Huawei Operations Management Concepts

Huawei Operations Management Concepts and Practices and their Application in Real Business

Huawei – Operations management has been expanding to a broader notion of service and production management hence signifying the principalities of operations management concept in the transformation of raw materials to finished good ready for delivery to the consumer. The increasing recognisability and importance of operations management in organisations have led to growth and exploration of techniques and concepts fundamental in production and service delivery. Therefore, the effectiveness and efficiency of operations and service delivery in organizations are determined by how well they apply operations management concepts and practices in their endeavor.

Operations management scope ranges across various enterprises where people are involved in production and service delivery activities such as product and service design, technology selection and management, system design, process selection, quality improvement etc. (Kunchala). These concepts and functions entail many interrelated activities including scheduling, quality assurance, inventory management, capacity planning etc. fashioned toward effective and efficient production and delivery of goods and services.

Huawei Technologies Corporation, being among the leaders in the production and sale of mobile devices, they need to maintain a high-end operations management through the application of the latest and best operations concept in operations management. Besides, various factors necessitate the organization to facilitate streamline operations management. These factors include the quantity and quality of production, market diversity, change in technologies, competition, and the ecosystem.

Huawei, for instance, is inculcating the user-centric operation initiative which is aimed at digitizing their product while improving quality and user experience. This, therefore, entails the use of market research in their quest to deliver quality products which are user-friendly and well-paced with trend and technology (Huawei). Since the organisation uses make to deliver production approach, their market research should involve an in-depth analysis of the consumer preference and inculcate them during the planning, design, and production of various products.

The organization applies a generic and multistep product development process where they are technologies pushed product and platform products. For instance, the production of the Huawei GR5 product was a platform product as it was built around the pre-existing technology subsystem of the Huawei GR3. Besides, the Huawei Y series is built along a product platform where they use already pre-existing technology. Due to the overly increasing enormity and complexities due to technologies advancement, Huawei, therefore, enhances management transformation as they resort to a lean operation to accommodate customer requirement to improve production efficiency while controlling costs.

To cope with the competition and rapidly changing technologies, the organization applies the quick-build products which entail the rapid modelling and prototyping. To achieve a seamless and quality production, the organization integrates the operations and management organisation with the resources, platforms, and expertise through centralized processes. (Mingwei, Yaling & Feixiang) This highlights the importance of the effective layout decision within the organization.

Facility layout is essential in the realization of a seamless and lean production process in the Huawei Corporation. This entails determining of the arrangement and placement of workgroups, workstation, departments, inventory etc. to reduce possibilities of waste such as motion, movement, inventory, and quality accruing. It is worth noting that Huawei implements a Quality First strategy as they seek to enhance sustainability in materials and suppliers through performance appraisal.

As a contract manufacturer, Huawei has a high-end procurement decision-making team aimed at strengthening customer and supplier’s sustainability. For instance, the organisation has posited a procurement quota to enhance supplier sustainability hence minimizing the risks in supply while facilitating customer satisfaction hence boosting supply chain a competitive advantage. The organizations evaluate supplier eligibility based on compliance with the established supplier Huawei Supplier Sustainability Agreement, laws and regulations.

Further, the procurement process in Huawei is value oriented which entails adhering to the supplier’s regulations, transparency, and scientific procurement which is aimed at building a seamless and healthy s(secure, reliable, and competitive) supply chain. Besides, to facilitate the procurement process, Huawei facilitates a joint innovative, strategic cooperation with a win-win and benefit sharing process. This is achieved by enabling and encouraging mainstream partners to engage in the initial stages of product research and development to assure supply and competitiveness during the process (Tao).

Huawei Operations Management
Huawei Operations Management

Being a contract manufacturer, the organization needs to outsource various parts and or services and maintain robust industrial relations to enhance operational efficiency and effectiveness. This is critical as it enhances reasonable profit distribution within the industry thus ensuring key partners and suppliers gain sizeable and reasonable profits hence enhancing a success shared, competitive, and sustainable supply chain. A comment by Huawei’s Consumer Business Group chief, Yu Chengdong, “We are laying out plans for all our key smartphone parts. Huawei might not manufacture these components directly, but it does not mean we do not own technology to manufacture them ourselves” indicates the commitment and appreciation by Huawei to outsource their non-core competencies and dwell on competency for efficiency and effectiveness in their operation after the flash memory incident (Tao).

Additionally, while the organization seeks to facilitate lean manufacturing which is eco-friendly and sustainable, the organization should conduct regular value analysis and sensitivity analysis. These analyses are essential as they enhance the better performance while adhering to customers’ requirement. Lastly, Huawei has prioritized quality as the quality control department is fashioned to make the products synonymous with high quality. The objective is Huawei to win on quality through provision of high quality services and products consistent with their requirements.

MI global started operating in an already competitive market across China and the world. Various challenges culminated which had led to the organization to fall to a ‘unicorns’. Initially, the organization faced a slump supply chain associated with the rapid organizational growth which made the organization to retreat from overseas markets. Additionally, Mi had several organizational challenges that critically influenced their operations hence overall performance.

The organization has facilitated their design and manufacturing process through the application of an innovative business model which differentiate itself from other manufacturers at every phase of the customer journey. First, the organization has facilitated the production and development process of their products as depicted by their CEO, Lei Jun as “Mission Impossible.” Their manufacturing process is unique as they do not have a single physical factory as compared to Huawei which indicates a radical shift from the traditional approach in inventory management. This is vital toward the achievement of lean manufacturing as wastes are reduced in the production process. Xiamo’s make to stock production process inculcates customer requirement as depicted by the research and development process (Wang). The organization adopts a different strategy to reach client which entail cloud sourcing and application of social community to create awareness while at the same time gather information from the customers.

Different organizations have varying strategies and operations in their manufacturing and distribution. In comparison with MI, both organizations applied quick bound product development process where sample and prototypes are designed which includes the mix of the shape and the identity of the line design while depended on the outsourcing various components. Therefore, Huawei and Mi can be described as contract manufacturers.

Mi started operating in an already volatile and competitive market which necessitated differentiation. First, the organization MI Global prompted to restructure their operations through the adoption of more seamless and effective operation management practices. For instance, they restructured their smartphone hardware, supply chain, quality management as well as Research and Development initiative. Besides, the marketing of the end product and delivery to the consumer was exclusively online which made it inaccessible to many less tech-savvy clients (Kline). The organization had to implement therefore a unique and multistep production system which was more platforms based to facilitate production and supply. After their fall, the organization has become one of the super houses in tech in China competing with Huawei. In contrast, Huawei’s also invested greatly in research and development but they had a different marketing strategy which was both through outlets and online platforms.

 Besides, the production design and development entail outsourcing of various components including processors, casing, or camera from other organization for profound and seamless manufacturing. This process culminates with detailed quality tests which are critical in value and sensitivity analysis. Each phase of product development is closely monitored, and any mishap is remedied accordingly before mass production and supply of the product to the final consumer.

Additionally, Xiamo has been a market leader in terms of competitive prices on high quality products. This has been enhanced by sustainable and value-based procurement of components facilitated by quality controls and value analysis. For instance, the Mi3 has a Sony Camera with a sharp LG display and Phillips flash. The organization, however, is purposed toward zero inventories as they only manufacture based on orders hence inventory holding cost is automatically reduced. They procure components only when they get orders (Ghong). This has enhanced the effective alignment of their business model and operations hence meteoric rise.

Huawei Strengths

Huawei had various strengths as compared to Mi in terms of and manufacturing and distribution. For instances, their approach on stock-to-order was favourable in term of logistic and inventory management. Mi implemented a zero inventory management practice where they solely depended on customer orders to procure components. Although this method can save a lot of inventory cost, it can be constraint in case of inventory shortage or delays in delivery. In addition, Huawei had a clear procurement and tendering scheme which facilitated the selection of supplier hence facilitated suppliers’ involvement in the manufacturing process.

Adoption and implementation of seamless and profound operation management concept in the production and delivery of goods and services is a blueprint to the organizational success. They main operations management principles and knowledge adopted by the company included; the principle of reality where Huawei didn’t focus only on lean management or total quality management but rather focused on tools and time-based approaches to provide nearly universal successful operations management.

Besides, the principle of organization is clearly highlighted in the case study. Both organizations had organized their production process coherently as manufacturing, marketing, and distribution are interconnected set of processes. Other principles addresses in the study were the principal of variance, change hence the manufacturing and distribution must be bound with struggles with regulations, benefits, and wages to facilitate competitive advantage. Besides, the concept of lean manufacturing and inventory management are greatly highlighted in the Huawei and Mi manufacturing process. Additionally, the quality assurance and research and development are critically addressed. For instance, these principles enhance the process of procurement through manufacturing to delivery of the final product to the customers.

First, the organization is able to achieve or move toward lean production hence facilitating reduction of wastes which in return results in the eco-friendly operation and competitive advantage in the market (Onwuka, Ugwu & Ndife). For example, Xiamo was able to cut the cost of its products through inventory management and quality control initiatives. Reduced inventory costs and effective supply chain strategy enhances more competent, faster, and accessible products (Francis). To sum-up, adoption of operation management concepts and practices will enhance organizational efficiency, effectiveness, quality, lead time, capacity utilization, and cost objectives through value creation and value addition when transforming inputs to outputs.

Works Cited

Feixiang, Mao et al. “Making Manufacturing Productive Again With Iot – Huawei Publications” Huawei, 2018.

Francis, Abey. “Operations Management – Definition, Objectives and Functions”. MBA Knowledge Base, 2018.

Ghong. “Xiaomi: China’S Threat To Apple And Samsung – Technology And Operations Management”. Rctom.Hbs.Org, 2015.

Kline, David. “Behind The Fall And Rise Of China’s Xiaomi”. WIRED, 2017.

Onwuka, Ebele Mary et al. “Evaluation of Operations Management and Its Impact on Improved Logistics Control”. International Journal Of Economics, Commerce And Management, III, no. 5, 2015, pp. 591-602.

Tao, Li. “Huawei To Improve Supply Of All Key Smartphone Components”. South China Morning Post, 2018.

Wang, Lucy. “Xiaomi – Mobile Disruptor from China – Technology And Operations Management”. Rctom.Hbs.Org, 2018.

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Fiscal Policy Effectiveness within the European Union

The issue of monetary and fiscal policy within the EU is strongly debated at this moment in time. This is particularly true with the unconventional monetary policies being put in place for the first time by the European Central Bank such as quantitative easing; as the economy looks to recover from the sovereign debt crisis of 2008. This dissertation seeks to answer the following research questions: (1) Was the lack of a fiscal union a key contributing factor to the crisis? (2) Can a monetary union be effective without a unified fiscal policy to support it? (3) Has there been increased conformity in these key indicators since the crisis?

With these questions in mind, a literature review is undertaken to discuss and analyse the key issues within the European Union and beliefs and approaches regarding fiscal and monetary policy, including the heavily debated topic of whether or not a fiscal union is required. This dissertation also carries out a study of income and corporate taxation rates and expenditure figures for seven key EU countries in order to answer the above research questions.

A clear pattern of convergence is seen in the taxation rates and allows us to conclude that there has been increased conformity in key fiscal indicators since the sovereign debt crisis of 2008. We then link these findings back to the literature review and show that they fit with the beliefs of a large amount of previous academic work in the field. Our findings suggest that there has been increased fiscal conformity since the crisis and also that the lack of fiscal conformity (not necessarily achieved through the presence of a fiscal union) was a key contributing factor to the crisis.

Finally we also find that there can be an improved level of fiscal conformity without a fiscal union within a monetary union however we are unable to say conclusively that a monetary union can be effective without a unified fiscal policy.

This finance dissertation aims to establish the answer to a number of questions that stem from the 2008 European sovereign debt crisis:

  • Was the lack of a fiscal union a key contributing factor to the crisis?
  • Can a monetary union be effective without a unified fiscal policy to support it?
  • Has there been increased conformity in key fiscal indicators since the crisis?
Fiscal Policy EU
Fiscal Policy EU

Fiscal Policy Dissertation Contents

1 – Introduction
Overview of Research Aims and Strategy
Research Motivation
Introducing Monetary and Fiscal Policy
The Maastricht Treaty and the Stability and Growth Pact
Overview of Structure

2 – Literature Review
Can a monetary union be effective without the support of a fiscal union?
A monetary union can be effective without the support of a fiscal union
A monetary union cannot be effective without the support of a fiscal union
Was the lack of fiscal union a key reason behind the 2008 sovereign debt crisis?
The lack of a fiscal union was not a key reason behind the crisis
The lack of a fiscal union was a key reason behind the crisis
Shortcomings in the literature: Has there been increased fiscal conformity since the sovereign debt crisis hit?
Changing Role of the European Central Bank
Summarising the Literature
Anti Fiscal Union
Pro Fiscal Union
Lack of Fiscal Union was not key to Sovereign Debt Crisis
Lack of Fiscal union was key to Sovereign Debt Crisis

3 – Research Methodology
Sample Selection Criteria
Hypotheses Development and Reliability
Data
Top Band Personal Income Tax Rates (%)

4 – Findings
Income Tax Data
Corporate Tax Data
Total Tax Data
Government Expenditure Data
Implications of Findings

5 – Conclusion
Summary of the Results and their Implications
Limitations
Suggested Areas for Future Research

References

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Nanotechnology Application Neuroscience

Introduction

Nanotechnology is defined as the technology and manufacture of small non-biological or biological objects that involve individual molecules or atoms, or are manipulated on the scale of 10 -9 meters (less than 100 nanometers) (Veloz-Castillo, West, Cordero-Arreola, Arias-Carrión, & Méndez-Rojas, 2016). These materials are usually designed to perform particular tasks, and the technology is being utilized in scientific disciplines like tissue engineering, molecular imaging, molecular biology, surface science, and microelectronics (Mattei & Rehman, 2015).

Due to the small size of nanotools and nanoparticles, medical applications of nanotechnology support the possibility that interventions of better control, higher precision, and minimal invasion can be done at the subcellular level, and provide more accurate control of intracellular networks than is currently in existence.

In neuroscience, a field that is involved in the understanding of nervous system functions and information processing, and the application of knowledge to treating neurological disorders, nanotechnology can be used to recognize cellular-level diseases during diagnosis, and deliver therapeutic compounds in the treatment of these conditions.

Historical Timeline and Predecessor Assessment

K. Eric Drexler (1986) wrote the first book in nanotechnology and credited technology for people’s ability to arrange atoms and manipulate them to create specific forms or perform particular functions. He recounted the progress that engineers were making in microelectronic technology and spoke of molecular technology, a new invention that will change the world by enabling people to handle individual molecules and atoms with precision and control. Regarding medicine, Drexler (1986) observed that genetic engineers were already paving the way for molecular technology by using modern gene synthesis machines that built orderly polymers with a level of precision that microelectronic engineers of the time could not achieve.

Before Dexter’s work, other scientists had seen the possibility of nanotechnology being real in the future, and after him, engineers invented devices that transformed theories into reality.

Year Milestones in Nanotechnology
1959 R. Feynman initiated the thought process.
1974 Taniguchi used the term nanotechnology for the first time.
1981 IBM invented the Scanning Tunneling Microscope.
1985 “Bucky Ball”
1986 K. Eric Drexler published the first book on nanotechnology.
1989 IBM made its logo using individual atoms.
1991 S. Iijima discovered the Carbon Nanotube.
1999 R. Freitas published the 1st book on nano medicine.
2000 Launching of the National Nanotechnology Initiative.
2001 Feynman Prize in Nanotechnology was awarded for developing theory of nanometer-scale electronic devices and for synthesis and characterization of carbon nanotubes and nano wires.
2002 Feynman Prize in Nanotechnology was awarded for using DNA to enable the self-assembly of new structures and for advancing modeling molecular machine systems.
2003 Feynman Prize in Nanotechnolog was awarded for modeling the molecular and electronic structures of new materials and for integrating single molecule biological motors with nano-scale silicon devices.
2004 First policy conference on advanced nanotech was held. First center for nano mechanical systems was established, Feynman Prize in Nanotechnology was awarded for designing stable protein structures and for constructing a novel enzyme with an altered function.
2005-2010 Preparation of 3D Nano systems like robotics, 3D networking and active nano products that change their state during use.
2011 Era of molecular nano technology started.

Source: Nikalje A. P. (2015, p.82).

Before the 20th Century

Nanoporous ceramic filters were being used to separate viruses. Albert Einstein and Max Planck (1900 cited in Krukemeyer, Krenn, Huebner, Wagner, & Resch, 2015) produced evidence that there had to be a series of tiny particles that obeyed their own laws although there were no instruments at the time to make these elements visible.

20th Century

In 1902 Richard Zsigmondy and Henry Siedentopf developed an ultramicroscope that used ruby glasses to detect structures that were smaller than 4 nanometers (Krukemeyer et al., 2015). Zsigmondy created an immersion ultramicroscope in 1912 which investigated the behavior colloidal solutions. After that, scientists got better resolutions with the transmission electron microscope (TEM), the filed ion microscope (FIM), and the voltage clamp so that they were able to understand DNA and RNA by the 1960s (Krukemeyer et al., 2015). In 1980, Gerd Binnig and Heinrich Rohrer created the scanning tunneling microscope (STM), and future applications of their methods made it possible to demonstrate nanoscale structures accurately, and to position and manipulate them in a controlled manner (Krukemeyer et al., 2015). It opened up the possibilities of new scientific disciplines including nanomedicine.

By the time Drexler (1986) wrote his book, biochemists were using gene machines to write DNA tapes so they could direct cells and build designed proteins. However, they could not design chains that fold up to create proteins of the correct shape and function. Drexler (1986) believed the problem was that the scientists were focused on predicting the fold patterns of natural proteins instead of taking on an engineering challenge and designing proteins so they can fold predictably. He was certain that the protein-folding solution would allow biotechnologists to deal with individual atoms, which is central to nanotechnology.

Social Impact of Nanotechnology

There has been a lot of interest in nanotechnology and its applications since the idea was coined in 1959, and the investments that companies and countries put in the process are expected to increase drastically in future. Currently, carbon nanotubes and graphene are the most followed nanomaterials on Facebook, and most users are interested in the nanotechnology (58,188) and nanomedicine (5,366) pages (Sechi, Bedognetti, Sgarella, Van Eperen, Marincola, Bianco, & Delogu, 2014).

Graphene, carbon nanotubes, and quantum dots are the most liked nanomaterials on Facebook (2,683, 1,433, and 160), have the most number of groups on the site (16, 7, and 5), and the highest number of members in those groups (288, 414, and 170) respectively (Sechi et al. 2014). However, the public and international institutiona are concerned that nanomaterials have negative effects on the environment and human health so they advocate for industry regulations.

Campbell, Deane, and Murphy (2015) believe that people think of nanotechnology as a frontier culture, and that is why it has excited their cultural imagination. Since nanotechnology is being used in outfits, medicine, and numerous services, it affects everyone. Analyzing the development of nanotechnology in the society using Piaget’s theory of cognitive development:

Developmental Stage Nanotechnology
Sensorimotor stage Scientists learn about the basics ofnanotechnology, how to use the scanning tunneling microscope and they discover the first carbon nanotube as the pioneer authors on the topic publicize the concept (Nikalje, 2015).
Preoperational stage IBM create their logo using individual atoms, and the simplified feature help people to grasp the physical impact of nanotechnology and star building devices for storage, biosensors, and computer chips (IBM, 2009).
Concrete operations Nanotechnologists realize that they can implement the new technology in both the service and product industries like food nutrition, social security, renewable energy, quality education, communications, neuromedicine, health care services, and advertising (Aithal & Aithal, 2016).
Formal operations Scientists play the first nano guitar even though its sound cannot be conceived by the human ear, and create usable revolutionary sports equipment and outfits, and successful drug delivery systems used to treat neurodegenerative disorders (PRI, 2014, McNamee, 2011, Taylor, 2008, Nikalje, 2015).

Table 1: Analysis of nanotechnology’s development using Piaget’s theory.

Cultural Impact of Nanotechnology

According to a report published by Seear, Petersen, and Bowman (2009), between 1997 and 2004, the United States of America spent more than the European Union (EU) did on R&D for nanotechnology. In 2004 alone, the US spent $1 billion more than EU countries, and America leads in the field since it has world class universities that pioneer research. For example, the first nano guitar was built at Cornell University, New York in 1997 (McNamee, 2011), and in 2015, researchers at Berkeley Lab US developed an ultra-thin invisibility cloak which hides 3D objects from detection (Dockrill, 2015). Words that were introduced into the English language through such research include nanoparticles, bionanotechnology, and silver nanoparticles, and artists and musical groups were using variations of these terms on Facebook (Sechi et al. 2014).

In 1989 when Don Eigler and his team at IBM realized that they could use the scanning tunneling microscope (STM) to arrange individual atoms on a surface with precision, Eigler used 35 xenon atoms to write the company logo (IBM, 2009). The exercise was a nanoscience and technology breakthrough, so IBM took some credit for Eigler’s work and the invention of the STM, as its scientists continued working on more nanotechnology inventions (IBM, 2009).

The images of this logo taken by Eigler pioneered the work of California-based scientist and artist Cris Orfescu who uses a scanning electron microscope to get nanoscale images of landscapes he calls ‘nanoart’ (PRI, 2014). Orfescu prints these electron scans on canvas and uses the creations to inform people about nanotechnology in the 21st Century while using his online nanoart contest to encourage nanotechnologists to embrace the new science as an art form (Feder, 2008).

NanoTubes
Engineering Professor at Michigan University, John Hart, used 150 million vertically positioned carbon nanotubes to create each face in this image called Nanobama in 2008. (PRI, 2014)

Nanotechnology has also been used to design ultra-lightweight swimwear that absorbs water to only 2% of fabric weight compared to previous materials which absorbed 50%, and to create tennis racquets that are 22% more powerful than conventional ones, and twice as stable (Taylor, 2008). Nanotechnology helps designers to make athletic shoes since they are able to use molecular-sized particles to achieve maximum durability and comfort. During the 2008 Olympic Games, Jeremy Wariner used such a shoe designed by Adidas, and it was called ‘Lone Star spike’ because it was said to provide Wariner with increased flexibility, safety, better torsion, comfort, and more stability even as it reduced energy loss (Taylor, 2008).

Economic Impact

The industries that are utilizing nanotechnology include food, drinking water, energy, cosmetics, medicine, sport, automobiles, construction, banking, mass communication, retailing, hospitality, and entertainment (Aithal & Aithal, 2016). With the increase in the nanotechnology patents applied for in different industries across the world, it is expected that the StatNano database will expand substantially over the next five years.

Nanotechnology-Dissertation
Global Value of nanomaterials, pessimistic view (a) and optimistic view (b) (USD billion)

Source: Inshakova & Inshakov, 2017

According to this data published by Inshakova and Inshakov (2017) shows that NN-related publications have increased from 16,397 in 2000 to 128,436 in 2014. Both developed and developing industries are participating in the development of nanotechnological applications, with China leading (233,250) in the number of articles it has published between 2000 and 2014, followed by the USA (201, 203), and then Japan (81,516) (Inshakova & Inshakov, 2017). This number also indicates the amount of resources that these countries are dedicating to the advance of nanotechnology in their respective areas, and their willingness to regulate the industry while taking advantage of the opportunities available in science.

Nanotechnology Environmental and Political Impact

The development of specific applications for each field in the business world has made it easier for regulators to measure the actual effect that nanotechnology has in different areas. The industrial prototyping and commercialization of nanotechnology started back in 2000 with the first generation nanostructures being passive, the second generation being active, the third generation being systems, and the fourth generation being molecular nanosystems (Seear, Petersen, & Bowman, 2009).

By 2008, analysts had not yet seen the harmful effects that would have arisen due to exposure to nanotechnology in terms of ecological damage or harm to humans (Seear, Petersen, & Bowman, 2009). However, they were of the opinion that it is best to address the expected risks of nanotechnology by tightening the regulations that govern nanotechnology and its applications across the globe. Those who participated in the study held by Sechi et al. (2014) also felt that it would be safer for the environment if the international community came together to ensure that governments did not create anything related to nanotechnology that will endanger people and their surroundings.

References

Aithal, P. S., & Aithal, S. (2016). Business Strategy for Nanotechnology based Products and Services. Munich Personal RePEc Archive, MPRA Paper No. 71766.

Dockrill, P. (2015). Watch: Nano:sized invisibility cloak can make small objects disappear. Science Alert.

IBM (2009). IBM celebrates 20th anniversary of moving atoms. IBM News Releases.

Inshakova, E., & Inshakov, O. (2017). World market for nanomaterials: structure and trends. In MATEC Web of Conferences (Vol. 129, p. 02013). EDP Sciences.

McNamee, D. (2011). Hey, what’s that sound: Nano guitar. The Guardian.

PRI (2014). Scientists are becoming artists, thanks to ‘NanoArt’. Public Radio International.

Sechi, G., Bedognetti, D., Sgarrella, F., Van Eperen, L., Marincola, F. M., Bianco, A., & Delogu, L. G. (2014). The perception of nanotechnology and nanomedicine: a worldwide social media study. Nanomedicine, 9(10), 1475-1486.

Seear, K., Petersen, A., & Bowman, D. (2009). The social and economic impacts of nanotechnologies: A literature review. Final Report Prepared for the Department of Innovation, Industry, Science and Research, Monash University Victoria, Australia. Taylor, D. (2008). Nanotechnology in sports. EE453 Project Report.

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International Financial Management

International Financial Management – Evaluate the extent to which the bargaining model can be viewed as a practical implementation of the law of comparative advantage?

International financial management is a coined term in today’s world, and it is also known as International Finance. In simple words, it means financial management in an International business environment. International Financial Management is, however, different countries and regions due to the different currencies, government situations, political situations, deficient markets, varied opportunity sets (Susan, & Anil 2009, pp. 381–399)

It is said that international financial management came into the limelight when countries started opening up their borders due to the liberation and globalization policies that came with capitalism. Because of the open borders and increased freedom to conduct business in any country around the world. Entrepreneurs started to source for raw materials and establish their business in different countries provided that the state met the preferences of the entrepreneur (Wissam & Ellen 2014).

The development of liberalization was further enhanced by the swift move towards development of telecommunication and transport technologies. Financial innovations such as currency derivatives, multi-currency bonds, cross-border stock listing and International mutual funds further catalyzed the development of international financial management (Frederic et al. 2010, pp. 395-427).

Globalization and Multi-national Firm

Globalization has manifested itself in today’s world through the relationship of financial markets, increasing roles of the multinational corporations, the dependence of the local economies on foreign trade, transfer of technologies. This type of relationship has led to demands for harmonization of the world statically standards (Susan, & Anil 2009, pp. 381–399). Harmonization and standardization include updating the National Accounts System and the Balances of payment among other systems that would make the exchange of capital easier.

Multinational firms have contributed a lot towards international financial management, in fact, MNCs are the focal point for the studies of International Financial Management. Globalization has enabled companies to expand their territories to different countries and regions. For example countries like NIKE, Nescafé, and Shell Oil among others are present in almost the whole world.

According to Frederic et al. (2010, pp. 395-427), the structure of the global industry has experienced great changes especially in the 1990s due to the cross-border mergers and acquisitions; this is evident since most companies committing their affairs freely with stakeholders in different parts of the world is becoming standard. A massive increment by $200 billion to more than $500 billion in cross-border mergers was recorded in a span of only 2years i.e. from 1995 to 1999.

This lead to the healthy of business especially to the advanced developing countries like Taiwan and Hong Kong who are currently leading in investing in China and other South East Asia countries. In South America Brazilian and Chilean firms have dominated the region. In the same sense, Brazil and Argentina based companies have reciprocated. Korean companies overseas are roughly one-third of the massive domestic investments during 1999.

Due to this traffic foreign investment and trade have developed to become inter-wined. There are exports of foreign affiliates in developing states to the parent organizations overseas. This accounts for one-third of all the exports that originate from developing countries while two-thirds of the developing states involve a multinational buyer or seller. In the least developed countries, these ratios are probably higher because of the advantage that Multinational Corporations take over the cheap labor available in these countries. The rise of Multinational companies and foreign ownership has given various opinions about their effects on the developing countries.

International Financial Management and International Monetary Systems

Chiara et al. (2010, pp. 42-65), outlines that the international monetary system involves the management of money flows in conjunction with institutions that are government related that keep track of vast bulk of money including supporting currency needs and it also ensures payment obligations within and across countries are met accordingly. Various institutions that are responsible and are part of the international monetary system include the central banks international financial institutions, commercial banks, and some monetary market funds.

International Financial Management Dissertations
International Financial Management Dissertations

Wissam and Ellen (2014), adds that one distinguishing factor that makes IMS different from other financial institutions is that IMS is not interest bearing. Instead, money is considered as a unit of account and also means of exchanging goods and service and capital flows across borders in order to facilitate and ensure a perfect environment for exchange of financial assets and the excellent of financial markets. The commonly known definition of money since time immemorial is that it’s an asset in addition to its storage of value.

The USD has incurred changes that have been unheard of especially the one noted in 1985 where the dollar had hit a peak of USD 100 Billion a year. According to most economists was far much beyond the equilibrium level that has ever been attained. This record was due to the high exchanging rate which was a sign of confidence in the US economy, the high rate of exchange was due to the sticker hypothesis of the Dornbusch to fiscal irresponsibility. It was then decided that the dollar value be lower without considering much what took it high by intervening in the foreign exchange markets, this was done for the protectionist sentiment that conducted the US Congress that was mounting trading deficit

A plaza agreement that was formed by the big five countries i.e. united states France Japan great Britain and West Germany, a coordinated program to reach the target of forcing down the enormously shooting US dollar value against other currencies, the program worked perfect was successful in the end. It lost 11 percent of its SDR in 1986, the decrement of the US dollar was steady when Italy and Canada joined the group 5, forming a new group known as the G-7.

The policies worked like a charm, and the US promised to cut the budget deficit and ultimately lower the rate at which the dollar was growing. To achieve this further Japan and Canada promised to stimulate their economies, although they achieved the reduction of the dollar value the budget cuts weren’t forthcoming and so Germany and Japan never succeeded in their mission to stimulate their economies (Arthur 2003, pp. 979-992).

Trade is among the factors in addition to inequities that balances out countries in todays world. These fluctuations in a system of a freely floating exchange of goods and services gives the adjustment system to bring trade back to balances. A country that has both trade and account deficit could get back to balance through devaluing its currency which will increase its exports and lessen the amount of imports (Chiara et al. 2010, pp. 42-65).

In reality the existence of chronic trade deficits in country have consequences to the economy through the systems of flexible exchange rate. One of the main reason for the failure in adjustment of exchange rates is deficit for incentives for various states to keep their currency strong in order to attract foreign investments. But according to the reports by the World Bank over valued currencies only impairs trade more while calling for more inflow of foreign currencies. Finally the game reaches the end and the investors run away and the deficit country have a fall in their currency that erodes even the domestic savings and ushers in inflation and these leads to the international financial management emergency assistance that is directed towards economic austerity.

World Bank statistics recognizes the fact that a mechanism of semi-fixed exchange rates that provides for flexibility in a narrow range and orderly mechanism for adjustments for such ranges. In 1994 the former chairman of the Bretton Woods Commission Volcker Paul openly condemned the liberation of the exchange rates and advocated for the semi-fixed exchange rate regime (Jean et al. 2005, pp. 1-43). In exchange for the Bretton Woods Institution (World Bank and IMF) the countries suffering from deficits are expected to implement a range of deflationary fiscal and deflationary policies, in the late 1990s they were known as Structural Adjustment Program and mostly implemented through letters of intent. The process is usually refer to us loan conditionality’s since IMF financial assistance are conditioned when implementing policy reforms (Xiaoying & Xiaming 2005, pp. 393-407).

Foreign Direct Investments

The rise of foreign Direct Investment started over tree decades ago. From 1980s when the FDI flow was estimated to be 50 billion US Dollars per year OFD has grown up to 2.1 trillion US Dollars in 2007. Due to the economic recession in 2008 FDI fell down to 1.9 trillion US Dollars that is -10% (James & Mark 2000). Foreign direct Investments from developed countries have increased due to the high growth in economies and high performance from the corporate world of these countries.

OFDI particularly flows from the European Union and The United States of America who take up to 84%, the remaining 16% is represented by the transitional economies (BRIC countries).

International financial management, the distribution of emerging market OFDI has evolved considerably changed over the past years. Asia overtook Latin America and Caribbean America has become leading region for Foreign Direct Investment. While MNCs have become fundamental investors in many developing countries, they have also invested in developed countries. The general number of Multinational Corporations has been growing in tandem, with FDI (Caroline 2004, pp. 20-29). This rise does not only show the increasing ownership benefits of these firms but also the pressure for the companies to get a portfolio locality assets as foundation for International competitiveness (Arthur 2003, pp. 979-992).

The Bargaining Model

According to the theory of bargaining, governments yearn for development and a stability payment balance. These goals can be achieved through attracting foreign investments. On the other hand, MNCs are in constant look for sources of raw materials and strategic manufacturing points near their targeted markets. These objectives can be satisfied when MNCs deal successfully with governments of host countries because it is through the sovereignty of the states that the MNCs can achieve these Governments seek economic development and balance-of-payments stability, for example, and both goals can be pursued by attracting and channeling the activities of foreign TNCs. TNCs seek inexpensive sources of raw materials and manufacturing sites (Chiara et al. 2010, pp. 42-65). According to Jean et al. (2005, pp. 1-43).The bargaining process is enhanced by the relative resources that each country has.

The government has its high points from the control over the two most fundamental requirement of the MNCs which are raw materials and intensive labor. On the other hand, the MNCs have goodies that the government desires that they use to influence the government with some of these goodies include helping in lowering the unemployment rate in the country, improving the host countries balance of payments through providing access to the International Markets (Arthur 2003, pp. 979-992).

The relevance of these factors during the bargaining process substantially determines the expected outcome of negotiation between an MNC and the national government. Another factor that greatly influences the negotiation process is the situation between the firm and the government. The relative stakes that each party offers give a situation affecting the bargaining outcome.

Lastly the degree of similarity of interests that both the government and the multinational corporation have. The Similarity of interests makes negotiation more natural and smooth while different and parallel interests among the principles will make decision making very hard (Arthur 2003, pp. 979-992).

The Balance of Payments in International Financial Management

According to Wissam and Ellen (2014) defines this as an account records the payments and receipts of transactions of the citizens of that particular country with residents living in another country. Ones the payments and receipts of each country will include equally only if the operations are also included, neutrality will only favor one state at the expense of the other by allowing it acquire more assets from the not so preferred country. (Xiaoying & Xiaming 2005, pp. 393-407).

An evident example is if Americans purchase automobiles from the Japanese, and don’t engage further in other transactions chances are the Japan will end up holding dollars either in the form of bank deposits or engage in other investments in the US. These payments are then balanced depending on the transactions made for the acquisition of the dollar assets (Jean et al. 2005, pp. 1-43).

However much the balancing is done deficits must occur as a result of inequalities and excess payments, therefore leading to a surplus in particular forms of transactions including the service trade merchandise trade (James & Mark 2000). The balance of payments in any country must refer to some class of operations.

Various definitions have been given to the balance of payments surplus and deficits in the past. Every definition had its distinct implications and purposes. It is until 1973 that there was a focus on the definition of balance-of-payments which had the intentions of measuring the ability of a country to meets its responsibilities of exchanging its currency for other currencies or for tagging it to the Gold system at a fixed rate exchange like the Great Britain did (Maurice 2010, pp. 1–23).

So as to meet the newly formed obligations countries strived to maintain a stock of official reserves, in the form of foreign country currencies or gold that they would use to in supporting their local currencies. The decline in this stores stock was seen as crucial balance-of-payment deficit since it threatened a country’s ability to meet its responsibilities (Arthur 2003, pp. 979-992).

This type of debt was not a good indicator at all when looking at the financial position of a state. The reason being that it never looked at the likelihood that the state would be called upon to meet its delegated duties and the willingness of the international monetary institution to provide assistance (James & Mark 2000).

Caroline (2004, pp. 20-29), points that after 1973, official reserves unit of measuring a country’s ability to meet its obligations diminished as various economic giants gave up their responsibility of converting their currency at a fixed exchange. The made reserves look more meaningless, and there was no longer any concern about the changes in a country’s reserves (Ngaire 2000, pp. 82-841).

Xiaoying and Xiaming (2005, pp. 393-407), purports that after the 1973 talks on the balance of payment surplus or deficits now refer to current accounts. This account has a trade in goods, investment incomes earned abroad and the unilateral transfers. It doesn’t include the capital account, which includes the sales of securities or property. Since the current account and the capital account sum up to the total account, which is necessarily balanced, debt in the current account always comes with an equal surplus in the capital account and vice versa (Maurice 2010, pp. 1–23). Deficit or surplus present in the current account cannot be evaluated without different explanations and the evaluation of an equal surplus or deficit in the capital account.

A State is considered to be in deficit when in its current account is higher its price level. When the Gross National Product is greater the interests rates are also higher and the lesser the barriers towards imports and more attractive it’s to international investors, compared to other countries (Barry 1999).

Kenneth (1996, pp. 647-668), argues that the impacts of any change in one of these factors on the country’s current account balance cannot be predicted without looking at the effects of the other international financial management factors. For instance, if the government increases tariffs, citizens are likely to import fewer goods, therefore, decreasing the current account deficit. In this case, where this decline will occur only when one of other factors changes to bring about a reduction in the capital account surplus.

According to Axel and James (2015, pp.120-148), if none of these factors changes then the decrease in imports due to an increase in tariffs will lead to a decline in the demand for the country’s foreign currency, this, in turn, will raise the local value of the respective country. The increase in the value of any countries increase makes that individual country exports more expensive and imports cheaper, therefore offsetting the implications of the growth in Tariffs. The overall result is that the increase in tariff will bring no change to the current account (Caroline 2004, pp. 20-29)

Contrary to the thoughts of most people, the existence of a deficit in the present account in itself is not a signal towards a recessing economy or irrational economic policies. If a country has a deficit in its current account, it can sometimes mean that the country is importing capital. Importing capital is no more a peculiar system it is just like importing coffee or tea.

References

 Arthur, C 2003. “The euro: faith, hope and parity, International Affairs.” pp. 979-992.

 Axel, D 2009. “IMF conditionality: theory and evidence, Public Choice.” pp. 233-267.

 Axel, D, Jan, E, S & James Vreeland 2015. “Politics and IMF Conditionality”. Journal of Conflict Resolution. Vol. 59, Vol. 1, pp.120-148.

 Barry, E 1999. “Kicking the Habit: moving from pegged exchange rates to greater exchange rate flexibility”. The Economic Journal C1 – C14 Equator Principles III.

 Caroline, M 2004. “Managing Exchange Rates: Achievement of Global Rebalancing or evidence of global co-dependency.” Business Economics, pp. 20-29.

 Chiara, F, Francesco, R & Giuseppe, M 2010. “Why do Firms Invest Abroad? An Analysis of the Motives Underlying Foreign Direct Investments.” The IUP Journal of International Business Law. Vol. 9, No. 1 & 2, pp. 42-65

 Frederic, B, Melika, B, S & Marine C 2010. “Detecting Mean Reversion in Real Exchange Rates from a Multiple Regime STAR model.” Annals of Economics and Statistics, pp. 395-427.

 James, R, L & Mark, P, T 2000. “Purchasing power parity over two centuries: strengthening the case for real exchange rate stability A reply to Cuddington and Liang.” Journal of International Money and Finance. Vol. 19, No.1, pp. 759–764.

 Jean, I, Haroon, M, Morten R & Helene Rey 2005. “PPP Strikes Back: Aggregation and the Real Exchange Rate.” The Quarterly Journal of Economics. Vol.34, No 1, pp. 1-43.

 John, H, D 2000. “The eclectic paradigm as an envelope for economic and business theories of MNE activity”. International Business Review 9, pp. 163–190.

 Kenneth, R 1996. “International Financial Management The Purchasing Power Parity Puzzle.” Journal of Economic Literature. Vol. 45, pp. 647-668.

 Maurice, O 2010. “Does the Current Account Still Matter?” American Economic Review. Vol.102, No. 3, pp. 1–23.

Ngaire, W 2000. “The Challenge of Good Governance for the IMF and the World Bank Themselves.” World Development. Vol. 28, No. 5, pp. 82-841.

Shaun, F & Andrew L 2004. “International Financial Management, new financial system? Towards a conceptualization of financial reintermediation.” Review of International Political Economy. Vol. 11, No.2, pp. 263-288.

 Susan, F & Anil G 2009. “Subsidiaries and Country Risk: internalization as a safeguard against weak external institutions.” Academy of International Financial Management, Vol. 52, No. 2, pp. 381–399.

 Wissam, H & Ellen, M 2014. “Hong Kong’s Currency Crisis: A Test of the 1990s.” Washington Consensus’ View, International Finance. Vol. 17, No.3, pp. 273–296.

Xiaoying, L & Xiaming, L .2005. “Foreign Direct Investment, International Financial Management and Economic Growth.” An Increasingly Endogenous Relationship World Development. Vol. 33, No. 3, pp. 393-407.

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Tort Law Case Law Analysis

Tort Law

Tort Law – Any business field is affected by many aspects that may give rise to wrongful acts which may be done by the business or by a different party to a business entity. Tort law thus comes in to deal with any sort of the civil wrongs which may arise in line of doing business, such as negligence which emanates from other sources than breach of contracts (David Ziemer, n.d.).

One of the significant court cases in this category is the Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 (1928). This case is considered to be among the leading in the American tort law in regard to liability to an unanticipated plaintiff (David Ziemer, n.d.). When a civil wrong occurs, both the individual and business could be financially and legally responsible for the injuries caused as a result of negligence. One of the main factor relied upon when determining negligence include the breach of duty by the defendant which they owe to the plaintiff.

The case of Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 was handled by the New York Court of Appeals. In the case, Helen Palsgraf was the plaintiff and was waiting at the Long Island Rail Road station. She was on her way to take her kids to the beach. While boarding, two men tried to get on board before the plaintiff, and one dropped a package while being assisted by railroad employees, and it exploded. The explosion caused a huge coin-operated scale located at the platform to hit Palsgraf. She started stammering after the occasion and ultimately sued the railroad (Palsgraf, Punitive Damages, and Preemption, 2012). She argued that the railroad employees acted with negligence when they were aiding the man, and it was neglect that led to her harm.

Tort Law Dissertations
Tort Law Dissertations

The plaintiff first got a jury verdict in which she was to be compensated $6,000, but the decision was appealed by the railroad. On Appellate Division, Palsgraf got 3–2 decision and the railroad appealed once more. In the New York Court of Appeals, the railroad won the case as the court overturned the original jury verdict. It was ruled that there existed no negligence as the employees did not have the duty of care to Palsgraf while they were assisting the man to board because the injury was unforeseeable harm from helping an individual with a package.

A dissent was however made stating that the employee negligently extricated the package thus dislodging it without clear knowledge of the contents in it, thus leading to the explosion which broke the scale and harmed plaintiff who was an intending passenger (Teacher, Law, 2013). The dissention held that regardless of the duty to plaintiff, the doer of negligent act should be held to account for the threat caused to other people’s safety and all its immediate consequences.

The ruling may outwardly appear to be unfair because if the employees had been more careful with the package, the harm could not have occurred. However, I agree with the ruling in that it is based on the law of tort, specifically under the liability clause. The law holds that a tort liability only occurs in the event that the defendant breaches a duty of care, which such defendant is owing to the plaintiff, and in turn this act of negligence leads to injury being sued for. This is the concept which was accepted in the American tort law after the ruling made by the New York Court of Appeals (Teacher, Law, 2013). This case shows how the law deals with the proximate cause of the injury in connection to negligence.

References

David Ziemer. (n.d.). Duty of care remains thorny issue in Wisconsin law. Wisconsin Law Journal (Milwaukee, WI)

Palsgraf, Punitive Damages, and Preemption. (2012). Harvard Law Review, 125(7), 1757–2012

Teacher, Law. (November 2013). Palsgraf v Long Island Railroad – Case Brief

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