The State of Sovereign Wealth Funds Essay Example | Topics and Well Written Essays - 2000 words

The State of Sovereign Wealth Funds - Essay Example The commonly utilised value for price volatility is the percentage, which serves to eliminate the problems presented by changing currency values, when presenting volatility of commodities available globally. In most circumstances of international commodity price volatility, economists normally utilise a common currency, like the dollar to represent volatility. International businesses, however, present the calculation of volatility in terms of percentage of a specified figure. Volatility normally revolves around measurement of dispersion observed in numerous securities or market index. The calculation of volatility enables economists to predict the amount of uncertainty existing for given commodities. The uncertainties are normally presented by notable changes observed in the commodity prices. These changes are utilised in making predictions concerning stability of stocks and expected changes, based on previous observations. Volatility represents commodity risk and high volatility in dicates high investment risk in such stocks. The risk is normally presented by anticipated change, with stocks having high volatility being marked as expected to have dramatic price adjustments over a short duration. Price fluctuations remain a fundamental constituent of calculated volatility values established by economist. Stable commodities customarily experience minimal fluctuations; hence lower volatility for such commodities. Stability in commodity prices does not occur often within the free market economies as demand and supply change continuously. Expanding boundaries of national economies dissolving into the global economy have contributed to increased difficulty in management of commodity price volatility. Technological advancements have contributed significantly towards a global shift in the living standards, consequently resulting in increased price volatility. Within the global economy, price control continues to become increasingly difficult because of the existing pol icy discrepancies among different countries. The concept of free market has continued to create an unprecedented, uncontrolled flux in pricing within the global market. Increases in commodity demand against the available supply continue to have a negative impact on the prices, causing increased price volatility. Investors, within the business world, commonly rely on volatility when making numerous investment decisions. Through volatility the individuals can make estimations of expected returns on investments, based on security volatility. Management of volatility remains a fundamental element for investors seeking success in the constantly changing commodity prices in the free market. Though volatility could be utilised in making future predictions, numerous changes could be initiated in the management process of volatility, consequently avoiding the adverse effects created by high volatility. The business decisions made following estimations from volatility consist of numerous assu mptions. One major assumption in estimating volatility remains the unchanging business environment, enabling constant business conditions. Though calculations remain accurate, as they are based on current market prices, the prevailing business conditions resulting to the result cannot remain fixed. Governments, for example, might introduce regulations and policies seeking to protect investors from adverse effects of volatility. Changes in the business

Assessments instead of online discussions and seminar Essay

Assessments instead of online discussions and seminar - Essay Example The purpose of an industry analysis is to assist an industry’s management to create and maintain a competitive advantage that helps a company to prosper in the market. Industry analysis needs to understand the structure of an industry and its attractiveness because it determines the profitability of a business (Hill and Jones, 2010:41). The level of industry profitability is not random but it rather has a systematic influence of the Industry’s structure, which eventually determines the entry and exit barrier. This paper will analyze the industry analysis applied to different industries in European markets (1) - Industry Analysis Analysis of five forces using UK Airline industry as our case study Porter arguers that there are five forces that determines an industry’s competitiveness that may change over time as the industry conditions change. These forces are entry threats, rivalry from existing competitors, threat of substitution, bargaining power of suppliers an d the bargaining power of buyers (Porter, 2008:6). This paper will outline the five forces that the European airline industry put into practice. Competitive rivalry (European airline industry) Competitive rivalry will be the first force to analyze. The purpose of competitive rivalry is to assess the rate of competition within an industry (Porter, 2008:29). Airline industry’s is among the prominent industries globally that exist in an intensive competitive market. In Europe, the top three airlines are Air France, Lufthansa, KLM and British Airways. These airline companies compete against each other for the same customers through prices, technology, in-flight entertainment customer service and other services (Rothkopf, 2009:213). Entrants’ threat New entrants invade the existing market and bring competition and changes in the market environment. The cause of new entrants is the profitability in certain industries, which in turn attracts other businesses who intend to joi n the industry (Porter, 2008:7). European air industry has improved tremendously which has led to attraction to new entrants; however, the cost of entry is becoming higher. The required capital for an airline entering the industry is quite expensive. Competitive substitute The products and services provided in a particular industry usually have the same substitutes elsewhere. This substitute products and services pose a threat because they limit the ability of a firm and their prices (Porter, 2008:25). In our case, the main substitutes that offer other forms of transport are road, rail and marine. The distances between European destinations are relatively small, and people prefer other transport services. More so, the substitute means of transport tend to be cheaper than air transport. Additionally, environmental factors affect air travel because customers tend to see the environmental impacts of air travel as crucial disadvantage. These factors pose threats to the British airways i n the business market. Supplier bargaining power Bargaining power is the ability to influence setting of prices because it assesses the ease of suppliers to hike prices (Porter, 2008:26). Suppliers can influence the profitability of a firm by exerting pressure for both higher and lower prices. The airline industry have little control over the rising fuel prices because there is no alternative source of fuel so far hence leading to the strength of supplier power (Porter,