Global Warming Essay

It is sometimes unbelievable that science discoveries are being disproved despite scientific evidences. This action is a manifestation of political influence over a matter of â€Å"facts† about climate science according to some analysts. However, disbelieving will result in too much danger because truth is truth; it will exist and will manifest itself regardless of human efforts. In the case of Galileo who made a theory that the sun stands still while the earth and other planet revolve around the sun had caused his liberty and life. This is because his theory was against Catholic belief. Politicizing then would mean full intervention and manipulation of people in authority to dispute or reject something as a means of protecting their interest or institutions. Galileo had many discoveries during his time but none of them were recognized. If Galileo’s early discoveries were acknowledged perhaps the science today was even more advanced compared today. However, the danger of refuting science and what it holds as truth is currently done on climate science known as global warming. Many scientists gave warning about the possible consequences of greenhouse effects in the society but some view it as unrealistic that brings disaster causing irregularities and hazards in the economy. For instance, Coleman (2009) stated that people are already enduring the â€Å"CO2 silliness in many ways† in which he pointed to prohibition of new refineries to operate, and the conversion of sources of energy is very costly. Some even claim that climate change brings positive effect in the environment. Oreskes noted that scientific community has â€Å"substantive disagreement †¦ about the reality of anthropogenic climate change† and that the claim of IPCC regarding global warming was not totally recognized by politicians, economists, and journalists for confusion. A senator named Gore, a coauthor of Revelle in an article about the global warming, turned his back to recognize that everything about global warming was just â€Å"too uncertain to justify drastic action†¦Ã¢â‚¬  (Sheppard, 2006). Politicizing the global warming issue is also evident in the libel suit filed against Lancaster for pressuring Singer to drop the name of Revelle as co-author in a global warming anthology. This case revealed a secret agreement between Lancaster and Gore who wanted to politicize what could be resolved by science (Sheppard, 2006). The CFAT report stated also that around 18,000 scientists claimed that â€Å"they see no scientific evidence that human is altering our climate. † These scientists discredit the predictions of previously claimed effects of global warming by 2025 or 2050. What role do â€Å"facts† play in the modern global warming drama? It is definite that what science refers to as facts are proven true based on scientific investigation and studies. Likewise, these facts have special role to play in the modern global warming drama in such a way that predictions made in the past are now prevalent causing changes in the climate. This environment condition has moved many government and international leaders to act to prevent the rapid effects of global warming. As a consequence, many suggested the replacement for fuel fossil and other sources of energy. Instead, many scientists recommend corn and biochemical for fuel; solar and wind energy for electricity. The facts pertaining to what causes global warming, its effects in the environment, the human activity, etc. only prove that global warming is true and it poses danger not only in the environment but most importantly in the human body. However, opposition to this make counterattack against global warming; but, to their dismay still majority believe the facts about global warming and climate change because of reliable scientific explanations; that is if there will be no manipulation from political group. At what point does science lose its independence and ability to rely on critical thinking, and is this dangerous? Science loses its independence when its discovery is refuted and manipulated by known and respected people in the society like government official. In the case of Galileo, his opponents to his view were religious leaders who used their authority to denounce him from Catholic faith. Galileo renounced his first statement and bound to obey the Catholic law. Politicizing of sciences issues loses its credibility because political intervention and manipulation is being allowed to control its content and its publication. Because of this, science lost its savor and credibility; and most importantly it loses its function as knowledge provider necessary for people to enjoy his environment. The claim that climate change is a natural occurrence, while global warming does not post danger, which is not facts, only limits the function of science to society in some aspects alone. Because of this, many scientists will no longer rely on their critical analysis for fear of manipulation. Primarily, politicizing is done to serve the interest of a few but will not generate benefits to all, which is very dangerous because no one could escape when there is extreme weather condition or natural disaster due to changes in climate brought by too much heat on the atmosphere. Reference Coleman, J. (2009). The Amazing Story Behind the Global Warming Scam. Kusi News San Diego. http://www. kusi. com/weather/colemanscorner/38574742. html CFACT (2004). Scientific Questions, Ethical Concerns Missing in Today’s Debate over Climate Change. http://www. cfact. org/site/view_article. asp? idCategory=4&idarticle=436 Halsall, P. (1999). Modern History Sourcebook: The Crime of Galileo: Indictment and Abjuration of 1633. http://www. fordham. edu/halsall/mod/1630galileo. html Oreskes, N. (2009). The Scientific Consensus on Climate Change. Essay Beyond the Ivory Tower. http://www. sciencemag. org/cgi/reprint/306/5702/1686. pdf Sheppard, M. (2006). Gore’s Grave New World. American Thinker. http://www. americanthinker. com/printpage/? url=http://www. americanthinker. com/2006/06/gores_grave_new_world. html http://www. americanthinker. com/printpage/? url=http://www. americanthinker. com/2006/06/gores_grave_new_world. html

Credit Card and Paypal

In this report, we focus on all aspects of the PayPal business. PayPal Basics PayPal is quickly establishing itself as a global payment processor with scale, facilitating nearly $60B in Total Payment Volume in 2008. It remains the largest player focused solely on online payments; however when compared to the total volume of large global players, such as Visa and MasterCard, PayPal’s volume remains fairly small: its $60B TPV was just over 1% of the total volume of payments processed last year by Visa and MasterCard combined. Figure 1: PayPal’s Volume Dwarfed by Incumbents in billions 2,000 1,500 1,757 1,548 969 1,000 500 0 Visa (Credit) Visa (Debit) MasterCard (Credit) Source: Company reports, J. P. Morgan estimates. Note: Parts of PayPal volume may be processed using Visa or MasterCard’s network; Visa volume excludes Visa Europe 406 60 MasterCard (Debit) Pay Pal PayPal is an Established Payment Network and Brand – A Rare Commodity PayPal is in rare company , successfully creating itself into a formidable payment network and brand alongside dominant payment brands in Visa, MasterCard, American Express and Discover.Payment networks sit at the top of the value chain in payments, collecting high-margin fees for facilitating payments from participants seeking access to a network of trusted merchants and consumers. PayPal overcame the classic chicken-and-egg dilemma and now has a critical mass of users in its network, differentiated as a trusted brand for facilitating online payments with the potential to extend its presence into offline opportunities longer-term.One driver of PayPal’s growth is that, unlike traditional payment methods which developed in an offline world and have been overlaid onto eCommerce, PayPal’s platform was built with eCommerce in mind. As such, PayPal has developed tools and risk management measures to address the unique complexities of handling card not present payments over the web – one of th e fastest growth categories in payments. Moreover, PayPal is elegantly structured to simplify the web of connections required in a traditional payment system, making it well positioned to penetrate the small business payments market. Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 2: PayPal Simplifies the Payment Process Traditional payment structure Merchant Payment gateway provider Merchant bank Source: J. P. Morgan. PayPal payment structure Merchant Consumer Consumer Card issuer processor Card-issuing bank Merchant bank Consumer bank We think the online marketplace, and sellers in particular, benefit from this simplification in several ways: †¢ Ease of Use.PayPal gives virtually anyone the capacity to accept payments, enabling a merchant to operate even at an initial scale that would otherwise be uneconomical (i. e. , there are no minimum requirements for payment volume in order to use PayPal. ) Higher level of trust. The payments system is not very transparent, and not all aspects were intended for mass use. A trusted central clearinghouse like PayPal can encourage use of online payments by lowering users’ safety concerns and raising their willingness to send money online. †¢PayPal Is Differentiated beyond Just Online Commerce PayPal is different from other payment brands (e. g. MasterCard, Visa) in that it is a vertically integrated payment provider. In other words, PayPal is a single source provider of payment services. By contracting directly with PayPal Merchant Services, small merchants can get all of their payment needs, and do not necessarily need a separate merchant bank account or payment gateway services provider. PayPal is gradually expanding its presence off eBay by promoting itself as an integrated payment offering along side other payment brands (e. . MasterCard, Visa), supported by PayPal ’s own merchant services offering and alliances with payment vendors like CyberSource (payment gateway) and Chase Paymentech (largest merchant acquirer in the U. S. ). PayPal’s Product Offerings for Online Sellers PayPal offers several different products for payment acceptance, based on the size and needs of the merchant: †¢ Email product. This is the offering used largely by smaller eBay merchants, who receive payments entirely via e-mail, with no site of their own on which they need to integrate PayPal. Website Payments Standard.This product allows merchants to place a PayPal button on their site, and when a user is ready to check out, the user hits the button and is taken to the PayPal site where the actual checkout occurs. †¢ 4 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 †¢ Website Payments Pro. With an incremental $ 30 monthly fee, the Pro product is better integrated into a seller’s site. The product is intended for small- to medium-size sellers, and requires the seller to be using a compatible hopping cart vendor (most are compatible). Express Checkout. Intended for larger merchants (those already accepting include Dell and Barnes & Noble). Express Checkout is incremental to the payment acceptance service used by a vendor – it gives users an additional checkout option. When a shopper uses Express Checkout, s/he logs into PayPal, and PayPal then forwards address and other info to the merchant. This allows an existing PayPal user to bypass entering personal and shipping information again, even if it is the user’s first time using the specific merchant. †¢ Strong Growth in Active UsersBy continuing to add users across multiple platforms, PayPal has been able to post strong user growth in recent quarters, even despite the slowdown in on-eBay growth and low-single-digit u ser growth on the eBay site itself: Figure 3: PayPal Active User Growth Strong in Recent Quarters Users in Millions 150 100 50 26. 7% 23. 7% 20. 7% 19. 6% 18. 6% 19. 2% 17. 7% 16. 3% 16. 1% 16. 0% 17. 3% 22. 9% 21. 4% 30% 20% 10% 73 70 65 63 60 57 53 55 51 47 49 45 44 0 0% 1Q'06 2Q'06 3Q'06 4Q'06 1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 Pay Pal Activ e Accounts Y/Y Grow th Source: Company reports, J.P. Morgan Payment Business Basics For a primer on the payments industry, please see Payment Processing: Payments Market Share Handbook published on June 5, 2009 by J. P. Morgan's Computer Services & IT Consulting analyst, Tien-tsin Huang When a buyer hands cash to a seller, the transaction is self-contained. If a credit (or debit) card is involved, however, several other parties become involved in the transaction, which we describe below: †¢ Issuer (Cardholder’s Bank). Card transactions start with a card issued by an issuing bank (e. g. Bank of America, Chase, et c. ) to a consumer.In terms of economics, the bank that issued the consumer’s credit card takes the purchase price, collects its interchange fee (in the US, ~170 -225 bps depending on the type of card), and passes the remainder to the†¦ Acquirer (Commonly the Merchant’s Bank). The acquirer provides merchant services to the merchant, handling all the card and/or electronic payment acceptance needs of the merchant. The merchant’s acquiring bank 5 †¢ Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 ccepts the payment, collects a merchant discount (generally in the 30-50 bps range in the US), and forwards the balance to the seller/merchant. Both the Issuer and the Acquirer pay a small (~7-9 bps each) fee to the Payment Network (see next entry). Merchant acquirer functions include: †¢ †¢ †¢ †¢ †¢ †¢ Sign up merchants to enable them to accept card payments. Enable merchants to authorize card payments via the network. Pay all network and associated fees for a merchant’s transactions Facilitate clearing and settlement of card payments Provide incremental services, e. g. , sending out statements, etc. Payment network (e. g.Visa, MasterCard). As the backbone to the payments industry, networks connect various banks that need to process credit card payments with merchants and provide authorization, clearing and settlement services. Networks also set rules and interchange rates (earned by the issuing bank). Payment gateway. In the offline world, the payment gateway is the equivalent of a point-of-sale terminal that accepts the payment type (e. g. credit, debit card) and translates it into a format that can be accepted by the merchant acquirer. In the online world, the gateway generally connects an eCommerce site with the merchant acquirer.PayPal already functions as a Payment G ateway, largely as a result of its acquisition of VeriSign’s payment business, which had 144,000 customers when acquired in 4Q’05. †¢ 6 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 4: Example of a Credit Card Payment Processing Cycle Source: J. P. Morgan. How Does PayPal fit in? In most cases, when a PayPal user pays with a credit or debit card, PayPal functions as the Merchant (in Fig. 4).PayPal relies upon its merchant acquirer (usually Wells Fargo) to facilitate the transaction. PayPal the charges the merchant its fees, which on average represent a spread over what the acquirer charges PayPal. In addition, if merchants want, PayPal offers certain merchant acquiring services such as the means to authorize valid card transactions and facilitating the clearing and settlement of the transaction through the payment network. At this point, we estimate that PayPal’s merchant acquiring business comprises less than 5% of PayPal’s TPV. 7 Imran Khan (1-212) 622-6693 imran. t. [email  protected] om Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 PayPal Revenue Model Transactional Revenue PayPal’s business model involves collecting a percentage of revenue from each payment made on the system; this percentage has remained in the 3. 75%-4. 0% range since F’05. In F’08, PayPal collected 3. 86% of TPV as revenue. The following table summarizes the contributors to take rate: Table 1: Contributors to PayPal’s Transactional Revenue Take Rate Type Cross-border transactions (â€Å"CBT†) US sellers, non-CBT Int'l sellers, non-CBT Payment Gateway Website Payments Pro Source: J.P. Morgan estimates % of revenue ~35% ~33% ~25% ~3-5% ~2-5% Comment PayPal charges up to 100 bps higher rates for CB transactions; charges an additional 250 bps for currency conversion Sliding scale from 1. 9% based on volume Country-specific pricing; generally higher rates than US Acquired from Verisign in 4Q'05; limited growth since Monthly $30 fee for WPP product Figure 5: Our Estimates of Contributors to PayPal’s Transactional Revenue Int'l rev enue Pay ment Gatew ay Website Pay ments Pro Monthly Fees Cross-border rev enue US rev enue Source: J. P. Morgan estimatesMarketing Services and Other Revenue Several items are counted as a part of Marketing Services and Other revenue. These include: †¢ Interest earned on some customer balances. PayPal earns revenue as it receives interest on the balances of some non-US account holders. Note that US customer balances are held in FDIC-insured accounts or in a money market account; PayPal does not receive interest on these accounts. BillMeLater interest and fees. Interest and fees earned on existing BML client balances are classified as Marketing Services and Other revenue. †¢ Comparing PayPal Fees to Online CompetitorsPayPal’s fee structure is similar to those of its online-only competitors; both Google Checkout and Checkout by Amazon offer a similar package of fees depending on a merchant’s monthly sales volume; Amazon differs in charging a slightly different fee level for transactions under $10 as well as minimal cross-border support: both buyer and seller must have a US-based financial instrument to use the service. Both Google 8 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 nd PayPal charge roughly (in Google’s case, exactly) 1% more for cross-border transactions. See Table 2 for a summary. As a point of reference, we believe offline fees for accepting cards (aka merchant discount rate) average around 1. 9-2. 0% in the U. S. In March of 2009, Google announced that it woul d no longer offer a discount on payment processing on Google Checkout for Google AdWords advertisers. Table 2: Fees for PayPal, Google, Amazon Remain Similar Transaction Type/Volume Transactions under $10 Up to $3,000 / month Between $3K-$10K Between $10K-$100K $100K and above Cross-border PayPal Same as below 2. % of transaction + 30 cents 2. 5% of transaction + 30 cents 2. 2% of transaction + 30 cents 1. 9% of transaction + 30 cents Varies by currency but ~1% extra; payments with currency conversion add 2. 5% charge Google Checkout Same as below 2. 9% of transaction + 30 cents 2. 5% of transaction + 30 cents 2. 2% of transaction + 30 cents 1. 9% of transaction + 30 cents 1% of transaction Checkout by Amazon 5. 0% of transaction + 5 cents 2. 9% of transaction + 30 cents 2. 5% of transaction + 30 cents 2. 2% of transaction + 30 cents 1. 9% of transaction + 30 cents US only (seller and buyer must have US-based account)Source: Company websites PayPal’s Transaction Costs Set aga inst the ~3. 9% revenue take rate, the business faces two key expense lines that drive its transactional margins: transaction processing cost and fraud losses: Figure 6: F’08 Revenue and Expense Drivers for Aggregate PayPal Payment Volume % of Total Payment Volume, Aggregated across all TPV and Funding Methods 4% 3% 2% 1% 0% 100% of PP rev enue 30. 9% of rev enue 1. 19% 7. 4% of rev enue 0. 28% 61. 8% of rev enue 3. 86% 2. 67% 2. 38% 2. 38% Rev enue Take Rate – Processing Ex pense – Transaction Losses = Transaction ProfitSource: Company reports, J. P. Morgan estimates Processing expense is driven by funding mix PayPal’s profitability is driven in large part by the mix of sources from which customers draw funds in order to pay on PayPal. In particular, when customers pay using a credit card, PayPal incurs a significantly higher cost of funds than when customers fund a purchase using their PayPal balance or an ACH transfer. 9 Imran Khan (1-212) 622-6693 imr an. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009Specifically, PayPal, similar to any merchant that accepts credit cards, is charged a variety of fees (the largest of these is interchange, which is the fee charged by the cardholder’s bank). For PayPal, we believe these fees amount to ~220-250 bps of payments funded with a credit card, with the range representing different types of cards and different geographies (interchange fees are generally higher in the US than across parts of the world, including Europe and Australia). Fees are slightly lower, but still in the 150200 bps range, if users choose a debit card rather than a credit card.By comparison, a payment funded from money already in a user’s PayPal account carries virtually no cost to PayPal. A payment funded though ACH carries a flat processing fee, usually less than 25c; this represents less than 40 bps on an ave rage PayPal transaction of $62. Figure 7: PayPal’s Funding Mix Merchant PayPal collects take rate (~1. 9% to as much as 5%), based on merchant volume and location (significantly higher if currencies converted) PayPal If funded via If funded from user’s PayPal balance, cost to PayPal is negligible Credit card, cost to PayPal is ~220-250 bps; PayPal then functions as Merchant in Fig. above. If funded via If funded via ACH, cost to PayPal is ~$0. 10-$0. 25 Debit card, cost to PayPal is ~150-200 bps PayPal’s cost of funds becomes more favorable Source: J. P. Morgan 10 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Drivers of Funding Mix PayPal allows users to pay with both a credit/debit card and ACH; however, PayPal defaults to using an existing balance or ACH, and users must actively select to pay via a credit/debit card every time t hey use the service.The company has noted that customers generally shift toward a more favorable funding mix over time. Additionally, as PayPal adds new merchant sites, users of those sites begin with a heavier mix of credit card use. The mix for a merchant site begins to resemble that for PayPal overall as users’ familiarity with PayPal grows – generally, 12-18 months. Additionally, we believe BillMeLater, which is funded entirely through checks and ACH, can help improve funding mix for PayPal down the road. Other Margin Drivers PayPal margins have historically been in the 20% range, excluding corporate expenses.We believe several factors drive the variance between the 60%+ transaction margins and the high-teens overall profitability. Primary among these are: †¢ Customer service costs. Call centers as well as a variety of employees needed to manage any problems that arise in the payments process. We do not expect these expenses to show meaningful economies of sca le as the business continues to grow. Sales and Marketing. As PayPal has invested in growing its Merchant Services business, we believe that segment’s growth has been fueled by higher Sales spend. When the business matures, we believe there should be some scale economies in Sales. BillMeLater Basics PayPal acquired BillMeLater in 4Q’08. The service allows users to request transactional credit, rather than a revolving credit line as is the case with a credit card. BML offers consumers rapid credit decisioning on the basis of less detailed information (date of birth and last four digits of a Social Security Number) than necessary for more traditional financing. The majority of BML’s revenue is derived from consumer interest payments and fees, as shown below: 11 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 8: BillMeLater Econ omics as of Time of Acquisition % of TPV 12% 10% 8% 6% 4% 2% 0% 2. 4% Merchant Fees + 6. 5% 3. 6% 2. 9% 3. 4% 2. 1% 4. 1% Cust. Interest Cust. Fees – Acquisition ; Income + Credit ; Cost of Funds = Transaction Profit Serv icing – Fraud Loss – Source: Company presentation, J. P. Morgan estimates Note: Cost of funds includes an implied cost of financing consumer receivables; transaction expense for processing funds is minimal due to funds being sourced primarily via ACHAt this point, BillMeLater’s presence on the eBay site itself remains minimal; the company has placed a 3Q’09 target for better integration of the business with PayPal, and we believe that, after fuller integration, eBay may choose to drive higher BML penetration on the Marketplaces business through, e. g. , promotional or interest-free financing. Complete integration of BML into all aspects of the PayPal solution is expected in 1Q’10. Charge-offs BillMeLater reports its net cha rge-offs as a percentage of the average receivables balance over the course of the quarter; in Q1’09 net charge-offs rose to 8. 95%, compared to 8. 5% during the part of the fourth quarter after the acquisition. Due to the transactional nature of the business, we believe BML has the capacity to continue keeping loan losses at a reasonable level; additionally, the company has expressed that it plans to focus on being more conservative with offers of credit in the near term, even at the expense of TPV growth. Nevertheless, we expect charge-offs to continue rising somewhat. Historically, credit card charge-offs have been correlated with the unemployment rate, as seen below. 12 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Figure 9: Historically, Credit Card Charge-offs Rise when Unemployment Rises 10% 8% 6% 4% 2% 0% Q1'95 Q1'96 Q1'97 Q1'98 Q1'99 Q 1'00 Q1'01 Q1'02 Q1'03 Q1'04 Q1'05 Q1'06 Q1'07 Q1'08 Q1'09 Unemploy ment Rate Source: Federal Reserve, J. P. Morgan Credit Card Net Charge-off Ratio While we believe charge-offs at BML can be managed better, due to the transactional nature of BML’s exposure, we think rising unemployment is unlikely to leave the business untouched. Thus, if unemployment keeps going up, we would expect continued upward drift in charge-offs.PayPal’s Growth Strategy PayPal’s original growth engine was the marriage between PayPal and eBay, and the ability to drive higher penetration on the eBay site. We believe the low-hanging fruit in this regard has largely been gathered, but room for growth still exists along several areas of opportunity. 1. Growth Opportunities for PayPal on eBay Continued Geographic Expansion Can Drive Growth One of the biggest factors driving higher PayPal penetration on eBay has been geographic expansion in territories where the business is less mature than in the US.PayPal has had approximately five years of operating history in much of continental Europe, compared to nearly a decade in the United States. Table 3: PayPal Penetration as % of Addressable TPV continues to Grow % of addressable TPV Country US Canada United Kingdom Australia France Spain Italy Germany 2004 64% 60% 49% 7% 8% 5% 7% 2% 2008 80% 79% 74% 47% 43% 37% 36% 15% 2011(E) 84% 82% 81% 72% 61% 57% 56% 39% Comment Could see add’l boost from BML Penetration already nearly 60%; see below In terms of online activity, much of continental Europe is following in the footsteps of the UK, but several years behind.Penetration nearly doubled in F’08 alone Source: eBay Presentation, J. P. Morgan estimates We believe the 2008 experience in Australia, where PayPal penetration went from under 40% to nearly 60% over the course of a year, is reflective of eBay’s capacity to grow penetration via rule changes: the company rolled out rules mandating most sellers to offer PayPal as an option in 2008, and penetration grew by more than half over the course of the year. 13 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009Figure 10: Australia Demonstrates PayPal’s Capacity to Quickly Boost Penetration 60% 50% 40% 30% Q1'08 Q2'08 Q3'08 Q4'08 Source: Company presentation, J. P. Morgan estimates Additionally, several continental European countries have seen growth roughly in parallel since the rollout of PayPal in much of continental Europe in summer 2004. We See Limited Opportunity for Domestic on-eBay Growth Having already achieved notable levels of penetration on established sites, we don’t think PayPal will see significant additional increases in on-eBay penetration from current levels, especially in the US.However, as eBay increases the amount of buyer protections and begins to offer credit through BML, we thi nk the percentage of GMV that is addressable by PayPal can rise. Figure 11: PayPal volume as a % of Addressable GMV, 2008 GMV in $B 30 20 $29B $24B 10 0 79% 41% US Source: Company reports, J. P. Morgan Pay Pal Non-Pay Pal International One additional way to increase penetration on the site is for the company to offer increased incentives for sellers and buyers to choose PayPal as the payment method.These incentives can take the form of carrots (coupons, higher levels of protection) or sticks (e. g. , rules making other forms of payment more difficult to accept). PayPal has continually increased buyer protections on eBay for uses who pay with PayPal, with the levels rising from $1,000 to $2,000 in January 2007 and going up again to offer unlimited coverage in June 2008. We think offering higher levels of buyer protection – but only when paying with PayPal – remains a useful lever for increasing the penetration of PayPal on the eBay site. 14Imran Khan (1-212) 622-6693 im ran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 PayPal on eBay: Challenges Weak Marketplaces Growth Will Negatively Impact TPV Growth In line with recent declines in GMV, the percentage of PayPal’s TPV that is driven by on-eBay activity has been steadily declining in recent quarters, with 3Q’08 having represented the first quarter in PayPal’s history that saw a majority of TPV come from the Merchant Services part of the Payments business.Figure 12: On-eBay TPV Continues to Decline as a Percentage of Total 70% 60% 50% 40% 30% 20% 10% 0% 62% 58% 56% 56% 54% 51% 49% 49% 46% Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Percentage of TPV deriv ed on eBay Source: Company reports, J. P. Morgan estimates As eBay has struggled to improve GMV growth and faced headwinds from FX, the on-eBay portion of TPV has seen nominal growth turn negative in recent quarters, a s shown in the chart below; adjusted for FX the last two quarters have seen on-eBay TPV grow 5% and 3%, respectively.Figure 13: On-eBay TPV Growth Continues to Lag Off-eBay TPV Y/Y change 80% 60% 40% 20% 0% -20% 1Q'07 50% 19% 57% 62% 66% 61% 57% 49% 35% 26% -7% 18% 18% 17% 17% 19% 12% -3% 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 On-eBay TPV, Y/Y Source: Company reports, J. P. Morgan estimates Off-eBay TPV, Y/Y We are currently modeling GMV to shrink by 14% in F’09, returning to slight growth in F’10 with a 1% rise. Even when looking only at non-Vehicles GMV, our model calls for an 11% decline this year, followed by a 1% growth in the next year.While we think eBay has taken many correct steps in improving the competitiveness of its Marketplaces segment, we remain concerned that the competitive environment 15 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 will make it difficult for eBay to reaccelerate growth and reclaim market share in future years. Additionally, we believe the shift to a frictionless eCommerce model is driving buyers to choose fixed-price formats over an auction approach.As this has the effect of moving from a space eBay controls into a much more competitive, multi-channel environment, we think it creates an additional headwind to growth. Cultural Headwinds in Some Geographies In addition to the above, two specific geographic regions have presented challenges for growing PayPal penetration: †¢ In Germany (and Austria, combined, estimated at ~15% of GMV), the majority of online payments are made using bank transfers, and PayPal has had limited success displacing this system. However, as Table 3 (above) indicates, PayPal’s penetration in Germany has been rising.In Korea (we estimate ~5% of GMV), where eBay recently announced plans to acquire GMarket and combine it with its current a uction. co. kr site, the predominant mode of payments is using escrow accounts. As in Germany, we believe penetration can rise over time as users become more comfortable with PayPal. †¢ Given the challenges in these two areas, which comprise approximately one fifth of eBay’s GMV, we believe it could be difficult for eBay to go significantly past the ~70% penetration threshold in the next five years. Bottom Line: We see ~$36B in F’11 on-eBay TPVBased on our current model of F’10 GMV (excluding Vehicles) of $43B, and an assumption of accelerating GMV growth to 10% Y/Y in F’11, we think PayPal’s oneBay TPV could hit $36B in F’11 (implying a 6% 3-year CAGR), with a range of $33B-$40B depending on more or less favorable assumptions. Figure 14: On current trends, on-eBay portion of PayPal would contribute ~$36B in F’11 TPV On-eBay TPV, $ in billions 40 35 30 25 2008 2009E Optimistic Current Model 2010E Pessimistic 2011E Source: Company reports, J. P. Morgan estimates 16 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 2. Growth Opportunities for PayPal off eBay PayPal’s growth through increasing penetration of off-eBay online commerce has been a key component of the business’s growth in recent years. We think the company retains significant runway to add customers. Historically, Focus on Smaller Sellers Due to its roots as a solution for payments on the eBay platform, PayPal has generally seen a higher penetration among smaller and mid-size sellers.This is partly due to the fact that PayPal has no fixed costs to a merchant, whereas accepting credit cards carries fixed costs. For a seller generating $100K in annual revenue, a $60$70/month cost for accepting credit cards amounts to nearly 1% of sales. Table 4: Economics of PayPal compelling for SMB market PayPal Setup fees Monthly Service Fee Monthly Gateway Fee Transaction fee Monthly Minimums $0 $0 $0 1. 9%-2. 9% + $0. 30 None Merchant Processor $0-$300 $20-$50 $10-$30 2. 0%-3. 0% + $0. 10-$0. 50/transaction $0-$30Source: Company reports, processor websites and J. P. Morgan estimates Figure 15: Payment Solutions P a y m e nt s o lu tion s †¢ †¢ †¢ D is a d va n ta ge s re la tiv e to P ay P al Buyer S eller C an n ot b e tra cked L im ite d p rote ction ag a in st lo ss/th eft R estricte d to virtu a l w orld †¢ †¢ L im ite d p ro te ction a g a in st lo ss/th eft R e stricte d to virtu a l w orld †¢ †¢ S lo w se ttle m en t/fu lfillm e n t tim e C ost/tim e of w ritin g che cks †¢ †¢ S lo w se ttle m en t tim e F ra ud riskC red it C ard Joh n Q Pu b lic 5012 345 6 7890 1234 †¢ †¢ †¢ †¢ †¢ †¢ S ecu rity unce rta in ty of sm a ll b usin e ss site C re d it lim its In te re st co sts †¢ †¢ †¢ †¢ †¢ H ig h tra n sa ctio n fee s – p ro hib itive fo r sm a ll m erch a n ts R e qu ire s m e rcha n t b ank a ccoun t F ra ud risk (card no t p rese n t) P ro ce ssin g tim e /co st S e tup co sts W ire (e . g. , W e ste rn U n io n ) F ee s U su a lly re qu ire s p h ysica l visit to ve n do r L im ite d a cce p ta n ce Source: J. P. MorganPenetration among Large Businesses Small, but Growing Whereas smaller sellers were PayPal’s bread-and-butter in the early days, the greater part of online commerce now occurs at larger sellers. This is especially true when one includes online travel, a category PayPal has pursued aggressively: whereas eCommerce has a fairly long tail of sites, the great majority of online travel is transacted at the large providers and OTAs. 17 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009Table 5: Penetration at top 50 onl ine merchants, by geography As of March 2009 Country USA UK Germany France Australia Penetration 42% 28% 16% 36% 60% Source: Company presentation and J. P. Morgan estimates Internet Retailer Data: PayPal’s Penetration Higher with Smaller Merchants Based on data from Internet Retailer, we estimate that 26% of the total sales volume on the top 50 online retailers in F’08 came on sites that accept PayPal. Consistent with PayPal’s past focus on smaller sellers, PayPal penetration among sites outside the top 50 is 39%, nearly 1. x the penetration among the top 50. Figure 16: Smaller Merchants More Likely to Accept PayPal % of internet retailers accepting PayPal, weighted by 2008 online sales Internet Retailer Top 50 I. R. Top 50, ex cluding Amazon Rest of I. R. Top 500 (##51-500) 0% Source: Internet Retailer, J. P. Morgan estimates 26% 33% 39% 10% 20% 30% 40% Note: Internet Retailer does not include travel sites in its rankings The following table summarizes PayPalâ €™s presence (including previously existing BillMeLater relationships) on the top 50 retail sites as ranked by Internet Retailer. 8 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Table 6: 26% of Revenue at top 50 US eCommerce Sites is Addressable by PayPal 2008 Sales in $ millions Site Amazon. com Inc. Staples Inc. Dell Inc. Office Depot Inc. Apple Inc. OfficeMax Inc. Sears Holdings Corp. CDW Corp. Newegg Inc. Best Buy Co. QVC Inc. SonyStyle. com Walmart. com Costco Wholesale Corp. J. C. Penney Co. Inc. HP Home & Home Office Store Circuit City Stores Inc.Netflix Inc. Victoria's Secret Target Corp. Systemax Inc. L. L. Bean Inc. Macy’s Inc. Williams-Sonoma Inc. Gap Inc. Direct HSN Inc. Zappos. com Inc. Amway Global Overstock. com Inc. Avon Products Inc. 1-800-Flowers. com Inc. Nordstrom Inc. Buy. com Inc. Redcats USA The Neiman Marcus Group In c. Musician's Friend Inc. Blockbuster Inc. PC Connection Inc. Toys ‘R' Us Inc. Cabela's Inc. BarnesandNoble. com Inc. Scholastic Inc. The Home Depot Inc. VistaPrint Ltd. Saks Direct Nutrisystem Inc. Peapod LLC drugstore. com Inc. Nike Inc. Kohl's Corp.Verticals Multiple Office Supplies Computers Office Supplies Computers, Digital Sales Office Supplies Department Store Computers Computers Electronics Multiple Electronics Multiple Multiple Department Store Electronics Electronics Video Rental Apparel Multiple Electronics Apparel Department Store Home Apparel Multiple Apparel Multiple Multiple Health & Beauty Flowers Apparel Multiple Multiple Department Store Musical Equipment Video Rental Computers Toys Sporting Goods Media Media Home Office Supplies Department Store Food Groceries Health & Beauty Apparel Department Store 2008 Online Sales $19,170 $7,700 $4,830 $4,800 $3,642 $3,084 $2,693 $2,600 $2,100 $2,015 $1,993 $1,828 $1,740 $1,700 $1,500 $1,497 $1,414 $1,365 $1,333 $1,209 $1,072 $1,044 $1,040 $1,033 $1,030 $1,016 $1,014 $904 $834 $754 $750 $686 $657 $617 $565 $531 $526 $516 $500 $497 $466 $455 $437 $401 $381 $376 $373 $367 $366 $356 PayPal? No No Yes No No Yes No No Yes No No Yes Yes No No Yes No No No No Yes No No No No No Yes Yes Yes Yes Yes No Yes No No Yes No No Yes No Yes No No No No No No Yes No No BML?No No No No Yes Yes No Yes Yes No Yes No Yes No No No No No No No Yes No No No No No Yes Yes Yes No Yes No Yes Yes No Yes No No Yes Yes No Yes No No No Yes No Yes No No Comment Ended BML relationship after PayPal Acquisition Could leverage BML relationship Could leverage BML relationship Site now owned by Systemax, a PayPal customer Could leverage BML relationship Could leverage BML relationship Could leverage BML relationship Could leverage BML relationship Source: Internet Retailer, J. P. Morgan estimates 19 Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com N orth America Equity Research 26 June 2009 Off-eBay market share of 4. % in F’08 We estimate that PayPal’s $29. 5B Merchant Services TPV in F’08 (excluding BML) represented 4. 2% of the combined volume of eCommerce and Travel spend in that year. Our current estimates call for that number to rise to nearly 4. 9% of the total in F’09. Table 7: J. P. Morgan eCommerce and Travel Market estimates $ in billions Category Off-eBay eCommerce Travel Total off-eBay volume PayPal off-eBay TPV PayPal penetration F’07 311. 4 271. 9 583. 3 19. 9 3. 4% F’08 379. 0 329. 2 708. 2 29. 5 4. 2% F’09E 412. 0 342. 2 754. 2 37. 0 4. 9% F’10E 490. 8 405. 1 895. 9 50. 2 5. 6% F’11E 561. 4 458. 0 1019. 3 64. 2 6. 3% Source: Company reports and J. P.Morgan estimates We estimate that combined global online spend on eCommerce and Travel will exceed $1 trillion in F’11. By our estimate, PayPal’s Merchant services would need to access over 6. 0% of this volume in order to hit the low end of the target $4B-$5B PayPal revenue range indicated by the company. 3. Growth through BillMeLater We see several key effects on PayPal of the 4Q’08 acquisition of BillMeLater. In the near term, we think the addition could hurt profitability, while longer-term, we believe it can become a contributor to PayPal growth both on- and off-eBay. †¢ Minimal near-term TPV impact. BML accounted for 1. 2% of total 1Q’09 TPV.As such, we think it is important to note that the current impact of BML on PayPal results is likely to be somewhat small. Near-term growth likely slow. The company has stated that it intends to be very conservative in its approach to the tradeoff between growing BML volume and maintaining healthy credit metrics. Given the current environment, we believe this will significantly dampen growth in BML TPV through at least the end of F’09. Integration, portfolio losses to impact profits. PayPal’s segment margin in the last two quarters was 500 bps lower than in the same two quarters a year ago. The company has attributed this decline to the impact of integrating BML as well as charge-offs related to the unit’s loan portfolio.Medium-term, synergies become possible. Once consumer credit regains a measure of health, we think the company will begin to use BML as an additional tool to grow business, e. g. , by offering financing to incentivize users to pay with PayPal both on and off eBay. Target is convenience shoppers, not the underbanked. We believe eBay sees BML as an additional feature (or convenience) to attract higher-quality customers, rather than as a tool to expand its reach among customers who do not otherwise have access to credit. This approach appears consistent with the tradeoff noted above of slower growth in exchange for better credit metrics. †¢ †¢ †¢ †¢ 20Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 †¢ Auto financing unlikely to be priority. As noted above, Vehicles sold on eBay have been largely beyond PayPal’s reach up to now. We think eBay sees BML’s core expertise in transactional credit for smaller amounts than involved in a car purchase. A significant expansion of the business to include auto financing seems unlikely in the near to medium term. Impact on margins temporary. eBay expects segment margins to revert to historical trends as BML is incorporated into PayPal more completely (e. g. the company expects BML to be integrated into the PayPal wallet by 3Q; additionally sales teams for BML and for Merchant Services are being merged to give clients a single touch point). †¢ BillMeLater Can Improve Funding Mix We think the impact of BillMeLater in the longer term will be felt most strongly on PayPal’s funding mix: BML does not accept credit ca rds, and as such faces a lower transaction funding cost than the PayPal business as a whole. As such, any portion of TPV that shifts from the historical mix of funding sources to BML will help lower PayPal’s cost of funds. Assuming, conservatively, that PayPal manages the business to have a similar take to the rest of PayPal, we estimate that each 1% shift of TPV onto BillMeLater would drive ~2 bps improvement in funding cost.Thus, if BML were to grow to 4% penetration of our mid-point F’11 scenario of $100B in TPV, it would drive ~8 bps improvement in funding cost: an incremental $80M contribution to the bottom line, or 5c of EPS. Table 8: Sensitivity Analysis: EPS Boost from Lower Transaction Cost as BML Penetration Rises TPV in $B, BML as a % of TPV, EPS impact in $ TPV BML % 87. 1 100. 5 113. 8 Source: J. P. Morgan estimates 1% $0. 01 $0. 01 $0. 01 2% $0. 02 $0. 02 $0. 03 3% $0. 03 $0. 04 $0. 04 4% $0. 04 $0. 05 $0. 05 5% $0. 05 $0. 06 $0. 07 Credit Cards’ P ain Could Be PayPal’s Gain Recently, the House and Senate passed bills restricting certain practices in the credit card industry. We believe that such steps could have several points of impact on PayPal.Crucially, if these rule changes make credit card issuers less generous toward consumers (e. g. , lower profitability drives issuers to lower the levels of rewards for credit card use), PayPal could benefit from funding mix improvement, as the incentives for customers to fund their accounts with credit cards, vs. debit or ACH, would be reduced. Further, we believe that, should credit card issuers try to recapture profitability with less consumer-friendly rules as well as more frequent fees, the quality of the user experience for credit cards will erode, making consumers incrementally more likely to use PayPal. 21 Imran Khan (1-212) 622-6693 imran. t. [email  protected] om Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 4. Growth Opportunity: Expanding Merchant Acquiring Business We believe PayPal currently has two strategic growth opportunities going forward. The company can drive greater adoption of the PayPal solution by continuing to establish PayPal as a brand for online payment, alongside incumbent players such as Visa and MasterCard. Alternatively, PayPal can attempt to improve its payment economics by becoming a scale merchant acquirer. This would allow PayPal to capture the ~30 bps on card transactions that we estimate it currently gives up to its acquirer.Finally, PayPal may attempt to skate along the knife-edge between the two above strategies, maintaining relationships with large acquirers such as Chase Paymentech while at the same time functioning as an acquirer for its smaller client base. PayPal as a Brand Chase Paymentech, the largest merchant acquirer in the U. S. and the largest processor of e-Commerce transactions, offers PayPal as an integrated payment option alongs ide well known names like Visa and MasterCard. As such, Chase Paymentech clients have the option to advertise acceptance of PayPal as a payment type. According to Chase Paymentech, clients that accept PayPal (in addition to credit cards) commonly see an increase in sales. We view this as an important indication that PayPal has potential to be a powerful brand off eBay.We believe PayPal’s recent stated focus on larger merchants suggests this is the more likely strategic direction for the company, as PayPal may not want to jeopardize its status as a partner to the large acquirers, which make it easier for enterprise-scale businesses to include PayPal as one of several payment choices. Can PayPal Become a Scale Merchant Acquirer? In our view, PayPal also has the potential to become a scale merchant acquirer, which could enhance its off-eBay presence, especially among smaller and mid-size merchants. As a merchant acquirer, PayPal would handle all of the card processing needs of a merchant, including directly processing other brands like Visa and MasterCard.We believe PayPal can offer very competitive rates to small merchants (who often pay heavy miscellaneous fees to acquirers), given its scale, allowing it to deepen relationships with merchants and potentially handle offline transactions as well. Smaller merchants (especially the ~87% of US merchants with annual card acceptances under $100K) tend to pay a much higher spread to their acquirer. Whereas such merchants account for ~10% of credit card volume, we believe they represent as much as $2. 5B in merchant acquirer revenue: more than 1/3 of the total revenue in the US merchant acquirer business. We think PayPal’s historical strength among smaller sellers can be an advantage in accessing this market. Chase Paymentech offers PayPal as an integrated payment option for its clients.Chase Paymentech was the largest merchant acquirer in the U. S. in 2008 with 22. 5% market share 22 Imran Khan (1-212) 62 2-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Table 9: Top Ten US Merchant Acquirers, 2008 $ in billions Merchant Acquirer Chase Paymentech First Data BofA Merchant Svcs Elavon Fifth Third Processing Solutions Global Payments Wells Fargo Merchant Services Heartland Payment Systems First National Merchant Solutions RBS WorldPay Source: The Nilson Report. V/MA volume $567 $293 $283 $181 $165 $93 $91 $75 $51 $48 Market share 22. % 16. 9% 11. 2% 7. 2% 6. 5% 3. 7% 3. 6% 3. 0% 2. 0% 1. 9% As noted above, PayPal currently partners with Wells Fargo when it comes to handling non-PayPal branded transactions. One concern about a PayPal entry into the acquirer market would be whether it could successfully maintain its relationships with the other acquirers who currently offer PayPal as an option, and who would come to view PayPal as a more direct competitor. How Much is PayPal Worth? Combining the outlook outlined above, we believe PayPal TPV will reach $100. 5B in F’11; though somewhat more pessimistic or optimistic projections for the unit’s growth yield a range of $87B-$114B.At the midpoint, our estimate is for a 19% 3-year CAGR in Total Payment Volume. Figure 17: On current trends, TPV on pace for just over $100B in F’11 Total PayPal TPV, $ in billions 125 100 75 50 2008 2009E Optimistic New Model 2010E Pessimistic 2011E Source: Company reports, J. P. Morgan estimates Assuming the PayPal take rate remains just below 3. 9% (and assuming healthy growth in PayPal Marketing Services and Other revenue in F’11), our TPV estimate would result in $4. 1B in PayPal revenue. On the profitability side, we believe PayPal is likely to see segment margins shrink to 17. 2% for F’09 due to the continuing integration of BML; by comparison, segment 23 Imran Khan (1-212) 622-6693 imran. t. [email  protected] omTien-tsin Huang, CFA (1-212) 6 22-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 operating margin as reported by the company was 20. 0% in F’08. We think PayPal segment margins can expand back to above 18% by F’11. Figure 18: Segment income could reach $785M in F’11 PayPal segment operating income, $ in millions 1000 800 600 400 2008 2009E Optimistic New Model 2010E Pessimistic 2011E Source: Company reports, J. P. Morgan estimates Based on our scenarios for PayPal F’11 results, we believe the unit is likely to achieve approximately $450M in Net income. At a 20x multiple, this would yield a $9B valuation. Table 10: Scenario Analysis to Get to a PayPal Value in billions except where indicated On-eBay TPV Off-eBay TPV Total TPV Revenue Segment Margin [Unallocated Corporate Costs] Pro Forma Operating Income ($M) Tax Rate Net Income F'11 Earnings Multiple PayPal Value Source: Company reports, J. P. Morgan estimates Worse Case 33. 0 54. 2 87. 1 3. 57 17. 5% 4% 482 25% 361 16 5. 8 Average Case 36. 3 64. 2 100. 5 4. 09 18. 8% 4% 603 25% 452 20 9. 0 Better Case 39. 6 74. 3 113. 8 4. 61 20. 0% 4% 737 25% 553 24 13. 3 Comparative Valuation of PayPal Unit We believe it is instructive to look at several comparables when it comes to valuing PayPal. Specifically, Visa and MasterCard provide payment networks, while Global 24Imran Khan (1-212) 622-6693 imran. t. [email  protected] com Tien-tsin Huang, CFA (1-212) 622-6632 tien-tsin. [email  protected] com North America Equity Research 26 June 2009 Payments is a pure-play merchant acquirer, functioning in much the same way as PayPal does by providing an on-ramp for merchants into the payment system. Table 11: Comparative Valuation for PayPal $ in billions PayPal $67B 11% 1% $2. 70B 13% 17. 2% Some credit risk due to BML Visa $2,702B -1% 60% $6. 94B 6% 52. 9% None 20. 8 17. 1 15. 4 MasterCard $1,759B -9% 34% $4. 97B 0% 43. 2% None 15. 7 13. 4 11. 7 Global Payments N/A ($93B in F’08) N /A 4% $1. 59B 10% 19. 2% None 18. 4 15. 8 12. 5 CyberSource N/A N/A

Henry Higgins Essay

Higgins is an extremely interesting character and the life of the play. Although the play’s obvious concern is the metamorphosis of a common flower girl into a duchess, the development of Higgins’ character is also important. The play isn’t only Eliza’s story. One also detects changes in Higgins or to be more precise he appears to the reader in a new light at the end. This is seen when he tells Eliza that he has grown accustomed to seeing her face and hearing her voice. This is not much of a sensitive display of emotions but it is quite different than the savage invective he hurled at her at the beginning of the play in Covent Garden. Higgins is portrayed as being highly educated. Apart from being a professor of phonetics, he has a deep reverence for literature and fancies himself as a poet. In all seriousness he thinks highly of â€Å"the treasures of (his) Mittonic mind. † He is self-indulgent, whimsical, and ill mannered when it comes to interacting with other people. Higgins is not a man given to extravagant aesthetic tastes. The walls in the Wimpole street laboratory are not adorned by paintings but by engravings. His passionate fondness for sweets and chocolates stands out in comic contrast to his seriousness and austere mode of living. Higgins’ most prominent characteristic is his restlessness and the consequent inability to sit still. He is constantly tripping and stumbling over something. For instance, in Act Three, Shaw writes in the stage directions that Higgins’s sudden arrival at his mother’s at home is accompanied by minor disasters – â€Å"He goes to the divan, stumbling into the fender and over the fire-irons on his way; extricating himself with muttered impatiently on the divan that he almost breaks it†. These quirks and oddities of his character contribute to the laughs in the play and place Higgins in the tradition of the comic hero. It is obvious that simply as a professor of phonetics Higgins would not have been very humorous. Thus Shaw makes Higgins obsessed with his profession. His devotion to phonetics is so engrossing that it leaves little time or inclination for anything else. Consequently his behavior strikes people as odd and unconventional to the point of being rude. He despises the conventions of the middle class that include their manners and hypocritical sense of decorum. He claims to treat everyone with equal disrespect yet his invective is lavished on Eliza while Mrs. Eynsford-Hill and Clara, who represent a more despicable aspect of society are never verbally reprimanded; they are simply ignored. Higgins’s volatile temperament and frequent outbursts provide some of the most amusing moments in the play. While his apparently unfeeling condescending attitude towards Eliza in Act Two – â€Å"She’s so deliciously low – so horribly dirty† might have earned the reader reprimand for a lesser character, at times the reader is forced to laugh. This is because Higgins is not acting socially superior nor does he bear any malice or pride. Rather he is amazed at Eliza’s poverty and is only stating the facts in a very clever yet also tactless way. He is genuinely concerned about cleanliness, which is proved by his order to Mrs. Pearce to clean Eliza with Monkey Brand soap, burn all her dirty clothes and wrap her up in brown paper until new ones arrive from the shop. When the play opens, the audience encounters an egotistical bully who harangues the helpless Eliza. He is insensitive to the feelings of those around him. However, surprisingly enough, the reader does not disapprove of his egoism and rather indulges his frequent tyrannical outbursts because this is the key to his character, his childishness. At a certain level Higgins is an overgrown child. Shaw wrote in his stage directions that Higgins is, â€Å"but for his years and size, rather like an impetuous baby ‘taking notice’ eagerly and loudly, and requiring almost as much watching to keep him out of unintended mischief. â€Å" His manner varies from genial bullying when he is in a good humor to stormy petulance when anything goes wrong, but he is so entirely frank and void of malice that he remains likeable even in his least reasonable moments. This trait of impetuous childishness in an otherwise extremely articulate and learned adult lends complexity to his characterization. This interpretation is confirmed by Higgins himself when he defends himself against the imagined notions held by Mrs. Pearce. He tells Colonel Pickering, â€Å"Here I am, a shy, diffident sort of man. I’ve never been able to feel really grown-up and tremendous, like other chaps. And yet she’s firmly persuaded that I’m an arbitrary overbearing bossing kind of person. I can’t account for it. † His blindness to his faults serves to endear the audience to him despite him being an egoist and a bully. It is important to note Higgins’s lack of interest in women. In Act Three, Higgins’s conversation with his mother regarding Eliza’s society appearance gradually turns to the topic of young women and his antipathy towards them. Higgins dismisses the idea of any romantic association with a faint contempt for the fairer sex and dismisses them as â€Å"idiots. † He categorically tells his mother, â€Å"Oh, I cant be bothered with young women. My idea of a lovable woman is something as like as you as possible. I shall never get into the way of seriously liking young women; some habits lie too deep to be changed. † This antipathy to the fairer sex is a quintessential Shaw characteristic. Shaw believed that emotional entanglements were deterrents to intellectual fulfillment. Thus it is only natural that Higgins is single-mindedly devoted to his career and exhibits indifference bordering on contempt for women. Higgins embraces Pygmalion’s typical distaste for the feminine. Shaw further adds complexity to the issue by suggesting that the perfect woman for Higgins is his mother. This implies that Higgins only desires a sexually unchallenging mother figure who can take care of his daily necessities. This role is more or less fulfilled to a large extent by Mrs. Pearce, his housekeeper, who mothers and reproves him for his unsociable mannerisms. In his climatic encounter with Eliza in Act Five, Higgins declares that he cares for â€Å"life, for humanity† rather than for particular individuals. His world is too broad in scope and cannot revolve only around Eliza. It is this humanism which makes him repudiate Eliza’s complaint with a profoundly meaningful rejoinder that â€Å"making life means making trouble. † Thus although there are several suggestions of the possibility of a romantic involvement between Higgins and Eliza, one knows that union between the two is impossible because of their fundamental incompatibility in their views they hold about life. The readers know that Higgins had bought a ring for Eliza in Brighton. One also learns that he has become habituated to her face and voice and depends upon her for his domestic needs. But one also realizes that the two of them could not live happily together. The main thrust of the play is not the depiction of the love between the master- pupil/artist-creation but rather the portrayal of the pupil’s assertion of independence. Higgins is thus thrilled when Eliza is no longer a â€Å"millstone† hanging around his neck but at last a â€Å"woman† capable of taking care of herself. Shaw questions the defining criteria of what constitutes a gentleman through the character of Higgins. It is obvious that Higgins’s manners are not much better than those of the Covent Garden flower girl. In fact Higgins comes off much worse because of the fact that he has had all the civilizing benefits of wealth and education yet he is rude to the point of being boorish and ill mannered, is given to frequent inflammatory outbursts, and possesses abominable table manners. The fact that such an ill- mannered person is accepted by society as a â€Å"gentleman† provides Shaw with an opportunity to expose the shallowness and hypocrisy of such a society. Shaw thus critiques a society that views wealth and the ability to speak correctly as the constitutive criteria of a prescriptive gentleman. It is one of Shaw’s master ironic strokes to make such a rude and boorish egotistical bully the main agent for transforming a common flower girl into a lady.

Education in Online Environment Essay Example | Topics and Well Written Essays - 1250 words - 1

Education in Online Environment - Essay Example The main consideration for posing the question under discussion is that if online learning through virtual classrooms and its other auxiliary function are capable of delivering an equally rigorous, high-quality education, then why not substitute the traditional brick and mortar classroom with the online classroom? The first and most important reservation and consideration against collegiate education which is quality has already been responded in the affirmative and it now becomes high time to make classrooms virtual to benefit of the many advantages of a technology-based education using the internet as a platform instead of the traditional classroom. Many if not most academicians agreed that the learning outcome for their students such as incorporating active learning techniques such as working collaboratively on assignments, participating in small-group discussions and projects, reading and responding to case studies, role-playing, and using simulations can now also be done online (Paliof and Pratt). Its many benefits include financial pragmatism which is very important today because are still in the process of recovering from the financial crisis. Online classrooms will save the student a huge amount of time and money and these saved time and money can be channeled to other things that are productive thus optimizing the time and resource of students. Students are able to save time in an exclusive online classroom in attending college because he or she no longer has to commute beginning in enrollment, going to class and attending to school documentary requirements. The saved time and opportunity cost saved are huge that the students can either used it to engage in other productive endeavors such as engaging in interesting hobbies or getting a job to help finance college. Speaking of finance, along with the saved time is also money. Commuting to and from college costs money and it is increasingly getting expensive due to the perpetual increase in the price of petrol. It would also save the student clothing expenses because he or she no longer has to purchase additional clothing that is suitable for going to class. If the student has to board near the school, the online classroom will no longer require that. Instead of paying board and lodging just to be near the school, the student can stay in the comfort of his or her house without the added cost of board and lodging. He or she has to pay only for the utility bills which are very minimal compared to paying room and board inside or near the university. It is also safer because students no longer have to leave the house and expose too many elements outside the house that could pose danger to the student. Danger such as road accident, mugging or being shot by a distraught student who has gone amuck is virtually absent if the student stays in the house to attend class.

Culture History Essay Example | Topics and Well Written Essays - 1000 words

Culture History - Essay Example Because it is only through the material remains discovered that some peoples and cultures are now known to have existed, we can only understand these societies by comparing what has been left behind with other cultures that we have more knowledge about. We can interpret the findings in many different ways, all of which may contain some truth relating to the original society, but perhaps none of which offers any accuracy. Yet culture history can provide some accuracy as it is constrained by the artifacts found and the necessities common to all human life. In considering the idea of culture history, it must be acknowledged that nothing is certain regarding our interpretations, but it is also a very real part of our present existence. While we do not have the first-hand accounts of the 15th-century diarist, we do have the ability to compare to human needs as they are expressed today. â€Å"The only way in which we can understand their meaning [the artifacts] – if you will, the way in which we can state the archaeological record in words – is by knowing something about how these material things came into being, about how they have been modified, and about how they acquired the characteristics we see today. That understanding is dependent upon a large body of knowledge which links human activities to the consequences of those activities that may be apparent in material things† (Binford, 19). In the end, we learn more about ourselves because of archaeological study into cultural history.

Incorporate Essay Example | Topics and Well Written Essays - 250 words

Incorporate - Essay Example This price that the option is offered is referred to as a â€Å"grant† price. This â€Å"grant† price is usually the market value of the shares at the time the employees are granted that opportunity to receive the stock option. Those employees that have received the grant hope that the market value of the shares will later increase and thus benefit from the grant. This program is perceived as a flexible way of sharing the company’s ownership with employees. This thus calls for high performance of employees as they feel attached to the company they are working for. It also attracts and retains a motivated workforce. However the option is not a strategy that would work for a company that its future is not certain as members and staff off the company would take that opportunity to sell their shares to avoid total loss of their investment. This can be valued by using the information of the company’s annual report. Using HP as our case study we begin by valuing the employee stock options using the black-Scholes option pricing method. To calculate the black-Scholes value, we combine the information with our estimates of the following

Race and racism (evolution Coursework Example | Topics and Well Written Essays - 1000 words

Race and racism (evolution - Coursework Example An example is Pedro Alonzo Nino who was a pilot of a ship in the fleet led by Christopher Columbus and was believed to be African (Smedley 89). Native Americans on the other were less exploited as slaves due to the fact that many of them got ill quite often and succumbed to European diseases. They were also perceived to be brutal and many would escape since they knew the land better than anyone else. This left the planters no choice but to take advantage of the vulnerable Africans and turn them into slaves. It is in 1661 that Virginia was granted a formal slave status by Queen Elizabeth which allowed slaves to be bought and sold just like any other commodity. From this time Africans’ status dropped drastically and they were consequently believed to be inferior to all other races. This legality to trade in slaves facilitated and maintained this trade for centuries. There was the perception that the whites were more superior to all other races while the rest were termed as color ed people. The whites in America even disregarded immigrants from Europe. They claimed to be biologically different from all immigrants regardless of origin. This perception created rifts in the society which caused the Americans to dominate others. The New World perpetuated slave trade because they had vast lands which were productive and the climate was favorable (106). This followed a massive expansion of plantations in Georgia and South Carolina which translated to increased production levels of rice and tobacco. These slaves did a great deal of work which the white servants had refused to do for example draining of swamps. West Africans came in handy especially in rice growing plantations since they were familiar with the kind of work required as their mother lands grew rice. Slaves worked for 15 hours on a daily basis especially during the harvest season. One overseer was required to supervise a minimum of 20 slaves doing back-breaking work and when a slave lazed around, the o verseer was supposed to whip them. The fact that slaves were cheap to buy and maintain saw planters buy them in masses so as to plant and cultivate more (281). As earlier indicated slaves used to work for many hours per day which translated to bumper harvests and therefore booming plantation business. Many plantation owners like the Byrd family from Virginia turned to be quite wealthy. Such families came together to form elite classes of planters in the southern states who ensured that slave trade remained because it was a lifeline to their wealth. Some slaves also supported the trade owing to the fact that some, especially the overseers, lived better lives than the one they left in Africa. Q2 America is comprised of people from a variety of ethnic backgrounds. When America was organizing itself as a country many people streamed in as immigrants from all over the world but majority from Europe. All these people on their arrival to the United States found a society strictly stratifie d hierarchically on the basis of ethnicity (Sacks 55). These hierarchies defined ones social and economic status thus limits had been set in regards to what one can or cannot do. The white settlers are the ones who set these hierarchies so as to protect their interests and to limit others from exploiting existing resources. The African-American population especially before the civil war was condemned to slavery. European immigrants like the Irish people worked as laborers or supervisors in farms or small

Proposal Presentation - Five Guy's Term Paper Example | Topics and Well Written Essays - 1000 words

Proposal Presentation - Five Guy's - Term Paper Example In this case, researchers are made to go through an array of ethical requirements. There is the need to meet professional and institutional standards as well as those for conducting any research related to human participants. In helping steer clear of any ethical quandaries, this research would consider a number of research ethics. First, the researcher would frankly discuss the intellectual property with the participants (Bernardin & Nairn, 2008). More often than not, academic competitiveness leads to trouble depending on who should be credited for authorship. The best way to avoid disagreements on who is to be credited and which order to use, the researcher should talk about the issues at the beginning of the researcher's working relationships with the participants and should ensure they are put in writing (DiMauro & Grant, 2006). This will act as a tool to help discuss and evaluate the contributions during the research process. Secondly, the researchers would be conscious of multi ple roles of the participants. This could be achieved by avoiding relationships that might tend to impair the researchers’ professional performance or could cause harm to others. However, they will have to take note that many multiple relationships are not ethical especially if they could have some adverse effects (Goree, 2006). When recruiting participants in this study, the researchers would have to think carefully before commencing multiple relationships with students. In this case, the researcher would act as a lab supervisor as well as a mentor and would make sure he or she does not abuse the power to differentiate himself or herself from the participants (Bernardin & Nairn, 2008). The researcher would make sure he/she outlines the nature and structure of mentoring before the mentoring begins. Thirdly, the code of ethics to be upheld during the study would be to make sure the informed consent rules are strictly followed. Doing this properly, the consent process would ens ure that the participants voluntarily participate in the research when fully informed of the relevant benefits and risks. Lastly, the researcher would have to consider respecting the confidentiality and privacy of the participants. Respecting individual rights to confidentiality as well as privacy is a key tenet for every researcher (Bernardin & Nairn, 2008). The researcher will, therefore, have to discus confidentiality limits, giving the participants information concerning how their data will be put into use and for them to know the law of the state, as well as taking practical security measures. Failure of observing ethical stipulations may lead to incidences of taboos – a common element in the incidents of ethical based violations. However, the task of establishing personal ethics is rather demanding. This is with regard to the essence of ethics in an individual’s life. Adoption of appropriate ethical perceptions is a demand that is instilled in the person by his o r her immediate community. This makes ethics seem inclusive of an expectation as well as the desire to protect one’s perception of life (Goree, 2006). Ethical beliefs are regularly challenged, especially during the address of various aggressions in the daily lives. The success in the addressing of these challenges implies a positive or impressive performance of our ethical beliefs and research. The development of successful ethical trends is based

Marketing planning for iPhone 4s Case Study Example | Topics and Well Written Essays - 500 words

Marketing planning for iPhone 4s - Case Study Example Basically, the market for iPhone 4s is the busy people and the gadget geeks. No particular age limit is specified for as long as one has knowledge in using smartphones. The lowering of the price set for iPhone 4s means that Apple is targeting the mass market. Since the product is priced lower than the usual, money spent to purchase it will be worth it and with its advanced features, the mass market will be drawn to the product thus leading to a sudden purchasing decision. The fast-paced lifestyle in most nations has driven Apple to create smartphones with its multiple usage that enable people to do multi-tasking using a single technological gadget such as the iPhone 4s. In the application of ethnographic research, the "human behavior is being studied in its natural context" (Lamb, Hair, and McDaniel 276) and is being held as an object of observation for consumer behavior. In reference to this form of research, Apple has made sure that the additions it has made to iPhone 4s are suited to what is needed by people based on their human behavior. Certain economic factors also affect the positioning of the product in the market. Price was set lower than before in order to reach more potential buyers, especially the mass market. It has a dual core A5 chip that makes this new iPhone version power efficient and convenient for everyday use (Apple, Inc.). Extensive research is needed to execute the plans for the promotion and launching of the product. In that case, ethnographic research can be useful since it does not only require a simple observation of individual behavior, but it also takes into account learning from the individuals behavior ("Ethnographic Research"). In the past months, there was a relative decline on sales of Apple smartphones. Because of this circumstance, the company has decided to keep prices in line with the competitors following a status quo pricing strategy. At the moment, the iPhone 4s is considered the most talked

Cultural Tourism Essay Example for Free

Cultural Tourism Essay Tourism is one of the largest industries in the world today that consists of eco-tourism, beach tourism, cruises, cultural tourism and business tourism. This essay will mainly discuss the authenticity of cultural tourism. Meethan suggested in 2001 that modern cultures and societies are just as authentic as those that are present since decades and even centuries. Meethan here is correct, because the tourists really seek a dispersed experience in cultures both modern and old. However, many people think that only the traditional cultures and original artefacts come under the definition of authentic cultural tourism. Even the tourists have a different insight of what constitutes the authenticity in cultural tourism. This essay will talk about these issues and their implications for cultural tourism. Cultural tourism, according to World Tourism Organization (WTO), is the visit of the interested tourists to culturally rich destinations and their visit consists of a range of activities such as visits to heritage buildings and sites, attending performances of the local artists, taking part in traditional festivities and pilgrimage of holy places. Many do not agree with this narrow definition by WTO as the cultural tourism is synonymised with the civilizations and the way of living of the historic societies in that tourist destination. The local residents are mostly ignored from the definition and also from the concept of cultural tourism. However, the truth is that the locals make up for the major part of the experience of tourists. Their way of living and the current culture of the residents if often revitalized for enhancing the experience of the tourists. This forced influence on the local cultures for attracting more tourists is hurting the authenticity of the cultures in tourist destinations (Clarke 2003). Although it is true that tourists seek a combination of modern and traditional cultures on their destinations, but they prefer to consume traditional and modern tourism separately. Some of the tourists just fly from East to West for sinking into the beauty of traditional culture. These tourists want to enjoy the tradition by visiting cultural heritage buildings, attending traditional theatres and listening to the cultural songs of the destination. However, some cultural entrepreneurs try to blend the modern aspects with the traditional culture for the promotion of the destinations. There is a triangle of the cultural entrepreneurs, the tourists and the residents of the destination. The culture of the destination is defined by the way of living of the residents and the activities of the entrepreneurs. For the purpose of expanding the business, attracting more tourists and enhancing their sales, the local hosts and cultural entrepreneurs force the residents to change their way of living and link it to the culture. This is done in order to present the tourists with a cultural experience. Hungary has been known for the production wine and the tradition of small wine shops with their own vineyards. These shops and the people involved in the production of wine were of a particular attraction to the tourists as they saw this tradition of wine production as a rich culture. As tourism thrived, there were attempts to increase the production of wines through both, the government authorities and through the cultural entrepreneurs. However, this mass production of wine was not as successful as the wine from small wineries. This is the threat to the authenticity of the culture and the tourists proved that they did not like this blend of modern and traditional culture in Hungary. They proved that they preferred the traditional culture over the modern culture as the mass production of Hungarian wine was not successful. The tourists came to this Hungarian destination for the experience of the traditional small wineries and not for the wine. The tourists also did not get any special treatment by the independent wine producers in Hungary because they considered the tourists as a source of sales. The tourists were not treated any differently from other customers and they were given the sale offer; taste it and purchase it if you like it. This was because the only interest for the wine producers was the revenue from the sale of the wines and nothing more. In this case, the original culture was not touched by the cultural entrepreneurs, and minimal accommodation was made for the tourists such as the use of local wood for furniture. This resulted in the reduction of wine tourism in this area as there was no cultural entrepreneurship. There was nothing more in the offer except the wine, but afterwards some food dishes were also added to the menu but the tourism still was low because of the more complex wine tourism efforts by the other countries. The other countries excelling in wine production attracted more tourists than Hungary because they were able to blend the modern and traditional culture. Another case that supports the view of Meethan is the case of â€Å"Valley of the Arts† which attracted millions of customers each year at the arts festival that was organized by Istvan Marta. The organizers gave a deep thought on the cultural perspectives of the valley and they came to the conclusion that different tourists have different needs. The high spenders would require different type of product than attending just a simple art festival. The venues were made better and redesigned and the marketing efforts were doubled. The organizers attracted sponsorships and media coverage and hence added to the appeal. The locals were also involved and were allowed to attend the shows and these events were transformed into a very fashionable one. Soon the streets became crowded with high end cars owned by the German tourists. Hence, from these two case studies, the lessons learnt are that an entrepreneurial spirit is necessary for the promotion of the cultural tourism focusing on the core of the activity. Hence, modern and traditional cultures need to go hand in hand for the attraction of the international tourists. The commercial intent is necessary but the tradition should be kept alive which is the driving force for the tourists. The tourists should be given added facilities to augment the sales and attract the high spenders and luxury seekers. While Alan Clarke was working in the rural areas of Hungary, the local tradition was kept alive but still the communication technologies had a lot of penetration. The list of available international channels was far more than the number available in United Kingdom. The rural areas had access to Hungarian, Italian, Spanish, French, German, American and Russian channels (Clarke 2003). Jaipur, a culturally rich city of India, is particularly selected as a destination by tourists because of its historical attractions including the handicrafts and the heritage. Jaipur inhibits some of the forts built by the Moguls, centuries old paintings, the preserved sculptures and the traditional excellence in architecture that is preserved in buildings such as mosques. The tourists are also keen to visit Jaipur because of the folklore dances and Sufi music that was inspired by pundits and saints centuries ago. However, the city is continuously gearing up and adding more hotels and hi-tech facilities for the tourists. The core product of tourism in this city is the same for all tourists, but different income level groups can enjoy different class of tourism in this city (Kala 2008). High spenders can opt to spend their evenings in luxury spas while the people belonging to lower income group can live in small hotels and save money to spend on the purchase of handicraft and sculptures. According to a survey on the local residents, around 85% of the residents of Jaipur think that there was an evidence of development of city because of tourism and more entertainment facilities such as pubs, bars, hotels, swimming pools and parks were being developed. In the city, the local small scale industries were also being promoted by the government as the handicraft items were in demand by the foreign tourists. New hotels were also being built for accommodating the increasing number of tourists over time. This has induced employment and created new job opportunities for the local residents. Around 81% of the respondents in Jaipur thought that employment was being generated in the city because of the increasing tourism. Hotels and restaurants are labour intensive and hence they require the locals to work in their facilities. This generates more jobs for the local residents. Increasing tourism had positive impacts on the economy, but the locals have to face the problems such as increased traffic jams in the city and change in the culture. The way of living of the locals change as the standard of living gets better. Once the international tourists start coming in, and development start, then the primary culture is forgotten. 71% of the respondents of a survey in Jaipur commented that the increase in tourism has affected their traditional culture (Kala 2008). This change in traditional culture and way of living could harm the cultural tourism industry in the long term because the tourists will not be attracted to the city once the way of living of the locals is changed. The tourist-host interaction is very important in cultural tourism because it is an integral part of cultural tourism. The cultural tourists expect a spontaneous interaction with the locals and their traditional hospitality. However, if these important elements are vanished from the Jaipur culture, then the cultural tourists will no longer be attracted to the city. From the case studies presented, it is proved that only those tourist destinations have been successful which integrated modern and traditional culture. Authenticity of the culture is affected by designing attractions for the tourists but this depends upon the definition of cultural tourism. The modern tourist, however, can no longer enjoy cultural tourism that is untouched by modernity. There are also some issues when there is a blend of the two types of cultures. If these issues are managed properly, cultural tourism can be of great help to the economy of the destination and it can be responsible for raising the standard of living of the locals too. WORKS CITED Clarke, A. The Cultural Tourism Dynamic. Conference on Developing Cultural Tourism. UK: University of Nottingham, 2003. Kala, N. Host Perception of Heritage Tourism Impact with Special Refernce to the City of Jaipur. entrepreneurs 1, no. 1 (2008): 65-76.

Leadership Plays Significant Role In Organizations Management Essay

Leadership Plays Significant Role In Organizations Management Essay Leadership plays an important and significant role in the organizations operation today. Leadership is seen as the capability of a leader to organize and form a group of people so that they can work together towards the way that achieves a shared vision and goal (Rudd, 2000; Kouzes and Posner, 1995, p.30). In terms of the meaning of leadership, it can be shown in different situations, and be expressed in different form (Rudd, 2000). The discussion of leadership can be derived from the behaviour of leaders and followers which between the relationship of those who is able to inspire others to follow their instruction and those who is willing to be led (Kouzes Posner, 1993). A leader that is able to encourage the organizational commitment of his or her followers is seen as an effective leader. Besides that, an effective leader is able and willing to share the vision, objectives, and plan to the employees. A competence leader will be able to set an achievable goal and lead the followers toward the goal together. An organization that is able to develop to retain the effective leaders will achieve a good result in the productivity and employees commitment to the jobs. According to Kouzes (1999, p.64), without the assistant, encouragement and motivation from others, one will not be able to reach a fascinating achievement. Thus, leadership is a significant determinant of the organizations effectiveness. For several decades, the literature study of leadership had been playing an important role for the area of organizational behaviour. A good practice of leadership with the supported of top management in the organization will encourage the employees job satisfaction, motivation and positive thinking. This will result in organizational commitment of the employees. According to Kouzes (1999, p.64), employees will feel confidence about themselves and be able to have a better performance when they work with a leader that always motivate, encourage, and care about their dignity. Employees that have fully commitment are willing to contribute their effort to the organization. They are willing to stay still with the organization even though at the time when company meet crisis or difficult time. Besides that, employees that have their commitment to the company tend to result in good performance and this will create a win-win situation for the organization as well as the work forces. In the globalization world of today, the implementation of leadership practices in organizations is getting more difficult due to the change in the organizations complexity and their advanced technology and operations. The diversity of current business environment will influent the employees perceptions, expectation and obligations towards the organization (Hyatt, 2007; Drucker, 1997; Kickul Liao-Troth, 2003). Todays organizations are going through downsizing, merging, and restructuring in many ways. Therefore, employees may feel that their organizations are not living up to their expectation. The relationship among the employees within an organization is the main factor to determine the achievement of the organization. Leaders ability to influence, and identify the contribution of the employees is essential to form a positive perception of the employees towards the leaders and organization (Hyatt, 2007; Weber, 1946). Leadership is said to be successful when its meet the expectation of the employees. According to Kouzes and Porner (1990), leadership is a process that involves two parties of people which are leaders and followers that treat each other in an equally way and willing to share the ideas within each other selflessly. A successful leadership depends on the employees perception and trust on the leaders ability. Therefore, the practices of leadership is a platform of winning the trust of the followers and thus results in organizational commitment. The five leadership practices suggested by Kouzes Posner (2009) are (a) Challenging the Process, the extent of a leader that is prepare to face the risks and challenges; (b) Inspiring a Shared Vision, the degree of a leader to share a future plan and vision; (c) Enabling Others to Act, the extent of a leaders to influent others to act; (d) Modelling the Way, the ability of a leader to practice his or her values and be the role model of the follo wers; and (e) Encouraging the Heart, the degree of a leader to show the appreciation and recognise of employees contribution (Carless, 2001). Leadership is an essential element in the association of leader and followers. Leaders play an important role in driving and managing the subordinates. Hence, leadership can be identified as a process of knowledge, skill and social exchange between leaders and followers (Weinberger, 2009). Managers are seen as leaders of their subordinate in an organization. Therefore, the perception of the followers towards their leaders will link to their perception of the company as well as the leadership process. In this study, leadership practices were examined in the context of organizational commitment. Problem Statement Leadership practices are important elements in fostering organizations culture and building organizational commitment for the sustainability of the organization performance. Managers play a significant role to influent the perception of subordinates to the organization through effective leadership practices. Leaders affect their followers directly through their interactions with the followers. However, there is a difference of current managers behaviour. Many of them claim they care about employees expectations, obligation, and well being. Yet, there are managers of some organizations today always implement projects with words and make empty promises to the employees (Hyatt, 2007; Kouzes and Posner, 1993). In such situation, managers can be said that they are not facilitating their obligations, thus the trust and organizational commitment of the employees towards the managers will then decrease. There are studies found that 68% of employees do not have any confidence on their managers words and behaviour. Meanwhile, 43% of employees think their managers always deceive them (Connel, Ferres Travaglione, 2003; Davis and Landa, 1999). Shaw (1997) argues that employees nowadays are getting selfish in terms of knowledge sharing and willingness to contribute to the organization due to the erosion of trust towards their leaders. Consequently, employees decrease their confidence in work and also their organizational commitment. The management literature tends to emphasise the importance of the trust and commitment of employees towards their managers. It is believed that a successful leadership practices in work place promotes greater productivity and commitment among employees (Connel, Ferres Travaglione, 2003). The nurturing of relationship between managers and employees is very important. This is because a relationship that form with mutual trust and respect within all the members in an organization will prepare the organization to confront with difficulties and at the same time create a harmony situation (Kouzes Posner, 2009). A good leadership practices by the managers in the company will increases employees organizational commitment. This can lead to desirable workforce behaviour. Therefore, it needs to be determined if there is a correlation between five leadership practices and organizational commitment among managers in Malaysia. Objectives of Study Generally, this study attempts to investigate the influence of each of five leadership practices on organizational commitment. Specifically, this study aims to: Examine the influence of challenge the process leadership practice on organizational commitment. 2) Examine the influence of inspire a shared vision leadership practice on organizational commitment. 3) Examine the influence of enable others to act leadership practice on organizational commitment. 4) Examine the influence of model the way leadership practice on organizational commitment. 5) Examine the influence of encourage the heart leadership practice on organizational commitment. Today, the movement and speed of the organization in terms of structure, systems, and processes change rapidly. This scenario has increases the need for the organization to train their managers to become better leaders and better (Skipton and Fred, 2010). This study focused on the effectiveness of the leadership practices implemented by the managers in the attempt to influence organizational commitment of their subordinates. Leaders are the group of people that have the ability to lead the subordinates towards desirable objectives even in a diverse situation. This study is conducted among managers in different organization and work place and aims to determine the levels of organizational commitment and leadership practices among manager. Research Question This study will be guided by the following research questions for the purpose of answer the research objectives above. To what extent leadership practice of Challenge the process influence organizational commitment? To what extent leadership practice of Inspire a shared vision influence organizational commitment? To what extent leadership practice of Enable others to act influence organizational commitment? To what extent leadership practice of Model the way influence organizational commitment? To what extent leadership practice of Encourage the heart influence organizational commitment? Hypothesis H1: Leadership practice of Challenge the process has a positive significant influence on organizational commitment. H2: Leadership practice of Inspire a shared vision has a positive significant influence on organizational commitment. H3: Leadership practice of Enable others to act has a positive significant influence on organizational commitment. H4: Leadership practice of Model the way has a positive significant influence on organizational commitment. H5: Leadership practice of Encourage the heart has a positive significant influence on organizational commitment. Conceptual Framework The research of Kouzes and Posner (2003) shown that leadership was a set of practices that can be mastered by leaders through consistent training. In theory, the Leadership Practices Inventory was created in order to have a consistent research on all levels of leaders (Kouzes and Posner, 2006). The purpose of this study is to determine if 5 types of leadership practices is related to the levels of organizational commitment among managers in Malaysia. The independent variables of this study are leadership practices of (a) Challenge the Process, (b) Inspire a Shared Vision, (c) Enable Others to Act, (d) Model the Way, and (e) Encourage the Heart, while the dependent variable will be organizational commitment. The moderating variable of this study is the demographic details of respondents include gender, age, marital status, race, occupation, monthly income, education levels and working experience. Figure 1 shows the research framework of this study. Leadership Practices Q1 Challenge the Process H1 Q2 Inspire a shared vision H2 Q3 Enable others to act H3 Organizational Commitment Q4 Dependent Variable Model the way H4 Q5 Encourage the heart H5 Independent Variable Figure 1: Research Framework Significance of Study Leadership is not something that is difficult and impossible to explain, and it can be understood by ordinary people (Kouzes Posner, 2003). This study will be beneficial to all managers and leaders of different organizations in Malaysia. Through this study, managers get to design leadership programs base on 5 leadership practices. Leadership practices can provide an appropriate and understandable model for the managers in conducting their leadership program. Besides that, leaders that fully understood the 5 leadership practices will lead to a good performance of their team in the organizations. This is because leadership practices conducted by the leaders will receive feedback of the employees in the end of the projects and this will improve their attitudes and behaviours to become better. Leadership practices suggested 5 types of practices should be posses by managers. Managers can improve and foster the relationship with their employees by implementing the leadership practices efficiently. It also increases the confidence of the managers while confront any crisis. Furthermore, leadership practices provide a platform and foundation in forming organizational commitment. Many young people that took leadership course for the first time already have more leadership experience then they realize (Kouzes Posner, 2006). So, this study also helps the part time students of Master Business Administration to obtain more information about leadership practices. This is because they are people from executive levels and have some experience in work place. They may have the chance to become a leader or manager in the future. Therefore, they will have the opportunity to demonstrate the leadership practices in their tasks as a group or team. Through these practices, the employee at executive levels or taking the courses of MBA will be able to improve their performance in work place and building their confidence especially in the time that need to have decision making. 1.7 Definition of Terms Following are some important terms used throughout this study: Leaders: The term leaders refer the body of people who lead a group of people in the organization. Leaders is the people that in charge or in command of others. Leadership: Leadership is a group of people of a particular organization. It is the ability to be a leader or the qualities a good leader should have. Leadership Practices: For the purpose of this research, Leadership Practices is viewed as the tasks of division managers, head of department or supervisor involving in one of the following: (a) Challenging the process, (b) Inspiring a shared vision, (c) Enabling others to act, (d) Modelling the way, (e) Encouraging the heart. Challenging the process: The process that leaders venture out into an unknown world or situation. Leaders constantly look for new and innovative products, processes, and services. Leaders also encourage their employees to challenge the former ways and attitude in doing their work. Inspire a shared vision: The ability of leaders to inspire a shared vision within the followers and spur out their commitment. It is the desire of leaders to change the way things are and create something new. Enable others to act: It is the ability of leaders enables others to act not by coercive power but by their sincerity to affect others. They strengthen followers capacity to deliver on the promises that they make and promote collaboration in the organization. Model the way: The ability of leaders to guide and lead the follows by setting a good example and role model. Leaders model the attitude and behaviour expected by their subordinates in order to achieve high standard of organizational performance. Leaders behaviours and attitudes are far more important than their words (Kouzes and Posner, 2006). The employees would rather believe the person first than the plan. Encourage the heart: The ability of leader to recognize and appreciate the contribution of the employees. Leaders create a culture of cherish the contribution of their followers and reward them for their achievement in order to retain the good employees. Organizational commitment: It is the willingness and feeling of responsibilities of the employees to work hard and contribute their energy and time to a mission or a task in the organization. Managers: A Manager is the person responsible for planning and directing the work of a group of individuals, monitoring their work, and taking corrective action when necessary.