South African Automotive Industry Impact of Globalisation

South African Automotive Industry Impact of Globalisation 1. Introduction This paper discusses the impact of globalisation on the South African automotive industry in the business context. It explains the concept of globalisation and the importance of globalisation on the South African automotive industry. We explore the innovation, development and skills required in a globalized industry. This paper summarises of the current research of the business imperatives of globalisation in the South African automotive industry, which must be aligned with foreign investment and ownership, development of local skills, manufacturing and exporting. 2. A Definition of Globalisation According to Held and McGrew [2003:3], the term globalisation denotes the growth of connections between various countries that exists as society and states become increasingly entangled in worldwide systems and an exchange of communication via interaction. Kugut (1999:166) defines globalisation as a means of union between nations and companies achieving a common way of doing things. Gill (1999:70) defines globalisation as a method of growing economic integration, and a rising economic interdependence between the different economies of countries. Kiely (1998:3) defines globalisation as a world that has brought closeness of different economies, cultures and societies. Braithwaite and Drahos (2000:8) define globalisation as the growth of social, cultural, economic and political relations worldwide. These definitions highlight the magnitude of globalisation. A number of theorists present various meanings for globalisation. Essentially, all of these definitions describe economic, political and social integration on a worldwide scale. The globalisation method occurring in one part of the world influences what is taking place in other parts. 3. Globalisation as an Investment Driver of Growth in the Automobile Industry According to Flatters [2005], Foreign Direct Investment (FDI) has increased substantially in the South African automobile industry since 1995. It is difficult for South Africa to compete against other automotive supply chains around the world. This requires large amounts of capital, experience, skilled workers, and the latest technology systems. According to Zhu, Xu and Lundin [2006], high-end technology is required for any industry to compete in a sustainable manner, and this is very costly in terms of finance and time. According to Flatters [2005], in 1995 the initialization of the Motor Industry Development Plan (MIDP) and the Productive Asset Allowance (PAA) incentive scheme set a high standard of Foreign Direct Investment in the South African automotive industry. As a result, investment in this sector is high and vehicle exports have grown. 4. Positive effects of globalisation in South Africa Innovation in the South African Automotive Industry According to De Klerk [2006], ever since the Motor Industry Development Plan (MIDP) was brought in by the government in 1995, the South African automotive industry has integrated into the global automotive supply chain. The MIDP have removed all the competition from the automotive industry. Initially, when foreign ownership had a part in the South African automotive industry, it seemed as if it would have a negative impact on the South African automotive industry. According to De Klerk, JJ [2006], foreign ownership is exactly what the South African automotive industry needed. According to Lourens Barnes [2004], in order to improve in the industry, South African automotive industry technology needs to be improved. This requires foreign capital investment, and the opportunity for the domestic market to take advantage of it. When foreign and domestic markets work together, the technical knowledge is transferred to the developed country, which is then able to progress forward. Many auth ors have confirmed that when a country inherits the technology that comes with Foreign Direct Investment, the host country will have a very good base to develop its industry further. [Sadoi, [2008]; Doctor, [2007]; Basser, [2008], Lorentzen and Barnes, [2004]] According to Flatters [2005], South Africa has attracted substantial foreign investment over the past few years for example, Daimler Chrysler, and Alfa Romeo have invested here. However, this is very little compared to other developing countries. Multinational enterprises (MNE) view South Africa according to its size and for the potential for future growth in its domestic market. MNE look at the advantages that can taken from unsettled exchange rates in developed countries, the experience and quality of the workforce, and whether it is a low cost centre compared to other nations. According to De Klerk [2009], South Africa presents a beneficial emerging market for the multinational enterprises. South Africas population growth has increased by 8 percent (around 3571 350) in 1994 and by 11.9 percent (around 5333 550) in 2000, and is still growing. There are advantages that can be taken from the defect of the exchange rate.Wessells (2004) says that since the death of the Bretton Woods system, countries worldwide may choose an exchange rate ruling. According to De Klerk [2009], South Africa has a promising economy with an unpredictable currency, which is seen as a great benefit to the multinational enterprises. The quality and competence of the South African automotive workers are not of high standard. According to De Klerk [2009], the industry has a lack of skills and a surplus of untrained laborers. 5. Foreign Ownership, Education and Skills Development According to De Klerk [2009], it is expected that the same level of skills in a developing country be matched to that of the foreign investor. However, in developing nations the level of education is not that high. According to a literature review by Chatterji Montagma [2008] on foreign ownership, the multinational enterprise expects developed countries to have a high level of education before investing. Nevertheless, foreign direct investment continues although the standard of education is not high. The research done by authors Chatterji Montagma [2008] around training and processes and routines found that: developed countries would receive on-the-job training training is carried out with the use of advanced technologies multinational enterprises is impacted with quality of assembly line by the processes and routines of the host countries laborers. According to De Klerk [2009], the low cost of laborers in the local economy and processes and routines are beneficial to the multinational enterprises, with the aid of advanced technologies. 6. The Development of the South African Automotive Industry According to Black [2009], the South African automotive industry went through a bad period in the 1980s.The economic growth was slow due to political factors and international isolation. Vehicle sales had gradually recovered up until 2003, and had reached 617 000 units in 2005. According to NAAMSA [2006], 525 000 vehicles were produced in 2005, of which 26.6 percent were sold abroad. By the year 2005 the South African automotive industry was liable for 7.4 percent of South Africas Growth Domestic Product. (DTI, 2007). According to Black [2009], like most other countries with growing economies, the South African vehicle industry had set tariffs and a string of local content programs aimed at protecting the industry. According to Black [2009], the protection ruling became a serious problem 1980s, which led to the perception South Africa automotive industry as incompetent. According to Black [2009], a year before the first democratic elections, the Motor Industry Development Plan (MIDP) was introduced. This has allowed tariffs to decline by 40 percent for light vehicles and 30 percent for vehicle components before 2002. According to Black [2009], the MITs International Motor Vehicle Program published its first book on the future of the automobile industry. The South African automotive industry was not mentioned much, but the book contained some negative comments on the future of the South African automobile trade. 7. Automobile Exports According to Black [2009] motor vehicle exports grew fast in 2001. The increase in the quantity of vehicle exports does not mean that a foreign firm is being competitive in the automobile industry. Being competitive relies on the company global plan and the need to optimize its global manufacturing ability according to the policy ruling at each production location. The significance of economies of scale increases competitive pressure on companies in the automotive industry, requiring that they boost their production in order to decrease unit costs [Black, 2009]. In 2005, the export of motor vehicles grew rapidly as foreign companies had to adopt a strategic plan to supply vehicles out of South Africa.   According to Black [2009], in 2001 the three German vehicle companies, BMW, Volkswagen and DaimlerChrysler introduced an export strategy that was generating almost 50 percent of their import rebate credit certificates from exporting vehicles. Other vehicle firms like Ford and Nissan consistently practiced a multi-modal plan, using low local content standards. By 2005, Toyota and Ford employed an export plan together with other assemblers that followed later. The growth and success in the export of the automotive vehicles has been driven by the Motor Industry Direct Plan. Many multinationals do not see South Africa as an exporting location. Keeping costs low positively impacts the rapid growth of exports. The cheap labor and low management costs, joined with cheap property and electricity, add to the competitive advantages. According to Black [2009], in mid 2002 the cost of assembly for domestic firms such as DaimlerChrysler and BMW are below the manufacturing costs of the plants in G ermany. High costs were gained in the South African processes through supply chain management .i.e. the inbound and outbound logistics. According to NAAMSA [2006], Automotive Industry Export Council [2007], Department of Trade and Industry [2002, 2004], the Table 1 below, signifies the growth of the automotive exporting in 1990s, which exceeded the small regional markets and major export destinations that are at considerable distances from South Africa. The investment of vehicle production and component producers has gradually improved since the depression in the mid 1990s, when unclear politics and policies and a weak domestic market led to a serious slump in new capital expenditure. According to Black, [2009], an amount of capital totaling R847 million was invested in the automotive manufacturing industry in 1995. By 2005 this had increased to R3.5 billion. South African production plants still lag behind in capital expenditure compared to the vast capital expenditure in explosive markets like China, Mexico, Brazil, Thailand, and Central Europe. [Black, 2009] When the Motor Industry Direct Plan [MIDP] was introduced in the 1990s, the South African automotive industry entered in to the African markets. Unfortunately, this market was too small to increase the production line. On a smaller scale, the Completely Knock Down [CKD] assembly investments continued to grow. For example, in 1998 Fiat agreed to spend R250 million in order to manufacture new models from the Automaker production factory in South Africa. [Black, 2009]. 8. Automobile Manufacturing based in South Africa 8.1 Toyota in South Africa According to Black [2009], the Toyota brand was popular in the 1990s, with a big local market slice for its cars and light commercial vehicles. In the past, Toyota and Nissan were locally owned and operated by licensed agreements. Two well known international vehicle companies, Nissan and Toyota, have taken control of the South African automotive operations. These two firms have created a reaction amongst rival competitors in the South African market. Toyota South Africa has firmly incorporated itself into the parent global manufacturing system. The first Toyota vehicle exported out of South Africa was the Corolla. In 2005, on a large scale, Toyota exported light commercial vehicles as part of its Global project, which was called the Internal Multipurpose Vehicle project. At its Durban plant, Toyota has started production and aim to complete 300 000 units per year. However, Toyota Motor Corporation (TMC) stated that the South African manufacturing plant will be entirely incorporated into the TMC global supply system. 8.2 Ford in South Africa According to Black [2009], Ford has a history in the automotive assembly line in South Africa. Ford withdrew its vehicle assembly plants in the mid 1980s due to the political regime at the time. Toyota and Ford have reinvested into the South African domestic vehicle market after the first democratic election in 1994. At first they were hesitant to export vehicles out of South Africa on a large scale and therefore they kept their plants going worldwide, as well as knowing that there assembly production lines are in various markets. According to Black [2009], Ford Motor Company fully invested in South Africa in 2002 and has boosted its production line volumes by producing 100 000 units per year on the T6 pickups. 8.3 General Motors in South Africa According to Black [2009], Delta Motor Corporation is currently licensed to export under the brand name of GM. Initially they had a problem exporting vehicles out of South Africa because they did not have a stake in the South African domestic market. In 1996, Delta invested in its first production plant in South Africa. It is a small plant that has a low production turnover on volumes. GM has started an export plan, but the units produced and content levels are too low. Additionally, their position in the domestic market is weak. 9. Conclusion This paper reviewed the impact of globalisation on the South African automotive industry, and discussed measures that may allow South African automotive businesses to achieve their objectives through foreign investment and ownership, development of local skills, manufacturing, and exporting.

Essay --

T.Y.W. 1618-1648 The Thirty Years War was a series of conflicts, not-knowingly involving most European countries from 1618 to 1648. The war, which was fought mainly in Germany, was started when Bohemian Protestants furiously attacked the Holy Roman Emperor in terms to impose a restriction on their religious and civil liberties. By understanding the Thirty Years War, you will notice the notable religious, political and social changes. The changes paved the religious and political maps of Europe. Not only did this war affect the religious and political demographic, it caused populations to perish and lose large amounts of their goods. What was known as a religious battle, turned out to be a political feud in competition of which state has the greater power affecting men, women, soldiers and civilians. â€Å"[The bohemians] had no idea that their violent deed would set off a chain reaction of armed conflict that would last thirty years and later be called Europe’s â€Å"first world war† of the modern era.† When the war ended, the lands were defiled and over 5 million people were killed. During the Thirty Years War, men and women had to experience trials and tribulations. Solders and officials, putting fear into the eyes of the countrymen, were testing all their patience, tolerance, and rights. The soldiers thought they could do anything they wanted because they abuse their powers. Citizens were often tortured by water boarding, daggers and hung if they did not satisfy the needs and wants of the officials. Martin Botzinger briefly describes his experience saying, â€Å"they beat me to the ground with daggers†¦ both my feet were bound together, and the other took the rope round my left arm, and they shoved me in water.† Scenes like this caused so ... ... then five more, one after another†¦ they allowed themselves to eat those bodies†¦ They said, ‘it was the great unbearable famine that did it.’† The struggle to find food was real. It was a heavy burden for people to bear. The need to stay a live became a daily struggle many civilian and soldiers. The Thirty Years War, known as a religious war started off as a small debacle between the bohemians and the Roman Catholics. Not knowing this was a beginning to something big. The war that lasted thirty years, allowed for torment and diminishing events to happen. Events that effected men, women and soldiers. While some suffered more than others, there was not much left to do but to deal with what you had. The war defiled the lands of Europe leaving individuals helpless without much to eat or look forward to. All in all, the Thirty years War paved the new European landscape

Competitor Of Starbucks Essay

There are the known international company that become the competitor for the Starbucks. There are: Coffee Bean & Tea Leaf The endurance and popularity of The Bean, as it is affectionately referred to by devotees, can be attributed to the high standards that were established from the beginning. From trend-setting drinks like the World Famous Ice Blended, to the employees who become a part of the communities they work in, The Coffee Bean & Tea Leaf  ® has discovered the formula for a successful coffee and tea company. San Francisco Coffee The company that serve fresh coffee sourced from the best coffee farms on this green earth and the roast master, uses company to concoct blends and roasts that have the people wringing their hands, anxious for their next hit. Secret recipe Secret Recipe Cakes & Cafà © offers a friendly and personalised full-service dining experience for customers and incorporates a modern contemporary and vibrant interior concept with comfort ambience, and great food. It provides a great respite for customers to enjoy good food and quality time with friends, family or associates, after a long day at work. Old town white coffee To be Asia Pacific’s leading white coffee brand, providing high quality products to customers globally All the competitors try to win the demand of the customer who loves to drink coffee. Each company have their own strategy and uniqueness of their product. THE MACRO AND MICRO ENVIRONMENT THAT AFFECT THE STARBUCKS COMPANY MACRO ENVIRONMENT For the Starbucks micro and macro environment factor, we can use PESTEL element to evaluate and observed about the Starbucks. The (PEST) element included: Political factors The first factor which shall be kept in mind while studying the macro environment of Starbucks is the political aspect. It has been seen that, Starbucks has significant levels of presence in the coffee market. Starbucks consists of various types of products for government offices, corporate offices. The growth of Starbucks has increased and it means there are lots of demands about the Starbucks Coffee. However, in certain country, the political try to avoid the Starbuck because some of the countries try to boycott the Israel product. The cases of the boycott make the Starbucks have problem for their expansion of the business. Indirectly, the political of the country will affect the performance and growth of the Starbucks. Economic factors Economic factors such as recession which hard a big impact to the different organizations also to the consumer ability to purchase their product due to been unemployed and having debts. The way income is distributed among the individuals impact the marketing activities such as higher income earners, middle and low earners. These economic factors influence marketing segmentation and decisions. The exchange rate also will affect the Starbucks Company. When the currency decreases their value, it affects the monetary policies. Most of the supplier of the coffee comes from outsider. When the monetary decrease, it will affect the higher cost and the raw material become expensive. Finally, this situation makes the price of the Starbucks become expensive. It’s also become risk for Starbuck in making its coffee with the higher cost. Social factors Social factors that influence marketing decisions are such as demographic factors which is relating to the population where when the population  increases creates good opportunity for the marketing activities but if it decreases results to great impact in the market. Age, marketers tend to target their market according to the number of age available in an area. Behaviour also may influence the marketing decision where by some ethnics may not be able to purchase certain products due religion aspects also due to consumer’s different in taste, style and fashion some may like the products others may find them not attractive. Another than that, the social also included the changing in culture, taste and health consciousness. The culture of Malaysia who loves the coffee made the demand of Starbucks increase. However, Starbucks also need to learn about the culture among the country. Starbucks is International product and well known. Some of the country most prefers tea compare than coffee. That means , that is one of the challenges for Starbucks to come out with variety of product. Health consciousness of people also influences company to come out with healthy product for its customers. They need to plan new product that concern about the good healthy. It will provide opportunity to Starbucks to expand its business. Technological factors The fourth factor which shall be kept in mind while evaluating the macro environment for Starbucks refers to the technological aspect. Starbucks being one of the reputed coffee houses had a robust distribution strategy which helped them to stay ahead of the competition. Starbucks try to variety their distribution strategy within use the internet and mobile application. Starbucks launched a mobile payment system. This technological advancement helped the customers to pay while sitting at the store with the help of their smart phones. Starbucks also launched an I-phone mobile payment application. With this  application, the customers would be able to have an access of their favourite Starbucks card application. The use of technology will help the enterprise to break through the various distribution channels & be a step ahead of its immediate competitors. MICRO ENVIRONMENT The micro environment factors are about internal aspect of Starbucks. The micro environment are evaluate using Porter’s 5 forces model). There are about bargaining power of buyer, bargaining power of supplier, threat of substitute product, threat of new entrant and rivalry among competitors. Rivalry among existing competitors is high within the industry Starbucks operates in with major competitors like San Francisco coffee, Old Town White Coffee, Coffee Bean & Tea Leaf, Dunkin Donuts and thousands of small local coffee shops and cafes. Starbucks customers possess large amount of bargaining power because there is no and minimal switching cost for customers, and there is an abundance of offers available for them. The threat of substitute products and services for Starbucks is substantial. Specifically, substitutes for Starbucks Coffee include tea, juices, soft drinks, water and energy drinks, whereas pubs and bars can be highlighted as substitute places for customers to meet someone and spend their times outside of home and work environments. Starbucks suppliers have high bargaining power due to the fact that the demand for coffee is high in global level and coffee beans can be produced only in certain geographical areas. Moreover, the issues associated with African coffee producers being treated unfairly by multinational companies are being resolved with the efforts of various non-government organizations, and this is contributing to the increasing bargaining power of suppliers. However, the threat of new entrants to the industry to compete with Starbucks  is low, because the market is highly saturated and substantial amount of financial resources associated with buildings and properties are required in order to enter into the industry.

How carter subverts snow child Essay Example

How carter subverts snow child Essay Example How carter subverts snow child Paper How carter subverts snow child Paper How does Angela Carter subvert the traditional form off fairy-tale in her short story The Snow Child? Why does she do this? Carter as a feminist was interested in fairy-tales because of hoe gender roles are presented in them. For example, women. Women are normally the lead characters of a fairy-tale. However, there are several different types of women that exist in fairy- tales and the reader is often able to figure out a characters role in a fairy-tale based on their physical appearance. If the woman is attractive, it is often a sign to show a future of happiness and that she Is a damsel In distress In need of her prince harming to come and rescue her. On the other hand, women that are less attractive are automatically classed as a source of suspicion. The evils stepsisters from Cinderella are a prime example of this. Carter, as a feminist writer, can unpick and stripe the myths that compose and uphold western social and sexual relationships. In her opinion, male desire dominated the popular Imagination and as a result of this, female desire became squeezed, denied and twisted. In The Bloody Chamber, Carter does not do Versions of the common fairy-tales we all know but rather extracts the hidden content from them. One of the fairy-tales that Carter subverts is Little Snow White written by the Grimm brothers. There are many similarities and differences in The Snow Child and Little Snow White, one being how both of then begin. In Grimes story is starts off by saying Once upon a time, Midwinter and in carters story It starts off by saying Midwinter- invincible, Immaculate. Both stories draw attention to the setting being Midwinter which suggests its cold but Carters use of alliteration, invincible, immaculate, exaggerates the extremity of the weather. Also the way Carter begins her story in the resent tense, which is an immediate departure from the once upon a time traditionally shown in fairy-tales. This shows Carter subverting the story already as the beginning suggests Its a horror story rather than a fairy-tale. The characters In The snow child could be seen as something drawing a connection to Little Snow White as there is a husband, his wife and a girl that has all the traits of Snow White. However, where traditionally its the woman who wishes for the child, in Carters story its the man. Again, we are seeing how Carter seems to be subverting the fairy-tale genre here. The Count says l wish I had a girl as white as snow. I wish I had a girl as red as blood. l wish I had a girl as black as that birds feathers. As the count wishes for a girl, we are forced to contemplate whether or not his wish Is of paternal meaning or sexual whereas if it where a woman we would assume her desire is maternal. Overall, we get the idea that the count is not satisfied with his wife and wishes for the girl to give him what his wife is not able to give. This is made evident in the simile that is used in the counts wish. The as white as snow simile symbolisms the girls untainted virginity and purity. The as red as blood however, has a more sinister meaning. It could suggest danger and could also be foreshadowing omen due to the fact that we associate ravens with death and bad luck. All of the colors mentioned used to describe the girl are traditional, gothic colors, again showing that Carters story is nor fairy-tale. The way that Carters tale end is very different to what we normally expect to see in fairytale. The beautiful, young girl the count wishes for ends up dead. Traditionally, the beautiful girl lives happily ever after with her prince charming and the baddie IIS, but that is not the case with Carters story. Instead the girl picks a rose; pricks her finger on the thorn; bleeds; screams; falls. The very brief description of the girls death suggests that she was never a very important character in the story. You could also interpret it in another way and say that this shows how men treated woman, used them and disposed of them when they were no longer needed. This could draw attention to Carters feminist views. Also, the fact that the girl dies shows that Carters story is not a fairy-tale but rather a sinister, gothic, horror story. However, the fact that the girls death is due to the Countess Jealousy shows that there is an element of Grimes story in The Snow Child as Carter has arguably created an evil stepmother. We are shown this as the countess constantly asks the girl to do dangerous tasks for her such as purposefully dropping her diamond broach through a frozen pond and asking the girl to Dive in and fetch it for her. Looking at all the evidence, it seems that Carter re-writes the fairy-tale as she does to show the different and dark side of femininity. In traditional fairy-tales the image of a male is mostly associated with the good, the decent, the innocent and naive but Carter has rendered her story completely and shown women in a different light. The fact that fairy-tales have an element of teaching in them suggests that Carter has a message she wants to pass but she doesnt specifically indicate what the message is, which show that she may want the reader to work it out for themselves. You could also look at The Snow Child in a different way and say that it is not Just a re-writing of a fairy-tale to show what goes on in a really think but could also be revealing men to themselves.

kenpo made easy essays

kenpo made easy essays The Rules and Characteristics of Kenpo The first rule of Kenpo is proper awareness. All successful self defense is predicated upon this rule. You can not successfully defend yourself if you are not properly aware. It does not matter if you hold a black belt, if you are armed with a weapon, or if you can bench press 400 pounds. If you are not aware, then you will be injured or killed. Only through this, the first rule of Kenpo, is one protected from all of the forms of violence, i.e. direct violence, indirect violence, chance encounter, or reckless/negligent violence. A simple code for reminding us of awareness is the color code of combat. White = relaxed and unalert. Yellow = relaxed but alert. Orange = anticipating a problem. Red = action is occurring. Black = deadly force confrontation. The second rule of Kenpo is fighting spirit. This rule can be summed up in the epigram: "will beats skill". More properly stated: "will without skill beats skill without will." The development of fighting spirit is absolutely necessary in order to implement any of the physical skills of Kenpo. It involves the "never give up" attitude but extends beyond that to the willingness to cause trauma and even death to an attacker(s). It is the fuel needed to ignite and power a self defense technique during an actual gut check assault. The third component of Kenpo is physical skill. Physical skill is embodied in and developed through the curriculum of Kenpo. Numerous self defense techniques are taught for a variety of self defense situations. These situations include escapes and counters for grabs, pushes, holds, locks, chokes, throws, punches and kicks. As one's skill develops, escapes and counters to multiple assailants is learned. Next, unarmed defenses against various weapons attacks are learned. These include attacks with sticks, knives, and pistols. At the highest level, spontaneous responses are initiated against any combination of attacks, i.e. ...

The World of Abstract Art Painting Research Proposal

The World of Abstract Art Painting - Research Proposal Example The paper "The World of Abstract Art Painting" aims to describe the abstract art by looking at the intended as well as created meaning from the artist’s and viewer’s perspective respectively. The artist in focus when it comes to contemporary abstract painting is John Walker, an English printmaker, and painter, and the work is entitled ‘Oceania – My Dilemma’ painted in the year 1983. The work is presented on triptych: oil on canvas and its dimensions on the overall are 217cm by 513cm by 4.3cm. His current collections include Maine landscapes and Seal Point Series. ‘Oceania – My Dilemma’ is a series presented in triptych formation, which uses motifs from his earlier works. The monolith motif is taken as a representation of the Duchess of Alba from the portrait of Goya of 1797. The quotation on the left panel of St. John is a representation of spiritual transcendence. The complexity of imagery in the painting reflects the painter’s Australian experience, which acknowledges European legacy contact with indigenous landscape and people. Incorporation of Aboriginal and Oceanic art elements like spirit figures, masks, barks, skulls, biblical references, and the Alba figure show a collision between traditional beliefs and the introduced Christianity. Therefore, the abstract form of art has grown over the years to take a dominant position in the world of painting. It has helped artists to break from the traditional forms and be free to include word and image in their paintings.

How the Fico or credit score impacts on consumers Research Paper

How the Fico or credit score impacts on consumers - Research Paper Example A lot of consumers don't appreciate the importance of personal credit scores and how it impacts on their daily lives. Some don’t know that credit scores are available and accessible online. A credit score can have a say on what a consumer is or is not able to do. For instance, it can determine what one pays for leasing or auto financing, credit card rates, car insurance and mortgages. It can affect things we may take for granted like whether one gets a job or rent an apartment. When applying for credit, the lenders want to know your credit risk level Buyers or consumers with poor credit (high credit risk level) are turned away by the lending institutions. The current tightening up of the loan and mortgage market makes the situation worse. Customers with less than a 700 credit score are being turned away by car dealers. It is now more important than ever to have a good credit score. Keywords: Credit score, FICOÂ ®, consumers, lenders. What is a Credit Score? A credit score is a number that summarizes your credit risk, based on your credit report at a particular point in time (FICO Booklet). Credit reports and credit risk levels can be evaluated using your credit scores by the lenders. Since it’s just a single number, the lenders don’t have to read through the whole credit history report. It is an indicator of how likely you are to pay your bills. Consumers should be aware that lenders use other information to determine one’s creditworthiness along with the credit scores.... A high score is preferred by the lenders. For instance a score of 720 will get you favorable interests on a mortgage, according to Fair Isaac Corporation. The following table shows how credit scores break out for the American public. Credit Score Percentage 499 and below 2 percent 500 – 549 5 percent 550 – 599 8 percent 600 – 649 12 percent 650 – 699 15 percent 700 – 749 18 percent 750 – 799 27 percent 800 and above 13 percent Components of the FICO Score A credit report contains different types of credit data. It is this data that is used to compute the FICO Scores. Data is grouped into five categories as illustrated below. The percentage represents the importance of each category in computation of your FICO Score. Source: Fair Isaac Corporation Website Items considered in the payment history are account payment information (credit cards, mortgage and retail accounts), Public records (legal suits, bankruptcy, liens and judgments) and delinqu ency, Severity of delinquency, recency of delinquency and adverse public records, past due items on file and accounts paid on time. Amounts owed is checked for the amounts owing on the specific types of accounts, number of accounts with balances, proportion of credit lines used and proportion of installment loan amounts still owing The line of credit history is concerned with the time duration since the accounts were opened and other account activities that have taken place. New credit category is used to check recently opened accounts, recent credit inquiries, last duration of credit inquiry and positive credit history re-establishment following repayment problems Lastly, types of credit used category looks at the recent information on the various types of accounts, be they