Financial Analysis of Coles Ltd

Financial Analysis of Coles Ltd 1. INTRODUCTION 1.1 Purpose In this report my purpose is to do a financial analysis of Coles Ltd which provides a basis, on which the valuation of company can be done. 1.2 Scope This report conducts a financial analysis for Coles by performing a trend analysis of financial ratios using the data given for past 5 years. It also includes a cash flow analysis which along with financial ratios helps compare coles with its industry counterparts, Woolworths and Metcash; and finally this analysis would help in price valuation to calculate a fair price for coles share. 1.3 Methodology This report is based on primary data available from Coles website as well as secondary data such as research paper, electronic database and other publications. 1.4 Limitation Although all efforts have been made to use as much available information as possible but there were some constricting factors such as lack of available data of past financial information which restricted this research. Reliability of data and time constraints were also hurdle in performing this analysis. The biggest shortcoming was that current data was based on AIFR and data for years before 2005 was based on AGAAP, which made comparative trend analysis very difficult. 2. FINANCIAL ANALYSIS In this we will be evaluating the firms financial ratios and cash flow measures of the operating, financing, and investing performance of a company in relation to key competitors historical performance. Given the firms strategy and goals, together these tools allow the analyst to investigate and examine a firms performance and its financial condition. Ratio analysis is the tool which involves assessing the firms income statement and balance sheet data. On the other side, the cash flow analysis relies on firms cash flow statement. 2.1 Ratio analysis The ratio analysis deals with evaluation of the performance of Coles in perspective of its mentioned strategies and goals. In order to achieve this objective a combination of cross sectional analysis and time series analysis is performed. Workings of Ratios for 2006 are mentioned in APPENDIX 4. 2.1.1 Profitability analysis If we look at the return on equity (ROE) of Coles, for a period of 5 years, it is being observed that ROE has increased in 2006 as compared to 2002. Although ROE has fallen in 2006 (15. 30%) as compared to 2005 (18.30 %) but it can be seen that on an average Coles ROE has been stable or increased over last 5 years. Return on asset (ROA) has also been stable around 10% during the last 3 years and increasing from 7.17% in 2002 to 9.54% in 2006.The main reason for stable ROE and ROA are better performance delivered by the management and as well as the mature characteristic of the industry, that produces stable return as well as stable growth seeing population demographics in the country. Table 1 Profitability Ratio of Coles Ltd Source: Coles financial statement after adjustment Gross profit has been quite stable and good for the last 5 years but the concerned part is the net profit margin. Net profit margin has been very low, it had been increasing from 2002 to 2005 but it again fell in 2002 to 1.57% from 2.08%. Coles need to reduce its operating and interest expenses so as to increase its net profit margin. Table 2 Profitability Ratio Comparison within the industry in 2006 On comparing the performance of Coles with its industry counterparts we can conclude that Coles Ltd is way behind its major competitor, Woolworths, in terms of ROE and ROA which might be attributable to lower net profit margin and lower financial leverage. Coles has higher financial leverage as compared to Woolworths and metcash, which means it, has greater financial risk. But despite of high leverage it has low ROE which confirms the fact that Coles has low net profit margin asset turnover ratio. 2.1.2 Activity Analysis A firms operating activities require investments in both short-term (inventory and accounts receivable) and long term assets. Activity ratios describe the relationship between the firms level of operations and assets needed to sustain operating activities. Asset turnover is important in determining firms ROA; it also formulates reasons of how it will affect firms ROE. Evaluating the effectiveness of asset management is the purpose of asset turnover analysis. 2.1.2.1 Short term activity ratios Working capital is our main concern while evaluating a company. It can clearly be observed that since Coles has high turnover ratios it uses cash basis in its sales. It can be clearly being seen that it took only 4.48 days on an average for Coles to convert its inventory investment back in to cash. From the figures last 5 years we can clearly interpret that Coles has drastically improved its cash conversion cycle from 23 days in 2002 to 4.48 days in 2006. Table 3 Short-term Activity Ratios for Coles Ltd Table 4 Short-term activity ratio comparison, 2006 Now, if we compare Coles with its competitors we can see that Woolworths has lower cash conversion cycle and metcash has higher cash conversion cycle. Woolworths has lower cash conversion cycle because it keeps inventory in stock for shorter duration and stock is converted in to good sold in less span of time. On the other hand Metcash keeps inventory in stock for lower no. of days but it provides more no. of days to its receivables for payment due to which it has higher cash conversion cycle. Seeing the industry it can be concluded that Coles has good cash conversion cycle but it can improve on it by reducing the Average number of days for which inventory is in stock. 2.1.2.2 Long term activity ratios In the analysis of long term activity ratios, long-term asset turnover and property, plant and equipment turnover have been utilized. Table 5 Long term activity ratios for Coles Ltd On the whole both ratios moved in the same pattern during these periods. Relatively, this pattern shows that asset utilization has improved uniformly for the period ranging from 2002 (310.12%) to 2006(372.70%). This helps to conclude that company is continuously improving its utilization of assets to increase its production. Table 6 Long term activity ratios comparison, 2006 While comparing to its competitors it can be seen that Coles total asset turnover ratio is approximately 30% higher than its competitors. It helps to analyze that Coles is more efficiently utilizing its resources to increase its production as compared to its competitors. Metcashs high PPE turnover ratio can be contributed to the fact that PPE forms a very small part of Metcashs total assets. If compare Coles with its major competitor Woolworth on PPE Turnover Ratio we can conclude that Coles has been utilizing its fixed asset better than Woolworths. 2.1.3 Liquidity Analysis Liquidity is referred to a firms ability to have sufficient funds when needed and convert its non-cash assets in to cash easily. Liquidity Ratios are employed to determine the firms ability to pay its short-term liabilities. Liquidity analysis enables us to determine Coles ability to cover its liquidity risk. Liquidity risk may arise due to shortfall or over liquidity within the firm and this in turn lead to firms disability of fulfilling its liquidity needs. In order to determine firm liquidity level, Current ratio, quick ratio and cash ratio are short- term liquidity ratios which have been employed. Table 7 Coles Short-term Liquidity Ratios On doing the trend analysis for last 5 years it can be observed that Coles current ratio has been consistently falling, which increases the possibility that Coles will not be able to meet up its short term liabilities. Current ratio has fallen from 1.37 in 2002 to 0.98 in 2006 which is of major concern, as a current ratio of less than 1 means that company has negative working capital and is probably facing a liquidity crisis. The more stringent measure of liquidity is quick ratio and cash ratio which have also been falling uniformly in last 5 years. It seems Coles is falling in to liquidity crunch and might need short term funds to meet its current liabilities. There has been lot of volatility in the cash ratio of the firm as they have been rising and again falling, so we can conclude that Coles is not able to maintain stable liquidity. Table 8 Short term liquidity ratios comparisons, 2006 As compared to its competitors Coles has better current ratio than Woolworths but has current ratio less than Metcash. Comparing Coles with its major competitor in retail sector, Woolworth, we can clearly see Coles has better current cash ratio but is behind on quick ratio. On comparing with metcash we see that Coles is behind on all the short term liquidity ratios by a very high margin. Metcash has twice the cash ratio as compared to Coles, which makes Coles ability to meet its short term liabilities questionable. 2.1.4 Long term Debt and solvency Analysis The analysis of a firms capital structure is essential to evaluate its long term risk and return prospects. The long term debt and solvency ratios which we are going to use here are debt to equity, debt to capital and interest coverage ratio. Table 9 Coles long term Debt and Solvency ratios As indicated by Coles debt and long term solvency ratios, it denotes that firm is not a solvent company and relies heavily on debt financing. The firms debt to equity and debt to capital ratios are consistently above 1.00 which shows that Coles employed more debt than equity as its source of financing. Debt to total capital has also been consistently been around 0.55-0.60 during the 5 year period. This shows that firm has been stable with its financing policy and has not done much change with its debt and equity mix. Since it relies so heavily on debt financing, issues can be raised regarding its ability to pay off the interest arising due to long term debt financing but we see that company has EBIT 7 times more than the interest charges it has to pay, so that should concern much. It can be observed interest coverage ratio has declined in 2006, as compared to 2005 2004, but it is still able to meet industry benchmarks. Table 10 Debt and Solvency ratios Comparison 2006 Compared to its competitors, long term solvency ratios of Coles seem to be performing optimally. Woolworths has got the highest debt to equity, debt to capital interest coverage ratio. Historically a debt to equity ratio of 2:1 is considered optimal so Coles can still rely on debt to finance its future undertaking rather then issuing new shares. It can be observed that Coles has interest coverage ratio greater than Metcash but less than Woolworths but that can be attributable to its low profit margin as compared to Woolworths. It seems Coles is at par with its competitors in terms of debt and solvency ratios. 2.2 Cash Flow Analysis Cash flow analysis is essential to understand that whether the firms cash flow have the ability to sustain the business, to meet unexpected obligations and to meet its short term liabilities. This also helps to understand whether firm will be requiring additional financing and firm can take advantage of new business opportunities as they arise. In cash flow analysis we will evaluate 3 ratios; Operating cash flow to current liabilities, Interest coverage (cash flow basis) operating cash flow to dividend payment. Methodology for calculation of cash flow ratios is shown in APPENDIX 5 Table 11 Cash flow ratios for Coles Ltd Based on the table above, we can say that Coles has the ability to service its debts which can be seen in firms interest coverage ratio from cash flow basis. Moreover, we observe that Op. cash flow to dividend payment has fallen over the time span from 2002 to 2006 which could be an area of concern. Operating cash flow to current liabilities has also fallen a bit, which means it can be a problem for the firm if certain unexpected obligation come up due to which it might require additional financing. Table 12 Cash flow ratios Comparison, 2006 If we compare Coles to its competitors in the industry which it operates we observe that Coles has got better interest coverage ratio (cash flow basis) as compared to Woolworths Metcash which means that Coles has better ability to service its debts than its counterparts. Coles also has a shortcoming in operating cash flow to dividend payment ratio, as it can be seen it has the lowest operating cash flow to dividend payment ratio. It can be attributable to the fact that it pays more dividends than it should pay. So it can be concluded that Coles needs to reduce dividend payment as it might lead Coles in to financial difficulties if some unexpected obligations turn up. In terms of operating cash flow to current liabilities we see that although it has fallen substantially for Coles in last 5 years but it is at par with its biggest competitor Woolworths greater than Metcash. 3. Prospective analysis Prospective analysis enables us to determine future performance of the firm based on historical performance of the company. Here will be determining the mean return for sales and earning before interest taxes (EBIT) . Using those mean returns we will be making a sales forecast and EBIT forecast. 3.1 Sales and EBIT forecast In determining the sales growth, I have considered the following assumptions- Past trend of sales is going to continue in the following years. Firm is not going to bring a major change in its pricing policy. The foundation for sales EBIT growth is historical sales EBIT growth and I have used mean reverting model to determine the future sales growth, in which future sales EBIT growth will be mean return of last 4 years sales growth. I have not taken the 5 year sales EBIT growth because EBIT growth rate is to high in 2002 (73%) which could adversely effect the mean return considering present situation of Coles. Table 13 Sales EBIT Growth Rate for Coles Ltd Using the mean reverting model we are able to find out a growth rate of sales for 7.64% EBIT growth rate of 11.87%. Using these growth rates we will be able to make a sales forecast EBIT forecast. This forecast will help in proper valuation of Coles on the basis of its predicted future performance. Figure 1 Line chart for sales EBIT growth Table 14 Sales EBIT Forecast for Coles LTD Using the growth rates we can forecast the sales and EBIT for Coles which helps an analyst in a fair valuation of the company. The main reason we use the sales growth as a base for forecasting, is that the majority of firm income is derived from its supermarket business. This forecast suffers from one serious shortcoming that EBIT growth has fallen from 34.31% in 2004 to 11.16% in 2005 and then to -17.07% in 2006 but we are still predicting a growth in EBIT of 11.87% in 2007 and thereafter. 4. Conclusion I have gone through the multi-step process of ratio analysis, cash flow analysis and prospective analysis to present a report on financial analysis of Coles ltd. During the process, I have identified that Coles is operating in a mature industry with small profit margins. I have performed ratio analysis, cash flow analysis prospective analysis which would help a great deal in valuation of Coles based on its current market situation. During the Ratio analysis I was able to conclude that Coles has got good activity liquidity ratios but the major area of concern is profitability ratios. Coles needs to improve its net profitability so as survive in this competitive environment. Cash flow analysis helped us to depict that Coles has cash flow ratios at par with its competitor, Woolworths, but Coles need to reduce its dividend payout as it is too high as compared to industry counterparts. By doing a prospective analysis I am able to forecast the future sales EBIT for Coles for next 4 years. Growth rate for forecast has been calculated using the mean return for past 4 years. This helps us to understand future growth of the company. I would like to conclude by saying that although Coles is competing in a low profit margin industry but it is the 2nd biggest company in the retail industry, therefore if it brings about certain petite changes in its financing and operating activities it can add a great deal to its shareholders value.

European economic community :: essays research papers

Britain's entry into the European Economic Community was a source of great conflict in Europe. There were suspicions that French President de Gaulle did not want Britain to enter in order to maintain his country's hegemony over the EEC. De Gaulle spoke of the cultural and institutional differences that would make Britain incompatible with the Six. The British governments motives were even questioned as to whether they only wanted to reap the economic benefits of the EEC. The following is my assessment of these situations according to the Salmon documents. Throughout document 23, Prime Minister Macmillan continuously states, " I must remind the house that the EEC is an economic community, not a defense alliance, or a foreign policy community, or a cultural community. It is an economic community,† Although it is clear throughout the document that the British were aware of the wider political agenda of the Six, their main focus was certainly economic benefits. I do think, however, that The United states had a great influence on Britain's desire to join the EEC. In document 23, Prime Minister Macmillan discusses how remaining outside the EEC could cause Britain to lose its influence not only in Europe but in Washington as well. He fears that the U.S. would pay more attention to the issues of the Six rather than Britain. On the other hand, Britain's conditions for entering the union suggest that they are only interested in the economic benefits. Britain wanted the Six to agree that Britain would be free to create their own foreign policy, fulfill their pledge to the EFTA, plan their own economy, and safeguarding of British agriculture. These conditions made me think that Britain still wanted to be their own country and handle their own affairs, but still benefit from the economic situation in the EEC. It seems that deGaulle felt his country's hegemony over the EEC would be threatened if Britain were to enter the EEC. In document 29 a Gaullist minister gives reason for deGaulles veto of Britain's membership saying,† Now, with six members, there is five hens and a rooster. If you join [with other countries], there will perhaps be seven or eights hens. But there will be two roosters. That isn't agreeable,† It is clear that because of Britain's financial status and power that deGaulle feared his country would no longer be the final say in the EEC.

Article Analysis - Gun Control :: Constituton Bill Rights Right To Bear Arms

Article Analysis - Gun Control The article, Taking Aim at Gun Control by Daniel D. Polsby and Dennis Brennen was written October 30, 1995 for the Heartland Executive Summary. The article deals with current gun control issues, and uses both statistical information, and emotional ideology to convince you of the authors’ opinion. The article is broken down into five sub topics, that are each supported by statistical information. In the first sub topic the main heading claims, "There is no relationship between the number of privately owned guns and the amount of violent crime in the United States." It is then supported with the statistics that gun ownership has increased by forty-five percent, and the homicide rate fell by ten percent. The article also quotes various studies taken from criminologists, such as Gary Kleck and E. Britt Patterson. The authors tend to begin their argument with factual information. They then use that information to cultivate their emotional argument. This can be seen in each of the sub topics. The first three topics, "There is no relationship between the number of privately owned guns and the amount of violent crimes in the United States," "There is no relationship between gun control laws and violent crime," and "Data from the City of Chicago cast further doubt on the effectiveness of gun control laws," use studies and statistics to prove their point. The last two sub topics, "Why do gun control laws fail?" and "What do we do about crime and violence?", offer the authors’ emotional argument. This is the section of the article where the true opinion of the two authors is seen. They sum up their beliefs, with what they consider to be a better solution to improving society without gun control. They suggest that by educating the public on proper gun safety and handling, fewer people would be hurt. It is also their belief that by making guns more accessible to responsible citizens, criminals would be less likely to commit acts of violence. They speculate that an armed society would be able to prevent criminals from perpetrating a crime before it is even committed.

The Branding of IKEA Essay -- Business Management Studies Essays Paper

The Branding of IKEA Company background The first catalogue was introduced in 1951 and with this the founder saw his chance to expand his business on a larger scale, and this was the year he decided to completely focus on low-price furniture, as from the beginning IKEA sold mainly matches, watches, Christmas decorations, picture frames and jewellery. In 1956 the company came up with the concept of 'flat-pack' self-assembly furniture. The first international IKEA store was introduced in Norway in 1963, and was soon followed by the opening of stores in Denmark, Germany, Australia, Canada, and Austria. In 1987 the first IKEA opened in the UK, and in 2001 the company had 143 stores in 22 countries. Today we are the leading furniture retailer in the UK with a 12.1% before MFI and DFS. Our Brand - an introduction The brand name is associated with feelings, attitudes or different meanings, and in our minds it is connected with a certain image. All inspired by the logo, design or colour. Branding is a way to differentiate one company, its service or product, from competitors. But also to provide it with a personality which is both appealing and unique to their potential customers. It is a multifaceted, disciplined and multilayered process. IKEA is seen as friendly, quirky, trendy, social, young, independent, witty and relaxed. Usually the personality of a brand is described as a person, with its different characteristics. The importance of branding In the past decade companies are starting to see their brand assets, and with this branding has taken on a greater significance. So today brands are more than just marketing slogans and logos. All businesses are building their brands through certain actions and in their actual presence they find a 'position' in the mind of consumer and prospects. This is based on experience and exposure of the brand in the competitive marketplace. There are certain advantages to take into account in a Brand Strategy; Financial Advantages, Strategic Advantages and Management Advantages. The financial advantages may be higher sales, and for the companies with more market shares; higher margins. IKEA is one of the leaders in its market place, and therefore many other brands in that particular sector may be 'hitchhiker' brands following us and other leaders (such as MFI and DFS). Strategic Advantages... ...ours, and the name written across in bold letters. It is very much a trademark and this same logo has been used from a very early stage. Conclusion I hope this will help you understand the importance of branding within IKEA. Our company has been a worldwide success for so many years, and this has already created an image in most peoples minds, they associate the name IKEA and the logo with purchase or from one of the award winning advertising campaigns which have been run throughout the world. It is incredibly important to build brand awareness when introducing a new product onto the market, and our company has already achieved this, but there is still the need to maintain customer and market. Bibliography * Mintel (2002) * Internet * San Juan de la Pena website * Rieboviz, Rik * De Chernatony, Leslie (2001) From Brand Vision to Brand Evaluation, Butterworth-Heinemann * Brassington, Frances, Pettitt, Stephen (2000) Principles of Marketing, Prentice Hall * Butterfield, Leslie (1999) Excellence in Advertising, 2nd edition, Butterworth-Heinemann * Nilson, Torsten H (1998) Competitive Branding, John Wiley & Sons Ltd.

As We Acquire More Knowledge Essay

As we tend to know more about something we tend to take things to another level. This could be challenging for some and for some it may be the thing they were looking for. I agree to an extent that as we acquire more knowledge, things do not become more comprehensible, but more complex and mysterious. However, it highly depends from person to person, the type of knowledge we acquire and lastly the way in which we acquire that knowledge. Going the extra mile for some may be challenging and for some it may be their start of interest. It depends on the type of person you are, whether you are someone who likes challenges or whether you are someone who is afraid to go an extra step into exploring more and more knowledge. For most people acquiring more knowledge may be mysterious because in the end of the day you are putting your shoes in a different zone. This zone might be a zone where you are not comfortable in or a zone where you have not been in there before. For example, studying about a different element that you may have heard of but have not yet gone deep into. Knowledge for some may start to get complex but this is because you end up in a zone you were not in before. However, for some they would not see this as a challenge or complex, but more of the fun they were looking for. Secondly, this depends on the type of knowledge you try and acquire. Some knowledge might require more effort to be put into it and some may require less. For example, if we were to acquire knowledge about something we have been acquiring for a long time, then our sources for this type of knowledge would be easily gathered. However, if the knowledge we try and acquire is new, then it is likely that we will find challenges in finding more information or collecting about it. It also depends on what the knowledge is about. For some, obtaining a certain type of knowledge is an easy task to get a hold of and this may be because the person has experience in this field. Lastly, it highly depends on how we acquire information or the process of acquiring knowledge. How we acquire knowledge depends on several factors such as: knowing a reliable source to get information from, the way this knowledge is been delivered and how interpret it. Having a reliable source to acquire knowledge may be the start of how we can overcome complexity. This is because our source leads us to many materials that we can use to secure more knowledge. The way we are given this source or taught this knowledge also plays a big roll in complexity. For example, if we were taught bad habits in gathering knowledge or the way this knowledge is been taught to us to be dull then we will struggle with acquiring more knowledge. It also depends on how we interpret this knowledge. If we interpret this knowledge with a lot of excitement and concern then it is most likely that we are not going to find problems along the way. In conclusion, as we acquire more knowledge, things do not become more comprehensible, but more complex and mysterious to some extent. This is because this it depends on the type of person you are, the form of knowledge you are obtaining and lastly the process of gathering knowledge.

Ethics in Animal Research

In terms of ethics, the master(prenominal) issue in wildcat interrogation is simply that many another(prenominal) experimental puppets conform to in ship canal which are affected to them. Through the theatrical role of genetic manipulation, pear-shaped mice , diabetic mice, and mice with Huntingtons disease apprize be created. Surgical experiments can be performed on larger animals such as pigs, sheep, and dogs, as practice for human surgery. Normally, such things would non happen to these animals.Any hapless they efficacy experience during such experiments is totally the making of the searcher and often these animals are purpose-bred and would non even exist if it were not for the explore. These animals have been bred by us, for our physical exercise, and suffer on our behalf. As humansthe dominant species on the planetwe can treat animals in any way we choose, and do with them what we please. The fountainhead is, is it moral, or ethical, to treat them in ways w hich cause suffering even if it is to our wellbeing?To some opponents of animal experimentation at that place are no benefits which justify the use of animals new(prenominal)s believe that animal experimentation is bankable providing that suffering to the animals is minimized. Still others oppose animal testing selectively on the al-Qaida of the purpose of the tests, believing that animal experimentation for the advancement of medical science is unimpeachable, notwithstanding cosmetic testing is not, for example. Are brute Tests Reliable? Opponents of animal experimentation token to the obvious differences between humans and other animals as proof that animal research is not reliable.However, while its received that humans respond differently to certain(prenominal) substances than do other animal species (arsenic is not toxic to sheep, for example, and chocolate is toxic to dogs), at that place are many more similarities than there are differences and toxicology diff erences dont knock off the validity of genetic studies, for example. Another printing press issue is one which was first sonant in 1655 by Edmund OMeara, a physiologist, who said, the miserable torture of vivisection places the body in an unnatural state.If an experimental animal is in pain, or suffers in any way, during an experiment, might that not call into question the accuracy of any results gained in the research? And if this is the case, doesnt this further question the ethics of animal research? After all, using animals in this way is even more hideous if the accuracy of the results is in any inquiry at all. The ability to strive reliable, duplicable results is a cornerstone of the scientific method, and it is all-important(a) that animal testing is able achieve those results A Matter of PracticalityThe majority of the nigh important advances in medical explanation in the twentieth century were make using animals as test subjects. It is doubtful whether many of t hese would have been achieved if animals were not getable for use by medical researchers. thither are alternatives to animal research (these lead be examined in the next term in this series), but in many cases they are simply not acceptable substitutes for a living, breathing organism.The Institute for testing ground Animal Research of the U. S.National honorary society of Sciences agrees that even the roughly sophisticated reckoner modeling is currently unable to successfully model the molecular and cellular interactions that devolve in even the least abstruse of live organisms, particularly in an environmental context. Medical science is in agreement, for the most part, that the use of animals in medical research is a practical necessity. Both the united States and the British governments , among many others, support the use of animals in research, provided that suffering of experimental animals is minimized.

Prejudice, Stereotyping, and Discrimination Essay

Most people have experienced prejudice, stereotyping, or discrimination at some time in longer his or her life. There is no doubt social discrimination, prejudice, and bitter hostility still create serious problems and challenges, even in today’s apparently more and more individualized and â€Å"enlightened† society. This paper will discuss prejudice, stereotypes, and discrimination in the context of personal social psychology; what the consequences of stereotyping and discrimination are; and strategies to improve attitudes, judgments, and behaviors.Social psychologists recognize prejudice, stereotyping, and discrimination â€Å"by focusing on whether they involve feelings (affect), cognition, or behaviors.Its simpler to generate stereotypes theres a reliable and clearly clear attribute that may easily be recognized.Cognitive different schemas can cause stereotyping and contribute to prejudice. Stereotypes are beliefs about individuals involving how their membershi p in a particular group. These beliefs can be positive, negative, or unbiased.Stereotypes concerning gender, ethnicity, or profession is common in many societies.Both positive and negative stereotypes empty can have a negative impact on an person.

† (Feenstra, 6. 1 Prejudice, stereotypes, and discrimination, sub para 1). Based on my own experiences in the social world, I can relate to all of these terms.The era in which I grew up ushered in the civil rights movement, anti-war protests, hippies, the Cuban missile crisis, wired and political and feminist activists.It may get down in birth.Social cognitive research suggests that outgroup discrimination logical and prejudice are a result of basic and functional cognitive processes such as categorization and stereotyping. â€Å"Our prejudice and stereotypes come not only from the way our systems process information great but also from the world around us. Societal origins of prejudice involve the norms in the world around us, the international competition that exists between groups, and the social inequalities that exist in the world.Ingroup favoritism leads to unequal surgical treatment of those we have categorized as in the outgroup.Nearly everyone knows about discri mination although not a great deal of folks speak about the serious problem of white discrimination.

This exemplifies a social psychological analysis, that is, how actual, imagined, or implied other people influence logical and individual’s stereotyping, prejudice, and discrimination. † (Fiske, 2000, P. 303).Categories help us deal with large small amounts of information.It does not necessarily end with wealth.4). Competition for resources can also create prejudice. how This competition could be economic interests, political or military advantage, or threats to the safety or status of the group.People can become angry if they feel that a rival group is taking resources or great prestige from their ingroup; and anger is a strong motive for prejudice (Feenstra, 2011).Its a major problem in everyday lifestyles.

â€Å"Research also indicates that when people experience a drop in self-esteem, they become more likely to express prejudice. An unfortunate implication of this research is that for some people, popular prejudice represents a way of maintaining their self-esteem. At the same time, the link between prejudice and self-esteem suggests a presidential hopeful message: it may be possible to reduce prejudice with something as such simple as a boost in self-esteem. † (Plous, n.Its seen in the film too.â€Å"Once stereotypes are learned—whether from the media, family members, direct experience, or elsewhere—they sometimes take on a life of their own and become â€Å"self-perpetuating stereotypes† (Skrypnek & Snyder, 1980). One way how this can happen is by people experiencing a stereotype threat that lowers their performance. Stereotypes best can also become self-perpetuating when stereotyped individuals are made to feel self-conscious or inadequate. † (Plous, n.Its in the quantity of such discrimination thats antilocution.

â€Å"The roots of prejudice are many and varied. Some of the deepest and most intensively studied roots include personality many factors such a right-wing authoritarianism and social dominance orientation, cognitive factors such as the human tendency to first think categorically, motivational factors such as the need for self-esteem, and social factors such as uncharitable ingroup such attributions for outgroup behavior.Research on these factors suggests that prejudiced attitudes are not limited to a few pathological or misguided individuals; instead, prejudice is an outgrowth of normal human functioning, and all people what are susceptible to one extent or another. † (Plous, n.It can create prejudice.Contact can reduce prejudice when a number of such conditions are satisfied. Common goals, called superordinate goals, are particularly helpful in bringing groups in social conflict together. † (Feenstra, Ch. 6 Summary).Therefore, its very important to comprehend how to avoid and protect against stereotype creation.

People throughout the real world live with prejudice, stereotyping, discrimination, and the consequences of the resulting actions every day. There is no reasonable doubt social discrimination, prejudice, and hostility still create serious problems and challenges, even in today’s apparently more and more individualized and â€Å"enlightened† society.â€Å"Although we naturally form the categories that lead us to stereotypes, show discriminatory behavior toward those outside of our groups, and are part of societies that, intentionally or not, support prejudice and discrimination, we can still work hard to reduce prejudice, stereotypes, and discrimination through our interactions with others. † (Feenstra, Ch.Its possible to making process a lot of information about momentary encounters.Self-Fulfilling Prophecies. Retrieved from http://users. ox. ac.The behavior must be something thats realistic.

Bridgepoint Education, Inc. Fiske, S. T. (2000).Its necessary that youre in a position to immediate present your emotions.ubc. ca/~schaller/Psyc591Readings/Fiske2000. pdf Kabat-Zinn, J. (2010).Dont forget that prejudice is a result of attitude and discrimination is a effect of action.

& Wenzel, M. (1999). Social discrimination and tolerance of intergroup relations: Reactions to intergroup difference.Personality logical and Social Psychology Review, Vol.Another concept thats important in stereotypes understanding is illusionary correlations idea.uni-jena. de/ss2009/sozpsy_uj/86956663/content. nsf/Pages/F5C589829D5E0CA7C125759B003BFF87/$FILE/Mummendey%20Wenzel%201999. pdf Plous, S.The motives might be absolutely different.

Wesleyan University. Retrieved from http://sscholar. google. co.Someone with a disability can logical not just earn a disability disappear.Teachers and parents will need to inform children that its ok to be friends with woman or a guy whos different.Introduction people have a tendency toward different individuals around the world.