Economic Analysis Of The Us Airline Industry Economics Essay

Economic Analysis Of The Us Airline Industry Economics Essay An economic analysis on the nature of competition, collusion and pricing in the US domestic airline industry was conducted primarily on the nature of the oligopoly market structure of the airline industry. The impact of deregulation was performed and analysed including mergers and acquisitions. An analysis on the prospect for low-cost carriers (LCCs) was also conducted including measures to ensure their long term survival when competing with full fledged carriers. Finally, an impact analysis of the global recession on the airline industry was conducted. Measurements that could lead to a sustainable recovery for the airline industry was reviewed and highlighted. INTRODUCTION The airline has experienced phenomenal growth since the first US airline began operating between Tampa and St Petersburg, Florida on January 1st 1914. Today, supersonic aircraft fly routinely across the oceans, providing travel and employment to many travellers. The airline industry has global operations and the competition between them is extremely high. During the early days, strategic interest in aviation outpaced the financial viability of fledging airlines. Government support intensified worldwide as financial instability deepened due to the Great Depression of 1930s. During this period, military interest in aviation received further boost from rising geopolitical tensions. International service was governed by tightly controlled bilateral agreements, restricting the number of cities that could be served typically by a single carrier from each country. In many cases, these agreements negotiated market allocations across carriers that were enforced through capacity restrictions or revenue division agreements. Prices generally were established jointly by the airlines themselves in consultation with the International Air Transport Association (IATA), the industrys largest trade group, subject to approval by each carriers government. Nevertheless, government intervention failed to achieve satisfactory results in terms of overall economic performance. With deregulation in 1978, it has helped to stimulate more competition in the US airline industry with the influx of small, low-cost carriers. A recent National Bureau of Economic Research (NBER) working paper analysed the changes that have occurred in pricing, service and competition in the airline industry since the industry was deregulated in 1978. The study found that fares have declined since deregulation and efficiency has improved, but the volatility in industry earnings has continued and average earnings have declined. The average returns that the airlines have earned since deregulation are almost certainly insufficient to sustain the industry in its current state. The profitability of the airline industry is quite cyclical because travellers demand is sensitive to the overall performance of the economy. Yet, airlines must predict this demand accurately because of the lead time required to acquire aircraft. When airlines over predict demand, they would suffer losses. The IATA has recently doubled its forecast for losses in 2009 to US$9 billion and warned that the economic problems would continue for some time. The forecast was slightly better than the loss last year. But it was significantly worse than the associations projections in March this year that estimated a loss of US$4.7billion for 2009. Coupled with competition from low-costs carriers (LCCs) could further undermine the profitability of full-service carriers (FSCs). However, some industry experts believe that both will survive in parallel without losing many customers to each other. It is argued that LCCs induced either an additional demand or won clients for the air traffic, which would have gone otherwise by train or car. There is however, a concern that LCCs have turned the luxury service of fast travel with its implicit environmental damages into a day to day service for more and more people. The airline industry is in the midst of a dramatic restructuring. Many reasons have contributed to its fall in revenue. Some key success factors determine the success of the airline industry. Analysts say that the airline industry is likely to remain unstable and price increases are inevitable due to increasing costs. Furthermore, the rising concern for global warming and IATAs recent decision to cut emissions by 50% by 2050 is also likely to have some implications for cost of flying and profitability of the airline industry. The report has reviewed the structure of the airline industry and the nature of its competitions with specified focused on the airline domestic market including emerging competition from LCCs and the impact of globalised recession on the airline industry. NATURE OF COMPETITION, COLLUSION AND PRICING The enactment of the Airline Deregulation Act of 1978 eliminated price and entry regulation of the US domestic airline industry. [1] Since then it has grown tremendously. The US domestic market basically competed in an oligopoly landscapes. Hence there is certain level of barriers to competition like control over the computerised reservation systems used by travel agents have provided main carriers with a powerful weapon for disadvantaging smaller competitors. For example, American Airlines Sabre system and Uniteds Apollo system together accounted for three quarters of all national computer reservation systems in the late 1980s. Control of this important avenue for travel agents to make reservations enabled the majors to discriminate against smaller firms in a variety of ways from instituting screen bias favouring the on-screen presentation of the controlling firms flights, to charging exorbitant fees to other carriers for displaying their flights on these computer systems (transferr ing upwards of a half-billion dollars annually from the smallest to the largest carriers). [2] More recently, the Big Five carriers have joined together to collectively market their tickets online through their Orbitz Travel Web site [6], an alliance that may enable them to better coordinate their non-competitive oligopoly pricing and to circumvent rules put into place to prevent them from anti-competitive using their computer reservation systems while, at the same time, disadvantaging competing distributors of air tickets. [3] Predatory Pricing Dominant carriers were suppressing competition through predatory pricing. For example, when Spirit Airlines attempted to penetrate Northwests Detroit hub with a one-way Detroit-Philadelphia fare of $49, Northwest Airline responded by slashing its average fare on the route by 71% (from $170 to $49) and scheduling 30% more seats. Once Spirit abandoned the route, Northwest raised its fare to $230 and cut its seat capacity.[4] Similarly, when Frontier Airlines initiated service from Denver (United-dominated hub) to Billings, Montana, it offered an average fare of $100 which was half the prevailing fare charged by United. United, in turn slashed its fare to match Frontier. When Frontier exited the route, United raised its fare above its original level. [5] Collusion Collusion is a difficult game to play when the number of conspiring rivals is large. It is hard to keep a hundred firms in line when their cost structures differ, when their production facilities vary, and when some have an incentive to cheat on a price agreement or to violate output restrictions. Numbers make a difference. When numbers are large, conspiracies are difficult to organize, difficult to conceal, and difficult to enforce. However, public policy faces a serious challenge in oligopolistic industries like the case of the Airline industry where major carriers eschew outright collusion and rely instead on a course of conduct characterised as tacit collusion, or recognition of mutual interdependence to resemble the effects of outright conspiracy. The mechanics of tacit collusion is apparent particularly in an oligopoly market dominated by a few major players. Each carrier naturally recognises the mutual interdependence between it and its rivals. For example, Carrier X knows that it if were to cut price in order to increase its market share, its aggression would immediately be detected by carriers Y and Z, which would respond with retaliatory price cuts of their own. Market shares would be unaffected, but all carriers would now operate at lower prices and profits. Henceforth, Carrier X cannot expect to increase its market share or revenue at the expense of its rivals. It cannot afford to calculate in terms o f maximising its own profits in isolation but instead must constantly ask whether a particular decision on price or output will be not only in its own self-interest, but also in the best interests of its rivals. By recognising mutual oligopolistic interdependence, it must be concerned with group profits and group welfare. In other word, under oligopoly landscape, independent, aggressive, genuinely competitive behaviour is perceived as counterproductive-an irrational strategy for the individual carrier. In an oligopoly, groupthink will influence a carriers strategy when it is contemplating price increases as it cannot act alone. Hence, groupthink replaces the calculus of individual advantage, and each carrier must behave as a responsible member of the oligopoly group rather than as a reckless, self-seeking competitor. In oligopolies, this recognition of mutual interdependence may extend to non-price competition. For instance, if carrier X refrains from aggressive price competition but seeks to increase its market share through aggressive innovation program, it cannot expect its rivals to sit idly by. It must expect them to increase their research efforts as a simple matter of self-defence, th ereby nullifying its expected gains. Anticipating such retaliation which could erode oligopoly profits- carrier X might refrain from innovation for the same reasons it would avoid price-cutting. Rationality again commands responsible nonaggressive behaviours; the most effective profit-maximisation rule under oligopoly is to get ahead by getting along. Nevertheless, the level of oligopolistic interdependence and collusion varies from situation to situation.[8] It depends on such factors as whether the oligopoly is tightly knit (small number of firms) or loosely knit (a larger number);whether it is homogeneous or heterogeneous; whether it is symmetrical (having firms of roughly equal size) or asymmetrical (with one firm disproportionately larger); whether or not the industry is mature (having had time to develop its internal arrangements and institutions to promote cooperation); whether the industry is populated by reasonable managers or by a few mavericks. [9] In the US domestic market, the advent of the Internet has increased the efficient of signalling or collusion. Carriers can see what the competition is doing immediately by going to the Internet that allows them to react quickly to adjust their own prices. This is a far cry from the days when price books were set in type and could not be changed for months. Now most prices can be adjusted several times a day, if needed. Apparently, this is a game that the airlines are particularly adept at. As consumers have more transparent access to real-time flight pricing through online services like Orbitz Travel [6], the airlines are almost obligated to adjust to each other. This is particularly apparent on routes where there is no rogue player, like Southwest Airlines or JetBlue as they are (within limits) free to adjust prices upward. As long as the members of the oligopoly with real selling power tacitly agree that a major price war is not in their interest, chances are that prices can quickl y readjust themselves, keeping in mind the balance of costs and optimal prices for maintaining profitable sales levels. Fortunately, the combined market share of the Big Five network airlines (Delta, United, American, US Airways, and Northwest) that peaked in 1992 has been declining since deregulation. [7] Furthermore, with the influx of several low-cost carriers, tacit collusion is becoming difficult to organise, conceal and enforce even though oligopolistic rationality and its collusive consequences are inevitable concomitants of oligopoly industry structure. Pricing Pricing is important for the carriers. If prices are too low or too high, it can drag down profits. Thus, it is important for the carriers to derive profitable airfares and discourages unprofitable one. To maximise profits, the carriers should set prices so that marginal revenue just equals marginal cost. In other words, it should use profit-maximising prices as the starting point based on the economic model of pricing as shown in Diagram 1.0 which is called marginal cost pricing that clearly identifies a pricing strategy that will maximise profits. This pricing strategy also identifies the information needed to set prices, thus simplifying the process. In other words, the profit-maximising price is where the incremental margin percentage equals the reciprocal of the absolute value of the price elasticity demand. [8] Based on pricing rule, the carriers should adjust its price where there are changes in the price elasticity of demand or marginal cost since the carriers compete under oligopoly landscapes with homogeneous services. Airfares have dropped significantly over the years [10] since deregulation which helped to simulate competition resulting in the entrance of several low-cost carriers. This could partially be due to regulator and oligopolies increase efficiencies, putting direct or indirect price pressure on their suppliers as well as putting pressure on the wages and benefits of their employees. Hence, there is growing belief that oligopolies can be price-neutral as opposed to manipulating prices. The strategic variable for airline carrier is pricing in the short run. Generally without product and service differentiation, the basic service offered by the carriers would be rather homogeneous. Under the Bertrand model, the carriers which produce at constant marginal cost and compete aggressively on price in order to gain a bigger share of the market. Under such condition, the market equilibrium is perfectly competitive pricing. However, in a loosely knit oligopoly structure as in the case here, the individual carrier has incentive to offer heterogeneous services. Through heterogeneous services, it can charge personalised pricing or group pricing [9] based on passenger willing-to-pay to achieve higher profits. For example, if carrier X sells its airfares at a uniform price, it loses in two ways. Firstly, some passenger would be willing to pay more than $80 for a ticket during the last hour of the flight. Secondly the carrier does not sell to passengers who are willing to pay more than $50 but less than $60. This is illustrated in Diagram 2 below. By charging passengers at different price, the carrier could profitably sell to a much larger passenger base. Furthermore, with differentiated services, should one carrier cut its price below other carriers price; it would take away only part of the other carriers entire demand. Thus, carriers should have strong incentive to differentiate its offering in order to raise their equilibrium prices. However, there is a risk of loosing the market if the services are not on par with its pricing and demand. The carriers must balance their desire for market share at the same time avoid head-to-head price competition since the less differentiation in their services, the more direct will be in price competition among them and the lower would be incremental margins. IMPACT OF DEREGULATION ON THE US AIRLINE INDUSTRY The 1978 deregulation has path the way that allowed competition to begin to function as the prime regulator of decision making in the airline industry. Competition would allow the airline industry to develop and maintain an air transportation system that rely on actual and potential competition to provide efficiency, innovation, low prices, variety, quality air transportation services at the same time, emphasising safety as the highest priority in air travel.[11] In addition, carriers are free to determine their prices in response to particular competitive market conditions on the basis of such air carriers individual costs.[12] With deregulation, the number of certificated carriers offering passenger service in US has grown rapidly; in real terms after accounting for inflation, airfares averaged 13% lower by 1982; the proportion of air travellers flying on discount fares grew from 48% in 1978 to 80% by 1982. [13] The airline industry expanded at rates significantly greater than before. In fact, its load factors rose to the highest levels in fifteen years while industrys productivity increased with an estimated cumulative savings of some $10 billion. SUBVERSION OF COMPETITION Due to the lack of regulation or antitrust laws to regulate the newly deregulated airline industry, it has allowed large carriers to systematically acquired smaller, regional carriers that were rapidly expanding their routes and competitiveness in the newly deregulated environment. For example, Northwest acquired Republic Airlines, one of its major competitors in the upper Midwest; as a result of the merger, Northwest controlled more than 80 percent of the Minneapolis market and in excess of 50 percent of air travel in and out of Detroit [14]. Texas Air, which earlier had acquired Continental and New York Air, purchased Eastern Airlines and Peoples Express. In all, the Transportation Department approved every airline merger proposed to it once it had been assigned antitrust oversight of the field.[15] This has resulted in large carriers erecting additional barriers.[16]][17][18], obstacles[19][20] and predatory pricing[21][22][23][24] thus crushing what competition might appear. Subj ected to such predation, only thirteen new start-up airlines have emerged in the industry since 1989 and that only eight of these have managed to survive as independent entities. [25] By 1988, the major carriers had reportedly gained control over 48% of the nations fifty largest commuter lines, either through outright ownership or through operating and marketing links. [26] Table 1 show the downward trend of concentration in the immediate aftermath of deregulation was reversed after 1985 and trend upward. At the same time, a powerful system of fortress hub monopolies was erected across the United States as shown in Table 2. Table 1: Airline Concentration, 1978-2001 Combined Share of U.S. Market (%) 1978 1983 1992 2001 Four Largest Carriers 57.7 54.7 69.9 63.1 Eight Largest Carriers 80.4 74.1 95.7 90.3 Source: U.S. Congressional Budget Office, Policies for the Deregulated Airline Industry, Washington, DC, July 1988; Aviation and Aerospace Almanac (Washington, DC: Aviation Week, various years). Table 2: Airline Hub Monopolies, 1980 and 2001 Airport Leading Carrier Market Share (%) 1980 2001 Atlanta 52.5 79.2 Chicago OHare 31.6 45.9 Cincinnati 38.1 92.2 Dallas/Ft. Worth 36.0 61.6 Denver 27.3 65.1 Detroit 20.9 77.1 Memphis 41.6 62.1 Minneapolis 41.7 80.4 Pittsburgh 53.4 75.9 St. Louis 43.3 73.0 Salt Lake City 28.4 61.8 Source: Julius Maldutis, Airline Competition at the 50 Largest U.S. Airports-Update, Salomon Brothers, Inc., May 6, 1993, and Aviation and Aerospace Almanac (Washington, DC: Aviation Week, 2003), pp. 373-80. Nevertheless, it should be noted that the fault is not with deregulation. Instead, the main issues have been the failure of US government to enforce antitrust laws to enable competition to effectively regulate the field. It failed to recognise that deregulation is not synonymous with laissez-faire and that antitrust enforcement is vital if competition is to perform its function in a newly deregulated industry. Effective competition would prevent carriers from charging high and highly discriminating airfares. This is simply because passengers have the option of patronising competing air carriers. Effective competition would prevent carriers from offering deteriorating service at higher fares, which again, because passengers could choose to fly on alternative carriers. An effective competition would surely prevent an industry from being dominated by carriers with the highest costs rather than the lowest. [27] Therefore, a new regulation regime like antitrust law from the Justice Department is necessary to promote and protect competition. [28] With Antitrust law, mergers and alliances by the carriers could have been blocked to prevent any artificial barriers to competition and prosecuting any predatory practices or actions by carriers to ensure competition function effectively. PROSPECTS FOR LOW-COST CARRIERS AND PRICE-CUTTING WARS Low-cost carriers (LCCs) have experienced phenomenal growth in recent years in term of load factors, airlines launched, aircraft order and worldwide distribution. Its growth has come to a momentous point where LCCs is posing exciting challenges and opportunities to the airline industry. According to IATA and ICAD projections, LCCs will outpace their full service rivals in terms of traffic growth and earnings in 2009. With tougher economic conditions and lower fuel prices, LCCs will have a major advantage Ten years ago, LCCs did not have access to as many cities. Now, their reaches are broader thus making it easier for passengers to turn to them as choice selection. Moreover, the amenities cut by larger airlines mean that their offerings are not all that different from their low cost competitors. [29] Cost-conscious mainstream airlines are cutting cost in order to provide the lowest fares. As mainstream airlines slim down, it has given passengers more option to fly both comfortably and affordably. LCCs are able to keep their prices down by flying out of low cost terminals. In other words, it is very much dependent on the airport that can lower its charges [30]. It also relied on the Internet for online booking and providing very basic onboard services. Furthermore, LLCs usually stock their fleets with one type of aircraft to minimise the amount of training for crews. [31] With fluctuating fuel prices, economic downturn and continuing environmental pressures, LCCs need to be able to continue to create value to their target customers in order to gain the market trust. It must continuously evaluate its models carefully in order to identify new revenue streams, attract profitable customers to ensure its long term survival in a highly challenging and competitively industry. The bigger challenge will come from mainstream airlines as they embark on low fares flights. As more and more countries are adopting an open sky policy, this has opened up new routes for LCCs amid tough competition and new entrants. [32] As low cost carriers, it has to constantly keeps it cost down. One of the fundamental issues with LCCs is economies of scale. By exploring new routes, it can enjoy increasing returns to scale; the marginal costs will be lower than the average costs. Since the marginal units of production or service costs less than the average, any increase in production will reduce the average cost. Therefore, the average cost cure slopes downward as shown in diagram 3. This will be more apparent if the aircrafts, maintenance and crews have minimum fixed costs including a fixed quota on the airports charges. Apart from economies of scale, LCCs like JetBlue offers a relatively simple product, with little meal service, at relatively low fares. This helps JetBlue distinguishes itself from other carriers like Southwest by offering reserved seating, leather seats, and LCD TV at every seat. [31] Furthermore, it has offered a more traditional hub-and-spoke route structure and a more traditional mix of long and short-haul flights. Coupled with its friendly service and hassle-free technology (ticketless travel), no discount seats, all fares would be one-way with a Saturday night stay over never required. It strive to be truly customer-friendly with computer terminals that could be rotated to show the customer what the agent was looking at, giving a $159 voucher whenever a flight was delayed for more than 4 hours for reasons other than weather or air traffic, and giving a $25 voucher for misplaced bags. Its attempts to bring humanity back to air travel. JetBlues target market was people who are no t going to travel, people who are disgusted with their current choices, people who would drive, or people who would not go at all. Another differentiation was that JetBlue used new airplanes as opposed to other LCCs that used second-hand planes. In another words, it provided passenger another layer of comfort and safety factors. IMPACT OF GLOBAL RECESSION ON THE AIRLINE INDUSTRY Global recession and rising oil prices have major impact on the airline industry. Industry passenger revenues have declined nearly 15% which is equivalent to $80 billion. The impact was far greater than September 11 disaster. According to International Air Transport Association (IATA), the forecasted revenue loss has gone up by 50% from $4.7 to $9 billion. [33] Generally, first class and business class fliers have switched to economy class. Many businesses have freeze travelling and instead used video conferencing for meetings etc On top of this, cost pressures from rising jet fuel prices in 2008 forced up the industrys fuel bills to $165 billion and precipitated losses  of about $10.4 billion. Coupled with softer travel demand due to the spread of the H1N1 virus, have created a difficult business environment. [34] These forces that are affecting the industry are creating significant headwinds for the industry. SUGGESTED MEASURES Several carriers have taken the following measures: Reduce capacity on domestic and international routes. Aircrafts were grounded as a result including crews taking no-pay leave or shorter working week. Suspending non-stop services to certain routes. For example, Delta airline suspended its flight between Atlanta to Seoul and Shanghai. Reduce weekly frequencies of flights to certain destination while extending more flights to profitable routes Move quickly to rebrand and consolidate facilities, repaint aircraft and ramp-up our frontline training activities. accelerate integration like mergers and acquisitions MERGERS AND ACQUISITIONS In time of tough operating environment, merger makes more sense than ever particularly for air carriers. This would provide competitive advantage and strengthens its financial foundation. It also will maintain tight controls on its costs and capital spending. [8] Mergers acquisitions (MAs) is the easiest way to add to gross income is through mergers. By buying an established business with developed services and markets is a lot easier than focusing on internal innovation or better business processes. Many companies add 30 percent, 50 percent, even 100 percent to the gross income line simply by making a strategic purchase. Furthermore, there is synergies like greater economic efficiency, economies of scale, critical mass or greater customer base. At the same time, with lesser competition, it helped to stabilise airfares. CONCLUSION The airline industry operates in an oligopoly structure. By recognising mutual oligopolistic interdependence, it must be concerned and be aware of the group profits and group welfare. Under oligopoly landscape, independent, aggressive, genuinely competitive behaviour is perceived as counterproductive-an irrational strategy for the individual carrier. With declining market share by the Big Five network airlines and influx of several low-cost carriers, tacit collusion is becoming more difficult to organise, conceal and enforce. Through innovative and differentiated services, airline carrier could increase its equilibrium prices and avoid head-to-head price competition. New regulatory regimes like Antitrust laws is necessary to promote and protect competition. With Antitrust law, mergers and alliances by large carriers could have been blocked to prevent any artificial barriers to competition and prosecuting any predatory practices or actions to ensure competition function effectively. The prospect of LCCS can be sustained if can offer differentiated services like JetBlue which differentiated itself from the suite of no-frill services to its passenger that is niche and unique. LCCS should focus on cost efficiency and economies of scale by exploring new routes so that marginal costs will be lower than the average costs. The global recession has severely reduced the revenue of the airline industry. Several measures have been taken and adopted by many carriers in order to pull through the bad times. However, to ensure long term survival and competitive edge, carriers need to consolidate through merger and acquisition in order to enjoy greater synergies like greater scale, economic efficiency, economies of scale, critical mass or greater customer base and keeping airfares stable.

Internet Censorship in China

FYC Ruoxuan (Catherine) Yuan Internet Censorship has negative effects on China Censorship in China has gained much attention recently because of the conflict between Google and the Chinese government’s self-censorship policies. In fact, censorship has been practiced since ancient China and the intensity only increases by the years. Nowadays, the most notable measure of censorship is being done on the Internet. More and more restrictions have been put into actions by the Chinese government, which make the life of Chinese Internet users, the Chinese netizens, very inconvenient. With the intensity of censorship increasing and the censoring technology improving, Internet censorship has mainly negative effects on Chinese society. To start off, the current censorship situation needs to be described. In China, censorship is determined by the ruling party, the Communist Party of China, so Hong Kong, Macau, and Taiwan, special administrative regions that are mostly self-governing, are not fully affected by it. But in mainland China, Internet censorship has great impacts on the society. Facebook, Twitter, and YouTube, which people use everyday around the world, are banned in mainland China. Every time a Chinese netizen tries to open these sites, a blank page with bold words â€Å"404 not found† appears. This is very inconvenient for Chinese netizens. Moreover, the number of websites that are inaccessible is increasing. Also, Chinese government has forced search engines to adopt the self-censorship policies that force them to filter the search results for certain words. This triggered the withdrawal of Google from the mainland Chinese market. Attempting to search those â€Å"sensitive† terms not only results in little or no information being displayed but also in the shutdown of one’s Internet connection for a short period of time. Some people even suspect that doing so may lead to being spied on and arrested by the government. With so many coercive protocols, Internet censorship affects China in many different aspects, especially in economy, politics and culture. First of all, to boost the national economy, the Chinese government believes that using Internet censorship for economic protectionism is a good method. However, Internet censorship actually hinders the development of economy inside China. No matter in which nation, the best way to improve its economy is to utilize the most updated technologies and to focus on scientific innovations. China has always emphasized the development of science and technology and on learning the latest innovations from foreign countries, and the ex-leader of China Xiaoping Deng famously claimed that science and technology constitute the primary productive forces. However the new technology and innovations need a market of free competition in order to expand their influence and earn more benefits. Without good management ideas and marketing theories, these technologies cannot be applied properly in order to produce qualified commodities. This is exactly what the Chinese Internet censorship has caused. According to the national condition of China, a market combining socialism and capitalism is needed to rejuvenate the economy. However, the Chinese government proclaims its socialist ideology and promotes local businesses in a socialist manner and refuses the influx of some constructive theories, which may contain capitalist ideas in order to â€Å"maintain the stability of the Communist Party and to create a harmonious society. The restricted and narrow-minded economy strategy of the Chinese government, resulted from the Internet censorship, has undermines the development of the Chinese economy. The Chinese Internet censorship not only blocks useful information, but also interrupts communication between companies, therefore negatively affecting the Chinese economy. Nowadays the re is growing cooperation among companies from different countries, which is an important way to promote economic growth in a nation. However, the partial blocking of popular email services and the shutdown of multiple chat rooms has created many problems for local business contact with foreign ones. A famous example took place in May 2006, when Chinese netizens encountered difficulty connecting to Hotmail, which is an important method to communicate with foreign partners, since it is used all around the world. Also, soon after this event, Chinese netizens again reported that the access to POP mailboxes in many mail providers was difficult. Although Chinese netizens have tried to use blogs and forums to maintain communication, many blogs have been blocked ever since then, including Xanga and the LiveJournal. This makes international cooperation difficult. From this, the efficiency of producing commodities and the quality of the products in China cannot catch up with international standards, thus the Chinese economy suffers. Internet censorship and the requirement of self-censorship not only harm the economy inside China, but also are negatively affecting China in aspects of international commercial trade, even as globalization becomes the trend of today’s world. Chinese Internet censorship is applied to both directions; not only blocks Chinese Internet users’ access to certain foreign websites, but also prevents foreigners from knowing the truth about China through refusal of releasing reliable information. So when foreign companies want to enter the Chinese market, they face a serious question: â€Å"How do you assess an investment opportunity if no reliable information about social tensions, corruption or local trade unions is available? † It is impossible. All this information is necessary for a company to make wise decisions, to figure out a general plan and to find strategies that suit this market. Since most companies do not dare to enter a new market without analyzing and planning ahead, in this way, China lost the potential influx of many investments, technologies, and new management ideas. Even though some corporations were brave enough to challenge the Chinese market due to the lack of information and the restricted policies, most of them have failed. Examples are many, especially when concerning the Internet companies. â€Å"Many Internet giants have retreated from the country†¦ In fact, no major American Internet company has dominated its field in China. These companies, who are â€Å"armed with cash, intellectual property and an ability to manage complex networks and introverted workers,† have failed in the Chinese market. Therefore, it is natural for those companies who are less equipped and less experienced to presume that they will fail as well. Although some scholars assume that China’s restriction may decrease in the future, the block in Februar y 2007 of the French organization Observatoire International des Crises’ website after it posted an article on the risks of trading with China, makes the claim less convincing. This case of censorship, affecting a very specialized site with solely French-language content, shows the government attaches as much importance to the censorship of economic data as political content,† Reporters Without Borders quoted the organization’s comment. Hence, Internet censorship has discouraged foreign business to invest in the Chinese market, and it may keep doing so. Internet censorship has also been used as an efficient tool for economic protectionism in recent years, but the effect may hurt both sides. Renren, (original name is Xiaonei) the Chinese version of Facebook, was founded in 2005, and then in 2009 Facebook was banned in mainland China. Tudou, founded in 2005, and Youku, founded in 2006, both are Chinese versions of YouTube. Their shares of the market greatly increased after YouTube had been banned in 2007. The most notable example occurred when Google decided to quit the Chinese market. After warning in January that it might pull out of China, Google shut its mainland Chinese-language portal and began rerouting searches to its Hong Kong site in late March to avoid self-censorship demands from Beijing. Because China recognized that losing ties to the world's largest global search engine would dampen its innovation and business expansion efforts, and Google certainly wasn't happy at the prospect of losing China's online advertizing market, both sides reached a compromise when China renewed Google’s operating license in July 2010. Yet the damage had been done. Baidu, the Chinese version of Google and China’s top Internet search company, profited greatly and gained a much larger share of the market after Google exited. However, Baidu’s gain is China’s loss. â€Å"The whole industry will become worse. Without competition with Google, Baidu has no motivation to innovate. † said Yu Yang, chief executive of Analysys International, a Beijing research firm. Baidu is known for providing illegal music downloads, although it defended the practice, (Google vs China 2010)saying it simply provides the links. Also, Baidu faced criticism after the local media published reports saying Baidu gave high search rankings to companies selling illegal drugs. Soon after, Baidu signed a multimillion-dollar sponsorship deal with China Central Television, which had broadcast a fake investigative piece on Baidu to â€Å"clear its name†. Furthermore, Baidu is very cooperative with the government’s censorship efforts. So with Google’s absence from China, Chinese citizens are forced to use Baidu, whose ethics are questioned and which will increase the intensity of censorship by following every government order. â€Å"Chinese netizens are the biggest loser in this accident. † Additionally, the lacking of information and the coercive use of native providers caused by Internet censorship affects citizens not only economically, but politically as well. As mentioned in the previous paragraphs, censorship does not only apply to one direction; it affects both Chinese and foreign websites. So the Chinese press cannot post any reports on certain issues online, and they cannot report on those issues in any publications, because the Chinese government has always considered these issues â€Å"sensitive† and capable of â€Å"inciting subversion of the national regime or overthrow of the socialist system. Therefore, when the Internet was first introduced to China, many Chinese netizens discovered that the Internet can be a great way to gain access to foreign press. In this way, they were able to listen to opinions and comments, even critics, from all areas, which is an important step in learning about the government’s advantages and disadvantages and to participate in political lives. However, the Chinese Internet censorship has a focus on neutralizing critical online opinions, especially those that come from foreign press, and the most common way to execute this is to simply make whole websites completely unavailable in mainland China. By doing so, Chinese netizens are unable to know what the international reaction is about a new Chinese policy, or to see the evaluation of China in an international scope and to view the same issue from different sides. For example, the website of BBC, a relatively objective British TV channel, has been banned in mainland China since 2007. Before it was banned, BBC had provided many Chinese citizens access to the latest review on China from an international point of view. CNN, another TV channel, was banned for some time and now is accessible only partially. Chinese censorship policies are applied on Chinese websites as well. Many big Internet companies have to cooperate with the Chinese government, assisting and reinforcing the system of censorship, because they do not want to lose the Chinese Internet market. Therefore, these companies allow the Internet policies to examine their contents and remove anything inappropriate ones right after polices disapprove them. Even worse is that the number of the Internet polices is rumored at more than 50,000. With such an intense level of Internet censorship, critical comments appearing on Internet forums, blogs, and major portals usually are erased within minutes. In this way, Chinese netizens can never gain a full understanding of their own politics and their own government, because all they are exposed to is the government’s propaganda. The function of censorship is focused on preventing Chinese citizens from learning more about past and current failures of the Communist Party and about alternative systems of governance. However, as time passes by, the censored subjects are not limited to the Communist Party any more. Anything about politics can be termed â€Å"sensitive,† and reports on political contents are censored carefully since censorship about news reports is always a focus in the censorship systems. Although censorship does not follow any specific laws or regulations, the censorship system is vigorously implanted and the apparatus of Internet repression has become the most advanced and most extensive in the world. Moreover, Amnesty International notes that China â€Å"has the largest recorded number of imprisoned journalists and cyber-dissidents in the world. The offences of which these people are accused include communicating with groups abroad, opposing the persecution of the Falun Gong, signing online petitions, and calling for reforms and an end to corruption. Under such circumstances, the Chinese netizens can only read reports from the Chinese press which are untruthful and biased; on the other hand, the relatively objective reports from the foreign press are inaccessible. The lack of truthful reports harms the political consciousness of Chinese citizens. If one cannot even know about the truth, he or she cannot be aware of the real situation he or she is facing. For example, the Chinese news report website about the earthquake in Sichuan mainly contains the Communist Party’s propaganda, and lacks useful data or updates of the process on this event. When probing this website, people are more focused on emotions, and they cannot acquire many statistics or real information on the earthquake itself. But when looking at the Japanese news site about the same event, it is clear that its major contents are plain descriptions about the earthquake and the reconstruction process. There are abundant amounts of data, and the reports are largely based on facts and very objective. The American website of the earthquake, although it may not appear to be as objective as its Japanese counterpart, is still very truthful. People can find useful information about the earthquake, and the press also provides some comments and analysis on it. Chinese netizens desperately need the information provided by the foreign press to be politically conscious, but in reality, they cannot gain access to any of these websites, as they are banned by censorship. The government claims that their censorship practices can â€Å"harmonize† society, but in fact, they are only intensifying social conflicts and slowing down the progress of political development. In today’s world, as cultural exchange, which is as important as political communication, becomes more and more frequent, Internet censorship harms China from the perspective of cultural development and cultural communication. A culture is always in a continuous state of change. By communicating and acquiring knowledge from another culture, it is able to learn about the trends of the world’s cultures and update itself. Thus, such a culture will be greatly changed towards a more modern mode. An important compartment of cultural exchange is the exchange of popular culture. With the gradual spread of globalization, popular culture becomes similar across nations and cultures, and the entire world contributes to its further development. In a manner of speaking, popular culture in the world today is a combination of many cultures, each providing its own features and advantages to make the combination attractive to all kinds of people. By contributing to and learning from this popular culture, a nation can improve its own cultural features, thus providing better contents and even leading the trend in the world. However, Chinese Internet censorship inhibits the flow of foreign popular culture into China. A noticeable case is YouTube, an icon for fashion, freedom, individuality and novelty, which has beens inaccessible in mainland China since March 2008, right â€Å"after dozens of videos about protests in Tibet appeared. The issue about Tibet has long been a â€Å"sensitive† topic in China and the Chinese government has used many ways to keep the media out, even if this act is considered violation of the freedom of press. However, in this case denying the access of YouTube not only prevents people from knowing about the issue but also eliminates the communication and interaction between American popular culture and Chinese popular culture. Now it is hard for Chinese netizens to acquire the latest information on fashions in America, and they lose a good chance to be inspired by ideas presented through video clips and to develop their own cultural innovations. In conclusion, Chinese Internet censorship undermines economy improvement, hinders political development, and slows down cultural innovations. Although the Chinese government never admits their censorship policies in public, and although there are no specific laws or regulations addressing the censorship policies, the negative effects caused by Internet censorship are obvious. The president of China, Jintao Hu, vowed to purify the Internet, saying China needed to â€Å"strengthen administration and development of our country’s Internet culture. However, censorship is not the solution, even though the Chinese government does not want to face the reality. It is trying its best to stop people from discovering the truth and to feign a perfect society. Nevertheless, the public cannot be fooled and Chinese citizens are waking from the mirage. A group of former senior Communist party officials in China have criticized the Internet censorship, stating that strict censorship may †Å"sow the seeds of disaster† for China's political transition. Although a government spokesman responded that the government’s rules are â€Å"fully in line† with the rest of the world and that â€Å"no one had been arrested just for writing online content,† reports from the international society opposed this announcement, and Chinese citizens, who are experiencing Internet censorship every day, know the announcement to be a lie. The Chinese people can sense the deep sorrow under the superficial harmony. The nation seems to be prosperous and progressive, but no one knows what unpredictable crisis may happen if the government still insist on the censorship policy so arbitrarily. Although ordinary people may be powerless and vulnerable individually, the strength of the mass cannot be ignored. Chinese netizens have developed some Internet memes to ridicule Internet censorship. Some of them, for example the famous â€Å"Grass Mud Horse,† have become icons of resistance against Internet censorship and have gained media attention globally. These images and slangs cannot change the difficult reality, but they show the citizens’ increasing awareness of problems brought up by censorship. Hence, there is hope that by the effort of the mass, the increasingly pervasive and draconian censorship would end one day, and the government could become as democratic as it always claims to be. Works Cited Barboza, David. â€Å"Baidu’s Gain from Departure Could Be China’s Loss. † New York Times, January 13, 2010. Blum, Suan Debra. Happy news: censorship, nationlism, and language ideology in China. Notre Dame: Ind: The Helen Kellogg Institue for International Studies, 2010. Cheung, Anne S. Y. Self-censorship and the struggle for press freedom in Hong Kong. The Hague, the Netherlands; New York N. Y. Kluwer Law International; Norwell, MA Distributed in North, Central, and South America: Kluwer Law International, 2003. â€Å"China Blocks YouTube After Videos of Tibet Protests Are Posted. † New York Times. March 17, 2008. http://www. nytimes. com/2008/03/17/business/media/17youtube. html? scp=5&sq=youtube%20china&st=cse (accessed November 19, 2010). China. C riminal legislation in the People's Republic of China. Springfield,VA: National Technical Information Service, 1958. China, United States Congressional-Executive Commission on. â€Å"Google and Internet control in China a nexus between human rights and trade? the Congressional-Executive Commission on China, One Hundred Eleventh Congress, second session. Washington, March 24, 2010. â€Å"China, Where U. S. Internet Companies Often Fail. † New York Times. January 15, 2010. http://www. nytimes. com/2010/01/16/technology/16failure. html? ref=baiducom-inc (accessed November 13, 2010). China's Hu vows to â€Å"purify† Internet. Reuters, January 14, 2006. Chovanec, Patrick. â€Å"Al Jazeera: Internet Censorship in China. † January 2, 2010. http://chovanec. wordpress. com/2010/01/02/al-jazeera-internet-censorship-in-china/ (accessed November 14, 2010). CPC, The Central Committee of. . † the annual meeting, the 6th convention for the 16th Central Committee of CPC. Beijing: China, October 11, 2006. Deng, Xiaoping. Science and technology constitute the primary productive force. ex-president of China, 1988. â€Å"French website blocked for warning of risks of investing in China. † Reporters Without Borders. May 30, 2007. http://www. rsf. org/article. php3? id_article=21492 (accessed November 13, 2010). â€Å"French website blocked for warning of risks of investing in China. † Reporters Without Borders. March 30, 2007. http://www. rsf. org/article. php3? d_article=21492 (accessed November 13, 2010). Geoff Dyer, Mure Dickie. â€Å"Chinese Hotmail users suffer disruptions. † Financial Times, May 12, 2006. Human Rights Watch. â€Å"China: ‘race to the bottom’: corporate complicity in Chinese Internet censorship. † 2006: 141. â€Å"Internet freedom. † Background Global Internet Freedom Consortium. http://www. internetfreedom. org/Background (accessed November 20, 2010). Linnee, Susan. Freedom of Expres sion. Detroit: Greenhaven Press, 2009. News, BBC. China defends internet regulation. Feburary 15, 2006. http://news. bbc. co. uk/1/hi/world/asia-pacific/4715044. stm (accessed May 4, 2010). . Party elders attack China censors. Feburary 14, 2006. http://news. bbc. co. uk/1/hi/world/asia-pacific/4712134. stm (accessed May 4, 2010). Red Hearing. â€Å"Google vs China. † 2010: 1. Reuters. â€Å"Google Exit Appears to Benefit Top China Rival, Baidu,. † New York Times. January 15, 2010. www. nytimes. com/2010/04/30/technology/30baidu. html (accessed November 15, 2010). Richardson, Sophie. â€Å"China’s forbidden zones: shutting the media out of Tibet and other ‘sensitive’ stories. † Human Rights Watch, 2008: 67. Sichuan earthquake. http://topics. nytimes. com/top/news/science/topics/earthquakes/sichuan_province_china/index. tml? scp=1-spot;sq=china%20earthquake;st=cse (accessed November 20, 2010). Watts, Jonathan. â€Å"China's secret Internet pol ice target critics with web of propaganda. † London: The Guardian. June 14, 2005. http://technology. guardian. co. uk/online/news/0,12597,1505988,00. html#article_continue (accessed November 20, 2010). Wines, Michael. â€Å"A Dirty Pun Tweaks China’s Online Censors. † New York Times. March 11, 2009. http://www. nytimes. com/2009/03/12/world/asia/12beast. html? em. . August 8, 2010. http://baike. baidu. com/view/50946. htm (accessed November 14, 2010). . September 26, 2010. http://baike. baidu. om/view/2421360. htm (accessed November 14, 2010). â€Å". † October 15, 2010. http://baike. baidu. com/view/102023. htm (accessed November 20, 2010). . http://www. asahi. com/special/08004/ (accessed November 20, 2010). . http://www. xinhuanet. com/xhwenchuan/ (accessed November 20, 2010). . October 15, 2010. http://baike. baidu. com/view/620774. htm (accessed November 15, 2010). —————————— Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€œ [ 1 ]. Susan Debra Blum, Happy news: censorship, nationalism, and language ideology in China (Notre Dame, Ind: The Helen Kellogg Institute for International Studies, 2010). 2 ]. Cheung, Anne S. Y. , Self-censorship and the struggle for press freedom in Hong Kong, (The Hague, the Netherlands; New York N. Y. : Kluwer Law International; Norwell, MA Distributed in North, Central, and South America by Kluwer Law International, 2003). [ 3 ]. United States Congressional-Executive Commission on China, â€Å"Google and Internet control in China a nexus between human rights and trade? †, (paper presented at the Congressional-Executive Commission on China, One Hundred Eleventh

Life and work Essay

Brahmagupta is believed to have been born in 598 AD in Bhinmal city in the state of Rajasthan of Northwest India. In ancient times Bhillamala was the seat of power of the Gurjars. His father was Jisnugupta.[2] He likely lived most of his life in Bhillamala (modern Bhinmal in Rajasthan) during the reign (and possibly under the patronage) of King Vyaghramukha.[3] As a result, Brahmagupta is often referred to as Bhillamalacharya, that is, the teacher from Bhillamala. He was the head of the astronomical observatory at Ujjain, and during his tenure there wrote four texts on mathematics and astronomy: the Cadamekela in 624, the Brahmasphutasiddhanta in 628, the Khandakhadyaka in 665, and the Durkeamynarda in 672. The Brahmasphutasiddhanta (Corrected Treatise of Brahma) is arguably his most famous work. The historian al-Biruni (c. 1050) in his book Tariq al-Hind states that the Abbasid caliph al-Ma’mun had an embassy in India and from India a book was brought to Baghdad which was tra nslated into Arabic as Sindhind. It is generally presumed that Sindhind is none other than Brahmagupta’s Brahmasphuta-siddhanta.[4] Although Brahmagupta was familiar with the works of astronomers following the tradition of Aryabhatiya, it is not known if he was familiar with the work of Bhaskara I, a contemporary.[3]Brahmagupta had a plethora of criticism directed towards the work of rival astronomers, and in his Brahmasphutasiddhanta is found one of the earliest attested schisms among Indian mathematicians. The division was primarily about the application of mathematics to the physical world, rather than about the mathematics itself. In Brahmagupta’s case, the disagreements stemmed largely from the choice of astronomical parameters and theories.[3] Critiques of rival theories appear throughout the first ten astronomical chapters and the eleventh chapter is entirely devoted to criticism of these theories, although no criticisms appear in the twelfth and eighteenth chap ters.

Using Different Types of Stemmer - 1392 Words

Experimental Setup Preprocessing Data Preprocessing is actually a trail to improve text classification by removing worthiness information. In our work document preprocessing involve removing punctuation marks, numbers, words written in another language, normalize the documents by (replace the letter (Ø £ Ø ¥ Ø ¢ ) with (Ø §), replace the letter (Ø ¡ Ø ¤ ) with (Ø §), and replace the letter(Ù‰) with (Ø §). Finally removing the stop words, which are words that can be found in any text like prepositions and pronouns. The rest of words are returned and are referred to as keywords or features. The number of these features is usually large for large documents and therefore some filtering can be applied to these features to reduce their number and remove redundant features. Features Extraction Text is categorized by two types of features, external and internal. External features are not related to the content of the text, such as author name, publication date, author gender, and so on. Internal features reflect the text content and are mostly linguistic features, such as lexical items and grammatical categories[www]. In our work, words were treated as a feature on three levels: using a bag of words form, word stem, in which the suffix and prefix were removed and word root. With all these features we need to extract and generates the frequency list of the dataset features (single words) and save it in a training file. Feature Selection The output of feature extraction step isShow MoreRelatedA Experiment On Bacterial Transformation Essay1710 Words   |  7 Pagesampicillin. The results for the fluorescence of the plates was that only the +pGLO plate with LB, ampicillin and the arabinose sugar glowed. Introduction: Genetic transformation has the ability to alter genes, thus leading to the expression of different phenotypes. This technique can be used in a variety of sectors of biotechnology to help advance things such as agricultural production, bioremediation, and medical treatments. In this lab, we attempted to successfully complete genetic transformationRead MoreSystem Architecture Of Event And Temporal Information Extraction1420 Words   |  6 Pagessecond for tagging, which contain different syntactic and semantic tagging tools, Stanford part of speech tagger, Stanford parser, HeidelTime temporal tagger, Stanford named entity recognizer. Third component is the extractor and finally the template generator. The components are discussed in detail afterward. The architecture is depicted in Fig 6. Figure 4.1: System Architecture 4.2. 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Snake thing Essay - 1338 Words

Night Every author has a different ways to portray a certain scene and the different elements used can be identify in Elie Wiesel and Art Spiegelman’s ‘hanging’ scene. For example, in Night, the reader uses his imagination to create the images of the horrific events, while in Maus, the images are ‘fed’ to him, giving a different some sort of surprise or shock. Depending on the situation, one novel’s technique might be more emotionally powerful at times than the other. One element is ‘imagery’, and that technique in Maus compares with Night because Maus is a graphic novel with explanations and Night is a literary novel where one draws out his own picture in his mind. With Night, it all depends on the person’s imagination and how they†¦show more content†¦In the next fifth and sixth panels of Maus, we just see feet in the air and our minds automatically trace back to the hanging. Those feet could be jumping, but the way they drop down show that there is no life left in the bodies. On page 86, we see and feel the grief of the Jews and how morbid the atmosphere is. There is the technique of cinematography because in the foreground the reader can see the present situation while in the background, there is a flash-back and the faces of the hanged appear. In Night, the only part where we read about the aftermath of both hangings is when there is the comment about how the soup tasted. â€Å"I remember that on that evening, th e soup tasted better than ever†¦Ã¢â‚¬  for the first hanging, but on the second, â€Å"That night, the soup tasted of corpses†. These are powerful words which draw disgusting images in our minds. In Maus, Siegelman can almost rely on the illustrations to explain a situation, while in Night, Wiesel is forced to write in a way that the words become illustrations in our heads and almost become a reality. 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Military Accountability Essay - 2245 Words

Being late does not make one important. Tardiness is a very unattractive quality when it comes to most aspects of one’s life: family functions, meetings, interviews, and especially a job. While a family may forgive tardiness, a job will not. Being late once or twice in one’s life is unavoidable. Being consistently tardy makes one unreliable and shows a lack of respect for other people’s time and obligations. Being late tells others that one person can be waited on, while everyone else can’t. People do not like when their feelings were not taken into consideration, when they took the time to consider others. Punctuality is a very important part of military life for several reasons. one reason is that if someone is late for a patrol†¦show more content†¦What could have been done the night before? Punctuality is a habit. It’s a matter of creating the routine and sticking with the routine. Punctual people will be winners everywhere and will be one step ahead of the others. Planning ahead will contribute to being punctual, less stress, and the ability to navigate around unforeseen circumstances. This all helps avoid difficult situations as far as time is concerned. This show of respect will also command respect from others. Someone who shows, over and over, that they are the master of their time is someone who will be taken seriously in areas far removed from time management. That foresight and adaptability that gets you where you need to be, when you need to be there, tells the people around you that you can handle whatever is thrown at you. When it comes to the military certain things are automatically expected of a person. One of the most important expectations is time management and being on time. 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Mobil Oil Australia Wellcome International â€Myassignmenthelp.Com

Question: Discuss About The Mobil Oil Australia Wellcome International? Answer: Introduction Contract law, is a common law, which holds significance due to its common use in daily life of every person, which not only includes the organizations, but also the common man (Mau, 2010). And due to this significance, a number of cases are made on yearly basis whereby on or other aspect of a contract is contested. At times the decision is very clear, and at other instances, making this decision becomes a difficult task (Ayres and Klass, 2012). One of such cases where the complexities of contract law were taken into consideration was the case of Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475 (Jade, 2017). In the following parts, this case has been discussed whereby the issues raised in this case, the relevant laws, the arguments of the parties on the basis of the law and the judgement of the court has been highlighted. But before doing that, a brief background of the case is given. Factual background Mobil had told its franchises those franchisees, who lives up to ninety percent of the performance standards, would be rewarded pursuant to the scheme known as the Circle of Excellence, over duration of six years. The reward in this case had not been discussed in a clear manner; however, it essentially translated into the extension of the tenure of the franchisee with no costs. Marketing, just after four years, Mobil abandoned its scheme, even when different franchisees were spending both time and money for living up to these standards. And as a result of this, franchisees of Mobil initiated a case against it. The case went to the trial judge where it was established that the abandonment of the scheme resulted in a situation where the franchisees could not complete their performance. The trial court held that due to this action of Mobil, there is a need to treat the franchisees as entitled to the extension of their tenure and it would be treated as if the condition of the scheme had been fulfilled. However, an appeal was made from this ruling to the Full Court (Jade, 2017). There were a number of issues which were raised in this case. The first one in this regard was whether or not, a contract was formed in this case, due to the offer, acceptance and consideration not being established. Further, whether or not there was a presence of unilateral contract and whether the same could be revoked. Lastly, the issue was raised regarding whether or not, the concept of estoppel could be used in this case. Relevant Law A contract can be defined as a promise exchanged between two or more parties, for undertaking a particular promise, which becomes the obligation of the contract, and this promise covers one party doing something and the other party fulfilling the requirement of consideration (Clarke and Clarke, 2016). A contract can be formed in a written and an oral manner, where only the mode of forming the contract differs, but an equally binding contract is created in both. In written contract, the terms are written and signed by the parties, whereas in oral contract, the terms are merely exchanged orally. In order to form any contract, some components have to be present, included in which are the offer, acceptance, consideration, intention, capacity and clarity (Blum, 2007). An offer is made by one party, to another, which contains certain offered terms. It is crucial that the offer is clearly differentiated from an invitation to treat. An invitation to treat represents that the parties to the contract want to go forward with the negotiations on the basis of which the contract is to be formed. An offer, on the other hand, represents that the parties want to start the contract and have the intention of being bound legally (Andrews, 2015). In case of a conflict between whether an offer has been made and an invitation to treat is made, the facts of the case have to be considered. In order for an offer to be made, it is significant that it is clearly stated, i.e., the terms which have been offered is properly stated and is not vague (Latimer, 2012). The next step in formation of contract is acceptance. When a party has been made offer to, the party has to be accept the offer in the manner in which it was made. The acceptance has to be properly communicated to the offer making party and the date of acceptance is deemed as the date on which the communication reaches the offer making party (Marson and Ferris, 2015). The unilateral contracts, are however formed, where by the acceptance is not communicated, and instead, it is acted upon. In other words, the performance of the unilateral offer results in the unilateral contract being formed, where the performance becomes acceptance (Stone and Devenney, 2017). The next requirement for forming a contract is the component of consideration. Consideration is the amount which is paid to the other party for undertaking the performance of the contract as per the promise made (Gibson and Fraser, 2014). The amount of consideration is to be mutually decided between the parties, and is acceptable so long as it has an economic value. The other needed components include the intention of the parties to create and enter into lawful relations, the clarity regarding the terms of the contract, and the parties to have the contractual capacity (Mulcahy, 2008). Unilateral contracts were a key issue of this case and for this matter, different cases were referred to. With this concept, the revocation was also something which was looked into in this case. Revocation of a contract refers to the contract being terminated by one party. In unilateral contracts, the issues are raised when the attempt is made to revoke the offer, once the performance of the contract has started, but the same has not been financial (Lambiris and Griffin, 2016). One of the cases which were referred to in this case was the matter of Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424. The court held that neither consideration was present in this case, nor was the legal intention (Australian Contract Law, 2010). In the case of Errington v Errington [1952] 1 KB 290, the father had purchased a dwelling home for his newly wedded son. The purchase money was borrowed by the father from building society where he mortgaged the property. The father promised his son and daughter-in-law that he would transfer the property to them if they paid the instalments of the property. They did so, but left the property after some time, so the widowed mother continued to live there, and sought possession. However, her claim failed as the acceptance of unilateral contracts is done on full performance only. And the court also stated that the unilateral contract could not be revoked once the performance was started (E-Law Resources, 2017). The claims were also made based on promissory estoppel, which stops the promise making party from going back on the promise which has been made by them. A breach of contract was also claimed in this case which denotes that a promise which was made under the contract had been contravened (Australian Contract Law, 2013). The claim was also made for violation of section 52 and 59 of the erstwhile Trade Practices Act, 1974 (Cth), however, during the appeal, only section 52 was refereed to. This section relates to misleading or deceptive conduct, whereby a restriction has been placed on the businesses from indulging in such conduct which has the effect of misleading or deceiving the consumers, or does actually mislead or deceive (Jade, 2017). Application and the legal arguments of parties The franchisees made an argument that an offer was made in this case, which was a unilateral offer and which could be accepted by performing upon the terms of this unilateral offer. They relied upon the convention being attended by Stumbles, where offer and representation were both found in his address. This address was the one in which the 90% performance thing being linked to the reward being given to the franchisees was made. They highlighted that they had relied on this very statement made and that this was an offer made by Mobil, in which, by performing better, the acceptance would be made to this offer and the consideration was the reward which had to be given. This very statement was also claimed to be misleading by the franchisees, resulting in a breach of section 52 of the Trade Practices Act (Jade, 2017). Mobil on the other hand highlighted the clarity of terms as cancelling out the claims of the franchisees. They stated that the statement made at the convention was ambiguous and vague. A prerequisite in any offer is that it needs to be clear, but here the statement did not clarify about the reward. The proposal was very vague which could not give rise to a contractual obligation. Hence, an ambiguous statement could not be deemed as unilateral offer. Mobil relied on the case of Australian Woollen Mills Pty Ltd v Commonwealth and stated that they had no legal intention of making this statement as a unilateral contract. Further, even if a unilateral offer was deemed to be made in this case, the case of Errington v Errington allows Mobil to revoke the contract before the same was fully performed (Jade, 2017). The issue of consideration was also needs to be highlighted. The offer cannot be claimed to have been made as there was no consideration for the promise which has been alleged to have been made in this case. The reward was a vague term and for a consideration to be valid under contract, it needs to be clearly stated as the terms of the contract need to be clear. With regards to the breach of contract, Mobil stated that since a contract had not been formed for the lack of its needed elements, a breach of contract could not be cited by the plaintiff. The franchisees also have been wrong in stopping Mobil on basis of promissory estoppel as a promise was not made; it was simply construed to have been made by the franchisees, which was not right. The claim of breach of section 52 was also not present as per Mobil as the statement was made on reasonable grounds and was not done with the intention of misleading or deceiving anyone. Further, there was also an absence of the franchisees in re covering loss on the basis of reliance on this point. There was no promise which could give rise to a claim of promissory estoppel. Hence, this claim also needs to be quashed (Jade, 2017). Judgment When the matter went before the Full Court, they disagreed with the ruling given by the trial court in this matter. For each of the issue raised by the franchisees, they gave their verdict. With regards to the claim that an offer had been made in this case, the court stated that an offer was not made by Mobil to its franchisees. This was due to the fact that the terms of the communication were both vague and uncertain and it meant that there was a lack of certainty, where the scheme was just in its developmental stage (Paterson, Robertson and Duke, 2012). With regards to the unilateral contracts and its revocation, the court stated that there was no universal rule regarding revocation of a unilateral contract and so, there was a need to make the decision on case to case basis. In this case, the franchisees had not suffered a detriment in any manner, when they improved upon their own performance and so, there was a clear lack of real consideration. And they concluded that an offer which was made in return to the performance of an act, which was like any other offer, could be revoked at any point of time (Paterson, Robertson and Duke, 2012). Finally, the court took under the issue raised by franchisees to apply the concept of promissory estoppel. For this purpose, the court stated that it was essential to be shown that the defendant had encouraged an assumption that a specific lawful interest or a relationship would be created from the statement which was made at the convention. There was a clear lack of the details and the elements required to form a lawful relationship in this case. The generalised commitment of the defendant to finding a way could not be deemed as an assumption that a lawful relationship would be created. Hence, an emphasis was given on the creation or the encouragement by defendant of an assumption that an interest is being granted to the plaintiff. Hence, as there was no element of assumption in this case, the doctrine of estoppel was not raised in this case (Paterson, Robertson and Duke, 2012). References Andrews, N. (2015) Contract Law. 2nd ed. UK: Cambridge University Press Australian Contract Law. (2010) Australian Woollen Mills Pty Ltd v The Commonwealth. [Online] Australian Contract Law. Available from: https://www.australiancontractlaw.com/cases/awm.html [Accessed on: 16/09/17] Australian Contract Law. (2013) Mobil Oil Australia v Wellcome International. [Online] Australian Contract Law. Available from: https://www.australiancontractlaw.com/cases/mobil.html [Accessed on: 16/09/17] Ayres, I., and Klass, G. (2012) Studies in Contract Law. 8th ed. New York: Foundation Press Blum, B.A. (2007) Contracts: Examples Explanations. 4th ed. New York: Aspen management. Clarke, P., and Clarke, J (2016) Contract Law: Commentaries, Cases and Perspectives. 3rd ed. South Melbourne: Oxford University Press. E-Law Resources. (2017) Errington v Errington Woods [1952] 1 KB 290 Court of Appeal. [Online] E-Law Resources. Available from: https://www.e-lawresources.co.uk/Errington-v-Errington-Woods.php [Accessed on: 16/09/17] Gibson, A., and Fraser, D. (2014) Business Law 2014. 8th ed. Melbourne: Pearson Education Australia. Jade. (2017) Federal Court of Australia. [Online] Jade. Available from: https://jade.io/article/114770 [Accessed on: 16/09/17] Lambiris, M., and Griffin, L. (2016) First Principles of Business Law 2016. Sydney: CCH. Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited. Marson, J., and Ferris, K. (2015) Business Law. 4th ed. Oxford: Oxford University Press. Mau, S.D. (2010) Contract Law in Hong Kong: An Introductory Guide. Hong Kong: Hong Kong University Press. Mulcahy, L. (2008) Contract Law in Perspective. 5th ed. Oxon: Routledge. Paterson, J.M., Robertson, A., and Duke, A. (2012) Principles of Contract Law. 4th ed. Rozelle, NSW: Thomson Reuters (Professional) Australia. Stone, R., and Devenney, J. (2017) The Modern Law of Contract. 12th ed. Oxon: Routledge.