Psychosocial development of children

Psychosocial development of children 1.1 Introduction The influence of the media on the psychosocial development of children is profound. Thus, it is important for physicians to discuss with parents their childs exposure to media and to provide guidance on age-appropriate use of all media, including television, radio, music, video games and the Internet. In a matter of seconds, most children can mimic a movie or TV character, sing an advertising jingle, or give other examples of what they have learned from media. Sadly, these examples may include naming a popular brand of beer, striking a sexy pose, or play fighting. Children only have to put a movie into the VCR, open a magazine, click on a Web site, or watch TV to experience all kinds of messages. It really is that easy. Media offer entertainment, culture, news, sports, and education. They are an important part of our lives and have much to teach. But some of what they teach may not be what we want children to learn. This report gives an overview of some of the messages media send young people that could be negative or harmful to their health. You will learn how you can teach your children to better understand the media messages they see and hear in print, over airwaves, on networks, and on-line. The objectives of this study are to explore the beneficial and harmful effects of media on childrens mental and physical health, and to identify how physicians can counsel patients and their families and promote the healthy use of the media in their communities. Effects of media is categorise as 1)internet 2)music video 3)video games 4)television 1.2 STATEMENT OF THE PROBLEM What would be the possible impact of media on youth due to the increasing trend of violence, sexual abuses, nutritional disorders, less reading habits and useless long hours television viewing? 1.3 OBJECTIVE OF THE STUDY The objective of the study was to measure the impact of media on children and youth in Peshawar region in year 2008. In this report I try to find out that how television is affecting our young generation and what are the pros and cons of watching the television. 1.4 LITERATURE SURVEY The literature survey has been structured as follow: First impact of different media on youth and children were discussed. Then the impact of television on youth and children were discussed. 1.4.1. Impact of Different Media on Youth According to Canadian pediatric society (PP 2003-01). â€Å"The impact of media use on children and youth has a severe impact on children lives. In a research carried out by media awareness network (USA) Media exert a significant displacement effect 2 to 3hours per day spent watching television or playing video games means less physical activity, reading, and interaction with friends but such data do not speak to cause-and-effect concerns. Likewise, content analyses can only demonstrate what the average child or adolescent will view. Even so, such analyses are disturbing when they reveal what the average American child or teenager is exposed to annually. Now how can you guide youre childs television viewing? The government, in cooperation with the television industry, has implemented a rating system for television programming. This system is to help guide parents and assist them in establishing guidelines for their childrens TV viewing. However, the American Psychological Association Help Center reminds us that television networks rate their own programs, unlike the motion picture association. In 1996, the Telecommunications Act was passed in an attempt to help parents restrict the viewing habits of their children. The Act specifies that all television sets sold in the United States must contain a programmable v-chip. Mark Nadel, an attorney specializing in communication law and policy, explains that this will allow parents to block undesirable programming. Even with the rating system and the v-chip in place, parents still need to take an active interest in what their children are watching on television. Here are some suggestions from the Department of Education Set Limits. Know how much TV your child is watching. Set some basic rules such as no television before homework or chores are done or during meals. Participate. Watch TV with your child and discuss the program. Ask them questions and express your views. This will also let you know what your children are watching. Monitor. Avoid shows, movies, or video games that have violent or sexual content. Encourage children to watch programs about characters who show cooperation and caring. Analyze Commercials. Help children to critically evaluate advertisements. Be a Good Role Model. This suggestion comes from the Parents as Teachers National Center. Because children model behavior, set a good example with your own television viewing habits. Avoid watching programs containing adult content when your child is in the room or nearby. The power of media messages Sometimes you can see the impact of media right away, such as when your child watches superheroes fighting and then copies their moves during play. But most of the time the impact is not so immediate or obvious. It occurs slowly as children see and hear certain messages over and over, such as the following: Fighting and other violence used as a way to handle conflict Cigarettes and alcohol shown as cool and attractive, not unhealthy and deadly Sexual action with no negative results, such as disease or unintended pregnancy Further the power of the media and its effects can be seen as: Music Videos Music videos may have a significant behavioral impact by desensitizing viewers to violence and making teenagers more likely to approve of premarital sex (American academy of pediatrics community of music and videos). Up to 75% of videos contains sexually explicit material (American academy of pediatrics community of music and videos), and more than half contains violence that is often committed against women. Women are portrayed frequently in a condescending manner that affects childrens attitudes about sex roles. Attractive role models are the aggressors in more than 80% of music video violence. Males are more than three times as likely to be the aggressors; blacks were overrepresented and whites underrepresented. Music videos may reinforce false stereotypes. A detailed analysis of music videos raised concerns about its effects on adolescents normative expectations about conflict resolution; race and male-female relationships (Rich M). Music lyrics have become increasingly explicit, particularly with references to sex, drugs and violence. Research linking a cause-and-effect relationship between explicit lyrics and adverse behavioral effects is still in progress at this time. Meanwhile, the potential negative impact of explicit music lyrics should put parents and pediatricians on guard pediatricians should bring this up in anticipatory guidance discussions with teenagers and their parents. At the very least, parents should take an active role in monitoring the music their children are exposed Video Games Some video games may help the development of fine motor skills and coordination, but many of the concerns about the negative effects of television (e.g., inactivity, asocial behavior and violence) also apply to excessive exposure to video games. Violent video games should be discouraged because they have harmful effects on childrens mental development (Thompson KM). Parents should be advised to familiarize themselves with various rating systems for video games and use this knowledge to make their decisions. The effect of violent video games on children has been a public health concern for many years. No quantitative analysis of video game contents for games rated as suitable for all audiences were made until 2001 (Thompson KM). The study concluded that many video games rated as suitable for all audiences contained significant amounts of violence (64% contained intentional violence and 60% rewarded players for injuring a character). Therefore, current ratings of video games leave much room for improvement (Walls D) Internet Parents may feel outsmarted or overwhelmed by their childrens computer and Internet abilities, or they may not appreciate that the ‘new medium is an essential component of the new literacy, something in which their children need to be fluent. These feelings of inadequacy or confusion should not prevent them from discovering the Internets benefits. The dangers inherent in this relatively uncontrolled ‘wired world are many and varied, but often hidden. These dangers must be unmasked and a wise parent will learn how to protect their children by immersing themselves in the medium and taking advice from the many resources aimed at protecting children while allowing them to reap the rich benefits in a safe environment. The physician is in a good position to encourage parents and children to discover the Internet and to use it wisely. The Internet has a significant potential for providing children and youth with access to educational information, and can be compared with a huge home library. However, the lack of editorial standards limits the Internets credibility as a source of information. There are other concerns as well. The amount of time spent watching television and sitting in front of computers can affect a childs postural development (Salter RB). Excessive amounts of time at a computer can contribute to obesity, undeveloped social skills and a form of addictive behavior (Canadian Pediatrics society). Although rare, some children with seizure disorders are more prone to attacks brought on by a flickering television or computer screen. No data suggest that television viewing cause weakness of the eyes. It may be different when a child is closely exposed to a computer screen for long periods, although there are no definitive references to support this. Other concerns include pedophiles that use the Internet to lure young people into relationships. There is also the potential for children to be exposed to pornographic material. Parents can use technology that blocks access to pornography and sex talk on the Internet, but must be aware that this technology does not replace their supervision or guidance. 1.5 IMPACT OF TELEVISION ADVERTISEMENT Television has the potential to generate both positive and negative effects, and many studies have looked at the impact of television on society, particularly on children and adolescents (Johnson JG). An individual childs developmental level is a critical factor in determining whether the medium will have positive or negative effects. Not all television programs are bad, but data showing the negative effects of exposure to violence, inappropriate sexuality and offensive language are convincing (American academy of pediatrics). Still, physicians need to advocate continued research into the negative and positive effects of media on children and adolescents Televisions Impact on Kids Television is one of the most prevalent media influences in kids lives. According to Kids Take on Media, a survey conducted in 2003 by the Canadian Teachers Federation, watching TV is a daily pastime for 75 percent of Canadian children, both boys and girls from Grade 3 to Grade 10. How much impact TV has on children depends on many factors: how much they watch, their age and personality, whether they watch alone or with adults, and whether their parents talk with them about what they see on TV. To minimize the potential negative effects of television, its important to understand what the impact of television can be on children. Below you will find information on some areas of concern. Family is the most important influence in a childs life, but television is not far behind. Television can inform, entertain and teach us. However, some of what TV teaches may not be what you want your child to learn. TV programs and commercials often show violence, alcohol or drug use and sexual content that are not suitable for children or teenagers. Studies show that TV viewing may lead to more aggressive behavior, less physical activity, altered body image, and increased use of drugs and alcohol. By knowing how television affects your children and by setting limits, you can help make your childs TV-watching experience less harmful, but still enjoyable. You may not realize it, but there are many ways that television affects your childs life. When your child sits down to watch TV, consider the following: Learning Television can be a powerful teacher (Wright JC). Watching Sesame Street is an example of how toddlers can learn valuable lessons about racial harmony, cooperation, kindness, simple arithmetic and the alphabet through an educational television format. Some public television programs stimulate visits to the zoo, libraries, bookstores, museums and other active recreational settings, and educational videos can certainly serve as powerful prosocial teaching devices. The educational value of Sesame Street has been shown to improve the reading and learning skills of its viewers (Huston AC). In some disadvantaged settings, healthy television habits may actually be a beneficial teaching tool (Wright JC). Still, watching television takes time away from reading and schoolwork. More recent and well-controlled studies show that even 1 h to 2 h of daily-unsupervised television viewing by school-aged children has a significant deleterious effect on academic performance, especially reading. Television affects how your child learns. High quality, nonviolent childrens shows can have a positive effect on learning. Studies show that preschool children who watch educational TV programs do better on reading and math tests than children who do not watch those programs. When used carefully, television can be a positive tool to help your child learn. For older children, high-quality TV programs can have benefits. However, for younger children its a very different story. The first two years of life are especially important in the growth and development of your childs brain. During this time, children need good, positive interaction with other children and adults to develop good language and social skills. Learning to talk and play with others is far more important than watching television. Until more research is done about the effects of TV on very young children, the American Academy of Pediatrics (AAP) does not recommend television for children younger than two years of age. For older children, the AAP recommends no more than one to two hours per day of quality screen time. Nutrition Studies show that children who watch too much television are more likely to be overweight. They do not spend as much time running, jumping and getting the exercise they need. They often snack while watching TV. They also see many commercials for unhealthy foods, such as candy, snacks, sugary cereals and drinks. Commercials almost never give information about the foods children should eat to keep healthy. As a result, children may persuade their parents to buy unhealthy foods. Because television takes time away from play and exercise activities, children who watch a lot of television are less physically fit and more likely to eat high fat and high energy snack foods (CPC). Television viewing makes a substantial contribution to obesity because prime time commercials promote unhealthy dietary practices (J.C). The fat content of advertised products exceeds the current average Canadian diet and nutritional recommendations, and most food advertising is for high calorie foods such as fast f oods, candy and presweetened cereals (J.C). Commercials for healthy food make up only 4% of the food advertisements shown during childrens viewing time (ditz WH). The number of hours of television viewing also corresponds with an increased relative risk of higher cholesterol levels in children (ditz WH). Television can also contribute to eating disorders in teenage girls, who may emulate the thin role models seen on television (ditz WH). Eating meals while watching television should be discouraged because it may lead to less meaningful communication and, arguably, poorer eating habits (Briggs). Sexuality Today, television has become a leading sex educator in Canada. Between 1976 and 1996, there has been a 270% increase in sexual interactions during the family hour of 2000 hours to 2100 hours (crespo CJ). Television exposes children to adult sexual behaviors in ways that portray these actions as normal and risk-free, sending the message that because these behaviors are frequent, ‘everybody does it. Sex between unmarried partners is shown 24 times more often than sex between spouses (AAP), while sexually transmitted infections and unwanted pregnancy are rarely mentioned. Teens rank the media as the leading source of information about sex, second only to school sex education programs. Numerous studies document adolescents susceptibility to the medias influence on their sexual attitudes, values and beliefs (brown JD). A detailed guide to responsible sexual content on television and in films and music can be found in other peer-reviewed publications (brown JD).  ­Some people believe that the media can influence sexual responsibility by promoting birth control, such as condom use. No current empirical evidence supports this concept; it is expected that the debate will continue. Alcohol and smoking Messages about tobacco and alcohol are everywhere in media. Kids see characters on screen smoking and drinking. They see signs for tobacco and alcohol products at concerts and sporting events. Advertising and movies send kids the message that smoking and drinking make a person sexy or cool and that everyone does it. Advertising also sways teens to smoke and drink. Teens who see a lot of ads for beer, wine, liquor, and cigarettes admit that it influences them to want to drink and smoke. It is not by chance that the three most advertised cigarette brands are also the most popular ones smoked by teens. Advertisers of tobacco and alcohol purposely leave out the negative information about their products. As a result, young people often do not know what the health risks are when they use these products. Sometimes TV broadcasts and print articles do the same thing. For example, a magazine might do a story about the common causes of cancer but not mention smoking as a top cause. Does your child know why? The answer may be that the magazine publisher takes money to publish tobacco ads or even owns another company that makes cigarettes. Canadas two largest breweries spend $200 million on advertising each year (McKenzie). On an annual basis, teenagers see between 1000 and 2000 beer commercials carrying the message that ‘real men drink beer. Convincing data suggest that advertising increases beer consumption (brown JD), and in countries such as Sweden, a ban on alcohol advertising has led to a decline in alcohol consumption (romelsjo). Tobacco products are not advertised directly on television in Canada. However, passive promotion occurs when, for example, a soap opera star light a cigarette in a ‘macho act, a Formula One race car has cigarette advertising on it or sporting events carry the names of tobacco companies. There is evidence that passive advertising, which glamorizes smoking has increased over the past few years. Television is not the only way that children learn about tobacco and alcohol use; the concern is that the consequences of these behaviors are not accurately depicted on television. One-half of the G-rated animated feature films available on videocassette, as well as many music videos, show alcohol and tobacco use as normative behaviors without conveying the long-term consequences of this use (Thomas K). Viewing habit Its easy to let your child fall into the TV trap. First you let him unwind with a cartoon after school. Then you let him keep the television on while you make dinner. Before you know it, he like the average American kid is watching four hours a day, well above the two-hour maximum limit recommended by the American Academy of Pediatrics. TV has a powerful hold on most school-age kids. It provides the effortless entertainment they crave. By this age, children can also have a measure of control over what they watch: Theyve mastered the remote, and their reading and time-telling skills help them figure out when their favorite programs are scheduled. Theyre also intensely curious, and TV is one way they learn about the world, says Jane Healy, PhD, author of Your Childs Growing Mind. But its imperative that parents set limits on both content and the amount of screen time. Heres why: Early grade-schoolers lack the ability to regulate their own viewing habits. And a child whos constantly glued to the set is missing out on the chance to exercise, socialize, study, and play. Numerous studies have shown that young kids who watch too much TV struggle with schoolwork and are more likely to behave aggressively and become overweight than those who dont. Want to curb your childs viewing habits? Here are seven strategies you may not have tried yet. Advertising Advertising can have positive effects on childrens behavior. For example, some alcohol manufacturers spend 10% of their budget on advertisements warning about the dangers of drinking and driving. In addition, although some health care professionals disagree about the health benefits of appropriate milk use, milk consumption has increased as a result of print and broadcast advertisements. The developmental stage of a child plays a role in the effect of commercials. Young children do not understand the concept of a sales pitch. They tend to believe what they are told and may even assume that they are deprived if they do not have advertised products. Most preschool children do not understand the difference between a program designed to entertain and a commercial designed to sell. A number of studies have documented that children under the age of eight years are developmentally unable to understand the difference between advertising and regular programming (Michael). The average child sees more than 20,000 commercials each year (AAP). More than 60% of commercials promote sugared cereals candy fatty foods and toys (AAP). Cartoon programs based on toy products are especially attractive. Advertisements targeting adolescents are profoundly influential, particularly on cigarette use (Strasburg VC). The question of whether children are more resilient to the influence of television is debated frequently. Most studies show that the more time children spend watching television, the more they are influenced by it (Strasburg VC). Earlier studies have shown that boys may be more susceptible than girls to television violence (Gould MS). Time Children in the United States watch about four hours of TV every day. Watching movies on tape or DVD and playing video games only adds to time spent in front of the TV screen. It may be tempting to use television, movies and video games to keep your child busy, but your child needs to spend as much time exploring and learning as possible. Playing, reading and spending time with friends and families is much healthier than sitting in front of a TV screen. Professional Wrestling In recent years, the entertainment industry saw the booming and revitalization of professional wrestling. Professional wrestling is so popular today that ABCs Monday Night Football and the NBA Playoffs were dominated in terms of ratings (Fennelly). Professional wrestling continuously tops the charts among cable programming. In spite of all this, what is happening to Americas youth? Vince McMahon, the chairman and owner of the World Wrestling Federation (WWF), reports that 15% of his audience are 11 years old and under. Another 15% are between 12 and 17 years old. Adults from 18 years and older comprise the other 70% of the total viewers. McMahon notes his television shows are rated TV14 (McMahon). However, what happens to the 15%, or one million viewers of his audience who are 11 years old and under? Some people blame professional wrestling as the cause for an increase in violence among children. The two top organizations today are the WWF and its rival, World Championship Wrestling (WCW). WCW is a little more toned down than the WWF. In either case, violence is available to children across America every Monday night. In one episode of WCW, Macho Man Randy Savage attacked an opponent and his valets, Miss Madness and Gorgeous George, jumped off a turnbuckle onto his opponent and choked him out with a heel (Fennelly). Todays version of professional wrestling, WWF in particular, is more violent, sexual, and vulgar than ever before (Fennelly). Many pediatricians and parents argue that wrestling is teaching children at a young age everything that is bad in society. Is it acceptable to make racial stereotypes? Is it acceptable to make crude remarks? Is it acceptable to have children say, Kiss my ass or Suck it (Rosellini)? In a shocking study of 50 episodes done by an Indiana University-Inside Edition, there were 1,658 instances of grabbing or pointing to ones crotch, 157 instances of an obscene finger gesture, 128 episodes of simulated sexual activity, and 21 references to urination (Rosellini). In other episodes of the controversial wrestling shows, a mock crucifixion, SM scenes, wrestlers mooning others and a woman sucking on an Italian sausage was shown (Rosellini). Some of the characters depicted on WWF television advertise a type of message not meant for children. The character Val Venis, portrays a former film star that gyrates over opponents in the ring. (WWF Val Venis) Then, there is the Undertaker who portrays every bit of evil as a messenger of death. (WWF Undertaker) Val Venis friend is the Godfather who portrays a pimp. Before every match, a few hos (whores) accompany him to the ring. (WWF Godfather) Finally, there is Debra, who uses sex by stripping to her underwear on television to distract an opponent. Even more shocking is the way her breasts have come to be known as puppies (WWF Debra). Therefore, besides violence, kids are exposed to sex and death on television. In fact, Rena Mero, a former WWF employee, recently filed suit claiming that the WWF had become obscene and violent (USA Today Violence The amount of violence on television is on the rise . The average child sees 12,000 violent acts on television annually, including many depictions of murder and rape. More than 1000 studies confirm that exposure to heavy doses of television violence increases aggressive behavior, particularly in boys (AAP). Other studies link television or newspaper publicity of suicides to an increased suicide risk. The following groups of children may be more vulnerable to violence on television: Children from minority and immigrant groups; Emotionally disturbed children; Children with learning disabilities; Children who are abused by their parents; and Children in families in distress. Physicians who see a child with a history of aggressive behavior should inquire about the childs exposure to violence portrayed on television. Children learn their attitudes about violence at a very young age and these attitudes tend to last. Although TV violence has been studied the most, researchers are finding that violence in other media impacts children and teens in many of the same harmful ways. From media violence children learn to behave aggressively toward others. They are taught to use violence instead of self-control to take care of problems or conflicts. Violence in the media world may make children more accepting of real-world violence and less caring toward others. Children who see a lot of violence from movies, TV shows, or video games may become more fearful and look at the real world as a mean and scary place. Although the effects of media on children might not be apparent right away, children are being negatively affected. Sometimes children may not act out violently until their teen or young-adult year. Over the past two decades, hundreds of studies have examined how violent programming on TV affects children and young people. While a direct cause and effect link is difficult to establish, there is a growing consensus that some children may be vulnerable to violent images and messages. Researchers have identified three potential responses to media violence in children: Increased fear—also known as the mean and scary world syndrome Children, particularly girls, are much more likely than adults to be portrayed as victims of violence on TV, and this can make them more afraid of the world around them. Desensitization to real-life violence Some of the most violent TV shows are childrens cartoons, in which violence is portrayed as humorous—and realistic consequences of violence are seldom shown. This can be especially true of young children, who are more likely to exhibit aggressive behavior after viewing violent TV shows or movies. Parents should also pay close attention to what their children see in the news since studies have shown that kids are more afraid of violence in news coverage than in any other media content. Fear based on real news events increases as children get older and is better able to distinguish fantasy from reality The Research Center for Families and Children indicates that moderate television watching with discretion in program viewing can be somewhat beneficial for school age children. Van Evra is in agreement. Both indicate that those children who watched a moderate amount of TV performed better academically than those children who excessively watched television or those children who did not watch television at all. Research on media violence is often misunderstood by the general public. One reason has to do with research methodology. We cant randomly assign children early in their lives to watch different doses of violence on television and then 15 years later see which children committed violent crimes. But the same type of limitation also exists for medical research: We cant randomly assign groups of people to smoke differing amounts of cigarettes for 15 years, and then count the number of people who developed cancer. Tobacco researchers conduct correlational studies in which they look at the amount people have smoked during their lives and then chart the rate at which they have succumbed to cancer. They control statistically for other factors, of courseother healthy and unhealthy behaviors that either reduce or promote the tendency to develop cancer. Then they can find out whether smoking contributed to cancer, over and above these other influences. And since they cant do cancer experiments on people, they use animal studies. These are artificial, but they tell us something about the short-term effects of tobac

Valuing Project Achieve

Introduction After years as a teacher and principal frustrated by the inability to effectively track school and student progress, Stacey Boyd and HBS classmate Mandy Lee founded Project Achieve, an information management system for schools. In a quickly changing industry with fast-moving competitors, Project Achieve aimed to use leading-edge technology to reduce the workload of teachers and administrators while simultaneously keeping parents and students aware of performance. In an attempt to raise capital from an array of investors, Boyd needed to assess the firm’s value before moving forward. Project Achieve’s Competitive Advantage_ Project Achieve hopes to differentiate itself from its competitors via its emphasis on a completely web-based product and its founder’s knowledge of schools and teachers, its two main competitive advantages. As the first mover amongst entirely web-based products, Project Achieve hopes to gain significant market share before imitatio ns of its products appear. Being entirely web-based, the system was created in a standardized manner to allow numerous schools to have the capability to use the system and get support simultaneously. In short, the firm’s products are especially scalable. The company will also collect tremendous amounts of information on students, creating yet another potential revenue stream from advertisers and content providers. Potentially, Project Achieve could evolve into the nerve center for schools. With high switching costs, such a position could be attractive to content providers and other potential acquirers. Compared to NCS’s SASI and ABACUS, Project Achieve has a more integrated web-based design and most importantly, is cheaper. Additionally, Project Achieve features an easier template and user-friendly interface compared to similar systems like IMSeries. With the potential to be used by administrators, teachers, parents, and students, Project Achieve could possibly become the platform for distance learning and communication among the aforementioned parties. This partly rests upon Boyd’s ability to gauge the technology needs in academia. Luckily, Boyd’s knowledge of the space is one of the firm’s competitive advantages. Unfortunately, the company’s technological advantages will probably be short-lived after the product hits the market, since competitors are likely to imitate Project Achieve and also move to ntirely web-based products. Additionally, the firm’s marketing strategy depends heavily on the support of governors, but it is questionable whether the firm has the necessary lobbying resources to gain their support. We also question the firm’s ability to entice schools to buy its fee-based program without a sales force. Comparable Company Analysis Based on Exhibit 3 from the case, Project Achieve has nine public companies that can be indentified as comparable. Project Achieve’s closest comparable companies are Click2learn. com, Learn2. com, and Vcampus. These companies are most similar to Project Achieve in that they are all primarily online learning and training courseware. In addition, these three companies are relatively new in the marketplace with the oldest company, Learn2. com, going public mid-year 1994. Finally, these three companies have little to no debt, similar to Project Achieve’s reliance on internal funding. Boyd can use her research on comparable companies in her valuation of Project Achieve to calculate Project Achieve’s beta. The comparable companies could also be used in a multiples-based valuation analysis. Unfortunately we don’t have a complete set of data for each firm’s number of subscribers, otherwise we could have done a valuation based on value per subscriber. _Project Achieve’s Discount Rate_ Boyd should use a discount rate of 19. 0% in her valuation of Project Achieve. This rate was determined using Achieve’s three most comparable companies, Click2learn. com, Learn2. com, and Vcampus. These comparables’ equity betas were determined based on the movement of the market and company returns since their inception. We unlevered these betas and took the median to estimate an industry beta. We assumed an asset beta of 1. 15 (the median asset beta of the three comparable companies) and a debt beta of 0 (with no interest bearing debt) for Project Achieve. Using the 30-year treasury rate (5. 94%) as the risk-free rate because of Project Achieve’s expected life and a historical 7. 0% market risk premium, we calculated Project Achieve’s discount rate at 14. 0%. This discount rate values Achieve as a public company, comparable to its public counterparts. As a non-public start-up, however, Project Achieve is far more risky than the more established comparables discussed above. Thus, we added a 5% start-up risk premium to reach an appropriate 19% discount rate for the valuation of Project Achieve. (See Exhibit #1) Valuing Project Achieve In order to forecast the value provided by each customer type to Project Achieve, we must first identify the breakdown of customers based on the probabilities given in the case, and then forecast the cash flows associated with each type of customer. To determine the probability of a generic targeted school falling into any customer category, we created a decision tree. Exhibit #2) Per our analysis, there are five end user states – perpetual Achieve Express users, two-year users of Achieve Express, perpetual users of Achieve Express and Achieve Logic, two-year users of Achieve Express and Achieve Logic, and targeted schools that didn’t respond – all with varying probabilities. Now armed with the percentage breakdown of customers expected for Project Achieve, to determine the value of each customer we mus t forecast the cash flows associated with each type of customer. Exhibit #3) All of the costs and revenues associated with each type of customer are detailed in Exhibit #3. After calculating a WACC of 19. 00% and forecasting cash flows for each type of customer, it is easy to find the net present value of each customer. Not surprisingly, two-year Express users are the only loss makers for the firm, with a value of -$386. 63 per two-year Express user. Perpetual Express users, two-year Logic users, and perpetual Logic users are each worth $1,315. 79, $15,588. 16, and $44,659. 4 respectively. (Exhibit #3) Now that we have calculated the value per customer for all of our customer classifications (Exhibit #3), we can apply the probabilities found in our decision tree (Exhibit #2) to find the overall value per targeted customer. Doing so, we find that each targeted customer has a value of $5,102. 49. (Exhibit #4) Going one step farther, we matched the value per targeted customer with the forecasted number of customers targeted to find the total value of all of Project Achieve’s targeted customers. Discounted at WACC (19. 0%), all of the firm’s targeted customers are cumulatively worth $78,805,398. (Exhibit #5) Using the DCF method, the after tax value of Project Achieve is $11,991,608. (Exhibit #5) The valuation of Project Achieve is extremely risky considering the dependency of the company’s cash flows on customer acquisition and retention. In addition, Project Achieve’s tax rate along with its carry-forward loss of $1 million will significantly affect its value. The assumptions used in valuing Project Achieve are: Total estimated overhead costs 1999-2000 are $6,524,826 (case Table A) Total costs increase 20% per year for 4 years and after the fifth year costs rise in line with subscription base Revenues grow 2% annually after year 5 (rate of increase for target schools) No inflation taken into account on growth rate because downward pressure on prices with new market entrants will counter inflation $1 million loss incurred to date (will carry forward in tax burden and increase the value of Achieve) 35% tax rate (ignoring depreciation) The Role of Investors Given Project Achieve’s status as an early-stage start-up, its lack of a sales force, and its need to develop relationships with political authorities and schools, the firm requires investors that understand start-ups and can help market its products. Angel investors like Daniel Eliot don’t seem to fulfill either of these requirements. Venture capitalists deeply understand start up businesses and could provide a big chunk of capital, but they don’t know schools, their valuation is lower than Jostens’, and they would be no help in gaining traction for Project Achieve’s products. Additionally, a VC firm would likely require much more control than the other types of investors. Strategic investors are the most compelling. A strategic investor may wish to complement its own growth by integrating Project Achieve’s new technology into its business. Since strategic investors are almost always in the same industry as their targets, they can often help with industry contacts and business expertise. For example, Jostens knows schools, has a sales force in the field calling on schools, and offers the best valuation. We would go with Jostens now, perhaps bringing in a venture capitalist in a later round. We would also keep in mind the possibility of selling out to Jostens down the road if Project Achieve’s products gain traction. Potential investors have widely varying estimates of the value of Project Achieve because our valuation has many aspects. Primarily, different investors may have different forecasts of product adoption rates. As discussed earlier in the paper, we feel that Boyd is being excessively optimistic about the probability of schools purchasing her fee-based program without prompting from a sales force. Since our valuation is entirely dependent on the probabilities displayed in our decision tree (Exhibit 2), if different investors had different calculations for these probabilities, their valuations would be drastically different. Boyd needs to make sure she is realistic in her forecasts of product adoption, for they will set the stage for valuation discussions. Computing the explicit valuation, whether pre-money or post-money, is simple and unlikely to lead to disagreement. The valuations may differ, however, based on how big an investment is made. Since the three potential investors, Daniel Eliot, Jostens, and the angel investors, were all offering different amounts of capital, it makes sense that their valuations would differ slightly. Quantifying the implicit valuation is what makes valuing the firm particularly problematic. The implicit valuation includes valuing warrants, liquidation preferences, and dividends. Additionally, there are non-quantifiable valuation factors such as pre-emptive rights and anti-dilution provisions. To have a better deal, it is important for Boyd to present Project Achieve’s business opportunities thoroughly and disclose all useful information.

Mountain Man Brewing Company Case Study Essay

What is the current situation? Mountain Man Brewing Company (MMBC) is a family business founded in West Virginia in 1925 by Guntar Prangel. The company is now operated by Guntar’s grandson, Oscar. Oscar’s son, Chris, is slated to inherit the business in five years when his father retires. Mountain Man (MM) Lager is the flagship product and the only beer currently produced by the company. The recipe for the lager was based on a refined family recipe and is known for its flavorful, bitter taste. By the 1960s, the lager had established itself as a legacy beer with a rich history, and the company continues to maintain its independent, family-owned status which appeals to its core drinkers. By 2005, the popularity of MM Lager in the East Central region of the U.S. had grown to generate revenues of just over $50 million, and the beer held the top market position among lagers in West Virginia. MM Lager won â€Å"Best Beer in West Virginia† in 2005 for the eighth year in a row. What has made MMBC successful & distinguishes it? MMBC has enjoyed success because of several factors. Although it is a regional brewer, it has superb name recognition. A recent study showed that Mountain Man Lager was considered by many to be West Virginia’s best known beer. In addition, it has very strong brand position with consumers favoring MM Lager’s unique taste and quality ingredients from the family recipe. Finally, MMBC has a trained sales force that is very adept and getting its product into the right channels to compete with national breweries. The legacy of the company is its main distinguishing trait from its competitors. As mentioned before, the very strong brand equity has made MMBC stand out as a brewery that has experienced customer loyalty for successive generations. Holding the title of â€Å"West Virginia’s Beer† allows MM Lager to have an ingrained exposure to consumers in the region and act as a natural default for its blue collar patrons. What enabled MMBC to create such a strong brand? To quote the Mission Statement, â€Å"Mountain Man is still standing because we manufacture an exceptional beer with a great brand name, we’ve never lost sight of our core customer, and we’ve never been seduced by the other guy’s market.† MMBC stands for such unique qualities that have been the boilerplate for developing an enriched brand with strong equity. For almost 50 years it held the top market share for lagers of West Virginia in the majority of the states where it was distributed distinguishing them in prime position among competitors. Research of working-class males determined that MMBC was as recognizable as leading manufacturers Chevrolet and John Deere in the East Central region. Besides successful branding efforts in a large  market, MM Lager was priced with an extremely competitive Every Day Value below specialty brands, but above premium domestic brands. This allowed for an aura of authenticity distinguishing it as higher quality than Mill er and Budweiser, for instance, all while gaining incremental revenues from the craft brewers like Sam Adams. MMBC could generate increased turns at registers without having the deep pockets of their competitors. What has caused MMBC’s decline in spite of its strong brand? Analysis of MMBC’s business model requires the backdrop of the U.S. beer industry. Since 2001, U.S. per capita beer consumption has declined by 2.3% due to increasing competition from wine and spirits-based drinks. MMBC’s revenues are down 2% relative to the prior fiscal year. The current state of the company and market conditions suggests that a single product line may be unsustainable. As of 2005, MMBC was the only major regional beer company to not expand beyond its flagship lager product. A segment of the population was still interested in MMBC, but that segment, while loyal, was aging. The rate at which MMBC was building new consumers was only going to replace a fraction of their current buyers. Distributors were discriminating about which smaller brands they would carry, and the percentage of new consumers by age group was continuing to decrease. There have also been numerous uncontrollable circumstances that have been attributed to MMBC’s decline despite their strong brand. Increased taxes and fees to manufacturers have been clearly evident in the rising retail costs of goods in the marketplace. Companies cannot afford to absorb the added expenditures and therefore pass them on to the consumer whom tends to buy less as prices increase; these increases are hitting their pockets on the home front as well. In addition, the average consumer is becoming much more health conscious and has made changes in their preference of alcoholic beverage segment. Beer is very high in calories; for instance, as compared to wine or spirits and decreasing caloric intake has been one of those fairly recent health conscious changes being made. Beer lovers are sticking with their choice of libation; however, substituting a light version of their favorite brand. With these factors on the rise every day and the core demographic of MM Lager reaching an age bracket were considerably less  portions of income are dedicated to alcohol purchases, the brewery has slowly lost market share to the larger domestic brewers that have been fortunate enough to capital to invest on increased advertising and marketing. Should MMBC introduce a light beer? With sales declining and seeking new areas of business growth, Chris Prangel, a recent MBA graduate, is considering a campaign to launch MM Light. Light beer sales in the U.S. have been growing at a compound annual rate of 4%, while traditional premium beer sales, such as MM Lager, have declined by the same percentage. The core age group for light beer drinkers is 25- 44 which extends below the current core age group of MM Lager (men over the age of 45). Currently, MM Lager has a 4-to-1 male-to-female ratio while the light beer category ratio is roughly 3-to-2. Using current rates of decline with profit margin down 6.2% in 2005, 2010 sales of MM Lager will continue to decrease at the current rate of decline. Given the current state of the beer industry, it is reasonable to project that the rate of sales decline will continue to accelerate in the future. In 2005, MMBC was still profitable and could afford to take on the costs of extending its product line; however, each year that the company waited to do so jeopardized its ability to afford new costs. At first glance, there appears to be an obvious opportunity to expand the brand by introducing a light beer to the market. The concern is that a light brew would alienate the core customer base and erode the attributes that make MM a profitable company. MM Light will add additional capital expenditures for plant and equipment upgrades and could potentially hurt sales of the lager as brand loyalty may become threatened. To arrive at a well-informed decision  supported by strong financial calculations, it is first necessary to perform a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis (Exhibit 1). While weaknesses and threats identified are serious, they are few in number when compared to the many strengths and opportunities of expanding the MMBC product line. Because 9.4% of the region’s light beer production was captured by small brewers, there are successes to be had in producing a light beer. In addition, light beer is responsible for more than 50% of all beer sales in MMBC’s East Central region. Even a small percentage of the biggest market had the potential to be valuable for MMBC. Is MM Light financially feasible for MMBC? MMBC must produce a light beer product in order to remain a competitive player in the beer industry. This decision is based on financial projections of sustained profitability. Both industry and company data were initially provided to set the groundwork for these calculations (Exhibit 2). MMBC revenues for 2005 were estimated at $50 million; however, that revenue base was projected to decrease by 2% annually. Additionally, the number of barrels of MM Lager sold in 2005 was approximately 520,000. Regional light beer sales totaled just over 18.7M barrels that year and were estimated to grow at an annual rate of 4% as judged by industry experts. As judged by Chris Prangel, the initial market share for MM Light in 2006 is estimated to be 0.25%. Following Chris’ prognostication, we also assumed an annual growth rate of 0.25% in MM Light revenue for follow-on years. Lastly, we were provided with variable cost per unit data: $66.93 for MM Lager and $71.62 for MM Light. This foundatio nal set of data allowed for a series of critical assumptions to be logically made (Exhibit 2). Break-Even Point (BEP) Analysis In an attempt to demonstrate the viability of extending MMBC’s product line to include a light beer, breakeven point (BEP) analysis was conducted. These calculations were performed for both MM Lager and MM Light as both products will comprise MMBC’s total revenue in years to come (Exhibit 3). It is important to note that MMBC’s fixed costs were partially comprised of aforementioned financial assumptions. SG&A costs for each product line were given, however we chose to allocate an additional $50K in fixed costs for MM  Light to help with label design. Advertising remained consistent with 2005 data for MM Lager, but an additional $750K was added for MM Light as part of an intensive six month marketing campaign. This incurred cost is significant in introducing a new product to the burgeoning light beer market in the east central region. Completing the BEP calculations, we have determined that 66,982 barrels of MM Light and 364,738 barrels of MM Lager must be produced in order for MMBC to break even (Exhibit 3). At a cost of $97/barrel, this is possible for MMBC to achieve by 2008. The following cannibalization analysis provides added detail to support this assertion. MM Lager Cannibalization An increase in MM Light production will require shelf space that had previously be devoted to the MM Lager product. This will directly impact the sales of MM Lager to some degree. Analysis of cannibalization is necessary in order to show sustained profitability despite an anticipated drop in MM Lager sales. Three estimates (Optimistic, Realistic, and Extreme) were chosen for this analysis, each associated with a percentage (5%, 10%, and 20%, respectively) of MM Lager revenue cannibalization (Exhibit 4). In all three cases, as the revenue from MM Lager decreases each year, that loss is offset by the revenue gained from MM Light. Of particular interest is a comparison of Total Revenue (with MM Light) and Total Revenue (without MM Light). Although higher levels of cannibalization negatively affect MMBC’s total revenue each year, the growing revenue of MM Light will continue from 2007-2010 as MMBC earns a larger share of the light beer market. In a worst case scenario of 20% cannibalization of MM Lager, MMBC’s total revenue with  MM Light is projected to overtake its revenue without MM Light by 2009 (Exhibit 4). It is important to consider, however, that extending the product line does not necessary equate to MM Lager cannibalization. Shipping light beer as a standalone product offers MMBC freedom to market to a totally new segment without alienating their existing drinkers. MM Light should not erode sales of their core Lager product as MMBC’s sales were already declining due to erosion by other brewers light beers. Also a brewer with a broad product offering was seen as a more attractive prospect to consumers. According to consumers, additional products not only introduced new drinkers to the brand, but to the brand’s other product lines. If MMBC did not branch out, they are in jeopardy of being dropped from sales channels in their home territory. Additionally, the same amount of effort that supported their single product could be going to support multiple products from a different brewery because MM Light would not require capital expenditures in plant and equipment in the short term due to existing excess capacity in MMBC’s facility Product line extensions help brewers obtain greater shelf space for products and created greater product focus among distributors and retailers. MM Light Marketing Strategies The issue of marketing and advertising the new MM Light product was analyzed using industry data from 2005 along with an aggressive marketing plan for the first six months of production. We examined marketing strategies for introducing MM Light to not only MMBC’s current customers, but also to the growing population of light beer consumers. Basing our calculations off of industry advertising expenditure data from 2005, we segmented our $750K advertising budget for the first six months of 2006 as shown in Exhibit 5. This strategy, based on prior successes throughout the U.S. beer industry, will help gain consumer confidence in our new product primarily through the medium of television. After the first six months of 2006, a refined analysis of marketing alternatives will be necessary in order to judge MMBC’s next steps. Producing a light beer also presents an opportunity for MMBC capture part of the 19.5 million barrels forecasted to sell in 2006. The introduction of light beer will cause a 7% increase in per barrel cost but  given current trends the company needs to change the status quo or risk succumbing to the fate of many other regional brewers (Exhibit 2). MMBC has the chance to tap into a large sales opportunity. Since light beer sales in  U.S. have been growing at a compound annual rate of 4% whereas traditional premium beer sales had declined annually by 4%. Also, younger beer drinkers view MMBC as strong and a â€Å"working man’s beer†. This represents younger people‘s general dislike of â€Å"big business†. It would be effective to entice younger beer drinkers to emotionally and intellectually support the product whil e catering to their general taste for light beer. MMBC has also strategically positioned itself from a marketing perspective as a preferred alternative to large breweries due to its brand and business model. For example, MMBC does not attempt to compete against large breweries directly in its advertising with MM Lager. Instead, they pursue their own style of marketing, chiefly with a trained sales force. What is required is a strategy founded on the principle that MM Light should have a new product name and logo to differentiate it from MM Lager. For example, a bold new label with a subtle, â€Å"by Mountain Man Beer Company† would help further this cause. MM Light should also be marketed as a reducedcalorie beer brought to consumers by the legendary craftsman of MMBC. MM Light needs to set itself apart from the light beer crowd with quality ingredients and complement the bitterness of MM Lager by delivering a rich distinct flavor of its own. The introduction of light beer to MMBC product portfolio represents a classic adapt-or-die scenario. Fortunately for MMBC, its strong brand equity makes it possible to leverage the brand to expand to new products. MMBC must be  aggressive in developing a light beer to take advantage of its brand power, the economic conditions, and its current ability to afford the costs associated with a start-up product. It is imperative that MMBC market its extended product line to customers with the goal of taking advantage of its attention to quality and its niche hold in regional beer brewing.

Materialism in America Essay - 1712 Words

Beep. Beep. Beep. Cars, clothes, cell phones. Buzz. Buzz. Buzz. Facebook, Twitter, MySpace. Ring. Ring. Ring. American Eagle, Pink!, Miss Me. Beep. Beep. Beep. Need the new IPhone, need the new IPad, need new clothes. Buzz. Buzz. Buzz. Need to go shopping, need to check Facebook, need to play video games. Ring. Ring. Ring. Stay up until two in the morning on the computer, shop all day, played on phone for hours. Beep. Beep. Beep. Buzz. Buzz. Buzz. Ring. Ring. Ring. â€Å"Debit or Credit?† â€Å"Would you like the receipt with you or in the bag?† â€Å"You saved a total of twenty dollars today, please come back again.† Beep. Beep. Beep. Buzz. Buzz. Buzz. Welcome to the chaotic mind of many Americans in present day America. There is hardly a moment of†¦show more content†¦If that really expensive dress that was just purchased gets a tear when ripping of the tag off, will happiness still be there? The questions can go on and on, but the theme of them all is this: Can people survive, can people be happy if all materialistic and electronic items are out of the picture? Is current happiness in society revolving around items that are inanimate and have short life spans and in the end simply take money out of bank accounts? The first car was made in the early 1900s. The first mass consumed computers appeared in the 1980s along with the first mass consumed cell phones. From those dates America has increased their electronic production significantly. Now it is close to every year that electronic items come out with their new items. Starting in the early 1900s to now there has been an increase in the production and consumption of materialistic items. There is also another increase among American’s that corresponds with this: unhappiness and depression. A study done by Arizona State revealed, â€Å"increased prevalence rates of depression occurred during periods of modernity,† (Garfinkle 16). Not that depression is caused by materialism but there is a strong correlation between the two. The more people buy, the more dependency on materialistic items there is, the more people get upset andShow MoreRelated Consumerism and Materialism in America Essay1467 Words   |  6 Pagesof having money. Some people are never satisfied with what they have; they are always on the lookout for more money and more possessions. Man requires food, shelter, clothing and fuel everything else is superfluous. Luxuries lead to things like materialism and greed. People need to realize that everyone is the same on the inside. 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