Offered only to high-ranking executives by major corporations, a golden handshake is a clause in an employment agreement which states that the employer will provide a significant severance package to an employee if he/she loses their job through firing, restructuring, or even scheduled retirement.
In accountancy, the rules of debit and credit are known as ‘Golden Rules of Accounting’, which are as follows: Debit what comes in, Credit what goes out Debit the receiver, Credit the giver Debit all expenses and losses, Credit all incomes and gains
Golden parachute refers to an agreement between an employee and an employer under which the employer promises large financial benefits to the employee when he is terminated due to a merger or an acquisition of the company. It can be understood as a compensation offered to certain employees when they are terminated before their contract ends. A Golden parachute clause can discourage companies from a merger or from getting acquired due to the large financial sum involved. This clause is usually included in the agreement of the top executives in a business. The purpose of offering a golden parachute is to ensure that the employee is not disadvantaged or forced out of the company. Companies may offer golden parachute benefits in the form of cash, a special bonus or stock options. Golden handshake is also a clause much like the golden parachute with the only difference of inclusion of severance packages offered upon retirement too. Why was the golden parachute clause introduced? The golden parachute clause was introduced to protect the shareholders and other higher-level executives in case of a merger or a takeover. The term was first used in 1961 and in the 1970s firms began introducing the golden parachute clause in their employment contracts. Over time the intent with which the golden parachute clause was included in an employee’s contract started to change, with newer modifications making it too lenient at times. In current times, the clause has come to be interpreted as a lot more than what it originally was supposed to represent. During the 1980s, the golden parachute became a standard norm followed by various companies. Even small firms adopted a golden parachute clause to protect their employees. Companies would include monetary as well as other benefits for their employees in case the company undergoes a merger, takeover or anything alike. At the same time, companies have expanded the golden parachute and have introduced more leniency to it, causing some to believe it serves as a free pass for top level employees to leave office with a truck load of money and other benefits. How are golden parachutes beneficial? Golden parachutes can be beneficial for both employee and employer, in the following ways: Employee: The biggest advantage of a golden parachute clause for an employee would be the purpose behind the clause, i.e., the protection of said employee in case of a merger or acquisition. It acts as a security for the employee and is an insurance for the long term, making the position more lucrative for applicants. A job with a golden parachute clause is guaranteed to attract more applicants and would be highly valued compared to a job without the clause. The other advantage for employees is avoiding inadvertent takeovers by big firms. Big companies might be tempted to acquire a well performing firm and its top-level employees. In the presence of a golden parachute clause, companies would give a second thought before they acquire a firm due to the costs involved, thus, protecting the employees from structural changes to the firm. A golden parachute also offers clarity to an executive when faced with the dilemma of whether to get into a merger or not. When an employee has guaranteed financial benefits post the merger and has the option of retaining his job in case the merger does not happen, then he would act in the best interest of the company. An employee that has nothing to lose either way would act according to what is best for the company. Employer: An employer may benefit from a golden parachute as well. In the case of employee termination post a merger or acquisition, employers might be faced with the accusation of unfair treatment of their employees. A golden parachute allows employers to maintain cordial relations with the fired employees as well as it avoids legal proceedings by the latter. Thus, an employer could include a golden parachute clause to protect himself as well. What are the issues associated with the golden parachute clause? Golden parachutes may sometimes be too expensive for companies and thus, might not be feasible for small firms. Moreover, the clause is only included in the contracts of few selected employees and is not made available for the entire employee base. Another critique of the golden parachute is the leeway provided under current modifications of the golden parachute contracts offered by companies. Some contracts may allow employees to walk away with a large sum of money rather than act in the best interest of the company. They might also shirk from their work and underperform as they would earn a guaranteed sum of money once they are terminated. In addition to these issues, golden parachutes might not discourage mergers as is expected out of such a contract. Many opponents of the policy argue that the cost associated to a golden parachute may be too miniscule compared to the overall cost attached to the merger. Thus, the cost of a golden parachute might not be enough to discourage a merger, which would make them highly ineffective.
What is Brand Awareness? Brand awareness is the concept where the company is able to create a unique positioning and client association of its business, such that the customers can recognise a brand under varied circumstances. Awareness is not necessarily about the brand name recall but can also be about the features of the brand. Brand, one of the organisation’s most valuable assets, is defined as a unique face of the company in terms of its tagline, logo, website, trademark or some slogan. This strengthens the company’s Business to Consumer (B2C) association and brand loyalty. Brand awareness is created by understanding consumer behaviour, advertising mechanisms and brand management exercises. It is consumers' recall of the brand and its ability not just to recognise the brand image but also associate with products or services, ultimately leading to the purchase decision. What are the Aspects of Brand Awareness? Brand awareness consists of two aspects: brand recall and brand recognition. These two aspects are fundamentally different as the brand recall is linked to memory retrieval, whereas brand recognition is associated with object recognition. Both play a vital role in consumers' decision-making processes as the consumers consider only a few specific brands which are set in their mind. It is believed that the consumers hold about three to seven brands but typically purchase one of the top three brands from its set of brand list. Several studies have shown that consumers buy familiar, well-established brands. With the vast amount of product options that exist in the market, the company’s brand awareness plays a crucial role to distinguish it from the others. What is the Significance of Brand Awareness? It is a winning mantra for the brand - To Convert More Customers, Focus On Brand Awareness. Kalkine Image For brands to steer consumers towards the purchase of product or services, brand awareness plays a vital role. Yet with many options available for marketers, it is possible to fail to connect with the consumers. Today's consumers use more than one path before making a purchase decision; hence if the growing conversion rate is the goal, then brand awareness is the route. With generating a steady customer base, brand awareness can also help convert those substantial amounts of customers into brand ambassadors who then further widen the brand name through word of mouth. This snowball effect can grow the audience exponentially. Therefore, companies need to draw the aim to decide how they want the audience to perceive the brand before establishing awareness measures. What are the Metrics to Measure Brand Awareness? Current market is highly globalised for a brand and awareness plays a key role to put forward performance in the competitive market scenario. Marketers have developed a number of metrics to measure brand awareness and these measures are constantly evolving. These metrics are famously known as Awareness, Attitudes and Usage (AAU). From product launch to market decline, a product's entire life cycle is managed measuring the brand awareness metrics to ensure product or brand’s market success. Marketers regularly monitor brand awareness levels and if they fall below the pre-set benchmark, the advertising and other promotional activities are intensified to get the awareness to desired levels. Awareness: Whether you are promoting the business online or you want to position your brand to stand out from the crowd, whatever the goal, uniqueness is the key in order to influence consumers and expand their awareness. Comprehensive market research is conducted by doing effective market analysis to understand target audience, demographics etc Attitudes: Brand-related advertising increases the awareness. While brand exposure to the consumer increases the brand awareness, repeated brand publicity increases the recognition and recall. But It doesn't end at creating the awareness, marketers have to go one step further to influence consumer attitude towards the brand. Traditionally through advertising campaigns and print media, brands reached more people with multiple messages. To achieve steady sale and stable market share currently, marketers aim at impacting customers’ attitude towards the brand through advanced social media platforms, event sponsorship and different promotional partners. Usage: Now with the emergence of digital media, marketers have shifted their strategies and balancing with the traditional as well as digital platforms for advertising. Apart from advertising, organic content creation, involvement in social activities, government affiliations, cross promotions are also few ways to create indirect brand awareness. Are there any golden tips for strong brand awareness strategy? Remember Google+, the social media platform which tech giant launched in 2011 to compete with Facebook. Google was not able to scale its product growth, and finally, after running out of capital, they had to shut it down. Marketers believe that eight out of ten launches fail. No matter how compelling your brand awareness campaign is, if your product/ services do not meet the predetermined standards, the campaign may not have the desired impact on the consumers’ psychology. To ensure this doesn't happen to your brand, create a strong brand awareness strategy but don't forget to see through it. Build a corporate brand manual - Be it the logo or the brand name or the layout of your letterhead, have a structure in place to avoid inconsistency. Consistency of your brand esthetics is essential to create brand recall and recognition. Memorability of the brand comes with the consistency in branding. Compelling storytelling - All direct or indirect interactions with clients, investors, media or consumers are an opportunity to make a positive impact. More than a product feature, the stories around it are quite memorable. A compelling story will catch the target audience's attention, ultimately resulting in brand recall. Like Apple stores launching at unique places and designs, such as its Washington D.C store at Apple Carnegie Library or Chicago store at the Chicago Riverfront, each store represents a different story. Content creation - Nowadays, creating content is more accessible than before, as today's consumers turn to the internet for any questions, concerns. Thus, having a generous amount of relevant content with the spice of journalism will bring the consumer attention to your brand. It doesn't have to be only in written format but can also be about videos, infographics, podcasts, blogs. It's an easy way to position your brand as you want and connect with the audience directly. This is one of the significant components to personify and humanise your brand, and boost organic sales. Establish brand perception - This will separate the brand apart from the competitors and represent the brand the way you want it to be served. A less confusing, direct message about the brand overall or the products/ services will let the customers better understand what the brand does and the associated business ethics. Strategic event marketing - Sponsoring an exhibition, a conference or even a music concert, whatever expands the reach towards your target audience is to be done. Can't find an event to sponsor or participate, better host your own. It does not just create awareness through media publicity but also a great way for networking with clients or investors. Think long term - investment in both brand awareness strategies and lead generation mechanisms goes hand in hand. Brands need to create awareness for customers to make a purchase decision, and with lead generation tactics, the brand will reach the exact target audience. Staying on the path with the appropriate strategies to achieve the ultimate goal can lead to significant gains in your company's brand awareness and eventually increasing customer' client base. What are some mistakes to be avoided during brand awareness? Creating brand awareness isn't rocket science but a mix and match of strategies and tactics that work best for your business is needed; the same may not work for others. Many times, marketers are too focused on the tactics but lose sight of strategy. Like they would want to build a website but will not be able to draw the purpose for it. Hence rather than concentrating more on 'what' you want, focus on 'why' you want, it will lead you to the goal. Failing to set up a goal is another reason brand awareness strategy does not work. Very often, marketers would choose marketing collateral because they like it but not consider if the target audience will like it or not. Customer is the king and will never be forgotten. Understand the target audience and narrow it down. Not having a clear idea of whom your product or services campaign should target, will not yield any desirable results. Know your audience and create impactful, targeted marketing.
Technical analysis is the study of price actions which is based on one major assumption, i.e., freely traded markets travel in trend. Centuries of work in interpreting and understanding the movement of prices in financial markets have seeded the field of technical analysis with a rhetoric change from marks on paper and calculation by hand, pit trades to charts, price patterns, advanced mathematical calculations, and system-based trading or Algo trading. A lot of advancement has taken place in the way financial markets are traded, leading to a paradigm shift in how one now picks data, analyses it, and acts on it. The two famous methods for analysing the markets are technical analysis and the fundamental analysis. Good read: Significance Of Fundamental Analysis While fundamental analysis primarily considers economic cycles, macroeconomic and microeconomic data, industry data, and stock-specific data, the field of technical analysis primarily relies on historical price data to forecast the future direction of the security under consideration. More on this, read: What Is Technical Analysis? Centuries of work and observation along with the advancement of mathematical tools and computers have now divided the technical analysis into two subbranches, i.e., subjective technical analysis and objective technical analysis. The subjective field deals with charts, classical western price patterns, mathematical relationships such as geometric relationship- as in harmonic trading patterns, while the objective field majorly deals in studying the price history, identify functions which explains and correlates the past price behaviour to a certain extent, and the backtesting those functions to test their performance on the historical data. Despite a lot of advancement in the field, the primary goal of the field remains the same: identify the trend as early as possible, capitalise on it for as long as possible, and manage the risk along the way. How Technical Analysts Make Money? There are a lot of requirements to convert pure technical analysis into money, but the first and most important is to determine when a trend is beginning or ending. Then the money is eventually made by jumping on the trend as early as possible, which though may sound very simple theoretically, but could be really challenging in practice. The introduction to technical analysis generally brings novice learners of the field into “trend analysis”, which is the stepping stone. From a tactical standpoint, a technical analyst must decide on two things: when to enter the market and when to exit it; and choosing when to exit compose of two things, i.e., when to close a position to book profit when the trend moves in favour and when to book a loss and exit when it is moving against you. Three Golden Points to Abide by Read: Buying the Dips – A Tapestry of Technical Tools and Strategy Assumptions of Technical Analysis The market moves in trend is the basic principle of the underlying theory behind technical analysis, and to support this notion, technical analysts have made several other assumptions, which are as below: The supply and demand determine the price As per the basic economic theory, price increases when demand exceeds supply, on the same lines technical analysts believe that the market forces, i.e., the cumulative effect of buying and selling determine prices. Traders buy when they expect the underlying security to rise, and expectations emerge from human decisions – which are based on information, emotions – which emerges from the chemistry and electrical connections with our brains (a subfield of neurofinance), and cognitive limitations such as behavioural biases, from the school of Behavioural Economics. Must read: Making Wrong Investment Decision? Blame Your Amygdala! Price discounts everything Price, which is the result of the cumulative buying and selling, reflects all the available information in the public and private domain. The concept was first introduced and articulated by Charles H. Dow and was later emphasised by renowned technicians such as William Peter Hamilton in his Wall Street Journal editorials. Prices are non-random This is an important corollary to the notion that market moves in trend, and of course, an object which moves randomly cannot be in a measurable cognitive trend. History repeats itself The assumption is strongly based on psychological measurement that humans behave similarly to the way they have in the past under similar circumstances. The assumption leads to behaviour which further leads to trends which form into patterns. Effects of human behaviour read: What does Fear Do to your Portfolio? Stocks that Scared Investors in 2019 Patterns are fractal Each investor or trader has a specific period of interest in which one operates, and interestingly, regardless of period, patterns occur with similar, although not identical, shapes and characteristic. Also, this assumption points at the behaviour of patterns, i.e., they remain the same irrespective of the timeframe, as patterns are the result of human behaviour, which remains the same under similar circumstances. So, it does not matter if a head & shoulder chart pattern has emerged on the daily timeframe, weekly timeframe, or a monthly timeframe, it would result in the same. Emotions are affected by earlier emotions through emotional feedback loop in human brains. So if a trader buys a stock and the stock rises in price, the trader would share the information with the other and other would act the same on it, which is the reason, market bubbles emerge, and the above notion is the main logic behind the mean revision theory. Dow Theory and History of Technical Analysis Charles H. Dow, the father of modern technical analysis, was the founder of the Dow -Jones financial news service in New York and the first editor of the Wall Street Journal. Charles Dow was the first to create an index that measures the overall price movement of the U.S. stocks and wrote editorials about what and how he had understood. Charles Dow never formalised or documented what has become the basic foundation stone of modern technical analysis – The Dow Theory. After his demises in 1929, William Perter Hamilton succeeded him as editor of the Wall Street Journal and continued writing the journal using the tenets of Charles Dow. It was after Hamilton’s death in 1929, Robert Rhea, a renowned Dow theorist, collected and formulated what has today come to be known as the Dow Theory. Rhea’s Hypothesis and Dow Theorems Hypothesis The primary trend is inviolate. The average discounts everything. Dow theory is not infallible. It could be seen that how using tenants of Dow, Robert Rhea could actually match assumptions of modern technical analysis, that is why the Dow Theory is considered as the foundation stone of the modern technical analysis. Dow Theory Theorems The ideal market picture consists of an uptrend, top, downtrend and bottom, interspersed with retracements and consolidations. From the modern standpoint of the “Efficient Market Hypothesis”, this ideal market picture is interesting as it presumes that price oscillates over long-period based on accumulated emotion of investors as well as the facts of the business and market cycles. An Economic rationale should be used to explain stock market action - (The Concept of Confirmation). The idea behind the theorem is that two averages should always confirm each other, and if there is a divergence between them, the rise is a fluke and should be avoided. For example, as in Dow’s journal, the DJIA and Railroad average should move in the same direction at the same time as both segments are economically connected. Price moves in trends According to Dow theory, there are basically three types of trends, i.e., the primary trend, which always tends to continue rather than reverse (Rhea’s hypothesis – the primary trend is inviolate), the secondary trend, which is the reflection of the primary trend, and the minor trend, which is the reflection of the secondary trend.