that matter, tell you otherwise. I’ve got the strength, the hair, and the constitution to prove it! I’m “a great stout fellow big in brawn and bone. And win the ram at any wrestling show.” Why, I’ve even been known to “heave any door off hinge and post.” Some have called me “a wrangler and buffoon,” but I’ve “a store of tavern stories, filthy in the main” enough to make ye laugh and forget that I’m a drunk, and no genteel man.

In fact, I told one not a few moments ago that has that old man Oswald in a fit. As if one as “choleric and thin” as he could have a fit enough to put the sober into me. The old fart can’t even keep up! Why he rides in “the hindmost of our cavalcade.” He seemed to take great offense at my tale. He even yelled, saying “shut your trap! Give over with your drunken harlotry. It is a sin and a foolishness.” As if the drink that some say the gods gave to man could be considered a sin, the old “cuckold.”

The old man’s got some good and luck that my mate the Shipman was in the mood of telling a jolly tale, else I might have been persueded to “play my bagpipes up and down” his head! Anyhow, the Shipman, now there’s a man who can tell a good tale, “God bless my soul, he was a merry knave!” “May [he] sail the coast in safety, [that] noble skipper, [and not] get sunk.” His story, which tells a monk of all men, ready to betray and bed, warms the face with laughter. Well, it’s like I’ve always said, “shut your door against all monks!”

You ken, as much as I like a man who can tell a good story, I believe I like a woman who’s a bit deaf even better. All the easier to not have to be minding what ye say around that sex. All the better then a good man’s chances! There’s “a worthy woman from Bath city” among our caravan. She has a handsome face “red in hue,” and “she[s] had five husbands” so I ken she knows what’s she’s doing, if you know what I mean. She “like[s] to laugh and chat” and she’s deaf as a bat as is blind, and I have a secret belief that left in a room with she, a large book, and the bottle, we might have a damn good time!

Well, I’ve said enough, bring on the “Southwark ale!” And perhaps, more so than mine, a bawdier tale. I’ve no doubt the noble Knight will win our Host’s good bet. His has been the most moral tale yet. “Now dearest [professor] if thy pleasure be, in thoughts of [an A] think tenderly of me!”

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"The Destructors"

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Trevor’s Revenge

In “The Destructors,” by Graham Greene one thing comes to mind Trevor. Through the struggles of a country and a cry for help a quiet boy turns into a possessed leader. Trevor changes the direction of the Wormsley Common Gang from pranks to disaster. Trevor’s destroying of Old Misery’s home has a more detailing reason behind it then a prank.

The story is set in London nine years after the end a World War II. The Wormsley Common Gang is a unity of twelve young boys. The newest recruit becomes a leader and gives the gang the biggest thrill on the eve of August Bank Holiday. A quiet boy who just joined the Wormsley Common Gang in the summer changes dramatically though the story. A boy who “never wasted a word even to tell him name until that was required of him by the rules”(Graham 116) sits back and just goes with the gangs boyish every day pranks. His name is Trevor or T. to the gang. Trevor’s father was an architect and became a clerk after the blitz. His mother was a woman who thought of her as better then the neighbors. This makes the story ironic, because Trevor has such a passion for destroying a home that Sir Christopher Wren built. Trevor’s hatred for the house could be that since London had been destroyed and Trevor’s father lost his job and two of Wren’s buildings stand he wanted to get even.

Blackie is the gang’s former leader. When Trevor comes up with the idea to destroy the last standing home on the block it makes Trevor a leader. When Trevor shows Blackie Old Misery’s savings “it is highly significant that T. and Blackie turn Old Misery’s cache of pound notes, printed with the colors green and beige, into “gray ash”(0) by burning them”(Kolin 158). When Trevor and Blackie burn a note by note instead of stealing it they are getting back at London. This shows that it’s not just the one house that is standing on the block, but that once they all had money and now they have nothing why should he. This shows Trevor’s hatred for London’s economy. This is a “vivid symbol of cultural identity, here an image of the country’s economic health, is transformed into the drab meaninglessness that gray suggest”(Kolin 158). He is not doing it for fun, but to get back at London for the loss that he has had. By them celebrating it shows the pride that Trevor is taking on his revenge for the blitz and the damage, and loss he has suffered from.

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The meeting spot of the gang shows a lot about why Trevor planned this attack on Old Misery. The boys meet there “every morning in an impromptu car-park, the site of the last bomb of the first blitz”(Greene 116). They meet there every morning and the only house standing is Old Misery’s house. Trevor goes to the house and sees what it looks like inside. When he returns with a plan to destroy it you can tell he is spiteful that Misery’s home is still standing. He tells the gang in jealousy that it is beautiful with two hundred-year-old stairs, and paneling like a Blue Boar. This makes the gang furious and jealous at the same time. Trevor is then speaking out for the first time. This is the point were Trevor grows into a character with built up frustration and hate. He demises a destroying of a man’s home without remorse. Graham hints this about the character when he says “T. was giving his orders with decision it was as though this plan had been with him all his life, pondered through the seasons, now in his fifteenth year crystallized with the pain of puberty”(Greene 10). This shows that Trevor has been planning this and that because Misery’s house is the only house still standing from the blitz it must come down like the rest. Trevor slowly destroys the house and does this with joy.

When the driver ultimately takes down the house when he is picking up his lorry and laughs at Misery and says “nothing personal, but you got to admit it’s funny”(Greene). It shows the town felt the same way. Trevor saw the house as a symbol of everything bad that has happened to him. To him the house was just more then an everyday childish prank, but London itself. By destroying the house Trevor feels a relief that now everyday when they meet he won’t have the reminder that not everyone was effected by it. Now to him he is not alone, and blitz affected everyone not just his family. From a shy boy to a possessed leader Trevor is characterized as a leader not for destroying the house, but for getting even with London.

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The Comeback of Caterpillar, 1995-2001

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The Comeback of Caterpillar, 1995-2001

Background Information

This case deals with Caterpillar, Inc. who has been building the world's road and rail network for more than 75 years; and in partnership with Caterpillar dealers, is driving positive and sustainable change on every continent. A Fortune 100 company, Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company is a technology leader in construction, transportation, mining, forestry, energy, logistics, electronics, financing and electric power generation.

After a three consecutive years of tremendous loss, Caterpillar managed to come back as a high-tech globally competitive, growth company. Throughout the tenure of two very successful CEOs, George Schaefer and Donald Fites, and over a period of about 15 years, the company reinvented itself. George Schaefer introduced cost-cutting measures and employee involvement programs, outsourced machined, parts, and components, and began modernizing Caterpillar’s plants. On the other hand, Donald Fites diversified the company’s product line and reorganized the company structurally. He also completed Caterpillar’s modernization program, revitalized its dealership network, and altered the company’s approach to labor relations.

Key Issues

George Schefer and Donald Fites faced and overcame many obstacles during their eras. Schefer had to face 1) a global recession, 2) a costly strike, and 3) an unfavorable change in exchange rates. Fites faced costly labor strikes as well, but also had to overcome 1) a slump in the company’s earnings as well as 2) lower industry-wide demands in both the domestic and international markets.

Donald Fites retired in February of 1999, leaving newly elected CEO, Glen Barton, to face many challenges.

· Barton could not count on Caterpillar’s continual prosperity due to the downturn of the U.S. construction industry.

· During Barton’s first year (2000), the company’s sales declined by 6 percent and earnings by 7 percent. Also, Caterpillar’s share price traded close to its 5 week low in March of 2000.

· Caterpillar needed a strategy implemented that would allow it to withstand the forecasted grind of our economy and the construction industry as a whole. Barton needed to decide whether the strategies of the previous CEOs needed to be refined, reversed, or totally restructured.

Current Strategies

Named to the Dow Jones Sustainability World Index in September of  2000, Caterpillar is recognized for successful integration of long-term economic, environmental and social aspects into business strategies that benefit all stakeholders. Caterpillars commitment to social responsibility ensures our ability to meet today's needs without sacrificing the ability to meet the needs of future generations.

Caterpillar is committed to generating attractive returns for our shareholders. Strategic growth initiatives involving our machine, engine and service businesses are expected to drive these returns over the next several years.


Caterpillar’s products and components are manufactured in 50 U.S. facilities and in 65 other locations around the globe. By 1965, Caterpillar had established foreign manufacturing ubsidiaries. Caterpillars global dealer network provides a key competitive edge allowing customers to deal with people they know and trust. Almost all dealerships are independent and locally owned. Many have relationships with their customers that span at least two generations. Cat dealers serve equipment, service and financing needs for customers. Rental services are offered through more than 1,00 outlets worldwide.

In the first half of 2000, Caterpillar posted sales and revenues of $.70 billion and profit of $80 million or 81 cents per share. More than half of all sales were to customers outside of the United States, maintaining Caterpillars position as a global supplier and leading U.S. exporter.

Financial Analysis

Caterpillar is financially strong and able to fund product programs for future customer needs, provide financing for dealers and customers, and reward its shareholders. They continue to generate significant net free cash flow enabling investments in strategic growth opportunities.

Caterpillar has increased cash dividends nine times, boosting the quarterly dividend to $.5 per share. Since June 15, they have repurchased approximately 6 million shares, or about 15 percent of their outstanding shares.

Financial Data 001

Sales and Revenues $0,450

Profit $805

Profit Per Share (diluted) $.

Employment 7,004

(Dollars in millions except per share data)

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Starbucks Corporation

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Starbucks purchases and roasts high-quality whole bean coffees and sells them along with espresso beverages, pastries, and coffee-related accessories and equipment, primarily through its company-operated retail stores. Starbucks also sells whole bean coffees through a specialty sales group, a direct response business, supermarkets, and online at Additionally, Starbucks produces and sells bottled Frappuccino coffee drink, a line of premium ice creams, and premium teas produced by its wholly owned subsidiary, Tazo Tea Company.

Starbucks Mission Statement

Starbucks Coffee defines its mission as to “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow”. Its objective is to establish Starbucks as the most recognized and respected brand in the world, rapidly expanding its retail operations, growing its specialty sales and other operations, as well as introducing and developing new products and distribution channels. Starbuck’s guiding principles include respect, dignity, diversity, and excellence, and customer satisfaction, contributions to the community, environmental responsibility, and profitability. At an environmental level, Starbucks is committed to innovative and flexible solutions, and to buy, sell, and use environmentally friendly products.

Company History

In 1971 Starbucks started selling whole-bean coffee in Seattle’s Pike Market Place. Howard Schultz joined Starbucks as manager of retail sales and marketing, and proposed the creation of a national chain of cafes stylized on the Italian coffee bar, which was not accepted. Schultz opened his own coffee bar, Il Giornale, and in 1987 his company acquired Starbucks Coffee.

Starbucks’ Products

Starbucks Coffee changed the concept consumers had about drinking coffee transforming it into a lifestyle accessory; its success over the past 5 years relates to the quality of the product, and customers’ loyalty. Originally a seller of packaged, premium, roasted coffees, in 1984 Starbucks introduced Christmas blend. The product mix has changed significantly over the years, with beans accounting for about 15% of the chain’s actual sales. The company has diversified its products and now serves in coffee bars, where people learn about coffee and can choose between a variety of these and many other options. Starbucks introduced brewed coffee and espresso beverages and since the mid 80’s it has developed and introduced a variety of products including compact disks, Frappuccino blended beverages, ice cream, ice cream bars, Milder Dimensions coffee, Tiazzi blended juice tea, and a variety of high quality and Gourmet coffees like the Shade Grown Mexico coffee.

Beginning the new millennium, Starbucks implemented high speed wireless Internet in its locations, developed the Starbucks card, and added the Starbucks Barista Quattro thermal coffeemaker to its variety of automated home espresso machines; in addition, the Starbucks DoubleShot ready to drink coffee category, and non-coffee options such as Chai, Vanilla, and Coconut Crème Frappuccino were introduced to the market.

Operations Expansion

Starbucks has been considered one of the fastest growing companies in the United States. In 1987, Il Giornale Coffee Acquired Starbucks and adopted its brand name. After the acquisition, Starbucks developed in 1988 a mail order catalog to serve 50 states in United States. In addition to an aggressive locations expansion, since the 10’s Starbucks has acquired three roasting plants, as well as competitors such as the Seattle Coffee Company, Coffee Connection, and Tazo Tea Company; Starbucks went public in 1992, amplified its roasting facilities in 1995, launched in 1998, and acquired Hear Music Company in 1999.

National Market Expansion

Starbucks started in Seattle’s Pike Place Market and selling coffee to fine restaurants and espresso bars. In 1988 Starbucks introduced a mail order catalog that allowed it to serve 50 states in U.S., in addition to its now existing 33 locations.

During the next years, Starbucks acquired accounts and strategic relationships with Horizon Air, CARE, Nordstrom, Barnes & Noble, Itt/Sheraton, United airlines, Canadian Bookstore, Westin, Pepsi Cola, Canadian Airlines, Albertsons Inc, Transfair USA, and Hyatt Hotels Corp.; meanwhile, Starbucks continued its national and international expansion raising more than 5100 National locations and more than 900 locations around the world. The company continues to develop sales in alternative outlets, including foodservice and non-traditional retail sites.

Starbucks decided to sell fair trade coffee, and meet many of Global Exchange’s demands, buying the best fair trade coffee, and finding ways to market the product to support the company’s positioning as a socially responsible purveyor of the highest quality coffee.

International Expansion

The U.S. coffee market is considered saturated. The increase of coffee costs lowered the margins and intensified competition among big chains and smaller coffee bars. Given this situation, Starbucks turned its attention to foreign markets in order to continue growing. It was also taken into consideration the potential of the Emerging markets, mainly Japan, given their increasing income and growing economy.

The gourmet coffee industry exploded in the 1990’s presenting growth rates of around 30% per year. Since 1995, Starbucks implemented an international expansion strategy that has led to the establishment of nearly 900 coffeehouses in countries outside North America. This expansion started in 1996 in Japan, where 300 Starbucks locations operate nowadays thanks to the joint venture with Sazabi.

Starbucks then expanded trough Hawaii, Singapore, Philippines, Thailand, Taiwan, New Zealand, Malaysia, China, Kuwait, Korea, Lebanon, Canada, Dubai, Hong Kong, Shanghais, Qatar, Bahrain, Saudi Arabia, Australia, Switzerland, Israel, Austria, Oman, Indonesia, Germany, Spain, Puerto Rico Mexico, Greece, and Southern China. Starbucks is now evaluating its expansion though South America with the opening of a new location in Peru in June 2003, and future locations in Chile.

The breakdown of foreign stores as of July 2002 is as follows: 

The Gourmet Coffee Industry

Here are some other facts concerning coffee consumption as published in the March 27, 2000 issue of Coffee Fax newsletter

1. According to the National Coffee Associations (NCA) 2000, 79 percent of adults 18 years or older consumed coffee over the past year, compared to 78 percent in 1999 and 75 percent in 1997.

2. Daily consumption in 2000 was 54 percent, or 110 million American adults, an increase of one million new daily drinkers over 1999, due to the development of new quality beverages, an expanding coffee menu, and a new public place for coffees social consumption the gourmet coffee house.

3. Daily consumption in the gourmet coffee sector has grown from less than three percent of the adult population in 1995 to nine percent in 2000.

4. Occasional consumption in the gourmet coffee sector has increased from 5 percent of the population in 1997 to 53 percent in 2000.

5. Thirty-six percent of coffee drinkers said they drink from cups larger than eight ounces, compared to 30 percent in 1998.

There are basically two major types of coffee beans arabica and robusta, of which arabica beans are far superior in quality, taste, and price. The two largest producers of coffee in the world are Brazil and Colombia. Unlike ten years ago, Vietnam is now becoming the robusta leader, with 12% share of the world market, exporting to U.S. over half of U.S. Robusta consumption in 2001, raising its production 16% that year, while the production of quality Central American beans fell 25%.

Tempted by the lower prices, some packagers of lower-priced coffee brands are substituting cheaper beans for some of the better beans they used to put in their blends. Meanwhile, some importers of quality beans are finding it hard to source them, and are seeing prices rise. Many coffee farmers are very poor and thus have been forced to cut production of the better beans, which are more expensive for them to produce, forcing the prices to rise.

Coffee producers

Internal Analysis

Ashley’s part

External Analysis

Michael Porter’s Five Forces Model can be used to examine the opportunities and threats posed against Starbucks by the external environment. The five forces to be examined are risk of entry by potential competitors, rivalry among established firms, bargaining power of buyers, bargaining power of suppliers, and threat of substitute products. Management can make decisions about where Starbucks is at presently and in what direction they need to go by analyzing these five conditions.

Five Forces

The first of Porter’s five forces is risk of entry by potential competitors. According to Charles Hill and Gareth Jones, “potential competitors are companies that are not currently competing in an industry but have the capability to do so if they choose”. Presently the gourmet coffee industry is a very appealing industry to enter into. According to James Surowiecki of the New Yorker, “During the nineties, the number of coffee drinkers rose by almost forty million”. Yet there are many factors, such as barriers to entry, that turn many companies away. “Barriers to entry are factors that make it costly of companies to enter an industry”(Hill and Gareth). Barriers to entry are indirectly related to the risk of potential competitors. The greater the barriers the less likely a firm will enter into that industry.

One barrier to entry in the gourmet coffee sector is brand loyalty. Starbucks is such a well-known and admired brand name they don’t need to spend very much on advertising, only about 1% of total revenues ( Many firms will not even consider opening a coffee shop operation if a Starbucks is located close by. Another barrier to entry is absolute cost advantages. Starbucks has been in business since 1971, and in that time have perfected roasting almost to an art form some might say. “Roasters are promoted from within the company and trained for over a year, and it is considered quite an honor to be chosen”. While this promotion means higher wages, it also makes production more efficient and increases quality as well. Starbucks, by being such a sound and lucrative corporation, also enjoy access to cheaper funds because there is such little risk involved. Economies of scale are another barrier to entry aspiring firms face. Starbucks has a big advantage over incoming firms because of their size they can use economies of scale. This means that Starbucks can buy raw materials in bulk at savings smaller firms can’t get. Also Starbucks can spread fixed, marketing, and advertising costs over more sold units. Although these barriers exist, many companies do enter into the industry because of the high demand and relatively low start-up costs compared to other food and beverage retail outlets.

The next of Porter’s Forces is Rivalry among established companies. Already established firms can drive prices down or create a rise in costs, both of which will cause a decrease in industry profits. Starbucks deals in both whole-bean coffee and coffee beverages. Both of these markets are a fragmented industry, which means there are many sellers, none of which have any price setting capabilities. In the beverage sector Starbucks’ biggest competitors were Second Cup, out of Canada, and Seattle’s Best Coffee (SBC), out of Seattle. Starbucks bought out Seattle’s Best Coffee in April 2003, acquiring 51 SBC cafes. Starbucks also competes with many other small, independent firms as well. As of mid-2002, there were 13500 coffee shops in the United States, 4070 of which were Starbucks. Amid the plethora of coffee retailers, Starbucks has relied on its superior quality and high demand to not let the competition drive down prices in the states or abroad. “In London, a tall latte sells for $ 2.93, while the same drink goes for $ 2.12 at the rival Caffe Nero Group PLC”.

Bargaining power of buyers is another external factor to consider. The more bargaining power buyers have, the less control over price and quality the producer has. In the coffee industry, buyers have a lot of power. This is partly due to the fact that there are so many sellers. The more sellers there are of a product, the more choices and the more opportunity a buyer has to find the best deal. Another reason buyer power is so high is that switching costs are so low. Switching costs are the implicit and explicit costs associated with changing brands. If a customer is unsatisfied with Starbucks’ price or service, it won’t cost that customer very much to find a different coffee shop that can suit the buyers needs. Also, buyers of coffee have the option of buying whole coffee beans and brewing the coffee themselves. This takes away from Starbucks’ power because it gives the buyers alternatives if they are not satisfied with Starbucks.

The fourth competitive force is the bargaining power of suppliers. Suppliers with a lot of bargaining power can charge higher prices or produce lower quality products. One reason this is true is because there are many buyers. Yet in the coffee industry there are just as many producers of coffee beans as there are buyers. Therefore the supplier is not as powerful as other industries and the price of coffee beans are reasonably cheap. Another reason that suppliers in the coffee industry are not as powerful is because coffee beans are a rather homogenous product. There are only two types of coffee beans on the market, Arabica and Robusta beans. Robusta beans are the cheapest beans on the market, and they are the type usually found on the grocery market shelves. Arabica beans are considered a better quality bean, and they are the type that Starbucks uses in their roasters. The best Arabica beans used to come from Brazil and Columbia, but once the world started realizing the huge demand for coffee beans places like Kenya, Indonesia and Vietnam started producing more coffee beans. This increase in suppliers decreased the amount of buyer power and drove the price of coffee beans down.

Threat of substitute products is the last of Porter’s five forces. Substitute products are “the products of different businesses or industries that can satisfy similar customer needs” (Hill and Jones). In the coffee industry, substitute products include tea, pop, milk, juices and other non-alcoholic beverages. The more substitutes available and the closer they are related the stronger the competitive force and the less opportunity the industry will have to raise prices. Because in the non-alcoholic beverage industry, there are many options open to consumers, if the price of coffee gets to high it is easy and cheap for customer to switch to a different drink of choice. One way to reduce this strong competitive force is to diversify your product line. Starbucks has done that by introducing two new types of drinks. One is called Frappucino, which is a chilled blend of coffee and milk. Double Shot, a coffee flavored stout, is another product Starbucks recently introduced to help cut into the non-coffee drinking market.

Industry Life Cycle

Another indicator of opportunities and threats in the external environment is the stage of the life cycle an industry is in. Over time industries go through five stages in which environmental conditions change. Businesses must assess where they are at in this life cycle in order to make important decisions and plan where they want to go. Presently, Starbucks is in the shakeout stage of the life cycle. The shakeout stage is characterized by a reduction in demand and growth. The shakeout stage gets its name because this is where many smaller, less efficient firms get forced out of the industry. The market begins to reach saturation in the shakeout stage. This means that there is enough firms to service the entire market demand. Thus, any new firms cannot depend on first time buyers and must compete for all customers. Also in the shakeout stage, existing companies continue to grow at the same rate as in earlier stages despite declining demand growth. This condition leads to excess capacity and eventual cutbacks. This is apparent in the coffee industry. In 1995, Starbucks expanded into Japan. After a few years of profitability, Starbucks lost $3.9 million in 2002 due to market saturation according to Stanley Holmes of Business Week.

Financial Analysis

Financial analysis is the heart of a company. Without knowing what profits are being made and money spent on expenses, there is no way of telling how well a company is developing in the industry. While researching Starbucks, the industry to the company ratios were analyzed and discussed. Also, different comparisons were made from year to year to determine the financial success or failure of Starbucks.

Profit Ratios

Profitability ratios are one of the most important financial indicators that can be made for a company. It explains and measures how efficient the company is using their resources throughout a fiscal year. For the profitability ratios, Return on Invested Capital (ROIC), Return on Total Assets (ROA), and Return on Stockholders’ Equity (ROE) will be evaluated.

ROIC measures the profit that is earned on the invested capital. Comparing Starbucks as a company to the industry in the year 2003, the Return on Investments was

Company Industry

5 year Average 13.82 10.02

8.92 8.62

This comparison indicates that Starbucks as an individual company has a higher percentage when creating value than the overall industry during this last year.

ROA focuses on the ratio of net income to total assets after interest and taxes:
Company Industry
5 year Average 10.92 8.18 8.92 8.62
Because Starbucks has a relatively low use of debt this enables the ROA ratio to be higher than the Industry.

ROE is the most important accounting ratio, representing the ratio of net income to common equity. This ratio tells stockholders how large their return will be on their invested capital.

Company Industry

5year Average 14.08 13.43

11.81 14.49

If the company has zero percent debt this ratio will be the same as ROIC. However, the Starbucks ratio is greater than the industry ratio, resulting in a better rate of return for their investors. An overall average results in a greater return for the industry.

Liquidity Ratios

Liquidity Ratios shows Starbucks ability to meet maturing debt by comparing their current assets and current liabilities. Current Ratio and Quick Ratio will be calculated to determine the amount of short-term obligation assets. These ratios answer the question of; will Starbucks be able to pay off its debts as they come due?

Current Ratio is used to measure the credibility that Starbucks will have to their short-term creditors.

Company Industry

1.84 1.01

Because Starbucks has a higher current ratio than the average of the industry, they will be more likely to attract creditors. Creditors generally like to see a high current ratio. So, when evaluating short-term solvency on upcoming debts, creditors view Starbucks as having a relatively high liquidity position. In stockholder terms, this may suggest that Starbucks may have a lot of money tied up in other nonproductive assets. This would not be a great advantage for some shareholders.

Quick Ratio is a measure of a company’s ability to pay off short-term obligations without relying on the sales of their inventories. Inventories are considered the least liquid of a company’s assets. So, with Starbucks the Quick Ratio is considerably higher than the industry.

Company Industry

1.24 0.67

Since Starbucks has a high quick ratio it is expressing that they are able to pay off their current liabilities without having to convert their inventory into cash. Therefore, this suggests that Starbucks has enough liquid assets that will pay for its short-term obligations.

Activity Ratios

Activity Ratios are mainly used so a company can identify effective or ineffective use of their assets. It is important for a company to have the correct amount invested in assets because too much could result in a reduction of free cash flow and the companies stock price. If not enough assets are present the company could loose sales and even some of its profitability. Two primary activity ratios that are calculated include the Inventory Turnover and Days Sales Outstanding ratios.

Inventory Turnover is a ratio that helps to determine how often a company’s inventory is turned over. This ratio is directly affected by the company’s profits.

Company Industry

12.87  35.74

Starbucks has a relatively low inventory turnover compared to the industry, which shows that they are holding too much inventory. This in turn represents a very low rate of return for the invested inventory.

Days Sales Outstanding ratio is used to appraise accounts receivable. The average amount of time that a company must wait until receiving cash is a helpful ratio when concerning billing and collection procedures.



This calculation is stating that Starbucks must wait approximately eleven days before the cash is received for a sale. This information is useful when dealing with cash flow for the company. Knowing that it will take eleven days to fully collect the payment, the company has a more concise method for determining the preparation of the billing process.

Performance over the years

Starbucks has become more profitable throughout the years. Comparisons of revenues, profits, net income as well as an increase in the number of stocks and stockholders, indicates that Starbucks is growing at a rapid pace. It has almost tripled its financial statements over the course of five years. This comparison is a great indication that Starbucks is profitable and will continue its growth for more years to come.

SWOT Analysis

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Sex in the Media

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Sex is a word that catches everyone’s attention. Whenever a person hears the word “sex” he looks in that direction. Sex, by definition, is the “sexual urge or instinct as it manifests itself in behavior” (http// Is it possible that this exact urge manifests in behavior to buy certain products that arouse that urge? For example, if a woman sees a beautiful model wearing sexy lingerie in a TV commercial, does she subconsciously want to purchase the product in an attempt to be like her? If a male sees an ad in which other men are drinking beer and are surrounded by beautiful women at a bar, does he automatically thinks that by drinking this particular beer he will be able to live out the portrayed scenario?

It seems obvious that sex and the thought of sex demonstrate themselves have at least some affect on purchasing behavior. However, is it fair to say that whenever someone hears of sex, sees a sexually related ad, or thinks that a certain product is associated with sex, he will be more inclined to buy this particular product? Does this phenomenon depend on the gender of the consumer, their social preferences, or their sexual preferences? Are men more receptive to sex in advertising than women? Are young people more interested in buying sexually related products than older people? Is a liberal society more tolerant of sexual ads than a conservative society? Finally, how effective is sex in advertising? These are all questions that advertisers seek answers, but the answers may not be so simple. The following paper is a compilation of extensive research and findings that examine the effectiveness of sex in advertising and various factors that contribute to its success or failure.

Literature Review

The use of sex appeal over the years has increased considerably. Wise, King, and Merenski state that “his increase [in sex appeal] has been observed in several ways in the number of products for which such appeals are utilized; in the wider variety of products for which sex appeals are more commonly used; and in the intensity of appeals used.” There are a number of beliefs as to why this is the case. One is that “advertising is making fewer outrageous claims, but [they] are making them in a more outrageous manner.” Another theory says that consumers see more use of sexual appeals, but that is only because we see more commercials. (Wise, King, and Merenski 174).

The way in which consumers perceive advertisements has a direct affect on their feelings toward the product and company. When evaluating the effectiveness of sexual stimuli, which can be a controversial method of attracting attention, attaining a positive consumer perception is pivotal to the success of the ad. Therefore, it is important to understand the various aspects of perception, and how to create an ad that will appeal to the target audience without alienating or offending them.

Perception refers to the ability to perceive objects in the real world. It is the method of obtaining information about our surrounding world through our senses and apprehending this information as beliefs ( Perception is a process of information extraction by which people select, organize and interpret sensory stimulation into meaningful and coherent picture of the world. (Berelson and Steiner 164; Britt 178) In other words, it is how people make sense out of the world around them.

Perception is composed of three elements such as exposure, attention, and interpretation, which then lead to memory. Most of the research on sexual stimuli concerns attention and memory. In the attention process, an individual allocates part of his/her mental activity to a stimulus. There are several factors affecting attention, such as color, size, intensity, and isolation. To get attention, elements such as surprise, humor, emotional appeals, and sex can be used. There are two drawbacks to using these elements. It might be so successful in attracting attention to the stimulus object that it will reduce attention devoted sales message, and the interpretation of the message could be negatively affected. This phenomenon is recorded and discussed in several studies on sexual stimuli. The first and most influential of these studies was conducted by Major Steadman in 16. His study found that “non-sexual illustrations were more effective in producing recall of brand names than were sexual illustrations.” (Dudley) Reid and Soley took this research further and discovered that “even when the sexual content does not interfere with brand recall, it does interfere with message comprehension, particularly when the ad contains considerable text.” (Dudley)

However, some studies have found that consumers react positively to various forms of sexual appeals. Some researchers have chosen to evaluate the effectiveness of attractive models in advertisements, and it has been found that consumers automatically associate positive attributes with attractive models or spokespeople. In A.G. Miller’s study, it was determined that the participants found physically attractive models to be “more sensitive, interesting, kind, strong, modest, poised and outgoing, as well as to be of better character than individuals of lesser attractiveness.” (Miller) This research is critical to creating a successful ad, because it suggests that if the consumer sees physically attractive models using or wanting the product, they might subconsciously find the product more desirable as a result of their inferences on the models’ character. In addition, a study by Mills and Aronson found that an attractive female was far more effective in persuading a male audience when she “announced her intention to persuade than when she did not state her purpose.” An unattractive female model had no effect on the male audience regardless of her message delivery. (Mills and Aronson)

Another crucial aspect of perception is that it can be selective. The concept of selective perception is connected with all aspects of people’s lives. Based on the fact that perception is highly influenced by persons interests, beliefs, attitudes and other personal attributes that basically make an individual, it may be concluded that perception is highly subjective and selective (Runyon). Perception is subjective in terms that it takes places in the mind of receiver. Perception is selective because the person is not able to perceive all the stimuli around us and he subconsciously selects the ones to pay attention or to react. At any given point people are selecting the information to which they give attention. The same message sent to different people might get two different responses. This is a very important aspect in advertising. What is selected and emphasized in perceiving is connected with the perceivers perspective, his value systems, interests, needs and previous experience. These are related to the perceivers occupation, class, age, social background, gender, and other demographics. People remember more accurately messages that are closer to their interests, views and beliefs than those that are in contrast with their values and beliefs. This becomes important when choosing whether or not to use sexual stimuli as means of gaining the attention of consumers. If the target markets find sexual stimuli in advertising offensive, the ads will obviously be ineffective.

Perception is of great importance for a marketer. The knowledge of perception is essential to avoid problems when communicating with different target audiences. How consumers perceive the brand, the product, and how they perceive competitors determines how successful the product will be on the market.

Reactions of Men and Women to Sexual Stimuli in Advertising

A debate remains on the issue of whether or not sex can sell more products to men or to women. Current research in the fields of advertising and media suggests that men and women react differently to the use of sexual images in advertising campaigns. As Melanie Yarborough explains in her research, ads are often more detailed when targeted at women because they are more concerned about grooming and appearance. Also, women appreciate very fine distinctions, such as five different variations of shampoo-for curly, straight, oily, or dry hair. For men, by contrast, toiletry ads focus on a single product. Men are likely to pick up on one or two very salient and obvious kinds of cues. Men think in a more macro way, and need to be shown the big picture. Also, men are less likely to process complex metaphors (Yarborough). This study confirms that advertising is positioned differently at the two sexes. Furthermore, the same study continues to explain that men are much more responsive to sexual cues. In one study, men and women listened to audio taped conversations about non-sexual topics. In one, a woman discussed if she should be an anthropologist. Men read sexual cues into the conversation, while women didn’t. Consequently, men seem to be much more sensitive to sexual signals than women.

For many products it is possible to find or invent a sexual connection. However, “the sexual connection is much easier to create for men than for women” (Taflinger). As Richard Taflinger’s research suggests, sex is a strong stimulus in advertising, yet it is a gender-linked stimulus. Sex easily sells to men whereas it is an adjunct to women. In advertising, it is easy to get a man's attention by using women's bodies and insinuating that men will ‘get’ the woman if he buys the product. This technique is playing on his instinctive rather than intellectual view of the world. For a woman, sexual desire is a complex mixture of factors, most of which are extremely difficult to inject into an ad in the time and space available. To sell to a woman, advertising relies on that modern idea (only a few hundred years old) about how men and women relate - romance. Therefore, sex in the media has a greater impact and higher rate of success with males than with females.

Since previous examples demonstrate the differences in men and women in relation to advertising, it is necessary to discuss each sex and the particular attributes assigned to each sex by the media. For example, it is becoming more socially acceptable for women to speak about sex, and therefore more suitable for women’s magazines and television shows to discuss sexual issues and sexually related products. In a current study on sex and the modern magazines, Ann Marie Kerwin states, “ten or so years ago, sex articles tended to go in the middle of the magazine, away from all the advertising…now sex is the top cover line” (Kerwin). Because feeling sexy is now more socially acceptable, women are more open to sexual advertising because they would like to relate to the sexy model, which they associate with self-confidence. Kerwin comments, “Women today are kind of optimistic about their lives, and that’s part of the reason we talk about sex.” Conclusively, it is apparent that sex sells to women, but more for the purpose of providing an image that they find desirable and want to attain.

For men, sexual advertising plays a different role than that for women. It is rather evident to the general community which products use sex to sell to the male population, and these certainly include alcohol. In a study on sex in advertising, Tafliner states, “With sex appeal being the second strongest appeal, it makes sense to use it to make a certain beer more attractive to males. The easiest way to do this is to show how attractive a man can be to beautiful woman if he drinks beer” (Taflinger). Contrary to females, males are attracted to sexual advertising purely on the basis of sex appeal, not because it makes them feel better about themselves or increases their level of self-esteem. Therefore, advertisers must be careful in choosing the best form of ad for both sexes since men and women significantly differ in their sense of attractiveness and appeal.

Because society is becoming more liberal, sex altogether is more acceptable in the media. Hence, it can be concluded that sex sells more now than ever before, otherwise it would not be so widespread. Kolsti, in a Journal of Advertising study, compared the sexual content of advertisements in 184 magazines with those in 164 magazines. That study reported that women, and to a lesser extent men, were dressed more provocatively in the 184 ads than in ads from some years earlier. Furthermore, Playboy and Penthouse are among the top ten in circulation of American publications (Kolsti). This clearly proves that sex sells. As our society becomes less reserved with time, sex continues to sell even more. However, it is risky to apply this view to the world of advertising, where positive perceptions of products and companies are crucial to success.

Reactions of Specific Market Segments to Sexual Stimuli in Advertising

Though gender has a crucial role in attitudes and reactions to sexual stimuli, other population segments have been studied to find whether or not common attitudes toward sexual stimuli exist. In a 17 study, Morrison and Sherman “identified a number of components of sex in advertising and showed that different groups of individuals responded differently to the use of sex in advertising.” They took a common single statement, “Advertisers make too much use of sex appeals in their advertisement,” and studied the reactions of individuals to this statement. Included in their study were 61 college-aged adults (18-5 years old) and their parents. An interview was taken with each one of these individuals, where an attitude study was conducted and participants’ reaction to this statement was recorded. A Likert scaling technique was used where the respondents were able to choose from five responses ranging from strong agreement to strong disagreement. In addition, demographic and educational information was recorded so that a cross sectional study could be performed.

This study showed that attitudes range based on the race of the person, the age of the person, and the educational background of the person. At the most basic level, there was a slight tendency toward agreement with the statement. The strongest agreement came from the parents of college-aged young people and by females.

Taking a deeper look into the responses of the college aged respondents, the strongest agreement with the statement came from students of science and engineering and liberal arts. Business students tended to agree with the statement less. Other important findings to note were that there was a greater tendency to agree among the white respondents and the females. Among the older respondents, the only major finding was that females tend to agree much more strongly than males that there is too much sexual content in advertising. What was most interesting in this study was the fact some of the other variables- race, family income, and education level failed to produce statistically significant differences in responses.

This has tremendous implications for the advertising and marketing agencies that design and market product campaigns to consumers. This study clearly shows that there is a potential for backlash among certain market segments when sexual stimuli is used to sell products.

Evaluating the Effectiveness of Decorative Models

Though many studies attempt to measure consumers’ responses to sexual stimuli, these studies are very subjective in that they analyze only the conscious reactions of consumers. A consumers’ values and beliefs, as well as how they see themselves, can significantly affect how they choose to respond to these surveys. On a more psychological level, some studies have chosen to measure the effectiveness of sexual advertisements rather than consumers’ self-purported reactions. One such example of a more psychological study concerned the use of female models in advertisements. The researchers measured the ability for a consumer to recall a brand with the model versus a brand without the model. Sexton and Haderman performed a study in which they looked at print ads from 150 to 171. They found “an increment of 1% in the use of ‘decorative’ female models. Within this trend, the incidence of models being classified as ‘obviously alluring’ advanced from 10% in 151 to 7% in 171.” Belkaoui and Belkaoui also provide some supporting evidence to Sexton and Haderman saying “the image of nonworking women has shifted from family roles in 158 to more decorative roles in 17.” (Chestnut, Lachance, and Lubitz).

To prove that the use of a female model does have some bearing on the image of a product, Smith and Engel performed a study in which they systematically varied the use of a female model and asked respondents to rate several product attributes. Results of this study show that “the presence of a decorative model actually enhanced the image of the product. This held true for both sexes and was considered an ‘unconscious’ phenomenon in that few subjects reported themselves aware of any bias.” (Chestnut, Lachance, and Lubitz). Although this study shows that a model has an influence on a product’s image, it doesn’t record the affect of learning and brand recall of a product when a model is used.

Baker and Churchill designed a study to further investigate the impact of physically attractive models on successful advertising. They hypothesized that females will rate an ad more positively when a male model is present, whereas males will rate an ad more positively with the presence of a female model. The researchers believed that both sexes would rate an ad higher when the ad contained an attractive model as opposed to an unattractive one. Also, attractive models would have a stronger impact on participants’ ratings when the advertised product was of a romantic nature, such as perfume or cologne. The subjects for the study consisted of 48 male and 48 female undergraduate students from University of Wisconsin. The participants were shown advertisements for coffee, cologne, perfume, and aftershave with male and female models. The attractiveness of the models was previously determined by another study in which subjects were asked to rate the attractiveness of models. Those with the highest and lowest scores were then used for this study.

The results of the study mirrored those of previous studies, with a few notable exceptions. The female subjects were not significantly affected by either the attractiveness of the model or the type of product being advertised. However, the male subjects were very much affected by the attractiveness of the female model, depending on the type of product being advertised. Interestingly, for the coffee advertisements, the unattractive female model was more effective in terms of the male participants’ desire to purchase the product. For the romantic products such as perfume and cologne, the attractive female model was more effective in creating purchase intent. “The results suggest that in trying to sell a non-romantically oriented product to males, an unattractive female model may be more persuasive in creating eventual product purchase than an attractive model.” These results point to the limitations and dangers of using an attractive model as a full-proof way to produce a memorable ad. This study seems to suggest that attractive models are best used when appropriate to the product, such as beauty products or products with romantic overtones.

Sexual content in advertising is successful at gaining our attention because it appeals to our base instincts as humans. It logically follows that male and female models must be attractive for the sexual stimulus to have its desired effect. However, most research confirms that the use of attractive models in advertising is not a full-proof way to create a memorable ad.

The Effects of Sexual Stimuli on Brand Recall

Steadman’s famous 160 study was the first to analyze the actual effectiveness of sexual stimuli in advertising. He hypothesized that a “sexual stimulus may attract a great deal of attention but consumers may not associate the illustration with the product name.” To test this hypothesis, Steadman formed his own advertisements, using certain female models, and then attached an arbitrary brand name to these advertisements.  Then, he exposed respondents to these advertisements and tested their ability to recall the brands. He measured both immediate and delayed brand recall. His results indicated that a “sexy photograph did not facilitate band name recall. Instead, such photographs appeared to inhibit recall over time.” Steadman concluded that nonsexual advertisements were more effective than sexual ones in achieving brand recall. He also found that those with a positive attitude toward nudity in advertising would recall more brand names than those who opposed the use of sexuality in advertising. Baker conducted a similar survey, and agreed with Steadman’s findings. He said, “Although advertisements depicting female nudity possess attention-getting value, male viewers attend solely to the illustration of the nude and ignore the brand name.” (Baker)

A more recent study performed in 176 by Chestnut, Lachance, and Lubitz attempted to study this phenomenon as well. This study used print ads from actual magazines and utilized a recognition test to gauge participant responses, whereas Steadman’s study consisted of ficticious ads and utilized a recall paradigm for measuring participant responses. The researchers had two major hypotheses “First, an ad containing a decorative model will be recognized better than an ad with no model. Second, a decorative model will not facilitate the recognition of brand names taken from advertisements.” These hypotheses were based on the belief that using models in a print ad only fosters a remembrance of model-related information.

The findings of this study verify both hypotheses. “The presence of a decorative model in print advertising is shown to affect the memory for model-related information, but to have little influence upon the recognition of brand name information. The researchers then attempted to further analyze the findings of their study in an attempt to build upon Steadman’s original research.

They concluded that, “If the applied interest is on creating and putting in memory an image of a product’s differing aspects, then adorning the product with a sexual stimulus may not be the most profitable course. Or, if this style of advertising is chosen, at least some effort should be made to integrate the product or brand name into the model-related information.” (Chestnut, Lachance, and Lubitz).

Though Chestnut, Lachance, and Lubitz’ findings replicate Steadman’s findings, they are crucial because the results showed that almost two decades later, the effectiveness of decorative models has remained unchanged. All of these studies have major implications regarding the usefulness and effectiveness of sexual stimuli in advertising. These researchers suggest that sexual stimuli might not be effective if the product requires an understanding of benefits and uses.

Alexander and Judd designed a study to investigate whether these conclusions hold true in more modern times. They hypothesized that a higher number of brand names would be recalled when an ad depicts a nonsexual scene versus a nude female, and that the number of brand names recalled would significantly decrease in proportion to larger amounts of nudity within the ad. (Alexander and Judd)

Participants of the study comprised 181 male volunteers of a southwestern public university business school. Of these participants, 141 were given an attitude questionnaire to examine their feelings toward nudity in advertising. All participants were shown slides of advertisements that depicted five varying degrees of nudity, with level one containing no nudity, and each of the following levels containing increasing amounts of nudity. Immediately after the slides, the researchers measured the participants’ ability to recall the brands. The results proved the initial hypothesis that brand recall would be highest with ads containing no nudity. For level one, the participants were able to recall 18 brands total, whereas the remaining levels produced brand recalls ranging from 4 to 11. These findings were interesting because they showed that brand recall does not significantly decline as the level of nudity increases. Interestingly, the study also found that those participants who were married recalled more ads than their single counterparts.

A similar study tested consumers’ reactions to various ads for suntan lotion. Four tests ads were created and shown to 86 male and female junior and senior marketing students. (Dudley) One ad contained only the product, one depicted a model in a one-piece swimsuit, one featured a topless model, and the fourth depicted a nude model. In the introduction to the study, Dudley describes the “tremendous changes in the social standards related to sex and nudity during the past two decades.” He cites the example of NYPD Blue showing David Caruso’s ‘bare posterior’ as well as advertisements for Obsession and Guess as evidence that American programming and advertising has become much more provocative.

Many previous studies have shown that sexual advertising is most effective when there is a clear relationship between the product and the stimulus. (Peterson and Kerin; Weller, Sibley, and Neuhaus) With this in mind, the purpose of Dudley’s study was to determine the reaction of consumers’ to sexual ads with a product that appeals to both men and women and has an obvious relationship to bare skin. The participants of the study included 15 males and 16 females ranging in age from twenty to thirty years old. The participants broken into groups and shown were shown one of the four variations of the ad, which featured a model whose face was hidden so that attention would be focused only on the body. Eighty-seven participants viewed the product-only ad, 106 viewed the bathing-suit model, 8 were shown the topless model, and 7 viewed the nude model. The participants then evaluated the brand, ad, company, and their interest level in the product.

Results showed that the ad featuring only the product was rated significantly less appealing than the other ads. The amount of nudity within the ad resulted in increasingly strong evaluations from the participants in terms of their level of interest in the advertisement. Interestingly, though the brand with the nude model was seen as most distinctive, it was rated lowest for perceived quality. The brand with the swimsuit model was given the highest perceived quality ratings, and the ad was rated as equally desirable to the topless ad. The company selling the brand with the swimsuit ad was rated as the most reputable company of the four. The brand featuring the topless model was rated more distinctive than the swimsuit ad, but had a lower perceived quality. The topless ad was also rated the most offensive, but only by two points above the neutral point on the scale. The students were much more likely to try or buy the suntan lotion featuring the swimsuit model, while the ad featuring only the product received the lowest ratings for brand, ad, company, and interest level in the product. These results confirm that to use sex as a stimulus in advertising, it must be directly linked to the product itself. This study also brings up the interesting point that nudity in ads can have the unintended effect of a negative image of the company and brand. Though consumers may remember the ad well, they may associate the nudity with a lower quality product and company.

Though it is clear that sexual ads are effective in gaining the attention of most viewers, many studies suggest that this attention does not lead to better product recall. This theory highlights the fact that successful ads must not only gain the attention of the viewer, but also create a positive and long-lasting interpretation of the brand itself. Often, the use of sexual stimuli in advertisements is not guaranteed to produce these results.

General Discussion and Implications

An understanding of the various theories of sexual advertising developed by assorted studies is crucial to making solid marketing decisions. However, research in this area seems to be in its infancy. Researchers in this field recognize that societal values are constantly changing. When it comes to sex and sexually related issues, it is critical to acknowledge the fact that what is prevalent today may have no significance in several years and vice versa. This is clearly exemplified by the amount of sexually explicit scenes and information in television and magazines in today’s age. What is acceptable in the media in modern times would be considered extremely inappropriate and tactless several years ago. As times change, we seem to be becoming a more liberal and open-minded society. Just like our grandparents deem many aspects of the media unacceptable today, our generation of consumers might find many elements of the media offensive and improper ten years from now. This is extremely important for advertisers to take into consideration. What one can sell with the implementation of sex today may have no relevance in the future.

Sex sells particular products to certain people, but one must always take into consideration the society in which they are using sex as a motivational device. Every country has very different attitudes towards sex, and what is suitable in one country may be very well frowned upon in another country. America is considered to be a rather conservative society, where the general public is not very comfortable with sexually related products, explicit sexual content, and nudity. Europe, to the contrary, is much more liberal. Nudity is quite common in daily television shows on uncensored channels as well as all over billboards, magazines, and newspapers. It is not considered improper or inappropriate for a woman to be topless on a beach, or for a couple to engage in sexual activity in a park or on the street. Considering the differences in cultures and norms, it would be much easier to use sex as an advertising tool in Europe than in the United States. In Europe, companies would not be looked down upon for portraying naked women in their commercials or on the pages of a magazine ad. However, in America, most companies would not dare use such extreme visuals to attract consumers. This is very important for advertisers to understand and investigate, especially for global firms that advertise in more than one country. Consequently, lack of adequate research or an omission of information might cause the company a tremendous amount of financial loses, as well as damage to their image and reputation.

It is vital for studies to look at sexual advertisements with respect to different products in various categories. While sex can easily sell some products, it might be simply useless for others. When a consumer associates a certain product with sex, such as condoms or lingerie, there is a high probability that a sexy ad will sell the product to this consumer. However, when a consumer views a sexual ad for a product that has no relevance to sex, such as coffee or furniture, the consumer might recall the ad itself, but not the product advertised. This certainly defeats the primary purpose of the ad and has a negative effect on brand awareness and increase sales. Consequently, it is much more effective to use sex as a tool to sell sexually allied products than those completely unrelated to sex. 

It is also very important to choose the correct method of selling specific types of products. While sex sells to certain groups of people, it is necessary to decide on the correct time, place, and media when publicizing these products. For example, if a sexual ad is aired during a family show or in an every day newspaper, the consumer might be less susceptible to it, than if the same ad is shown late at night or in sexually related magazines, such as Maxim or Cosmopolitan. If such an ad is shown during a family show, the target audience might turn the channel or divert attention away from it when a younger person is present. Similarly, a person might feel embarrassed reading a sexy ad in the paper while at work or on public transportation. Nonetheless, if the same ad is shown when the potential consumer is alone, it might have their undivided attention, hence prove to be more effective. Therefore, it is essential to carefully decide on the method of advertisement when exposing a sexually affiliated ad in order to make the sale more effective.

Further research could include analyzing lawsuits brought about because of sexual stimuli in ads, how many companies and advertising agencies actually use sexual stimuli as the main objective for their campaigns, as well as studies that address marketing managers’ thoughts concerning the use of sexual stimuli to promote products.

Research on sexual advertising has provided several implications for managers in the marketing field. These implications should be studied closely when looking at new marketing campaigns. Our research into the effectiveness and reliability of sexual content in advertising showed that most Americans feel there is too much sex in advertising and that most sexual content in ads does not lead to greater brand recall.

Managers need to be weary of using sex as the main objective of any marketing campaign (either a “decorative” female model, or the actual practice of sex as a stimulus). Our research has shown that there are limitations of using sexual stimuli because it does not lead to greater brand recall and sometimes it diminishes the image of a product. The implication of this for a modern day manager is that when he/she chooses to use a sexual stimulus in their ad, it may backfire. Consumers could potentially see this marketing strategy as offensive thing. This could potentially lead to lawsuits that could be brought on because the ad is too offensive or a consumer boycott. Managers need to be weary of using sexual stimuli in any of their marketing campaigns and they need to understand the limitations of using sex as the main stimulus to grab the attention of the consumer.

Another key issue is connection between the product and the sexual stimuli. If the sexual stimulus does not have any connection with the product, then it merely serves as a distraction from the message. For example, using a sexual stimulus in a furniture ad probably will not have any benefit to the remembrance of that ad. Most consumers will probably only focus their attention on the female model or the sexual act and forget the importance of the product, the uses of the product, and the features of the product. On the opposite side of the spectrum, using a sexual stimulus in a cologne or perfume ad will most likely benefit the product because cologne appeals to the emotions of a consumer just as a sexual stimulus does. Managers need to consider their product category as well as the target audience before choosing sex as an attention-getting stimulus.

Managers need to tailor the marketing stimulus to the audience. This means that they need to be aware of the dangers of marketing a sexy advertisement to a vulnerable market, such as pre-teens and teens. For example, MTV uses a highly sexual form of advertising in their many shows and programs to grab the attention of young teens. Shows like “The Real World,” and “Dismissed” depict provocative scenes that are often cited as inappropriate for the audience by various activist groups. Managers need to be aware of this, constantly verifying the effectiveness of their ads and the opinions of the consumers who attend to these ads. In MTV’s case, the children are probably more than happy to see these kinds of programs. However, the parents would probably like a more subtle kind of advertising.

Looking at these implications to managers, it can be seen that there is a certain amount of risk involved in using sexual stimuli. There are a multitude of problems that arise when working with a sensitive subject such as sex. Managers need to be aware of all of these issues because their main goal is to have their product sell and be remembered.

Public policy regarding sexual advertising has become a topic of increasing urgency in recent years. Billions of dollars are being spent to encourage children and adolescents to buy products that are not healthy for them, with American advertising messages often including inappropriate sexual innuendos in an attempt to sell their products. Sexual content has not increased in quantity from 164-184, but it has become more explicit (Dudley). For example, 1% of models in prime time major network commercials were in some state of undress and 8% of these commercials featured sexual situations (Moore). The use of overt sexual appeals in print advertising has increased considerably in contemporary advertising practice (LaTour; Severn, Belch, and Belch; Soley and Reid).

American children have viewed an estimated 60,000 advertisements on television before graduating from high school (Strasburger). Also, 7% of high school students watch TV everyday (Moore). The United States has one of the highest teenage pregnancy rates in the Western world due, in part, to inadequate access to birth control, inadequate education, and inappropriate depictions of sexuality in American media. Interestingly, public service announcements for abstinence and birth control products-which could prevent unwanted teenage pregnancies and STD’s remain largely forbidden by national network television (AAPCA). Journal of Public Policy study examined the affect of media on adolescent sexual behavior, and recommended several ways to make public service announcements more effective in combating the sexual images in TV programming. These suggestions included more encouragement of open dialogue between parents and teens, as well as a more realistic and graphic view of the dangers of sex (Moore). Many activist groups feel strongly that the current guidelines for appropriate sexual content in advertising messages should be more closely followed. (Advocates for Youth)

If American advertising becomes increasingly graphic, there could be a significant government backlash as there was in France. Recently, French ad campaigns have become increasingly graphic in their use of sexuality. After a series of negative government hearings, the French advertising industry adopted a set of standards designed to control the most sexually exploitative advertising. The hearings focused on the use of increasingly graphic sex and violence in commercials for luxury goods, perfume, cosmetics, and fashion products. Some recent ads went so far as to feature themes of sado-masochism and bestiality. As a result of the hearings, future television ads in France must comply with the new code to be broadcast by French TV. France’s Advertising Verification Bureau’s new code requires ads to respect human dignity and prohibits ads that include degrading or humiliating portrayals of men or women. The code specifically bans ad campaigns that show sexual domination or exploitation. Nudity, however, will continue to be permitted, provided it is not degrading or otherwise alienating. The new code replaces a weaker version that was adopted in 1975. (


Abbott, Kate. “Let’s talk about sex policy and attitudes in Europe and America.” The Advocate. 1 Dec. 2000. Online. Internet. Feb. 2000.


Hartman, David and Hartman, Timothy. “Sex Appeal in Advertising.” Journal of Advertising Research .5 (18) 5-61.

Kalyanaraman, S., Steele, J., & Sundar S. S. “Sexual Suggestiveness in Online Ads Effects of Objectification on Opposite Genders.” Communicating objectification

Effects of sexually suggestive advertisements. June 2000. Online. Internet. Feb. 2000.  


Kerwin, Ann Marie. “Sex and the Modern Magazine Editor.” Advertising Age Oct.

Kolsti, Nancy. “Advertising is more sexually explicit, researchers say.” University of  North Texas. 1 April 1. Online. Internet.   


Robles, Steve. “Britain vs. USA Sexual Politics Across the Pond.” Eros-Guide. Sept. 2000. Online.


Taflinger, Richard. “Taking Advantage. You and Me Babe Sex in Advertising.” 8 May 16. Online. Internet. 1 Feb. 2000.


Yarborough, Melanie. “Gender-Pitched Advertising Do Men and Women See the Same Things?” June 1. Online. Internet.


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South African Breweries (SAB) is an international company committed to achieving sustained commercial success, principally in beer and other beverages, but with strategic investments in hotels and gaming. The company was founded in 1985 in response to the demand by gold miners in the Johannesburg region. Prior to the introduction of beer, the miners’ drink of choice was raw potato spirits mixed with tobacco juice and pepper. No wonder why the new beer was well received!

Because of Apartheid, South Africa was excluded from the United Nations from 174 to 10 . Due to the political isolation experienced throughout these sixteen years, SAB pursued a domestic policy of purchasing cross-holdings in other South African firms, and eventually controlled 8% of the South African beer market. Cross-holding was a form of capitalization for SAB because the local capital markets were drying up due to the international boycott of the country.

In the late 10’s, per capita beer consumption in South Africa was in decline, and SAB was working hard to sustain revenue growth. The fall in consumption is attributed to a number of factors, including the bad South African economy.

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Now that South Africa’s economy is open to the world the result will be an increased globalization strategy, necessitating an increased focus on, and benchmarking against, world-class standards in order to ensure competitiveness.

To what extent is a global strategy or a multinational strategy effective in the brewing industry?

There are two basic alternative strategic orientations in every industry: a multinational strategy and a global strategy . Beer companies expand outside their domestic markets for several reasons: to gain access to new customers, to lower costs and become more competitive on price, to leverage its core competencies, and to spread its business risk across a wider market base. The strategies a beer company uses to compete in foreign markets have to be situation-driven: cultural, demographic, and market conditions vary significantly among the countries of the world.

The following chart has been designed to portray the pros and cons for a beer company in deciding for a multinational or a global strategy.

There are four key factors that drive an industry toward globalization:

· The market factors that lead an industry toward globalization are homogeneous market needs, global customers, shortening product life cycle, transferable brands, and common international distribution channels. In the case of the beer industry the market needs are not homogeneous as there is a wide variation of taste and prices, there hardly is a global customer, the international product life cycle is not a major factor, and on top of all that, the distribution channels are very much local, and vary on a country-to-country basis.

· The economic factors that lead an industry to globalization are worldwide economies of scale in manufacturing and distribution, steep learning curve, significant differences in country costs, rising product development costs, and logistics. In the case of the beer industry the economies of scale in manufacturing and distribution are regional or national, not global. The learning curve is not a factor, and although country costs differ, it is not a traded product. The development costs are low, and sourcing efficiencies are unlikely at global level. Logistics not favorable for global strategy.

· The environmental factors that lead an industry toward globalization are falling transport costs, improving communications, government policies, and technology change. In the case of the beer industry the transport costs only affect super-premium imports. Communications may create some brand awareness spillover but otherwise it is not a factor. Government policies make new foreign entry and investment easier. Technology change is pushing up minimum economic size in manufacturing, but still below national levels.

· The competitive factors that lead an industry toward globalization are competitive interdependence among countries, global moves of competitors, and the opportunity to preempt a competitor’s global moves. In the case of the beer industry the competitive factors are little competitive interdependence among countries, firms are quick to match each others moves, most beer companies are pure beer companies -not diversified-, and face slow growth in their home markets. One of the ideal alternatives for the beer industry is to acquire an existing brewer in a new market even if it is at a high cost, since the cost to gain market share when entering a new country is even higher.

The bottom line is that in the beer industry it is not ideal to follow a global strategy (cross-border standardization, rationalization, integration). But it should be driven toward global companies. Companies cannot be either purely global or not global.

What resources and competencies can SAB use to improve local breweries that it acquires?

SABs competitive advantage is based on its value-adding capability and cost leadership. Its core competencies are brand building and people management. It offers high quality products, stays close to its customers, and especially has the necessary competencies to operate successful in emerging markets. All these competencies can be used to improve the acquired local breweries. Most of SABs acquisitions are done in developing countries; therefore SABs experience from South Africa is very helpful as South Africa is an emerging economy. The company can add value to the distribution strategies of local operations by introducing cost control and relationship marketing, since it knows how to build lean enough distribution channels. But even more important are its intangible assets. The company has a high goodwill and the necessary management skills to improve the internal structure of the acquired companies. Here, SABs company values can be extremely helpful as well. For example, empowering, developing and rewarding employees, as well as taking social responsibility can enhance the newly acquired brewery and finally lead to a higher market share and profit.

Combining SABs competencies with local breweries is optimal to succeed in the beer business. Consumers prefer local brands, and due to difficulty of storing and transporting the product, most beer is bought, sold, and drunk locally. Therefore SAB can add additional value to the acquired companies by using its brand building expertise and its approach in giving each emerging market consumer its own local, emotional, passionate brand. Furthermore, the acquisition of local breweries, in contrast to new market entries, includes the advantage of lower investment costs and avoids bureaucratic hurdles.

Advantages/disadvantages of merging with a major beer producer

In general, the advantages of a merger are to gain economies of scale in production and marketing, to fill gaps in technical expertise and knowledge of local markets and to share distribution facilities.

In this particular case, physical scale alone is no longer a competitive advantage. SAB could bring its experience from emerging markets in a merger. As a countermove, the company aims for a partner with a stable currency cash flow to improve its access to equity and debt for growth. Because in the beer market as a whole a race for consolidation had begun, another advantage of the merger would be an increase in the global market share.

On the other hand, a merger could also result in several disadvantages The partners first have to build mutual trust and have to cope with cultural differences. The process of the merger can lead to slow decision-making and high coordination costs, and it is likely that the focus is put on this process instead of the operations. In addition, SAB has balance between its internationalization and its South African interests. And the main challenge is to find the right partner.

For a successful merger it is important to choose a partner that shares the same values and vision. Ideally, both sides benefit from the merger. SAB is looking for a partner that supplements its existing competencies and, as SAB lacks exposure to stable currency cash flows, it strives for a partnership with a more balanced developed player. An American company would be very interesting due to the strong currency and the huge market volume. Anheuser-Busch, which is the largest brewer in the world, probably has no interest in a merger, whereas Miller (number ) has almost the same market volume as SAB (number 4). This could be an additional advantage for a merger because the two partners are in a way equally powerful. In addition, Miller produces a high quality beer and operates in a market that doesn’t intersect the SAB’s one and therefore complements.

Another option would be to merge with a company in the UK, as SAB already has its headquarters in London. A potential partner is Scottish Newcastle, which is looking for partners as well because the company has to expand abroad due to the strong regulations in the UK. But based on this, it is questionable if it is strong enough to be an interesting partner for SAB.

Heineken, the second largest producer in the world, already has a strong global brand, a fact that wouldnt allow SAB to continue its own strategy. Therefore, the company is not an interesting partner for SAB. Interbrew, the number six producer in the world, could be an interesting partner when it comes to market volume because both partners could reach their goal of improving the position in the ranking of the Top 10 Global Breweries. But as Interbrew also focuses on the emerging countries in Eastern Europe, it is questionable if the company really supplements SABs existing competencies.

Advantages/disadvantages of taking over a minor beer producer

Because taste for beer is rather local, and pride in the local brewery is strong, success potential in acquisitions of minor beer producers is high. However, because income is directly related to beer consumption, rich markets are considered to have reached their capacity and therefore they are no longer attractive in terms of growth potential. Then, emerging markets are a good option when targeting minor beer producers. Some emerging economies like Mexico, China, and countries in Southeast Asia are growing in a rather fast manner, hence increasing the income of its inhabitants. The potential for growth in the consumption of beer is enormous. Some of these countries have many small, inefficient breweries that can be purchased at a relative low price, and supplies of resources needed for beer itself in these countries don't appear to be a constraint.

However, when targeting takeovers in emerging economies, other problems may arise. Although the growth potential is big, the supply of materials, like cans or bottles, could be a problem, since it is not likely to be multiple suppliers in the region. The success of the brewery is highly dependent on continued economic growth, factors that are exogenous to the company. Consolidation of a small brewery is also dependent on infrastructure improvements, such as roads, electronic communication technology, vehicles, etc., hard to achieve in third world countries.

Advantages/disadvantages of organic growth

There are many advantages as well as disadvantages for SAB when it comes to organic growth. SAB has been in operation for more than hundred years, and the company knows its business to the core. SAB has a proven success trajectory in the beer industry, and it has evolved through good and bad times. Because South Africa is an emerging market, and SAB has managed to grow organically despite of world blockade during Apartheid, the amount of experience and knowledge developed through the years is an advantage to SAB. SAB can open subsidiaries in other emerging markets with increased potential for beer consumption growth. By keeping the company’s values and culture, and building critical mass from inside the company, SAB can actually develop an attractive growth strategy that may lead to success. In doing so, SAB may avoid the instability factors that arise from acquisitions and mergers. By growing organically SAB is able to focus further in its home market, balancing internationalization and South African interests.

However, the disadvantages of organic growth need to be considered. As we mentioned before, pride in the local beer is important in most countries, and therefore producing beer abroad for consumption in the market where it is produced is a risky business. However, a strategy that can be implemented is to create new brands in the new market -names that can relate to people in the local area. When planning to grow organically by building on emerging markets, the risk factor of political/monetary instability is a palpable reality, and a positive prognosis may very well plummet when crisis strikes leading the company to great loses and possibly an unfriendly takeover. Organic growth in a third world country has the additional disadvantage of low access to capital.


The most important aspect for SAB is to get access to equity and debt for growth, due to currency instability in South Africa. By doing so the company can lower the risk of being taken over by a competitor. Thus, we suggest merging with a major beer producer, which has a stable currency cash flow, a high quality product and which complements SAB’s competencies and geographical strengths. Based on the analysis above, we recommend beginning negotiations with Miller, which, on the other side, would benefit from SAB’s emerging market competencies.

Please note that this sample paper on SAB is for your review only. In order to eliminate any of the plagiarism issues, it is highly recommended that you do not use it for you own writing purposes. In case you experience difficulties with writing a well structured and accurately composed paper on SAB, we are here to assist you. Your cheap custom college paper on SAB will be written from scratch, so you do not have to worry about its originality.
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